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Civil Appeal No. 842 of 1964.
Appeal by special leave from the judgment and order dated February 19, 1963 of the Kerala High Court in Income tax Referred Case No. 23 of 1962.
R. Ganapathy Iyer and B.R.G.K. Achar and R. N. Sachthey, for the appellant.
675 A. V. Viswanatha Sastri and R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by Subba Rao, J.
The respondent, the South India Bank Limited, Trichur, is a banking company.
This appeal is concerned with the assessment year 1956 57, corresponding previous year being the calendar year 1955.
During the accounting year the Bank received a sum of Rs. 44,720/ towards interest in respect of taxfree Cochin and Travancore Securities.
During the course of the assessment of its income to tax, it claimed that rebate should be allowed on the entire sum of Rs. 44,720/ received as interest from the said securities.
But, the Income tax Officer, while completing the assessment, arrived at the figure of Rs. 33,444/ as the sum representing two items, viz., (i) reasonable sum expended by the assessee in realizing the said interest; and (ii) the interest payable on the money borrowed for the purpose of investment.
After deducting the said sum from the interest receivable from the said securities, he granted only a sum of Rs. 7,276/ as rebate for income tax.
On appeal, the Appellate Assistant Commissioner upheld the view of the Income tax Officer.
On a further appeal, the Income tax Appellate Tribunal, Madras Bench, held that the Bank was entitled to a, rebate on the gross amount of interest amounting to Rs. 44,720/ .
At the instance of the Department, the Tribunal referred the following question to the High Court of Kerala for its decision : "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that Explanation to section 8 is not applicable in this case and that the entire interest of Rs. 44,720/ earned by the assessee from securities issued by the former Native States, etc. is entitled to rebate of income tax." A Division Bench of the High Court expressed the opinion that the entire interest of Rs. 44,720/ was entitled to rebate for income tax under the notification issued by the Central Government in exercise of its powers under section 60 A of the Indian Income tax Act, 1922.
Hence the appeal.
Mr. R. Ganapathy Iyer, learned counsel for the Revenue, argued that under section 8 of the Indian Income tax Act, income tax was computed under the head "interest on securities" in respect of the interest received by an assessee on any government securities minus the expenditure incurred by him to realise the same in 676 terms of the first proviso and the Explanation thereto, that when under the third proviso the assessee was exempted from paying tax on the interest receivable on any securities of State Government issued income tax free, he was only exempted from such tax payable by him if it was not so exempted.
To put it differently, his argument was that the exemption under the third proviso was only in regard to that part of the interest which was taxable but for the exemption.
His further contention was that the notification issued by the Central Government under section 60A of the Income tax Act did not enlarge the scope of the exemption but that the said notification must be construed only in terms of section 8 of the Income tax Act.
Mr. A. V. Viswanatha Sastri, learned counsel for the respondent, argued that the substantive part of section 8, read with the first proviso and the Explanation thereto, had no application to securities issued income tax free and that the interest from the State Government securities was governed by the third proviso which did not provide for any deduction from the interest receivable from such securities for the purpose of income tax.
Further he sought to sustain the order of the High Court on the ground that the interest in question was solely governed by the notification issued by the Central Government whereunder the entire interest receivable from such securities was exempted from income tax.
As we agree with the High Court on the construction of the notification issued by the Central Government, we do not propose to express our opinion on the rival contentions of the parties based upon the provisions of section 8 of the Income tax Act.
Section 8 of the Income tax Act provides for the computation of income and deductions therefrom under the head "interest on securities".
Section 60 of the Act confers a power on the Central Government to make an exemption, reduction in rate, or other modifications in respect of income tax in favour of any class of income or in regard to the whole or any part of any income of any class of persons.
This power is conferred on the Government to meet special situations de hors section 8.
If section 8 of the Income tax Act makes an exemption in respect of a particular income, there is no scope or occasion for invoking the special power conferred on the Central Government under section 60A of the Income tax Act.
Unless we accept the contention that the notification under section 60A was issued by the Central Government in superabundant caution to cover the same ground occupied by section 8 we need not attribute any such redundancy to the Central Government we do not see any reason why the notification should not be construed on its own 677 terms in its application to the question of rebate raised in this, case.
The said notification reads : "No income tax shall be payable by an assessee on the interest receivable on the following income tax free loans issued by the former Government of Travancore or by the former Government of Cochin, provided that such interest is received within the territories of the State of Travancore Cochin and is not brought into any other part of the taxable territories to which the said Act applies.
Such interest shall, however, be included in the total income of the assessee for the purposes of Section 16 of the Indian Income tax Act, 1922 It is common case that this notification applies to the securities in question.
It will be noticed that this notification does not refer to the provisions of section 8 of the Income tax Act at all.
It gives a total exemption from income tax to an assessee in respect of the interest receivable on Income tax ' free loans mentioned therein.
It gives that exemption subject to two conditions, namely, (i) that the interest is received within the territories of the State of Tranvancore Cochin, and (ii) that it is not brought into any other part of the taxable territories.
It includes the said exempted interest in the total income of the assessee for the purpose of section 16 of the Income tax Act.
Shortly stated, the notification is a self contained one; it provides an exemption from income tax payable by an assessee on a particular class of income subject to specified conditions.
Therefore, there is no scope for controlling the provisions of the notification with reference to section 8 of the Income tax Act.
The expression "interest receivable on income tax free loans" ' is clear and unambiguous.
Though the point of time from which the exemption works is when it is received within the territories of the State of Travancore Cochin, what is exempted is the interest receivable.
"Interest receivable" can only mean the amount of interest calculated as per the terms of the securities.
It cannot Jr obviously mean interest receivable minus the amount spent in receiving the same.
We, therefore, hold, agreeing with the High Court, that no income tax is payable in respect of the entire interest of Rs. 44,720/ earned by the assessee from securities issued by the former native States.
In the result, the appeal fails and is dismissed with costs.
|
The respondent was a banking company.
During the accounting year for the assessment year 1956 57 the Bank received a certain sum towards interest in respect of tax free securities, and claimed rebate for the whole amount under the notification issued by the Central Government in exercise of its power under section 60 A of the Indian Income tax Act, 1922.
The Income tax Officer however, while completing the assessment allowed rebate only on the amount of interest that remained after deduction of sums expended by the assessee in realising the said interest and the interest payable on the money borrowed for the purpose of investment.
The Appellate Assistant Commissioner upheld the order of the Income tax Officer but the Tribunal held that the respondent was entitled to rebate on the gross amount of interest.
In reference, a Division Bench of the High Court upheld the Tribunal 's view; the Commissioner of Income tax appealed to this Court.
It was contended for the Revenue that the exemption under the third proviso to section 8 was only in regard to that part of the interest which was taxable but for the exemption.
The further contention was that the notification issued by the Central Government under section 60 A of the Income tax Act did not enlarge the scope of the exemption but that the said notification must be construed only in terms of section 8 of the Income tax Act.
HELD : The notification had to be construed on its own terms in its application to the question of rebate raised in the present case.
It is not intended to cover the same ground occupied by section 8, and there is no scope for controlling the provisions of the notification with reference to section 8.
The expression 'interest receivable on income tax free loans ' in the notification is clear and unambiguous, and can only mean the amount of interest calculated as per the terms of the securities.
It cannot obviously mean interest receivable minus the amount spent in receiving the same.
No income tax was therefore payable in respect of the interest by the assessee from the securities in question.
[677 E G]
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Appeals Nos. 979 and 980 of 1965.
Appeals by special leave from the judgment and orders dated November 12, 1962 and January 1, 1964 of the Madras High Court 951 in Tax Case Nos. 19 of 1961 and S.C. Petition No,. 142 of 1963 respectively.
section Swaminathan and R. Gopalakrishnan, for the appellant (in, both the appeals).
P. Ram Reddy and A. V. Rangam, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Shah, J.
section S.Rajalinga Raja hereinafter called 'the appellant ' owns acardamom plantation on a fifty acre estate.
For the assessment year 1957 58 he submitted a return under the Madras Plantations Agricultural Income tax Act 5 of 1955 disclosing a net income of Rs. 5,250/ from the plantation.
On enquiry the Agricultural Income tax Officer learnt that the appellant had sold stocks of cardamom of the value of Rs. 58,375 9 9 between April 1, 1956 and March 31, 1957.
The appellant explained that those sales represented not the produce of the year of account, but accumulated stocks of the past 3 to 4 years.
That explanation was rejected by the Agricultural Income tax Officer and after allowing expenditure estimated at the rate of Rs. 120/ per acre, the balance was brought to, tax, and a penalty of Rs. 3,000/ was levied under section 20(1) (c) of the Act.
The order was confirmed in appeal to the Appellate Assistant Commissioner, both as to the levy of tax and penalty.
But the Appellate Tribunal was of the view that the average production of cardamom per acre was 40 lbs.
and that if the stocks of cardamom, sold in the year of assessment be attributed to production of the year, the yield would approximately be 134 lbs.
per acre.
Holding that.
an estimate of 40 lbs.
per acre would be a "fair estimate" and that an average expenditure of Rs. 145/ per acre should be allowed, the Tribunal directed that the assessment be modified, and the order imposing penalty be set aside.
The State of Madras then applied to the High Court of Madras in revision.
The High Court was of the view that a part of the stock of cardamom sold in the year, though not the whole, was probably accumulated stock out of previous year 's production, but since the appellant did not lay before the taxing authorities reliable evidence, his explanation was rightly rejected.
The High Court also rejected the contention of the appellant that the income from sales of ' cardamom stock of previous years was not taxable in the year of ' account because it had been subjected to tax in those previous.
years under orders compounding the tax under section 65 of the Act.
The High Court accordingly allowed the petition and restored the assessment made by the Department.
With special leave, the 1 appellant has appealed to this Court.
It is claimed by the appellant in the first instance that under the Act, agricultural produce itself is income and becomes charged to, 952 tax under the Madras Plantations Agricultural Income tax Act 1955, when it is received, and not when it is sold, used or consumed.
Relying upon this premise it was urged that even on the view expressed by them the learned Judges of the High Court ought to have directed determination of the produce which was actually derived from agriculture in the year of.
account, and ought to have brought to tax only that quantity and excluded the value of the rest from taxation under the Act.
Section 3 of the Act imposes the charge of tax upon the total agricultural income of the previous year of every person, and by section 4 the total agricultural income of any previous year of any person comprises all agricultural income derived from a plantation within the State and received within or without the State. 'Agricultural income ' is defined (insofar as the definition is relevant in these appeals) as meaning: "(1) any rent or revenue derived from a plantation; (2) any in ,am , derived from such plantation in the State :by (i) agriculture; o (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii): Explanation 1.
Explanation 2. (3) Prima facie, section 3 of the Act read with the definition of 'agricultural income ' charges to tax the monetary return either as rent or revenue or agricultural produce from the plantation.
The expression "income" in its normal connotation does not mean mere production or receipt of a commodity which may be converted into money.
Income arises when the commodity is disposed of by sale, consumption or use in the manufacture or other processes carried on by the assessee qua that commodity.
There is no reason to think that the expression "income" in the Act has any other connotation.
A tax on income whether agricultural or non agricultural is, unless the Act provides otherwise, a tax on monetary return actual ,or notional.
Section 4 of the Act supports that view, for in the 953 total agricultural income is comprised all agricultural income.
derived from a plantation in the State.
It is not necessary, however, for income to accrue that there must be a sale of a commodity: consumption or use of a commodity in the business of the assessee from which the assessee obtains benefit of the commodity may be deemed to give rise to income.
Therefore, merely because the produce of his plantation was received in the earlier years, assuming that the appellant 's case is true, income derived from sale of that produce in the year of account is not exempt from tax under the Act, in that year.
Counsel for the appellant strongly relied upon a judgment of this Court in Dooars Tea Co. Ltd., vs Commissioner of Agricultural ' Income tax, West Bengal(1) a case decided under the Bengal Agricultural Income tax Act 4 of 1944.
It was held in interpreting the definition of section 2(1) (b) of the Bengal Agricultural Income tax Act, 1944, which is in substantially the same language as the definition under the Act that it was not predicated of the agricultural ' income that it must be sold and profit or gain received from such sale before it can be included in the definition of agricultural income.
In Dooars Tea Co. Ltd. case (1), the appellant grew bamboos, thatching grass and fuel by agricultural operations and utilized the products for the purpose of its tea business.
The claim of the Income tax authorities to tax the value of the produce was resisted on the plea that the produce was not sold.
In rejecting that plea, the Court observed at p. 13: "In terms the clause [section 2(1) (b)] takes in income derived from agricultural land by agriculture; and as we have already pointed out giving the material words their plain grammatical meaning there is no doubt that agricultural produce constitutes income under this clause.
Is there anything in the context which requires the introduction of the concept of sale in interpreting this clause as suggested by the appellant? In our opinion this question must be answered in the negative.
Not only is there no indication in the context which would justify the importing of the concept of sale in the relevant clause, but as we have just indicated the indication provided by clauses (ii) and (iii) is all to the contrary.
What this clause seems clearly to have in view is agricultural produce itself which has been used by the assessee.
" But these observations do not, in our judgment, imply that agricultural produce when received by a person carrying on agricultural operations becomes income in his hands.
The Court in that case was concerned to deal with a limited question whether a (1) ; ; 7Sup.
C.I./66 16 954 person who has raised agricultural produce instead of selling it uses that produce for his own business, can he be said to have earned agricultural income? The Court in that case held that he would be deemed to be earning income.
The decision is authority for the proposition that for agricultural income to arise, it is not predicated that the agricultural produce must be sold: user of agricultural produce for the purpose of the business of the assessee may give rise to agricultural income.
The decision in State of Kerala and Anr vs Bhavani Tea Produce Co.
Ltd.(1) on which reliance was placed by counsel for the appellant has, in our judgment, no relevance whatever in this case.
In Bhavani Tea Produce Company 's case (1) the assessee was required under section 25 of the , to deliver the coffee produced by it to the Coffee Board and the question which fell to be determined was whether such delivery constituted sale by operation of law as a result of which the assessee ceased to be the owner of the coffee, the moment it handed over the produce to the Coffee Board.
This Court held that under the relevant provisions of the Act as soon as the producer of coffee handed over the produce to the Coffee Board, it ceased to be the owner and income accrued to him at that point of time.
That case does not lay down the proposition that income accrues to a producer of agricultural produce before the date of disposal, use or sale.
The second argument raised by the appellant has also no substance.
For the years 1955 56 and 1956 57 the appellant did not submit returns of income, but applied to compound the tax under section 65 of the Act, and paid the tax determined at the rates specified in Part 11 of the Act.
Therefrom it cannot be inferred that the produce which was sold by him in the year of account to which these appeals relate had suffered tax in the earlier years.
It has to be proved that the crop sold by the appellant related to the years in respect of which he had applied to compound the tax; and on that part of the case there is no evidence.
The appeals therefore fail and are dismissed with costs.
There will be one hearing fee.
V. I P.S. Appeals dismissed.
|
The appellant owned a cardamom plantation.
For the assessment year 1957 58, he submitted a return under the Madras Plantations Agricultural Income tax Act, 1955.
The Agricultural Income tax Officer did not accept the return, and 'added to the income the value of stocks of cardamom sold in the accounting year.
The High Court in revision, confirmed the assessment made by the Department.
In appeal to this Court, it was contended that: (1) the agricultural produce itself was income and became charged to tax under the Act when it was received and not when it was sold, used or consumed, and therefore, the High Court ought to have directed determination of the produce which was actually derived from agriculture in the year of account and ought to have brought to tax only that quantity and excluded the value of the rest of the produce received in earlier years, from taxation; and (2) from the fact that the appellant applied to compound the tax for the earlier years, it must be inferred that the produce which was sold by him in the year of account had already suffered tax in the earlier years.
HELD : (1) Merely because the produce of the plantation was received in the earlier years, income derived from sale of that produce in the year of account was not exempt from tax under the Act in that year.
[953 B] Section 3 of the Act read with the definition of "agricultural income" charges to tax the monetary return either as rent or revenue or agricultural produce from the plantation.
The expression "income" in its normal con notation does not mean mere production or receipt of a commodity which may be converted into money.
Income arises when the commodity is disposed of by sale, consumption or use in the manufacture or other processes carried on by the assessee qua that commodity.
It is not necessary, however, for income to accrue that there must be a sale of a commodity : consumption or use of a commodity in the business of the assessee from which the assessee obtains benefit of the commodity may be deemed to give rise to income.
[952 G H; 953 A B] Dooars Tea Co. Ltd. vs Commissioner of Agricultural Income tax, West Bengal; , , referred to.
(2) It had to be proved by evidence that the crop sold related to the years in respect of which the assessee had applied to compound the tax, but there was no such evidence.
[954 F]
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Appeal No. 460 of 1987.
388 From the Judgment and Order dated 14.4.
1986 of the Jammu & and Kashmir High Court in Civil 1st Appeal No. 54 of 1985.
Altar Anjad, Adv.
General and S.K. Bhattacharya for the Appellants.
S.M. Aquil and Shakeel Ahmed for the Respondents.
The Order of the Court was delivered by THAKKAR, J. To condone, or not to condone, is not the only question.
Whether or not to apply the same standard in applying the "sufficient cause" test to all the litigants regardless of their personality in the said context is another.
An appeal preferred by the State of Jammu & Kashmir arising out of a decision enhancing compensation in respect of acquisition of lands for a public purpose to the extent of nearly 14 lakhs rupees by making an upward revision of the order of 800% (from Rs. 1000 per kanal to Rs.8000 per kanal) which also raised important questions as regards principles of valuation was dismissed as time barred being 4 days beyond time by rejecting an application for condonation of delay.
Hence this appeal by special leave.
The legislature has conferred the power to condone delay by enacting Section 51 of the Indian of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits '.
The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaning ful manner which subserves the ends of justice that being the life purpose for the existence of the institution of Courts.
It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court.
But the message does not appear to have percolated down to all the other Courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that: "Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908.
may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period." 389 1.
Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated.
As against this when delay is con doned the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day 's delay must be explained" does not mean that a pedantic approach should be made.
Why not every hour 's delay, every second 's delay? The doctrine must be applied in a rational common sense pragmatic manner.
When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides.
A litigant does not stand to benefit by resorting to delay.
In fact he runs a serious risk.
It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Making a justice oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal.
The fact that it was the 'State ' which was seeking condonation and not a private party was altogether irrelevant.
The doctrine of equality before law demands that all litigants, including the State as a liti gant, are accorded the same treatment and the law is admin istered in an even handed manner.
There is no warrant for according a stepmotherly treatment when the 'State ' is the applicant praying for condonation of delay.
In fact experi ence shows that on account of an impersonal machinary (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the in 390 herited bureaucratic methodology imbued with the note mak ing, file pushing, and passing on the buck ethos, delay on its part is less difficult to understand though more diffi cult to approve.
In any event, the State which represents the collective cause of the community, does not deserve a litigant non grata status.
The Courts therefore have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression "suffi cient cause".
So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even handed justice on mertis in preference to the approach which scuttles a decision on merits.
Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay.
The order of the High Court dismissing the appeal before it as time barred, is therefore.
set aside.
Delay is condoned.
And the matter is remitted to the High Court.
The High Court will now dispose of the appeal on merits after affording reasonable opportunity of hearing to both the sides.
Appeal is allowed accordingly.
No costs.
P.S.S. Appeal allowed.
|
An appeal by the State.
against a decision enhancing compensation in respect of acquisition of lands for a public purpose, raising important questions as regards principles of valuation, was dismissed by the High Court as time barred, being four days beyond time, by rejecting an appli cation for condonation of dalay.
The State appealed to this Court by special leave.
Allowing the appeal, HLED: 1.1 The expression 'sufficient cause ' employed by the legislature in s.5 of the Indian is adequately elastic to enable the Courts to do substantial justice to parties by disposing of matters on merits.
[388E F] 1.2 The State which represents the collective cause of the community.
does not deserve a litigant non grata status.
The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an equitable man ner.
The Courts, therefore, have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression 'sufficient cause '.
So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even handed justice on merits in preference to the approach which scut tles a decision on merits.
[390B C] 2.
In the instant case, sufficient cause exists for delay in instituting the appeal in the High Court.
Delay is, therefore, condoned.
The matter is remitted to the High Court for disposal on merits.
[390C D]
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5265.txt
|
ivil Appeal Nos.
3392 3394 of 1990.
From the Judgment and Order dated 30.11.
1989 of the Andhra Pradesh High Court in W.A. No. 269/89, dated 30.8.1988 in W.P. No. 12041/84 and dated 26.11.1987 in W.P. No. 194 of 1983.
P.K. Goswamy, Additional Solicitor General, M.K. Ramamurthy, C. Sitaramaiya, M.L. Paul, Kailash Vasdev, Ms. M.M. Rasaily, M.A. Krishnamurthy, Mrs. C. Ramamurthy, T.V.S.N. Chari, Mrs. B. Sunita Rao and Ms. Majula Gupta for the Appearing Parties.
The Judgment of the Court was delivered by KASLIWAL, J.
Special leave granted.
All the above cases are disposed of by one single order as identical questions of law are involved in all these cases.
In order to appreciate the controversy, facts in brief are stated of all these cases.
SLP No. 4176 of 1988: The respondent Vijaya Kumar was appointed as a Proba tionary Officer (Gr.
I Officer) by an Order of the Executive Committee of the Central Board of the State Bank of India on 7.12.71.
The respondent was charge sheeted in respect of gross irregularities and corrupt ?401 practices and was ultimately dismissed from service by an order dated 22.12.88 passed by the Chief General Manager of the Bank.
Shri Vijay Kumar filed a writ petition No. 194/83 before the Andhra Pradesh High Court challenging his order of dismissal.
A Division Bench of the High Court heard the writ petition alongwith writ appeal No. 141/86 and allowed the writ petition but dismissed the writ appeal by order dated 26.11.87.
The State Bank aggrieved against the afore said order of the High Court passed in writ petition No. 194/83 has filed this special leave petition.
The High Court has allowed the writ petition only on one ground that the appointing authority of Vijaya Kumar was Executive Committee of the Bank and as such Chief General Manager being an authority lower than the appointing authority was not compe tent to pass an order of dismissal.
SLP No. 15235 of 1988: In this case the respondent T. Dayakar Rao was appointed as a Clerk in the State Bank of India in the month of Octo ber, 1962.
In the month of July, 1971 he was selected as a Trainee Officer and was given job training at various branches of the Bank for two years.
While he was working as a Bank Manager he was chargesheeted for irregularities committed by him during the period 1.9.79 to 15.6.80.
Disci plinary proceedings were initiated on 29.7.82.
On 6.3.84 the Chief General Manager in the capacity of disciplinary au thority passed an order of dismissal.
T. Dayakar Rao filed a writ petition No. 1204/84 in the High Court.
The Division Bench of the High Court by an order dated 13th August, 1988 allowed the writ petition following the decision of Division Bench given in writ appeal No. 141/86 dated 26.11.87.
The Bank aggrieved against the aforesaid order has filed the Special Leave Petition under Article 136 of the Constitu tion.
SLP No. 2069 of 1990: In this case Shri A.K. Soundararajan appellant was appointed as Technical Officer by an order dated 14.6.68 of the Executive Committee of the Central Board of the Bank.
It was mentioned in the Order that Shri Soundararajan would be governed by the State Bank of India (Officers & Assistants) Service Rules.
Post of Technical Officer was considered equivalent to Staff Officer Grade III under the Rules.
He was suspended and given a chargesheet on 23.4.82 and was dismissed by an order dated 31.3.83 passed by the Chief General Manager.
Shri Soundararajan filed a writ petition No. 7108/85 in the High Court challenging his order of dismissal.
Learned Single Judge of the High 402 Court by order dated 31.10.88 allowed the writ petition by following the decision given by the Division Bench in writ petition No. 1204/84 in the case of T. Dayakar Rao.
The State Bank aggrieved against the order of the learned Single Judge filed an appeal before the Division Bench.
The Divi sion Bench in this case took into consideration an amendment made in Regulation 55 by a resolution dated 25.8.88 made applicable with retrospective effect.
The Division Bench by Order dated 30th November, 1989 allowed the appeal filed by the Bank.
Shri A.K. Soundararajan aggrieved against the Order of the High Court has filed this Special Leave Peti tion.
It would be necessary to narrate the facts of SLP (C) No. 5139/88 (State Bank of India vs Hanumantha Rao) disposed of by an order of this Court dated 30th January, 1990.
Hanumantha Rao was promoted as Grade I Officer on 1.4.1973 by the Executive Committee of the Central Board of State Bank of India.
In 1979 he was posted as the Manager of a branch of the Bank in Warangal District.
In respect of certain alleged acts of misfeasance/malfeasance he was suspended on 17.8.81.
On 4.5.82 a memo of charges was served on Hanumantha Rao by the Chief General Manager of the Bank.
The Chief General Manager of the State Bank of India, local head office Hyderabad dismissed Hanumantha Rao by an order dated 7.1.84.
Hanumantha Rao filed a writ petition No. 5509/84 in the High Court.
Learned Single Judge allowed the writ petition declaring the order of dismissal as incompe tent and invalid.
The Bank aggrieved against the order of the Learned Single Judge filed a Letters Patent Appeal No. 141/86 before the Division Bench.
The Division Bench heard and disposed of the writ appeal No. 141/86 and writ petition No. 194/83 by a common order.
The Division Bench agreed with the conclusion of the learned Single Judge that the order of dismissal passed by the Chief General Manager is incompetent and invalid being violative of the guarantee contained in the proviso to Regulation 55(2)(a) of the State Bank of India General Regulations, 1955.
While dealing with the cross objections filed by Shri Hanumantha Rao the Bench took notice of the fact that the writ petitioner had died on 24.11.87 and as such gave the following direction: "On account of the death of the writ petitioner it is unnec essary for us to go into the merits of the contentions urged by way of cross objections.
There is no question of 403 any enquiry or further enquiry hereafter.
We may mention in this connection that the learned counsel for the petitioner (respondent in this Writ Appeal) offered to file a petition to bring on record the legal representatives of the deceased writ petitioner as respondents in this Writ Appeal since, according to him, they would be entitled in any event to claim the monetary benefits flowing from the orders of this Court.
Now that we have agreed with the learned single Judge that the order of dismissal was incompetent and invalid, we direct that the writ petitioner shall be treated to be under suspension pending enquiry till 24.11.
1987 and all the monetary benefits that he is entitled to on that basis, including the arrears of suspension allowance, shall be paid over to his legal representatives.
Mr. Prasad will file the legal representatives petition within two weeks from today.
Post this Writ Appeal for orders after two weeks.
The Writ Appeal, accordingly, fails and is dis missed, but, in the circumstances, without costs.
" The Bank aggrieved against the aforesaid order filed the SLP No. 5139/88 before this Court.
Taking note of the facts and circumstances of the case of Hanumantha Rao having died on 24.11.87 leaving behind 14 children, this Court on 30th January, 1990 did not consider if fit to interfere with impugned order of the Division Bench.
It was further made clear that even though this Court was not interfering with the impugned order, the questions raised on behalf of the Bank were left open.
The Bank was directed to treat Hanuman tha Rao in service and pay the dues, arrears of salary and other terminal benefits in accordance with law to his legal representatives.
With these observations, the SLP was dis missed.
The question which calls for consideration in all these cases is whether the order of dismissal could be passed by the Chief General Manager who was lower in rank to the Executive Committee who was the appointing authority in these cases.
In order to appreciate this controversy, it would be proper to give reference of the relevant provisions of the (hereinafter referred to as the Act), State Bank of India General Regulations, 1955 (hereinafter referred to as the Regulations) and the State Bank of India (Supervising Staff) Service Rules, 1975 404 (hereinafter referred to as the Rules).
Section 43 of the Act empowers the State Bank to appoint such number of officers, Advisors and Employees as it con siders necessary or desirable for the efficient performance of its functions and to determine the terms and conditions of their appointments and service.
Section 49 of the Act confers power on the Central Government,in consultation with the Reserve Bank to make rules to provide for all matters in which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act.
Section 50(1) of the Act confers powers on the Central Board of Directors of the Bank to make regulations.
Sub section (3) of the Section 50 of the Act empowered the Reserve Bank to make the first regulations with the previous sanction of the Central Government.
In exercise of the powers conferred by sub section (3) of Section 50 of the Act, the Reserve Bank of India with the previous sanction of the Central Government made the State Bank of India General Regulations, 1955.
These regulations have been amended from time to time by the Central Board of Directors by making regulations under subsection (1) of Section 50 of the Act.
Regulation 55(2)(a) deals with the initial appointments and promotions to various categories of employees in the bank.
Initially the appointments of Officers used to be made only by the Executive Committee as provided in Regulation 55(2)(a).
As the bank grew larger in branches, the bank thought fit to vest the power of appointment and promotion to various functionaries of the bank and also gave power to delegate their power of appointment also.
Regulation 55(2)(a) was thus substituted by a resolution dated 18th August, 1971 of the Central Board.
After this resolution for Officers Grade I & II,the appointing authorities were speci fied as the Secretary and Treasurer or the Managing Director respectively depending upon whether the appointment/promo tion is for service in the Circle or the Central office.
The State Bank of India Officers & Assistants Rules which govern the service conditions of Grade I Officer whether they were Probationary Officers or Trainee Officers and Staff Officers followed the scheme of "appointing authority" laid down in the Regulations.
Regulation 55(2)(a) was again amended by a resolution of the Central 405 Board on 11th July, 1972.
By this amendment there was only a terminological regrouping of the earlier regulation rather than any qualitative change.
The State Bank Laws (Amendment) Act, 1973 introduced various amendments and one of the amendments was relating to change of designation of Secre tary and Treasurer as Chief General Manager.
Hence the Central Board vide its resolution dated 29.3.74 for the words "Secretary & Treasurer" substituted "Chief General Manager.
" The service conditions of all Officers came to be brought under a single set of service rules viz. the State Bank of India (Supervising Staff) Service Rules which came into force on 1.7.75.
It would be important to mention that Regulation 55(2)(a) at all relevant period for our purpose recognized the right of the officers or employees of the Bank under the following clause "such officers or employees shall not be dismissed from service of the State Bank by an authority lower than the appointing authority.
" Clause (f) of Rule 3 of the State Bank of India (Supervising Staff) Service Rules which is relevant for our purposes reads as under: (f) "Appointing Authority" means (i) in the case of Officers Grade II and Grade I and of other employees to whom the salary scales applicable to Officers Grade II and Grade I generally apply with or with out modification, the Chief General Manager concerned or the Managing Director according as the employee is serving in the Circle or in or under Central Office; (ii) in the case of Staff Officers of various grades and of other employees to whom the salary scales applicable to Staff Officers generally apply with or without modification, the Managing Director; (iii) in the case of Senior Staff Appointments and of em ployees to whom the salary, scales applicable to Senior Staff Appointments generally apply with or without modifica tion, the Executive Committee; Sub Rule (1) of Rule 50 relevant for our purposes is also reproduced below: 50(1)(i) The Disciplinary Authority may itself, or shall when so directed by its superior authority, institute disci plinary proceedings against an employee.
406 (ii) The Disciplinary Authority or any Authority higher than it may impose any of the penalties in rule 49 on an employ ee.
It may be further noted that an amendment in Regulation 55 was approved by Central Board at its meeting dated August 25, 1988 which reads as under: 55(1) Save as provided in sub regulation (2) and as may be directed the Central Board, a Local Board may exercise all the powers of the State Bank in respect of the Staff serving in the areas in its jurisdiction.
2(a) The appointing and/or promoting authority for various categories/grades of officers and employees shall be such as the Executive Committee may by general or special order designate from time to time.
(b) No officer or employee of the Bank shall be dismissed, discharged, removed or retired from the service of the Bank or reduced to a lower grade or post or to a lower stage in a time scale by an authority lower than the appointing author ity.
Explanation (For the purpose of clause (b) the term 'appointing authority ' shall mean and include the authority who has been designated as such in respect of such class or grade of officers or employees to which the officer or employee concerned, as the case may be belongs at the time when such Order is passed or any proceeding leading to such Order or termination is initiated. ) (c) Nothing in this sub regulation shall affect the powers of a disciplinary authority appointed or notified under any award, settlement under the , governing, affecting or regulating the service conditions of workmen of the Bank, and for the purpose of clause (b) above, the appointing authority shall be deemed to have been substituted by such disciplinary authority.
(d) The salary and other emoluments to be granted to offi cers and other employees shall be as laid down in the Rules of Service approved by the Central Board and, where no such rules have been laid down, as fixed by the Executive Commit tee.
407 (e) The power to grant pensions to officers and other em ployees leaving the service of the State Bank, other than pensions provided for under the Rules of pension funds respectively applicable to them, shall be reserved to the Central Board.
(f) The grant of gratuities or other financial assistance, either temporary or permanent, to widows, children or other dependents of deceased officers or other employees shall be made by the Executive Committee of the Central Board except where grant of any such gratuity or financial assistance is authorised by any general direction given by the Central Board.
Explanation (The term 'Officers ' in this regulation shall include any employee to whom the rules of service generally applicable to officers, apply with or without modification.) (Sub regulation (2) substituted with effect from 1.10.79).
" The Executive Committee of the Bank passed the following resolution on August 30, 1988: In exercise of the powers conferred by sub section (1) of Section 43 of the (23 of 1955) and amended sub regulation (2)(a) of Regulation 55 of the State Bank of India General Regulations, 1955, the Executive Committee of the Central Board of the State Bank of India hereby makes the following order: The initial appointments and/or promotions to various categories of officers and other employees in the Bank set out in Column I here under shall be made by the authority specified in Column II.
Column I Column II Employees working at branches i) Employees other a) Subordinate the concerned than officers Staff Branch Manager and deputy General Manager ii) Clerical the concerned Staff Regional Manager and Dy.
General Manager.
b) Employees working at LHOs/ 408 Regional Offices and their establishments The concerned Office Manager/ Admn.
Officer at Staff Colleges or Insti tutes Manager Dy.
Chief Manager or, where there is no post of above descrip tions the head of con cerned dept/office.
ii) Officers in The Chief General Manager junior management for appointments/promotions in the Grade Scale I Circle and the Chief General and Middle Manager (Personnel & HRD) in Management Central Office for Central Grade Scale II Office establishment.
iii) Officers in The Deputy Managing Director Middle Management Grade Scale III iv) Officers in The Managing Director Senior Management Grade Scale IV, V v) Officers in Top Recommending Authority: Executive Grade Scale VI, VII The Directors Promotion Committee and special consisting of the Chairman, the scales Managing Director and the Director nominated by the Central Government in terms of clause (e), sub section (1) of Section 19 and the Director nominated by the Reserve Bank of India in terms of clause (f) of sub section (1) of Section 19 of the Act.
Promoting/Appointing Authority: The Executive Committee of the Cen tral Board.
409 All authorisations in respect of appointing authority and/or promoting authority made by the Executive Committee from time to time after 1.10.79 shall be deemed to have been done under the amended regulation 55.
Appointments autho rised by the Chief General Manager (Personnel & HRD) in respect of JMGS I after 1.10.79 are also confirmed hereby.
All the employees of the bank in the cases before us where appointed by the Executive Committee.
Order of dis missal in their cases has been passed by the Chief General Manager.
It is an admitted position that on the date of passing the order of dismissal the Chief General Manager was the appointing authority.
According to the Bank though the employees were appointed by the Executive Committee, but at the time when inquiry was held and the order of dismissal passed, the Chief General Manager had become the appointing authority.
On the other hand the contention on behalf of the employees is that the Executive Committee being the appoint ing authority, no authority lower than the Executive Commit tee can pass the order of dismissal in their cases.
Accord ing to their contention the Chief General Manager, being a lower authority than the Executive Committee, he had no competence to pass the order of dismissal.
Learned counsel for the employees in this regard referred to Article 311 of the Constitution of India and placed reliance on a plethora of cases decided on the basis of guarantee enshrined under Article 311 of the Constitution.
The guarantee clause under Article 311(1) of the Consti tution of India which is relevant for our purpose reads as under: "No person who is a member of a Civil Service of the Union or an All India Service or a Civil Service of a State or holds a Civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed.
" Now so far as the right which has been conferred on the employees of the State Bank contained in Regulation 55(2)(a) is that such officers or employees shall not be dismissed from service of the State Bank by an authority lower than the appointing authority.
Thus a comparison of the provi sions contained in Article 311(1) of the Constitution and the right guaranteed to the employees of the State Bank under Regulation 55(2)(a) shows that there is a material difference between the language used in the two provisions.
Under Arti 410 cle 311(1) the words used are "by which he was appointed." In Regulation 55(2)(a) there are no such words "by which he was appointed" and in its place the only right guaranteed is that the employee shall not be dismissed by an authority lower than the appointing authority.
Thus the right guaran teed in case of the officers or employees of the State Bank is that the order of dismissal cannot be passed by an au thority lower than the appointing authority.
A perusal of the relevant Regulations and Rules mentioned above clearly go to show that the Chief General Manager had become the appointing authority of the employees in question under Regulation 55(2)(a) with effect from 1.7.74.
Admittedly the orders of dismissal have been passed long after these amend ments when the Chief General Manager had already become their appointing authority under the Regulations and the Rules.
The right that an officer or employee of the State Bank of India cannot be dismissed from service by an author ity lower than the appointing authority is a creation of statutory rules and regulations.
So far as the right or protection guaranteed under Article 311 of the Constitution is concerned, it applies to members of the Civil Service of the Union or an All India service or a Civil Service of a State or who holds a Civil Post under the Union or a State.
Admittedly the employees of the State Bank do not fall under any one of these categories and they cannot seek any protec tion under Article 311(1) of the Constitution.
The employees of the State Bank can only claim such rights which have been conferred under Regulation 55(2)(a) of the General Regula tions.
The only right conferred under the said provision is that the officers or employees of the State Bank cannot be dismissed by an authority lower than the appointing authori ty.
With the risk of repetition it may be stated that on the date when the order of dismissal has been passed, Chief General Manager had already become the appointing authority and as such the order of dismissal has not been passed by an authority lower than the appointing authority.
Apart from the view taken by us as mentioned above the Regulation 55 has been amended by a resolution of the Cen tral Board dated August 25, 1988 with retrospective effect.
It has now been made clear in the explanation that for the purpose of clause (b) the term appointing authority shall mean and include the authority who has been designated as such in respect of such class or grade of officers or em ployees to which the officer or employee concerned, as the case may be belongs at the time when such order is passed or any proceedings leading to such order or termination is initiated.
This provision now concludes the controversy if any and clearly provides that the appointing authority shall mean and include the authority who has 411 been designated as such at the time when such order is passed.
It was contended on behalf of the Learned counsel for the employees that the Bank had no power to amend the Regulations with retrospective effect.
We see no force in this contention.
Section 50(2)(a) of the Act clearly pro vides that all regulations made under this section shall have effect from such earlier or later date as may be speci fied in the regulation.
Thus the regulations can be made to give effect from earlier dates also as may be specified in the regulations.
We find no force in the contention of learned counsel for the employees that they had vested right in this regard and the same could not have been taken away by making regulations with retrospective effect.
There cannot be any vested right in such a matter.
As already mentioned above it was a right conferred under Regulation 55(2)(a) and the same can be amended with retrospective effect also in case the authority competent to make regula tions has been given a right to make regulations with retro spective effect.
It has been held in State of Jammu & Kash mir vs Triloki Nath Khosa & Ors., S.C.R. 1974 Vol.
1771 that it is well settled that a Government servant acquires a 'status ' on appointment to his office and as a result his rights and obligations are liable to be determined under statutory or constitutional authority which for its exercise requires no reciprocal consent.
In Bishun Narain Misra vs The State of Uttar Pradesh and Others, AIR 1965 Vol.
52 SC 1567 it was held that new rule reducing the age of retire ment from 55 years to 53 years could not be said to be retrospective.
The proviso to the new rule and the second notification were only methods to tide over the difficult situation which would arise in the public service if the new rule was applied at once and also to meet any financial objection arising out of the enforcement of the new rule.
The new rule therefore, could not be struck down on the ground that it was retrospective in operation.
In Roshan Lal Tandon vs Union of India & Anr., and Kunj Behari vs Union of India & Ors., AIR 1967 SC Vol.
541889 it was held that the legal position of Government servant is more one of status than of contract.
The hallmark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement by the parties.
Emolu ment of the Government servant and his terms of service are governed by statute or statutory rules which may be unilat erally altered by he Government without the consent of the employee.
It was further held in the above case that the petitioner had no vested contractual right in regard to the terms of his service and that the same can be altered uni laterally.
We may further add that the prohibition if any to alter the terms and conditions can be found only under the Constitution of India and in case power of the rule or law making authority is not circumscribed or limited by any constitutional 412 mandate then it has power to amend such terms and conditions of service unilaterally without the consent of the employee.
In the cases in hand before us the right whatsoever con ferred on the employees of the State Bank was on the basis of Regulation 55(2)(a) and the Central Board of the Bank was authorised to amend such regulations from any date under Section 50(2)(a) of the Act.
In the result the appeals filed by the State Bank of India in the case of Vijaya Kumar and T. Dayakar Rao are allowed, the impugned orders passed by the High Court are set aside and the cases are remanded to the High Court for deciding the writ petitions on other points in accordance with law.
Now so far as the appeal filed by Sh.
A.K. Sunda rarajan is concerned, the point decided by us shall remain concluded but the appellant would be free to raise other points before this Court which are left undetermined.
This case may now be listed for further hearing and final dispos al at an early date.
In the facts and circumstances of the case, the parties shall bear their own costs.
Y. Lal C.A. No. 3392 & 3393 of 1990 allowed.
C.A. No. 3394 of 1990 ordered to be listed for final heating.
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A common question of law viz., whether an order of dismissal against an employee, could validly be passed by an authority lower than the appointing authority of the Bank, arises for determination in these three appeals, two by the State Bank of India and the third by an employee.
Respondent, Vijaya Kumar in Civil Appeal 3392 of 1990, was appointed as Probationary Officer by an order of the Executive Committee of the Central Board of the State Bank of India.
He was charge sheeted for gross irregularities and corrupt practices and was dismissed from service by an order passed by the Chief General Manager of the Bank, whereupon, he flied a writ petition before the Andhra Pradesh High Court, challenging the order of dismissal passed against him.
A Division Bench of the High Court heard the writ petition, alongwith writ appeal No. 141 of 1986 (involving a similar point).
The High Court allowed the writ petition.
The State Bank being aggrieved by the said order has filed this appeal after obtaining special leave.
T. Dayakar Rao, respondent in Civil Appeal No. 3393 of 1990 was appointed as a Clerk in the State Bank in October, 1962 and while he was working as a Bank Manager he was chargesheeted for irregularities committed by him during the period from 1.9.1979 to 14.6.80.
He was dismissed under orders of the Chief General Manager being the disciplinary authority.
Mr. Rao flied a writ petition in the High Court and the High Court allowed the writ petition following its decision in writ appeal No. 141 of 1986.
Being aggrieved the State Bank has filed the instant appeal with special leave of the Court.
Civil Appeal No. 3394 of 1990 has been filed ,by an employee A.K. 399 Soundararajan, who was appointed as Technical Officer by the Executive Committee of the Central Board of the Bank.
It was specifically mentioned in the Order of appointment that Shri Soundararajan would be governed by the State Bank of India (Officers & Assistants) Service Rules.
Shri Soundararajan was chargesheeted and dismissed under orders passed by the Chief General Manager Thereupon he filed a writ petition in the High Court challenging his order of dismissal.
Learned Single Judge of the High Court allowed the writ petition.
The Bank filed an appeal before the Division Bench.
The Division Bench in this case took into consideration an amendment made in Regulation 55 by a resolution dated 25.8.1988 made applicable with retrospective effect.
Accord ingly the Division Bench allowed the appeal filed by the Bank, Aggrieved against this order.
Shri Soundararajan has flied Civil Appeal 3394 of 1990 with special leave.
The contention urged by the employees is that the Chief General Manager, being a lower authority than the Executive Committee, he had no competence to pass the order of dis missal whereas the Bank contends that the Chief General Manager had, by virtue of the amendment of Regulation 55(2)(a) made retrospectively, become the appointing author ity of employees in question and as such the orders of dismissal passed by him against the employees long after the amendment are valid.
Allowing the appeals by the State Bank and remanding the two cases to the High Court and directing that the appeal by Soundararajan be listed for final hearing, this Court, HELD: The hallmark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement by the parties.
Emolu ment of the Government servant and his terms of service are governed by statute or statutory rule which may be unilater ally altered by the Government without the consent of the employee.
[411F G] Under Article 311(1) of the Constitution, the words used are "by which he was appointed" In regulation 55(2)(a) there are no such words "by which he was appointed" and in its place the only right guaranteed is that the employee shall not be dismissed by an authority lower than the ap pointing authority.
[410A] Thus the right guaranteed in case of the officers or employees of the State Bank is that the order of dismissal cannot he passed by an 400 authority lower than the appointing authority.
[410B] The right whatsoever conferred on the employees of the State Bank was on the basis of Regulation 55(2)(a) and the Central Board of the Bank was authorised to amend such regulations from any date under Section 50(2)(a) of the Act.
This provision now concludes the controversy if any and clearly provides that the appointing authority shall mean and include the authority who has been designated as such at the time when such order is passed.
[412B; 410H] State of Jammu & Kashmir vs Triloki Nath Khosa & Ors., ; ; Bishun Narain Misra vs The State of Uttar Pradesh & Ors., A.I.R. 1965 Vol.
52 S.C. 1567; Roshan Lal Tandon vs Union of India & Anr. and Kunj Behari vs Union of India & Ors., A.I.R. 1967 S.C. (Vol. 54) 1889, referred to.
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6496.txt
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ON: Criminal Appeal No. 117 of 1961.
27 Appeal from the judgment and order dated March 21, 1960 ', of the Calcutta High Court in Criminal Revision No. 376 of 1957.
A.N. Sinha and P.K. Mukherjee, for the appellant M.C. Setalvad, Sukumar Ghose and B.N. Ghosh, for the respondent.
October 4, 1963.
The Judgment of the Court was delivered by WANCHOO J.
This is an appeal on a certificate granted by the Calcutta High Court.
The respondent, the Calcutta Tramways Co. Ltd., is running tramcars in the city of Calcutta.
It gets electricity in bulk from the Calcutta Electric Supply Company and gets the same converted from alternate current to direct current at a high voltage for electric traction for running tram cars of the company.
For this purpose it has an electric transformer house in 129/4 A and 130 D, Cornwallis Street.
The appellant Corporation was of opinion that the premises were being used for a purpose which was dangerous to life, health or property and was likely to create a nuisance.
It therefore ordered the respondent to take out a licence under section 437 (1) (b) of the Calcutta Municipal Act, No. XXXIII of 1951, (hereinafter referred to as the Act) and fixed a fee therefore.
The respondent however refused to take out a licence and consequently it was prosecuted under section 537 of the Act.
The respondent raised a number of points in defence, namely, (i) that the prosecution had not been properly filed; (ii) that the electric transformer house was neither a factory nor a place of trade, nor a place of public resort and therefore section 437 (1) (b) had no application; (iii) that the use of the transformer house for converting high voltage alternate current into low and medium pressure direct current was neither a use which was dangerous to life, health or property nor the same was likely to create a nuisance; and (iv) that as section 437 (1) (b) of the Act vests absolute power in the Corporation to form the opinion required thereunder, it was an unreasonable restriction on the freedom of trade 28 guaranteed under article 19 (1) (g) of the Constitution and therefore that provision is unconstitutional.
The Magistrate held that the complaint was properly filed.
He further held that the transformer house.
was meant for the trade which the respondent was carrying on and therefore was covered by section 437 (1) (b).
He also held that the Corporation had properly formed the opinion that the use of the transformer house was likely to be dangerous to life, health or property and was also likely to create a nuisance.
He further seems to have held that even though section 437 (1) (b)made the opinion of the Corporation conclusive and final, there could be no doubt that the use of the transformer house was dangerous to life, health or property and was likely to create a nuisance.
Finally he seems to have held that section 437 (1) (b) as it stood was not unconstitutional.
He therefore convicted the respondent and sentenced it to a fine of Rs. 100 only.
The respondent then went in revision to the High Court, and the main point urged there was that the provisions of section 437 (1) (b) were unconstitutional.
The High Court held that inasmuch section 437 (1) (b) made the opinion of the Corporation conclusive and not liable to be challenged in any court, the provision was unconstitutional inasmuch as it amounted to an unreasonable restriction on the fundamental right enshrined in article 19 (1) (g).
The High Court further held that the provision with respect to the conclusiveness and non justiciability of the opinion of the Corporation was so embedded in section 437 (1) (b) that it was not severable and therefore it struck down section 437 (1) (b) as a whole as unconstitutional.
Another point which was urged before the High Court was that the fee of Rs. 500 was in the nature of a tax which neither the State Legislature nor the Corporation of Calcutta could levy.
The High Court did not decide this question in view of its decision on the constitutionality of section 437 (1) (b).
The present appeal has been brought to this Court by the appellant on a certificate granted by the High Court.
29 Two main questions therefore that arise for our decision are: (1) whether the provision in section 437 (1) (b) which makes the opinion of the Corporation conclusive and non justiciable in any court amounts to an unreasonable restriction on the right to carry on trade etc.
enshrined in article 19 (1) (g); and (2) even if it be so, whether the provision relating to conclusiveness and non justiciability is severable or not.
Section 437 (1) (b) reads as follows: "(1) No person shall use or permit or suffer to be used any premises for any of the following purposes without or otherwise than in conformity with the terms of a licence granted by the Commissioner in this behalf, namely, (a) (b) any purpose which is, in the opinion of the Corporation (which opinion shall be conclusive and shall not be challenged in any court) dangerous to life, health or property, or likely to create a nuisance; (c) The contention on behalf of the appellant is that even though the opinion of the Corporation has been made conclusive and non justiciable, the restriction on trade resulting from the imposition of licence fee on the basis of such conclusiveness and non justiciability is a reasonable restriction in the interest of the general public.
On the other hand it has been urged on behalf of the respondent that by making the opinion of the Corporation in such matters conclusive and non justiciable, the law makes it possible that any opinion of the Corporation, howsoever capricious or unreasonable it may be, must prevail and therefore the provision is an unreasonable restriction on the right to carry on any trade etc.
enshrined in article 19 (1) (g).
Reliance in this connection has been placed on the decision of this Court in Joseph Kuruvilla Vellukunnel vs The Reserve Bank of India.(1) It is urged that the mere fact that the opinion of the Corporation has been made con (1) [1962] Supp.
3 S.C.R. 632 30 clusive and non justiciable would not make the provision unreasonable with respect to carrying on any trade etc.
In that case, section 38 (1) of the Banking Companies Act, provided that notwithstanding anything contained in the , the High Court shall order the winding up of a banking company, if an application for its winding up has been made by the Reserve Bank under section 37, or this section.
It was urged in that case that the provision amounted to an unreasonable restriction on the right to carry on banking as the whole procedure was a denial of the principles of natural justice, chiefly as it denied access to courts, for ordinarily it was for the court to be satisfied after a fair trial that an order of winding up a company was called for and the court was free to.
reach a decision after the company had shown cause and there was also a right of appeal against such decision.
This Court held by a majority that in view of the history of the establishment of the Reserve Bank as a central bank for India, its position as a banker 's bank, its control over banking companies and banking in India, its position as the issuing bank, its power to license banking companies and cancel their licences and numerous other powers, the provision could not be challenged as unreasonable as the Reserve Bank makes an application for winding up only where it is satisfied that it was necessary to wind up a tottering or unsafe banking company in the interest of the depositors.
We are of opinion that the decision in that case must be confined to the very special circumstances of the trade of banking, which is a very sensitive credit organisation and to the very special position the Reserve Bank occupies in the banking world in this country.
That decision cannot be extended as a matter of course to other cases where substantially similar provisions are made in other laws relating to exclusion of the jurisdiction of courts.
In other cases of this kind, the question has to be examined on the merits in each case to see whether the restriction created by conclusiveness and non justiciability is a reasonable restriction in the circumstances of the particular case.
31 We must therefore proceed to consider whether in the circumstances of this case the restriction contained in the parenthetical clause ins.
437 (1) (b) by which the opinion of the Corporation has been made conclusive and non justiciable, can be said to be a reasonable restriction on the right to carry on trade etc.
enshrined in article 19 (1) (g).
In Dr. N.B. Khare vs The State of Delhi,(1) this Court held that a law providing reasonable restrictions on the exercise of the rights conferred by article 19 may contain substantive provisions as well as procedural provisions and the court has to consider the reasonableness of the substantive provisions as well as the procedural part of the law.
The parenthetical clause which makes the 6pinion of the Corporation conclusive and non justiciable is in the nature of a procedural provision and we have to see whether in the circumstances of this case such a procedural provision is reasonable in the interest of the general public.
It has been urged that the Corporation which is an elected body would exercise the power conferred on it under section 437 (1) (b) reasonably and therefore the provision must be considered to be a reasonable provision.
This in our opinion is no answer to the question whether the provision is reasonable or not.
It is of course true that malafide exercise of the power conferred on the Corporation would be struck down on that ground alone; but it is not easy to prove mala fide, and in many cases it may be that the Corporation may act reasonably under the provision but it may equally be that knowing that its opinion is conclusive and non justiciable it may not so act, even though there may be no mala fides.
The vice in the provision is that it makes the opinion of the Corporation, howsoever capricious or arbitrary or howsoever unreasonable on the face of it may be, conclusive and non justiciable.
The conferment of such a power on a municipal body which has the effect of, imposing restrictions on carrying on trade etc.
cannot in our opinion be said to be a reasonable restriction within the meaning of article (1) ; 32 19 (6).
Such a provision puts carrying on trade by those residing within the limits of the municipal Corporation entirely at its mercy, if it chooses to exercise that power capriciously, arbitrarily or unreasonably, though not mala fide.
We therefore agree with the High Court that the conferment of such a power on the Corporation as it stands in the parenthetical clause in section 437 (1),(b) must be held to be an unreasonable restriction on the right to carry on trade etc.
This brings us to the next question whether this parenthetical clause is severable from the rest of the provision.
In this connection it may be observed that in the Calcutta Municipal Act, 1923, which was repealed by the Act, the corresponding provision was contained in section 386 and there was no provision making the opinion of the Corporation conclusive and non justiciable.
In similar provisions of other laws also there is no provision making the opinion of the Corporation conclusive and non justiciable.
In the Madras City Municipal Act, No. IV of 1919, there was a similar provision in section 287 read with Sch.
VI, which provided for licences where a place was used for any purpose in any area which in the opinion of the Commissioner was likely to be dangerous to human life or was likely to create or cause nuisance.
Similarly in the Delhi Municipal Corporation Act, No. 66 of 1957, there is a provision in section 417 (1) which provides that no person shall use or permit to be used any premises for any purpose which in the opinion of the Commissioner was dangerous to life, health or property or likely to create a nuisance.
We have referred to these Acts and the provision in the Calcutta Municipal Act which was the predecessor of the Act to show that it is quite possible to work such a provision without the opinion of the Corporation being made conclusive and non justiciable.
The question therefore is whether this provision contained in the parenthetical clause in section 437 (1) (b) can be severed from the rest of the provision.
33 The principles governing severability were considered by this Court in R.M.D. Chamarbaugwalla vs The Union of India.(1) Seven principles were there laid down in that connection, of which three are material for our purpose, namely " (1) In determining whether the valid parts of ,1.
statute are separable from the invalid parts thereof, it is the intention of the legislature that is the determining factor.
The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute was invalid. "(2) If the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity of the Act in its entirety.
On the other hand if they are "so distinct and separate that after striking out what is invalid, what remains is in itself a complete code independent of the rest then it will be upheld notwithstanding that the rest has become unenforceable". "(3) Even when the provisions which are valid are distinct and separate from those which are invalid, if they all form part of a single scheme which is intended to be operative as a whole, then also the invalidity of a part will result in the failure of the whole.
" Learned counsel for the appellant urges that the parenthetical clause in section 437 (1) (b)is severable in view of the first two principles set out above.
On the other hand, learned counsel for the respondent urges that in view of the third principle the parenthetical clause with respect to conclusiveness and non justiciability is not severable.
The High Court has also taken the view that even if the parenthetical clause is distinct and separate from the rest of the provision, the whole provision contained in section 437 (1) (b) constitutes a single scheme intended to be operative (1) [1957] S.C.R. 093 1 SCI/64 3 34 as a whole and therefore section 437 (1) (b) must be struck down.
We are of opinion that the view taken by the High Court is not correct.
We have already pointed out that such a provision did riot exist in the earlier Act relating to this very Corporation and it is no one 's case that without such provision the earlier provision did not work.
The first question therefore is whether it was the intention of the legislature when it passed section 437 (1) (b) that if it knew that the parenthetical clause was invalid it would not have enacted the rest of section 437 (1) (b).
The answer to this question in our opinion can only be one.
In view of the corresponding provision in the Calcutta Municipal Act, 1923, we cannot accept that the Legislature would not have provided for the licensing of premises which in the opinion of the Corporation were used for purposes which were dangerous to life, health or property or were likely to create a nuisance, unless that opinion was to be conclusive and non justiciable.
Similar provision had existed in the earlier law without the provision relating to conclusiveness and non justiciability in respect of using premises for purposes which were dangerous to life health or property or were likely to create a nuisance.
Such a provision in our opinion is a very reasonable provision in the interest of the general public and we do not see why it should be held that the Legislature would not have enacted such a provision unless the opinion of the Corporation was also to become conclusive and non justiciable.
The first proposition out of the three set out above is in our opinion clearly applicable to this case and we have no doubt that the Legislature would have enacted the provision contained in section 437 (1) (b) without the parenthetical clause.
So far as the second principle is concerned, we are of opinion that the valid and invalid provisions in section 437 (1) (b) are not so inextricably mixed that they cannot be separated.
On the other hand we are of opinion that they are distinct and separate 35 and even if we strike out the parenthetical clause as to conclusiveness and non justiciability what remains is in itself a complete code for the particular purpose independent of the invalid part.
Therefore, the remaining provision contained in section 437 (1) (b) can and should be upheld notwithstanding that the parenthetical clause providing for conclusiveness and non justiciability is invalid.
Finally we are of opinion that the third proposition does not apply in the present case.
That proposition applies only where the valid and the invalid provisions even when they are separate and distinct form part of a single scheme which is intended to be operative as a whole;if that is really so, then the whole must go and there is no question of severability.
But making a certain opinion conclusive and non justiciable is a separate matter altogether and it cannot be said that it is so embedded in section 437 (1) (b) as to make conclusiveness and non justiciability of the opinion of the Corporation a part of the scheme for licensing which is provided therein.
As we read section 437 (1) (b) it cannot be said that the whole of it is a part of a single scheme which was intended to be operative as one whole.
This is really another aspect of the first proposition relating to the intention of the Legislature and it seems to us that the scheme in section 437 (1) (b) is not such a single scheme that it must be said that the Legislature must have intended it to be operative as a whole.
We see no difficulty in holding that the provision in the parenthetical clause cannot be said to be part of a single scheme of such a nature that either the whole must be operative or nothing at all.
We are therefore of opinion that the parenthetical clause consisting of the words "which opinion shall be conclusive and shall not be challenged in any court" is severable from the rest of section 437 (1) (b) and therefore only these words of this section can be struck down and not the whole of the section.
It may be added that the respondent does not rely on any of the remaining principles set out in R.M.D. Chamarbaugwalla 's case.(1) (1) ; 36 The order of the High Court striking down the whole of section 437 (1) (b) must therefore be set aside and only the portion in parenthesis which makes the opinion of the Corporation conclusive and non justiciable struck down as an unreasonable restriction ' on the right to carry on trade etc.
under article 19 (1) (g).
In the view we have taken the judgment of the High Court must be set aside.
It has been urged on behalf of the respondent that as the Magistrate dealt with the matter on the looting that the opinion of the Corporation was conclusive and non justiciable it should be given an opportunity to show before the Magistrate that the opinion of the Corporation that the purpose for which the premises in this case were used was dangerous to life, health or property or was likely to create a nuisance was wrong.
It is also urged that the point whether the impost in this particular case was a fee properly so called or a tax which was taken before the High Court arises in this case and opportunity should be given to the respondent to raise this point before the Magistrate.
In view of this contention we set aside the order of the Magistrate also and remand the case to him for decision according to law, including the above two points.
The parties will be at liberty to adduce such relevant evidence as they think fit to do.
Case remanded.
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The respondent company got its supply of electricity from the Calcutta Electric Supply Co., converted the same from alternate current to direct current in its transformer house for running its tram cars.
The appellant Corporation was of opinion that the use of the premises as transformer house was dangerous to life, health and property and was likely to cause a nuisance and asked the respondent to take a licence under section 437(1)(b) of the Calcutta Municipal Act, 1951.
The respondent refused to do so and was therefore prosecuted under section 537 of the Act.
The trial Magistrate held in favour of the appellant and convicted the respondent and sentenced it to pay a fine of Rs. 100 only.
The respondent moved 26 the High Court in revision.
That Court held that the provision in s, 437(1) (b) which made the opinion the Corporation conclusive and non justiciable unreasonably restricted the fundamental right enshrined in article 19(1) (g) of the Constitution and since that provision was inseverable the entire section was unconstitutional.
The corporation appealed to this Court.
Section 437(1)(b) of the Act provided as follows ' "(1) No person shall use or permit or suffer to be used any premises for any of the following purposes without or otherwise than in conformity with the terms of a licence granted by the Commissioner in this behalf, namely, (a) (b) any purpose which is, in the opinion of the Corporation (which opinion shall be conclusive and shall not be challenged in any court) dangerous to life, health or property, or likely to create a nuisance.
" Held: The power conferred on the Corporation by section 437(1)(b) of the Calcutta Municipal Act, 1951, in the parenthetical clause "which opinion shall be conclusive and shall not be challenged in any court" which was in the nature of a procedural provision, was an unreasonable restriction within the meaning of article 19(6) of the Constitution and must be struck down.
The clause makes the opinion of the Corporation, however unreasonable, capricious and arbitrary, conclusive and non justiciable and thereby places trade and business within the municipal limits entirely at the mercy of the Corporation, even though it may not act mala fide.
The decision of this Court in Joseph Kuruvilla Vellukunnel vs Reserve Bank of India, must be confined to the special circumstances of the trade of banking and cannot be extended as a matter of course to other cases involving substantially similar provisions and each case should be judged on its own merits.
Joseph Kuruvilla Vellukunnel vs The Reserve Bank of India, [1962] Supp.
3 S.C.R. 632, held inapplicable.
So judged in the light of the principles laid down by this Court, the parenthetical clause was severable from the rest of the section and, consequently, that clause alone, and not the entire section should be struck down.
The scheme of the section was not so integrated as to indicate that the Legislature wanted it to be operative as a whole.
Dr. N.B. Khare vs State of Delhi, ; and R.M.D. Chamarbaugwalla vs Union of India, [1957] S.C.R. 930, relied on.
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1658.txt
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Appeal No. 219 of 1953.
Appeal from the judgment and decree dated June 26, 1952, of the Bombay High Court in Appeal No. 20 of 1952 arising out of the judgment and decree dated December 17, 1951, of the said High Court in its ordinary Original Civil Jurisdiction in Suit No. 1623 of 1948.
C. K. Daphtary, Solicitor General of India, M. N. Gharekhan and M. section K. Sastri, for the appellants.
H. D. Banaji, D. P. Madon, section N. Andley, Rameshwar Nath and J. B. Dadachanji, for the respondents.
January 22.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This appeal arises out of a suit instituted by the appellants in the High Court of Bombay for damages for conversion estimated at Rs. 4,71,670 15 0.
The suit was decreed by Shah J. sitting on the Original Side, but his judgment was reversed on appeal.
by Chagla C.J. and Gajendragadkar J.
Against this judgment, the plaintiffs have 57 440 preferred the present appeal on a certificate under article 133(1)(a) of the Constitution.
Messrs. Maitland Craig Lubricants Ltd. is an American Company engaged in the manufacture and sale of lubricants.
It carried on business in India with its head office at Calcutta and a branch office at Bombay.
The second plaintiff, H. J. Leach, was employed during the years 1933 to 1935 in the Bombay branch of the said Company.
Subsequent thereto, the Company closed its Bombay branch, and eventually wound up its Calcutta office as well, and thereafter its business was taken over firstly by Ewing and Company and then by the defendants.
After he left the service of Maitland Craig Lubricants Ltd., Mr. Leach started business as seller of lubricants on his own account and was importing them through the defendants.
On June 6, 1941, they entered into an agreement, exhibit A, under which Mr. Leach was given an exclusive right to sell lubricants of the make of Maitland Craig Lubricants Ltd., within the limits of Bombay Presidency, Central Provinces, Rajputana and such parts of Central India and Hyderabad as might be determined by the defendants.
The agreement was to continue for a period of five years "unless sooner determined in the manner hereunder provided.
" Clause 14 of the agreement runs as follows: "Notwithstanding anything hereinbefore contained this agreement shall be terminable by either of the parties hereto upon giving to the other three calendar months previous notice in writing expiring at any time but without prejudice to the rights and liabilities of the parties respectively which shall have accrued prior to such termination.
" Clause 16 provides that the agreement was personal to the selling agent, and that he was not to assign or attempt to assign his rights thereunder without the consent of the defendants in writing first obtained.
It is common ground that the dealings between the parties continued on the basis of this agreement during the relevant period.
On March 18, 1944, the first plaintiff, which is a Joint Stock Company, was incorporated under the provisions 441 of the Indian Companies Act, and on March 30, 1944, the second plaintiff assigned his business to it.
On June 13, 1945, the defendants wrote to the second plaintiff that they were cancelling the agency constituted under the agreement dated June 6, 1941, as he had assigned the same to the first plaintiff without obtaining their consent in writing as provided therein.
Before that date, however, the defendants had placed orders for import from America of certain goods which the plaintiffs had required, but these goods were actually received by them after the cancellation of the contract.
The plaintiffs called upon them to deliver those goods to them, but they refused to do so.
Thereupon, the plaintiffs instituted the present suit for damages for conversion alleging that the goods in question were due to them under Government quotas comprised in Nos.
P.L. 1004 to 1007, and that the defendants who had ordered them on their behalf had themselves no title to them.
The plaintiffs also averred that in importing those goods the defendants were acting as their agents.
The defendants repudiated this claim.
They contended that far from they being the agents of the plaintiffs, it was the second plaintiff who was their agent, and that the property in the goods was with the defendants and that the action for damages for conversion was not maintainable.
The suit was tried by Shah J. who held that the plaintiffs were not the agents of the defendants, that the goods in question had been imported by the latter on behalf of the former, and that in refusing to deliver the same to them, the defendants were guilty of conversion.
He accordingly passed a decree referring the suit to the Commissioner for ascertaining the damages.
On appeal, Chagla C.J. and Gajendragadkar J. held that on the terms of the agreement dated June 6, 1941, on which the suit was based, the title to the goods imported by the defendants vested in them, and that it would pass to the plaintiffs only when the defendants endorsed the shipping documents in their favour, and that as that had not been done, the claim for damages on the basis of conversion was misconceived.
They accordingly allowed the appeal, and dismissed the suit.
442 Now, the contention of the appellants before us is that on the facts proved, they were entitled to damages on the basis of conversion.
There is no dispute as to the position in law.
Before the plaintiffs can maintain an action in trover, they must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them.
If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants, passed to them in accordance with the provisions of the Sale of Goods Act.
If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them could undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price of the goods on behalf of the principal, and had not been reimbursed that amount.
This question, however, would not arise on the facts of this case, as the defendants denied the title of the plaintiffs to the goods, and there was no refusal by the latter to pay the price.
The main question that arises for determination, therefore, is as to the relationship in which the parties stood with reference to the suit transactions.
It is conceded that to start with, it is the agreement, exhibit A, that governs the rights of the parties.
It is therefore necessary to examine its terms to ascertain the true relationship of the parties thereunder.
It has been already mentioned that under this agreement Mr. Leach was constituted the selling agent of the defendants in certain areas specified therein.
Under exhibit A, the second plaintiff was not to sell the goods below a certain price, and they were also to be sold with the mark, Mait land Craig Lubricants Ltd. The course of business was that the second plaintiff used to intimate to the defendants his requirements.
They would then import those goods in their own names from America under c.i.f. contracts.
After importing them, they would fix their own price for those goods and 443 endorse the shipping documents in favour of the second plaintiff, who would be entitled to clear them at the harbour on payment of 80 per cent.
of the price, the balance of 20 per cent.
being payable on the delivery of the goods by him to his purchasers.
The sales to be effected by the second plaintiff within the area to his own customers were matters which concerned only him and his purchasers.
The defendants had nothing to do with them.
Under cl. 6, the second plaintiff had to "keep the value of his stocks at all times fully insured against fire risk.
" Clause 13 is as follows: " The relationship between parties hereto shall be that of principal and principal only and the selling agent shall have no authority whatsoever except such as may be conferred upon him in writing by the firm to transact any business in the name of the firm or to bind the firm by any contract, agreement or undertaking with or to any third party." In contrast with these terms, there is cl. 4, which provides that the defendants would themselves supply to the Indian Stores Department all their requirements of lubricants within the territory allotted to the second plaintiff, who was to act as their agent in clearing the goods and delivering them to the authorities.
And for this, the second plaintiff was to be paid a commission.
It is clear that the agreement read as a whole is a composite one consisting of two distinct matters.
So far as cl. 4 is concerned, the second plaintiff was merely an agent of the defendants.
As regards the other clauses, the true relationship is, as stated in cl. 13, that the second plaintiff was purchaser of the goods from the defendants, and the conditions relating to the minimum price at which they could be sold and the marking of the goods with the name of Maitland Craig Lubricants Ltd. were only intended to protect their trade interests but that once the shipping document were endorsed by the defendants to the second plaintiff, he became the owner of those goods.
The object of the insurance clause was obviously to safeguard the interests of the defendants with reference to the balance price payable by the second plaintiff.
In this case, we 444 are not concerned with any goods consigned by the defendants for supply to the Government under cl. 4 but with goods which were imported by them for meeting the requirements of the plaintiffs.
The relationship of the parties with reference to those goods, if it is governed by this agreement, is undoubtedly that neither party is agent of the other, and that the defendants are the sellers and the plaintiffs are the purchasers.
If so, the title to the goods would pass to the plaintiffs only when the defendants appropriated them to the contract, as for example, by endorsing the shipping documents, and as that had not been done, the claim for damages on the ground of conversion would be misconceived.
The learned Solicitor General who appeared for the appellants, did not dispute that this was the position under exhibit A.
But he contended that the relationship of seller and purchaser created by the agreement became modified when the Government introduced the licence system.
That was introduced in August ,September, 1941, while the war was on, with a view to regulate and control imports.
The system adopted was that every importer was required to give a statement as to they extent of his import business during the preceding years, and on the basis of that statement, a licence was given to him to import up to a limit.
On September 26, 1941, the second plaintiff applied to the Controller for a licence to import lubricants stating that he had been doing that business for seven years and giving particulars as to the volume of his business.
Sometime in November, a licence was granted to him by the Government.
The defendants also applied for a licence to import lubricants based on the volume of their business and obtained it.
That licence did not include the quantity which they sold to the second plaintiff, and thus the two licences were mutually exclusive.
Mr. Leach would have been himself entitled under the licence to import goods directly from America, but he chose to import them through the defendants as before, because under the terms of the agreement, exhibit A, he would have to pay only 80 per cent.
of the price when clearing the goods.
There was, 445 however, this change in the character of the transaction, that whereas before the licence system the defendants were the purchasers from American Companies under c.i.f. contracts and they then sold the goods to the second plaintiff on a price fixed by them, under the licence system the price payable to them was only what they themselves had to pay to the American sellers with an addition by way of commission on the transaction.
Now, the argument of the appellants is that as they were the persons entitled to import the goods under the licence granted to them, in importing them on their requisition the defendants must be held to have acted for them, and that the relationship between them was no longer one of seller and purchaser under exhibit A but of agent and principal.
To this, the answer of Mr. Banaji, learned counsel for the respondents, was twofold.
He contended firstly that in applying for and obtaining the licence in his own name, the second plaintiff was merely acting as the agent of the defendants, and secondly that the present contention was not raised in the plaint and was, therefore, not open to the appellants.
On the first contention he referred us to the correspondence which passed between the parties at the relevant period.
On September 5, 1941, the defendants wrote to the second plaintiff to send particulars of certain shipments consigned to him so that they could include them in their application for licence, and on September 11, 1941, they further wrote to him that those goods were not to be included in hi,, application for licence.
But the second plaintiff was obviously not agreeable to it, and actually included those very shipments in his application for licence dated September 26, 1941.
The defendants did not pursue the matter further, and wrote to the second plaintiff or December 10, 1941, to intimate to them the number and date of his import licence and continued to import goods for him on the basis of that licence.
Counsel for respondents relied on a letter dated December 11, 1941 in which the defendants advised the second plaintiff to join a group of oil merchants, which was to be formed at Bombay, but that was obviously by way of adviced 446 to him as a customer.
This evidence is too inconclusive and too slender to support the contention that the second plaintiff obtained the licence as the agent of the defendants.
On the other hand, if the true position of the second plaintiff under exhibit A was that he was a. purchaser of goods, then the sales by him of those goods were as owner and the licence issued to him on the basis of those sales must have been given to him in his own right and not as agent of the defendants.
This wag the finding of Shah J. and that has not been reversed on appeal, and we are in agreement with it.
It is next contended that the entire plaint is framed on the footing that the rights of the parties are governed by exhibit A, that there is no averment therein that that agreement had been cancelled or modified, and that a new agreement had been substituted after the licence system was introduced, that the evidence of Mr. Leach in the box was also that exhibit A was in force throughout the period, and that therefore it was not open to the appellants now to contend that the rela tionship of seller and purchaser under exhibit A had been altered into one of agent and principal.
It is true that the plaint proceeds on the basis that exhibit A is in force, and there is no allegation that it had been modified.
But exhibit A had not been wholly abandoned.
It was still in force governing the relationship of the parties in respect of various matters such as delivery of goods on payment of 80 per cent.
of the price.
The plaint does refer to the introduction of the licence system, and the defendants clearly knew as much of the true position thereunder as the plaintiffs, and there could be no question 's surprise.
Under the circumstances, if the rights of the parties had to be determined on the basis of the licence system, we would have hesitated to non suit the appellants merely on the ground that the effect of that system had not been expressly stated in the plaint.
But then, the licence system itself came to an end in March April, 1942, and was replaced by what is known as " Lease and Lend " scheme.
It was under this scheme that the goods which form the subjectmatter of this litigation were imported, and we have therefore to examine what the rights of the parties 447 are with reference to the incidents of that scheme taken along with exhibit A, which is admitted by the appellants to have been in force.
This scheme was introduced by the Government of India as a war measure to facilitate the import of certain essential goods and to conserve them for the effective prosecution of the war.
Oil and lubricants were among the goods which were controlled under this scheme.
Under it, the Government prohibited the direct import of oil and lubricants from America through private agencies, whether individuals, firms or companies and took upon itself to import the required quantity.
An association of importers and dealers in Calcutta called the Central Lubricants Advisory Committee (C.L.A.C.) was formed, and importers were to write to the Committee what quantity they required to be imported on their behalf.
This Committee was a private body, and served as a liaison between the importers and the Government.
A similar Committee was formed at Bombay called the Bombay Lubricants Advisory Committee (B.L.A.C.).
The procedure adopted in the import of goods was this: the importers were to state their requirements to the Committee which sent the same to the Government.
Then on intimation given by the Government authorities, the dealers would have to make deposits on account of the price to be paid for the goods.
The Government had a purchasing agent in America and he would be required by them to purchase the requisite goods and to arrange to get them transhipped to the destinations in India mentioned by the several dealers.
The shipping documents would be taken in the name of the Government and on payment of the bills endorsed over to the importer for clearance at the harbour.
The features of the system to be noticed are that it was the Government who was the importer of the goods and the dealers became entitled to the goods only on the shipping documents being endorsed to them by the Government.
Now, so far as the plaintiffs are concerned, the facts are that they made no deposits with the Government, 58 448 and their names were not in the list of traders for whom the Government imported the goods.
They had direct dealings only with the defendants and sent their requirements to them.
The defendants would in their application to the Government include what the plaintiffs required as well as what they themselves required and make the necessary deposits for all the goods.
But all that would stand only in their name.
Though it would be possible to ascertain by reference to the correspondence between the parties which of the orders placed by the defendants with the Government related to the requirements of the plaintiffs, so far as the Government itself was concerned it knew only of the defendants as importers, and it was in their name that.
it would endorse the shipping documents, and it was only when the defendants in their turn endorsed the same to them that the plaintiffs would get title to the goods, and the evidence of Mr. Leach makes it clear that this had not been done, as regards the shipments with which the suit is con cerned.
This is what he says in his deposition. " The goods were shipped all to the order of the Government of India Separate documents were drawn up in respect of the consignments which were to be supplied to each of the trader according to his requirement submitted to Government.
The traders who submitted their requirements cleared the goods by paying the amount of the bills.
The Government did not make any allocation to me.
I depended on the defendants for obtaining my requirements from the Government.
I did not make any cash deposit as required of the dealer.
1 made no deposit with the Government in respect of the quantity which I wanted.
The entire deposit was made with the Government by the defendants even in respect of my requirements.
The defendants endorsed over the documents in my favour for goods which were meant for me.
Excepting for the admitted portions the documents for remaining part of PL.
1004 to 1007 were not handed over to me or endorsed in my favour, except to the extent to which the goods were delivered," 449 The evidence of Sir John Burder for the defendants was "the shipping documents were received in the name of the defendants ".
It is thus clearly established that with reference to the goods comprised in P.L. 1004 to 1007, which formed the subject matter of the suit, the shipping documents had not been made out in the name of the plaintiffs, nor had the defendants in whose names they were taken, endorsed the same to them.
That being so, unless the plaintiffs established that the defendants were importing the goods as their agents, they would not have title to them, and the claim for damages on the basis of conversion must fail.
We should mention that the appellants relied on some of the letters written by the defendants as showing that they recognised the plaintiffs as having the title to the goods.
Thus, on August 12, 1944, the defendants wrote to the plaintiffs " We confirm that the consignment is for you ", and on March 24, 1945, they wrote, " We enclose herewith a statement showing quantities and grades that have been ordered by Government on your account against order P.L. 1006/10" But these statements are quite consistent with the position of the defendants as sellers who had ordered the goods on the requisition of the plaintiffs, and do not import that title thereto had passed to them, which could be only after the goods came into existence and were appropriated.
That did not happen in this case, and the shipping documents continued in the name of the defendants.
We therefore agree with the learned Judges that on the pleadings and on the evidence the claim for damages on the footing of conversion must fail.
That would entail the dismissal of this appeal, but the plaintiffs have applied to this Court for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for non delivery of the goods.
The respondents resist the application.
They contend that the amendment introduces anew cause of action, that a suit on that cause of action could now be barred by limitation, that the plaintiffs had ample opportunity to amend 450 their plaint but that they failed to do so, and that owing to lapse of time the defendants would be seriously prejudiced if this new claim were allowed to be raised.
There is considerable force in the objections.
But after giving due weight to them, we are of opinion that this is a fit case in which the amendment ought to be allowed.
The plaintiffs do not claim any damages for wrongful termination of the agreement, exhibit A, by the notice dated June 13, 1945.
What they claim is only damages for non delivery of goods in respect of orders placed by them and accepted by the defendants prior to the termination of the agreement by that notice.
Clause 14 of the agreement expressly reserves that right to the plaintiffs.
The suit being founded on exhibit A, a claim based on Cl.
14 thereof cannot be said to be foreign to the scope of the suit.
Schedule E to the plaint mentions the several indents in respect of which the defendants had committed default by refusing to deliver the goods, and the damages claimed are also stated therein.
The plaintiffs seek by their amendment only to claim damages in respect of those consignments.
The prayer in the plaint is itself general and merely claims damages.
Thus, all the allegations which are necessary for sustaining a claim for damages for breach of contract are already in the plaint.
What is lacking is only the allegation that the plaintiffs are, in the alternative, entitled to claim damages for breach of contract by the defendants in not delivering the goods.
It is no doubt, true that courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application.
But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the court to order it, if that is required in the interests of justice.
In Charan Das vs Amir Khan (1) the Privy Council observed: " That there was full power to make the amendment cannot be disputed, and though such a power (1) [1920] 47 I.A. 255.
451 should not as a, rule be exercised where the effect is to take away from a defendants, legal right which has accrued to him by lapse of time, yet there are cases where such considerations are out weighed by the special circumstances of the case.
Vide also Kisan Das vs Rachappa In the present case, apart from the contents of the plaint already set out, there is the fact that the defendants cancelled the contract without strictly complying with the terms of cl. 14.
The ground on which they repudiated the contract was that the second plaintiff had assigned his interests to the first plaintiff ; but the record shows that subsequent to the assignment the defendants had business transactions with both the plaintiffs and therefore the ground for cancellation appears to have been a mere device to deprive the plaintiffs of the benefits of the orders which they had placed.
We are of opinion that the justice of the case requires that the amendment should be granted.
The plaintiffs will accordingly be allowed to amend the plaint as follows: " 12(a) In the alternative and without prejudice to the claim on the footing of conversion, the plaintiffs say that by reason of the facts aforesaid, there was a contract between the parties whereby the defendants undertook to supply and deliver to the plaintiffs (or either of them) the goods ordered out by Government on their (the plaintiffs ') account and included in the quotas PL.
1004 PL.
The said goods arrived in Bombay, but the defendants failed and neglected to deliver the same though demanded, and in fact repudiated their obligation to deliver.
The plaintiffs say that they were always ready and willing to pay for and take delivery of the same.
The defendants at all material times well knew that the plaintiffs had purchased the same for resale and for fulfilment of contracts of sale and supply.
The plaintiffs claim damages as per particulars.
" This appeal must accordingly be allowed, the decree under appeal set aside, and the suit remanded for (1) Bombay 644.
452 rehearing to the trial court.
The defendants will file their written statement to the amended claim and the suit will be tried and disposed of in accordance with law.
There remains the question of costs.
As the plaintiffs are getting an indulgence, they must pay the costs of the defendants both in the suit and in the appeal to the Bombay High Court.
So far as costs of this appeal are concerned, as the defendants persisted in their contention that the plaintiffs were only acting as their agents, a contention which, if upheld, would have furnished a conclusive answer to the amended claim as well, we direct the parties to bear their own costs in this Court.
Appeal allowed.
Case remanded.
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The appellants filed a suit for damages for conversion against the respondents on the allegations that the respondents were the agents of the appellants, that the appellants had placed orders for certain goods with the respondents, and that the respondents had actually imported the goods but refused to deliver them to the appellants.
The suit was dismissed on the findings that the parties stood in the relationship of seller and purchaser, and not agent and principal and that the title in the goods could only pass to the appellants when the respondents appropriated them to the appellants ' contracts.
In appeal before the Supreme Court, the appellants applied for amendment of the plaint by raising, in the alternative, a claim for damages for breach of contract for nondelivery of the goods.
All the allegations necessary for sustaining a claim for damages for breach of contract were already present in the plaint and the only allegation lacking was that the appellants were, in the alternative, entitled to claim damages for breach of contract by the non delivery of the goods.
But a fresh suit on the amended claim was barred by limitation on the date of the application.
Held, that this was a fit case in which the amendment should be allowed.
The fact that a fresh suit on the amended claim was (1) A.I.R. [1954] Raj. 211.
439 barred by limitation is a factor to be taken into consideration in the exercise of the discretion as to whether the amendment should be ordered or not, and does not affect the power of the court to order it, if that is required in the interests of justice.
Charan Das vs Amir Khan, L.R. 47 I.A. 225 and Kisan Das vs Rachappa, Bombay 644, followed.
To maintain an action in trover the plaintiffs must establish that they had title to the goods in question and that further they were entitled to possession thereof when they called upon the defendants to deliver them.
If the parties stood in the relation of sellers and purchasers with reference to the transactions, then the plaintiffs must show that the property in the goods, which initially was with the defendants had passed to them in accordance with the provisions of the Sale of Goods Act.
If, however, the defendants imported the goods as agents of the plaintiffs, then the title to them would undoubtedly be with the latter, and the only question then would be whether the former were entitled to retain possession, as they would be if they had paid the price on behalf of the principals, and had not been reimbursed that amount.
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464.txt
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it Petition No. 459 & 460 of 1988.
(Under Article 32 of the Constitution of India).
Harish N. Salve, S.V. Kamdar and M.N. Shroff for the Petitioners.
P.K. Goswami, Additional Solicitor General, Kailash Vasdev and Ms. A Subhashini for the Respondents.
The Judgement of the Court was delivered by S.C. AGRAWAL, J. These petitions under Article 32 of the Constitution raise a common question as to the validity of sub para (10) of para 218 of the Import & Export Policy for the period April, 1988 to March, 1991.
236 The petitioners in both these writ petitions are partnership firms carrying on business of import of rough diamonds and export of cut and polished diamonds.
The Import & Export Policy for the period April 1978 to March 1979, in para 174, made provision for grant of certain import facilities to Export Houses which were registered in accordance with the provisions of the said Policy.
One of the said facilities was grant of an Additional licence in terms of para 176 of the said Policy for an amount to be calculated at one third the f.o.b. value of the exports of select products made by the Export House in the year 1977 78.
The petitioners submitted application for registration as Export Houses and for grant of Export House Certificate which would have entitled them to the grant of such Additional licence.
The said applications of the petitioners were rejected by the authorities on the view that petitioners had failed to diversify their export of "Other Products" during the year 1977 78.
The said order refusing the Export Certificate was challenged by the petitioners by filing writ petitions under Article 226 of the Constitution before the Bombay High Court.
One of those writ petitions (filed by the petitioners in writ petition No. 460 of 1988 herein) was dismissed by a learned Single Judge of the High Court and the said petitioners filed an appeal before a Division Bench of the High Court.
While the said appeal and the other writ petition (filed by the petitioners viz. writ petition No. 459 of 1988 herein) were pending in the Bombay High Court, this Court decided Civil Appeal No. 1423 of 1984, Union of India vs Rajnikant Brothers, and other connected matters by order dated April 18, 1985, wherein it was observed that there was no requirement of diversification of exports as a condition for the grant of Export House Certificates in theImport Policy for the year 1978 1979, and the authorities were directed to issue necessary Export Certificates for the year 1978 79.
In that order this Court laid down the following conditioned: "Save and except items which are specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules".
The writ petition and the appeal were decided by the Bombay High Court in accordance with the aforesaid decision of this Court in the case of Union of India vs Rajnikant Brothers, (supra) and the High Court directed the authorities to grant Export House Certificates to the petitioners under the Import Policy 1978 79 within three months.
While giving the said direction the High Court imposed a condition in 237 the same terms as laid down by this Court in its order dated April 18, 1985, referred to above.
While construing the aforesaid direction contained in its order dated April 18, 1985, in Rajnikant Brothers case (supra) this Court has held that the grantees of the Additional licences were not only prohibited from importing items which were excluded under the Export Policy 1978 79 but also from importing items excluded under the Import Policy prevailing at the time of import and that the word "banned" was intended to take in terms which were banned altogether as well as items which were banned for import by the holder of an Additional licence.
(See: Raj Prakash Chemicals Ltd. & Anr.
vs Union of India & Ors.
; In Union of India vs M/s. Godrej Soaps Pvt. Ltd. & Anr., ; this Court construed the words 'whether canalised or otherwise ' contained in the order dated April 18, 1985, passed in Rajnikant Brothers case (supra) and it was observed that the Court would not know whether in the future certain canalised items could be imported directly by an Export House holding an Additional licence and that the possibility of a policy being framed in the future enabling an Export House holding an Additional licence to directly import items which are `non canalised ' and also item which are `canalised ' could not be ruled out and it was in this light that the Court can be said to have used the words "whether canalised or otherwise" in the order dated April 18, 1985.
The matter was further clarified by this Court in D.Navinchandra & Co. Bombay & Anr.
vs Union of India & Ors.
, ; , wherein this Court has observed: "Analysing the said order, it is apparent, (1) that the importation that was permissible was of goods which were not specifically banned, (2) such banning must be under the prevalent import policy at the time of import, and (3) whether items which were canalised or uncanalised would be imported in accordance with the relevant rules.
These conditions had to be fulfilled.
The Court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go bye to canalisation policy".
(P. 1000) In accordance with the directions given by the Bombay High Court the petitioners in writ petition No. 459 of 1988 herein were granted the Export House Certificate and were also granted an Additional licence dated November 16, 1987.
Similarly, the petitioners in 238 writ petition No. 460 of 1988 herein were granted the Export House Certificate and an Additional licence dated August 31, 1987.
These licences were valid for a period of 12 months and they contained the following endorsement: "This licence in valid for import of items permissible to Export Houses under the Additional Licence category as per para 176 of Import Policy for the period 1978 79 excluding those items which were banner in the policy for the period 1978 79 and those which have been specifically banned in the prevailing Import Policy, 1985 88, pursuant to and subject to the decision of the Supreme Court dated 5.3.1986 in M/s. Raj Prakash Chemicals case civil appeal No. 4978 of 1985; the decision dated 15.5.1986 in the case of M/s. Indo Afghan Chamber of Commerce writ petition No. 199 of 1986, the decision dated 12.9.86 in the case of M/s Godrej Soap Pvt.
Ltd. civil appeal No. 3418/1986; the decision dated 12.9.1986 in the case of M/s Star Diamonds Company of India in civil misc.
petitions No. 20021 22 of 1986 in civil appeal No. 2924/1984; and the decision dated 15.4.1987 in the writ petition No. 1483 of 1987 filed by M/s. D. Naveen Chandra & Company.
xxx" It appears that the petitioners were not able to make imports under the said Additional licences till March 31, 1988.
With effect from April 1, 1988, the Government of India issued the revised Import & Export Policy for the period April, 1988 to March 1991.
The Import & Export Policy 1988 1991 also contains in para 214 and 215 provisions for grant of Additional licences to Export Houses.
In para 215 of the said Policy certain additional facilities have been given in the matter of imports by Export Houses under Additional licences issued to them.
In sub para(4) 215 it has been provided as under: "(4) Additional licences issued to Export Houses will also be valid for the import of the following items upto 10% (upto 15% in the case of Trading Houses) of the value of the licence for: (i) Import of technical designs, drawings and other technical documentation for a value not exceeding Rs. 10 lakhs in the case of Export Houses, and Rs. 25 lakhs in the case of Trading Houses; 239 (ii) import of items appearing in Appendices 3 Part A,3 Part B and 5 Part A subject to the following conditions: (a) that the c.i.f. value of a `single item ' shall not exceed 10% of the flexibility in value terms of Rs.10 lakhs, whichever is less: (b) where the value for import of a `single item ' on the basis of 10% as at (a) above, works out to less than Rupees one lakh, import would be permitted upto a value of Rs. 1 lakh, provided it is within the overall flexibility allowed on the licence: and (iii) import of non OGL capital goods (other than those appearing in Appendices 1 Part A and 8) without indigenous clearance, subject to the same conditions as stipulated at (ii) above, within the overall flexibility allowed to Export/Trading Houses".
Paragraphs 217 and 218 of the said Policy provide for transitional arrangements.
In para 217, it is prescribed that Export Trading House Certificates issued prior to April 1, 1988 would continue to be valid till the date of the expiry and the Export House Trading House can apply for fresh certificates, if they fulfil the eligibility conditions laid down in the policy and in cases where these Certificates are expiring on 31st March, 1988, and the applicants do not fulfil the eligibility conditions for recognition laid down under the revised Policy, recognition would be granted for one year only if they fulfil conditions for renewal of these Certificates as laid down in the Import Policy, 1985 88.
Para 218 of the said Policy reads as under: "218.
(1) Where the applications from Export Houses/Trading Houses for Additional licences have not been disposed of by 31st March of the proceeding licensing year, the rate of entitlement will be the same as permissible during the licensing year to which the application pertains, but the items to be allowed will be as per the Import Policy in force on the date of issue of the licence.
(2) Additional licences already issued prior to 1.4.1988 shall continue to be `non transferable '.
(3) The Additional licences issued prior to 1.4.1988 240 shall cease to be valid for import of items of raw materials, components and spares which appeared in Parts I and II of List 8, Appendix 6 of Import Export Policy, 1985 88, but are not now covered by Part I of List 8, Appendix 6 of this Policy.
These licences will also cease to be valid for the import of items of capital goods which appeared in Appendix 1 Part B of Import Export Policy, 1985 88 but are now covered by Appendix 1 Part B of this Policy.
(4) The Additional licences issued to Trading Houses prior to 1.4.1988 will cease to the valid for the import of items which appeared in Appendices 3 and 5 Part A of the Import Export Policy, 1985 88 but do not appear in Appendices 3 and 5 Part A of this Policy.
(5) Additional licences issued to Export Houses/Trading Houses prior to 1.4.1988 shall cease to be valid for import of items of spares appearing in Appendices 2,3, 5 Part A, 8 and 10 of this Policy.
(6) Notwithstanding the provisions contained in sub paras (3), (4) and (5) above, the restrictions will not apply to the extent the licence holders have already made firm commitments by irrevocable Letters of Credit opened and established through authorised dealers in foreign exchange before 1st April, 1988 but any extension of these letters of credit made after 31st March, 1988 shall be treated as `fresh commitments '.
(7) Additional licences issued to Export Houses/Trading Houses prior to 1.4.1988 will also be valid within their overall value, for import of raw materials, components, consumables and spares appearing in Appendix 6, List 8, Part A of this Policy.
Similarly, such licences will also be valid for import of items of capital goods now covered by Appendix 1, Part B of this Policy within their overall value.
(8) REP licences held by Export Houses/Trading Houses and already endorsed prior to 1.4. 1988 shall cease to be valid for import of any item which could be imported under Open General Licence under the Import Export Policy, 1985 88 but are no longer so in this Policy.
241 (9) Additional licences issued to Export Houses/Trading Houses after 1.4.1988 on exports made during 1986 87 or earlier periods, will be `non transferable '.
These licences will be valid for import of the items appearing in Part I of List 8, Appendix 6 of this Policy.
These licences when issued to Trading Houses, will also be valid for import of the items appearing in Appendices 3 and 5 Part A of this Policy, subject to the conditions laid down in this regard, in the Import Export Policy, 1985 88.
(10) Additional licences issued on Export Houses/Trading Houses prior to 1.4.1988, or issued after 1.4.1988 on exports made during 1986 87 or earlier periods, will not be eligible for the flexibilities in the import of items of raw materials, components and consumables covered by Appendices 3 and 5 Part A and items of non OGL capital goods (other than those covered by Appendices 1 Part A and 8) available under this Policy.
However, these licences will be eligible for the endorsement (if not already endorsed) for the import of non OGL capital goods (other than those covered by Appendices 1 Part A and 8) as allowed against such licences in the Import Policy.
1985 88, subject to the conditions laid down therein provided the items sought to be imported against such licences continued to be non OGL (other than those covered by Appendices 1 Part A and 8) under this Policy".
The grievance of the petitioners is confined to sub para (10) of para 218 which lays down that Additional licences issued to Export Houses/Trading Houses prior to April, 1, 1988, or issued after April 1, 1988, on exports made during 1986 87 or earlier periods, will not be eligible for the flexibilities in the import of items of raw materials, components and consumables covered by Appendices 3 and Part A, and items of non OGL capital goods (other than those covered by Appendices 1 Part A 8) available under the revised Policy.
Appendix 3 Part A relates to raw materials, components, consumables, tools and spares (other than Iron and Steel and Ferro Alloys) and part B of the said Appendix deal with raw materials (Iron and Steel and Ferro Alloys).
Part A of Appendix 5 contains the list of items import of which is canalised through public sector agencies.
As a result of the aforesaid provision contained in sub para (10) of the para 218, the petitioners who were granted Additional licences prior to April 1, 1988, cannot avail the flexibilities in import of items granted under 242 clauses (ii) and (iii) of sub para (4) of para 215 of the Import Policy 1988 1991.
On behalf of the petitioners it has been urged by Shri Salve that sub para (10) of para 218 of the Import & Export Policy 1988 1991 arbitrarily discriminates between Export Houses who were issued Additional licences prior to April, 1 1988, and Export Houses who were issued Additional licences on or after April 1, 1988 in as much as the Export Houses who were issued Additional licences prior to April 1, 1988, on the basis of exports made during 1986 87 or earlier periods have been denied the facilities which have been given to Export Houses who were issued Additional licences on or April 1, 1988, on the basis of exports made during the period subsequent to 1986 87.
It has been submitted that all Export houses who have been granted Additional licences constitute a single class and that there is no basis for classifying such Export Houses into two different categories on the basis of the date of issuance of the Additional Licences or on the basis of the period of the exports against which such licences have been issued and that such a classification has no connection whatsoever with the object sought to be achieved by the Import & Export Policy 1988 91.
On behalf of the respondents it has been submitted by the learned Additional Solicitor General that there is no similarity between the petitioners who have been granted Additional licences on the basis of their exports made during the period 1977 78 in accordance with the Import Policy 1978 79 and the Export Houses who would be granted Additional licences on or after April 1, 1988, under the Import & Export Policy 1988 91 inasmuch as the conditions of eligibility for grant of such licences and the value of licences under the Import & Export Policy 1978 79 were quite different from those contained in the Import & Export Policy 1988 91.
It has been urged that under Import & Export Policy 1978 79 Additional licences were to be given on the basis of one third of the f.o.b. value of the exports made in 1977 78 whereas under Import & Export Policy 1988 91 Additional licences are to be given on the basis of not foreign exchange earnings from the exports actually made and the value of such Additional licence is only 10 to 12% of the net foreign exchange earnings.
As regards the right to equality guaranteed under Article 14 the position is well settled that the said right ensures equality amongst equals and its aim is to protect persons similarly placed against discriminatory treatment.
It means that all persons similarly circumstan 243 ced shall be treated alike both in privileges conferred and liabilities imposed.
Conversely discrimination may result if persons dissimilarly situate are treated equally.
Even amongst persons similarly situate differential treatment would be permissible between one class and the other.
In that event it is necessary that the differential treatment should be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and that differential must have a rational relation to the object sought to be achieved by the statute in question.
The petitioners, in order to successfully invoke the right guaranteed under Article 14 of the Constitution, will have to establish that they and the Export Houses which were issued Additional licences under the Import Policy 1988 91 are similarly situate.
A close examination of the Import & Export Policy 1978 79 under which the petitioners have been granted the Additional licences and the Import & Export Policy 1988 91 shows that there is material difference between the conditions for grant of Additional licences under Import Policy 1978 79 and the conditions for grant of such licences under the Import Policy 1988 91 and it cannot be said that the petitioners who have been granted Additional licences under the Import & Export Policy 1978 79 and the Export & Import Policy 1988 91 are persons similarly circumstanced.
Under the Import & Export Policy 1978 79, there were two requirements for grant of Additional license: one was the condition as to eligibility for registration as an Export House and grant of Export House Certificates; and the other was the basis for issuing the Additional licences to Export House which had been granted Export House Certificates.
In Para 165 of the said Policy eligibility for grant of Export House Certificates was to be determined on the basis of the export actually made in the three year base period 1975 76, 1976 77 and 1977 78 and in para 166 it was laid down that annual average f.o.b. value of exports in the prescribed base period of select products should not be less than Rs. One crore or those of non select products Rs. Five crores, but in the case of a small scale unit or a consortium of small scale units, the said minimum limit was reduced to Rs. 25 lakhs for select products and Rs. 2 crores for non select products.
In para 176 of the said Policy it was laid down that the value of the Additional licences to be granted for 1978 79 would be calculated at one third of the f.o.b. value of the export of select products made in 1977 78 and manufactured by the small scale and cottage industries 244 plus 5% of the f.o.b. value of other exports of select products made in the same year.
In other words, under the Import & Export Policy of 1978 79 the basis for grant of Export House Certificate as well as grant of Additional licences to Export Houses was the f.o.b. value of the exports.
Under the Import & Export Policy 1988 91 provision with regard to eligibility for the grant of Export House/Trading House Certificate is contained in para 212 which prescribed that the said eligibility shall be determined on the basis of the net foreign exchange (NEF) earnings from the export actually made in preceding three licensing years termed as 'the Base period '.
The expression 'net foreign exchange earnings ' has been defined as the total f.o.b. value of admissible exports minus the c.i.f. value of Advance/Imprest (including Diamond Imprest/DTC Imperest) Licences/Import Export Pass Books (excluding Special Imprest Import Export Pass Book) if any issued, and the REP licences issued or the eligibility thereto, during the preceding three licensing years.
Among the conditions for eligibility for grant of such Certificates are that the annual average NFE earnings in the prescribed base period should not be less than Rs. 2 crores in the case of Export House and Rs. 10 crores in the case of Trading Houses and the NEF earnings in none of the three years of the base period should be less than 25% of the minimum average NFE earnings prescribed.
For determining the eligibility of the products manufactured by small scale and cottage sector industries are to be reckoned at twice the actual NFE earnings.
In para 215 of the said Policy, it is providedthat the Export House/Trading House would be eligible to Additional licences on the basis of the admissible exports made in the preceding licensing year and that the value of these licences will be calculated at 10% of the NFE earnings on the total eligible exports made in the preceding licensing year and that this percentage shall be 12% in cases where an Export/Trading House is able to achieve a minimum growth of 10% in term of NFE realisation in the previous year, over and above the year preceding the same.
This indicates that under the Import & Export Policy 1988 91 for the purposeof grant of Export House Certificate as well as Additional licences the emphasis is on the net foreign exchange earnings made by the Export House, which means that the value of the imports made by the Import House for the purpose of exporting goods is to be excluded from the f.o.b. value of exports.
That apart even the value of the Additional licences which can be issued under the Import & Export Policy 1988 91 on the basis of NFE earnings is much less viz. 10% as against 33.33% of f.o.b. value under the Import & Export Policy 1978 79.
The said 10% value can be 245 increased to 12% in cases where the Export House is able to achieve a minimum growth of 10% in terms of realisation in the previous year, over the above the year preceding the same.
The aforesaid examination of the provisions contained in the Import & Export Policy 1978 79 and the Import & Export Policy 1988 91 shows that while in the Import & Export Policy 1978 79 the emphasis was only on the f.o.b. value of exports without taking into account the outgo of foreign exchange in importing the goods required for achieving the export by an Export House and Additional licences were granted for a much larger amount at a high percentage on the basis of the f.o.b. value of the exports, in the Import & Export Policy 1988 91 there is a more realistic appraisal of actual benefit to country 's economy by the exports by taking into account the net foreign exchange earnings after deducting the value of the imports and additional licences are issued on the basis of the net foreign exchange earnings for a much lesser value on a smaller percentage.
The petitioners who were granted Additional licences to the extent of 33.33% of the f.o.b. value of the exports made them during the year 1977 78 cannot, therefore, be said to be persons similarly circumstanced as Export House who exported goods in the year 1987 88 and in subsequent years and obtain Additional licences for a much lesser value under the Import Policy 1988 91 on the basis of the net foreign exchange earnings.
The provisions conferring flexibility in the matter of imports contained in sub para (4) of para 215 of the Import & Export Policy 1988 91 are intended to give an incentive to Export Houses to increase the exports in a way as to enhance the net foreign exchange earnings of the country.
The petitioner were no granted Additional licences on the basis of net foreign exchange earnings and they have secured the Additional licences on the basis of the f.o.b. value of the exports, without taking into account the value of the goods imported by them for achieving the exports.
They cannot claim to be entitled to the same facilities that have been provided to Export Houses who are granted Additional licences under the Import & Export Policy 1988 91.
Shri H.N. Salve, has, however, urged that in view of the decision of this Court in D. Navinchandra & Co. case (supra) the Export Houses who were granted Additional licences under the Import & Export Policy 1978 79 have to be treated at par with Export Houses who have been granted Additional licences under the Import & Export Policy for the subsequent years and since there has been relaxation in the matter of policy of canalisation of imports under sub para (4) of 246 para 215 in respect of Additional licences granted to Export Houses under the Import & Export Policy 1988 91, the petitioners are also entitled to a similar relaxation.
We are unable to agree with this contention.
In D. navinchandra & Co. case (supra) this Court has not laid down that Export Houses, like the petitioners, who are granted Additional licences on the basis of the order Dated April 18, 1985, are to be treated at par with Export Houses who are granted Additional licences under Import & Export Policy prevalent at the time of import.
In that case this Court, while explaining the background in which the order dated April 18, 1985, was passed, has observed: "It has to be borne in mind that basic background under which the Rajnikant 's decision was rendered, the Export Houses had been refused Export House Certificates because it was insisted that they should have diversified their export and that was a condition for the grant or entitlement of an export house certificate.
it was found and it is common ground now that was wrong.
Therefore, the wrong was undone.
Those who had been denied Export House Certificates on that wrong ground were put back to the position as far as it could be if that wrong had not been done.
To do so, the Custom authorities and Govt.
authorities were directed to issue necessary Export House Certificates for the year 1978 79 though the order was passed in April, 1985.
This was a measure of restitution, but the Court while doing so, ensured that nothing illegal was done." (P.1000) After referring to the decision in Raj Prakash Chemicals Ltd. (supra) this Court has stressed: "The items had to pass to two tests, firstly, they should have been importable under the import policy 1978 79 and secondly they should also have been importable under the import policy 1985 88 in terms of the Order dated 18th April, 1985, and if one may add, in such terms 'in accordance with the import rules ' whether canalised or not canalised." (P. 1001) This Court has gone on to emphasise: "It must be emphasised that in the Order dated 18th April, 1985, this Court did not do away with canalisation.
That 247 was not the issue before this Court.
The expression 'whether canalised or not canalised ' was to include both.
This Court did not say that canalised items could be imported directly by the importers ignoring the canalisation process.
We are of the opinion that this Court did not say that canalisation could be ignored.
That was not the issue.
High public policy, it must be emphasised, It involved in the scheme of canalisation." (Pages 1001 2) Shri Salve has placed reliance on the following observations of this Court in this case: " Canalised items are those items which are ordinarily open to import only through a public sector agency.
Although generally these are importable through public section agencies, it is permissible for any import policy to provide an exception to the rule and to declare that an importer might import a canalised item directly.
It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond exporters.
They would be entitled to import items which were canalised or not if the import policy prevailing at the time of import permitted them to import items falling under such category.
This was also viewed in that light in the case of Indo Afghan Chambers of Commerce (supra).
" These observations only indicate that import of the canalised items under Additional licences issued to Export Houses, like the petitioners, would be permissible if the import policy prevailing at the time of import permits them to import such items.
In other words it would depend on the terms of the import policy prevailing at the time of import.
The decision in Indo Afghan Chambers of Commerce vs Union of India, to which reference has been made, is also to the same effect.
In fact case Export Houses, like the petitioners, wanted to import to Dry Fruits under the Additional licences issued to them.
Under the Import POLIcy 1985 88 prevailing at the time of such import, the import of Dry Fruits was permissible only by dealers engaged in the trade of stocking and selling Dry Fruits.
It was held that the Export Hoses could not import Dry Fruits in view of the said restriction placed in the Import Policy 1985 88.
The decision of this Court in D. Navinchandra & Co. case (supra) reiterates that the rights of the petitioners under the Additional licences issued to them would be governed by the terms of the import policy prevailing at the time of import.
248 Here we find that in the Import & Export Policy 1988 91 there has been relaxation to a limited extent in respect of import by Export Houses who are granted Additional licences under the said Policy on the basis of their exports during that period 1987 88 and subsequent periods.
Since the basis for the grant of Additional licences which are entitled to this relaxation is different from the basis on which Additional licences were granted to the petitioners, the petitioners cannot claim the benefit of the same relaxation and assail the validity of sub para (10) of para 218 of the Import & Export Policy 1988 91.
Shri Salve has invited our attention to the Import Licence dated November 21, 1988 issued in favour of M/s. Suraj Diamonds Industries Pvt.
Ltd wherein it is stated that this licence is valid for import of items as per para 215 of Import & Export Policy 1988 91 subject to restrictions/conditions laid down therein.
It has been submitted that this licence has also been issued under the Import & Export Policy 1978 79 on the basis of the f.o.b. value of exports.
It has been urged that the petitioners as well as the said license, namely, M/s. Suraj Diamonds Industries Pvt. Ltd. are persons similarly situate and whereas M/s. Suraj Diamonds Industries Pvt. Ltd. have been granted an Additional licence whereunder, it is permissible to import items as per para 215 of the Import & Export Policy 1988 91, the said facility has been denied to the petitioners and that the petitioners have been subjected to arbitrary and hostile discrimination.
The learned Additional solicitor General had pointed out the said licence to M/s. Suraj Diamonds Industries Pvt. Ltd. was used under a mistake and the said mistake has been rectified on 2nd December, 1988, i.e., within 10 days of the issue of the said licence.
In view of the fact that the licence issued in favour of M/s. Suraj Diamonds Industries was issued under a mistake and the said mistake has been rectified, it cannot be said that the petitioners have been subjected to hostile discrimination vis a vis other Export House similarly situate.
Before we conclude, we may take note of the recent decision of this Court in B. Vijay Kumar & Co. etc.
vs Collector of Central Excise and Customs, ; The appellants therein had been granted Additional Import licence in pursuance of this Court 's order dated April 18, 1985 in Rajnikant Brothers, case (supra) and had imported canalised items under the said licence.
The goods were not cleared by the customs authorities and the Collector of Customs imposed penalty and passed orders for confiscation of the goods and permitted the appellants to take delivery of good on payment of redemption fine.
The Customs, Excise & Gold (Control) Appellate Tri 249 bunal (hereinafter referred to as 'the Appellate Tribunal ') on appeal, while upholding the order of imposition of redemption fine, set aside the order of Collector imposing penalty.
In view of the special facts and circumstances of the case and specially having regard to the findings of the Appellate Tribunal that the appellants imported canalised items bona fide, this Court set aside the orders of the Collector and the Appellate Tribunal with regard to confiscation of goods and imposition of redemption fine without dealing with the submissions of learned counsel for the parties with regard to the interpretation and the effect of the earlier judgments of this Court in Raj Prakash Chemicals case (supra), Indo Afghan case (supra), Godrej Soap case (supra) and D. Navinchandra & Co. case (supra).
This decision is, therefore, a decision based on the facts of that particular case only.
As a result of the aforesaid discussion it must be held that the petitioners have failed to make out a case for interference by this Court under Article 32 of the Constitution.
As indicated earlier, the licences issued to the petitioners were valid for a period of twelve months and the said period has expired during the pendency of these writ petitions.
By order dated may 3, 1988, this Court, whiledirecting that notice be issued had further directed that the matter be listed on July 20, 1988, and in these circumstances this Court did not pass any interim order for stay.
The writ petitions could not, however, be heard as per the aforesaid directions.
Since the matter has been pending in this Court and the Additional licences issued to the petitioners have expired in the meanwhile we consider it appropriate that the period of validity of the said licences should be extended so that the petitioners can avail the same and are able to import the goods which can be so imported under the prevailing Import Policy.
It is, therefore, directed that the period of validity of the Additional licences that have been granted to the petitioners under Import & Export Policy 1978 79 may be extended by six months from the date of such extension.
Subject to the aforesaid observations, the writ petitions are dismissed.
The parties are left to bear their own costs.
T.N.A. Petitions dismissed.
|
The petitioners, carrying,on import export of diamonds, field applications for registration as Export Houses and grant of Additional Import Licences under Para 174 and 176 of the Import and Export Policy 1978 79 which were rejected by the authorities on the ground that they have failed to diversify their exports of "other products" during the year 1977 78.
They challenged the order of the authorities by filing writ petitions before the Bombay High Court under Article 226 of the Constitution.
One of the petitions was dismissed by a learned single judge of the High Court and the said petitions filed an appeal before a Division Bench of the High Court.
During the pendency of the appeal 233 and the writ petition,the Supreme Court by its order dated April 18, 1985 decided the case of Union of India vs Rajnikant Bros. holding that there was no requirement of diversification of exports as a condition for the grant of Export Houses Certificates in the Import Export Policy for the year 1978 79 but the grantee of Additional Licences were not only prohibited from importing items which were excluded in the Export Policy 1978 79 but also from importing items excluded under the Import Policy prevailing at the time import.
The High Court decided the cases of the petitioners in accordance with the decision of this Court in Union of India vs Rajnikant Bros. Purusant to the decision of the Bombay High Court petitioners were granted Export House Certificates and Additional Import Licences which were valid for 12 months, with the same condition as provided by this Court in its order dated April18, 1985 in the case of Rajnikant.
However, the petitioners were not able to make imports under the said licences till 31st March,1988.On 1.4.1988, the Government of India issued a revised Export and Import Policy for the period 1988 91.Under Para 215 of the said revised policy certain flexibilities were granted in the matter of imports to the grantees of Additional Import Licences.
However, under para 218(10) of the said revised Policy the holdersof the Additional Import Licences issuedprior to 1.4.1988 were made ineligible for the benefit of flexibilities in import as contained in para 215(4).
Since ,the petitioners were holding licences issued prior to 1.4.1988 they could not avail the flexibilities in import as contained in Para 215 of the 1988 91 Policy.
Consequently, they filed writ petitions in this Court challenging the validity of para218(10) of the 1988 91 Policy contending (i) that all the Export Houses who were granted Additional Licences constitute at single class and their classification on the basis of date or on the basis of period of exports has no connection with the object sought to be achieved by the 1988 91 policy; (ii) that Para 218(10) of 1988 91 Policy arbitrarily discriminates between Export Houses who were issued Additional Licences prior to 1.4.1988 since the benefits ofPara 214 of 1988 91 Policy were conferred only on the latter; (iii) that in view of the judgement of this Court in C.Naveenchandra and Co. vs Union of India, [1987] 2 S.C.R. 989 the petitioners should be treated at par with the grantees of Additional Licences under the Export Policy for the subsequent years and since there has been relaxation in the matter of policy of canalisation of imports under Para 215(4) in respect Additional Licences granted to Export Houses under the 1988 91 Policy, the petitioners were also entitled to a similar relaxation.
Dismissing the petitions, this Court, 234 HELD: 1.
The right to equality guaranteed under Article 14 ensures equality amongst equals and its aim is to protect persons similarly placed against discriminatory treatment.
It means that all persons similarly circumstance shall be treated alike both in privileges conferred and liabilities imposed.
Conversely discrimination may result if persons dissimilarily situate are treated equally.
Even amongst persons similarly situate differential treatment wouldbe permissible between one class and the other.
In that event it is necessary that the differential treatment should be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and that differentia must have a rational relation tothe object sought to be achieved by the statute in question.
[242H, 243A B] 2.
A close examination of the Import & Export Policy 1978 79 and the Import & Export Policy 1988 91 shows that there is material difference between the conditions for grant of Additional licences under Import Policy 1978 79 and the conditions for grant of such licences under the Import Policy 1988 91.
While in the Import & Export policy 1978 79 the emphasis was only on the f.o.b. value of exports without taking into account the outgo of foreign exchange in importing the goods required for achieving the exports by an Export House and Additional licences were granted for a much larger amount at a higher percentage on the basis of the f.o.b.value of the exports, where as in the Import & Export Policy 1988 91 there is a more realistic appraisal of actual benefit to the country ' economy by the exports by taking into account the net foreign exchange earnings after deducting the value of the imports and additional licences are issued on the basis of the net foreign exchange earnings for a much lesser value on a smaller percentage.
Therefore, the basis for the grant of Additional Licences which are entitled to relaxation in import under the 1988 91 Policy is different from the basis on which Additional Licences were granted under the 1978 79 policy.
[243C, 245B C,248A] 3.
The petitioners were not granted Additional Licences on the basis of net foreign exchange earnings and they have secured the Additional Licences on the basis of f.o.b. value of the exports, without taking into account the value of goods imported by them for achieving the exports.
It cannot be said that the petitioners who have been granted Additional Licences under the 1978 79 Policy and the Export Houses who were granted Additional Licences under the 1988 91 Policy are persons similarly circumstanced.
Therefore the petitioners cannot claim the same facilities that have been provided to Export Houses who are granted Additional Licences under the 1988 91 Policy.
Hence they have failed to make out a case for interference by this Court under 235 Article 32 and consequently they cannot assail the validity of Para 218(10) of the Import & Export Policy 1988 91.[245E, 243D, 245F, 249C, 248B] 4.
Export Houses, like the petitioners, who were granted Additional Licences on the basis of order of this Court dated April 18, 1985 are not to be treated at par with Export Houses who are granted Additional Licences under the Import & Export Policy prevalent at the time of import.
Import of canalised items under Additional Licences issued to the petitioners would be permissible if the import policy prevailing at the time of import permits them to import such items.
Therefore the rights of the petitioners under the Additional Licences issued to them would be governed by the terms of the Import Policy prevailing at the time of import.[246A B, 247E, 247H] D. Naveenchandra & Co. Bombay & Anr.
vs Union of India Raj Prakash Chemicals Ltd. & Anr.
vs Union of India & Ors.
, ; ; Union of India vs Godrej Soaps Pvt . Ltd., [1986]3 S.C.R. 771; Union of India vs Rajnikant Bros., Civil Appeal No. 1423 of 1984 decided on 18.4.1985; Indo Afghan Chamber of Commerce vs Union of India, , referred to.
B. Vijay Kumar & Co. etc.
vs Collector of Central Excise and Customs, ; ; held inapplicable.
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Appeal No. 104 of 1970.
(From the Judgment and Order dated 23 10 1967 of the Patna High Court in Civil Writ Jurisdiction Case No. 299/66).
L.M. Singhvi, U.P. Singh and S.N. Jha, for the Appellant.
Sarjoo Prasad and U.S. Prasad, for the Respondent.
The Judgment of the Court was delivered by KHANNA, J.
The short question which arises for determi nation in this appeal on certificate by Damodar Valley Corporation against the judgment of Patna High Court dis missing the writ petition filed by the appellant is whether the appellant is liable to pay electricity duty under Bihar Electricity Duty Act,, 1948 as amended by Bihar Electricity Duty (Amendment) Act, 1963.
The High Court answered the question in the affirmative against the appellant.
The appellant is a corporation established under the for the development of the Damodar Valley in the States of Bihar and West Bengal.
One of the functions of the appellant is the promotion and operation of schemes for the generation, transmission and distribution of hydroelectric and thermal electrical energy.
Bihar Electricity Duty Act, 1948 (Bihar Act 36 of 1948) (hereinafter referred to as the principal Act) was published in the Bihar gazette; on October 1, 1948.
It was an Act for the levy of duty on the sales and consumption of electrical energy in the province of Bihar.
Material part of sec tions.
3 and 4,.
as they stood before the amendment made in 1963, read as under: "3. Incidence of duty. (1) There shall be levied and paid to the: State Government on the units of energy consumed or sold, excluding losses of energy in the transmission and transformation, a duty at the rates specified in the First Schedule: Provided that no duty shall be leviable on units of energy : (i) . . (ii) . (iii) . (iv) . . 120 (v) consumed by, or in respect of, or sold for consumption in any (a) mine, as defined in the Indian Mines Act, 1923: (b) industrial undertaking; except to the extent specified in the Second Schedule: (vi). (2) . 4.
Payment of duty. ( I ) Every licensee shall pay every month to the State Government at the time and in the manner prescribed the proper duty payable under section 3 on the units of energy consumed by him or sold by him to the con sumer.
(2) Every licensee may recover from the amount which falls to be paid by the licensee as duty in respect of energy sold to the consumer.
(3). . (4) . (4a) . (5) .
The principal Act was amended by Bihar Electricity Duty (Amendment) Act, 1963 (Bihar Act 20.
of 1963) (hereafter referred to as the amending Act).
The amending Act received the assent of the President on December 4, 1963 and was published on December 17, 1963.
By section 2 of the amending Act, new section 3 was substituted for the old section 3.
Material part of new section 3 read as under: "3.
Incidence of duty.(1) Subject to the provision of sub section (2), there shall be levied and paid to the State Government on the units of energy consumed or sold, excluding losses of energy in transmission and transformation, a duty at the rate or rates specified in the Schedule.
(2) No duty shall be leviable on units of energy (a) . (b) . (c) . (d) . (e) consumed by the Damodar Valley Corporation for the generation, transmission or distribution of electricity by that Corporation; (f) . (3) . 121 Amendment was also made in the First Schedule of the principal Act.
The relevant part of the sched ule read as 'under : THE SCHEDULE (See section 3.) RATES OF DUTY A. For a mine or an industrial under Such rateor rates taking, save in respect of its not exceeding 2 naya premises used for residential or paisa per unit of office purpose energy as may, from time to time, be fixed by the State Govern ment with the previ ous consent of the President, by order in this behalf".
In the writ petition the appellant prayed for quashing three notices dated February 10, 1965 issued by the Superintendent of Commercial Taxes Giridih as also his orders dated March 24 and 29, 1966.
By the impugned notices the Superintendent of Commercial Taxes called upon the appellant to show cause as to why penal action under the princi pal Act as amended,, should not be taken against the appellant for having failed to get itself registered under that Act.
The appellant was also called upon to apply for registration.
By the impugned orders the Superintendent of Commercial Taxes directed.
the appellant to pay electricity duty under the: Act as amended.
The case of the appellant was that it enjoyed immunity from payment of tax under clause (1) of article 288 of the Constitution.
No law satisfying the requirement of clause (2) of article 288, it was contended, had been made warranting the levy of such a duty.
The High Court repelled this contention, and we find no sufficient ground to take a different view.
Article 288 of the Constitution reads as under: "288(1) Save in so far as the President may by order otherwise provide, no law of a State in force immediately before the comencement of this Constitution shall impose, or authorise the imposi tion of, a tax in respect of any water or electric ity stored, generated, consumed, distributed or sold by any authority established by any existing law made by Parliament for regulating or develop ing any inter State river or river valley.
Explanation.
The expression 'law of a State in force ' in this clause shall include a law of a State passed or made before the commencement of this Constitution and not previously repealed,, notwithstanding that it or parts of it may not be, then in operation either at all or in particular areas.
(2) The Legislature of a State may by law impose or authorise the imposition of, any such tax as is mentioned in clause ( 1 ), but no such law shall have any effect unless it has, after having been reserved for the consideration of the President, received his assent; and if any such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority, the law shall provide for the previous consent of the President being obtained to the making of any such rule or order.
" 10 1003 SCI/76 122 Article 288 grants exemption from tax under any law of a State in respect of any water or electricity stored, gener ated, consumed, distributed or sold by any authority estab lished by any existing law or any law made by Parliament for regulating or developing any inter State river or river valley, except in certain cases.
According to clause (1) of the article, this exemption would not be available in respect of such tax imposed under any law of a State in force immediately before the commencement of the Constitu tion if the: President by order so provides.
Although the principal Act is a pre Constitution law, being an Act of 1948, no order was admittedly made by the President with drawing the exemption in respect of the appellant from levy of such, tax under the principal Act.
Indeed, there was no question of issue of any such order because the principal Act did not provide for the imposition of electricity duty upon a corporation like the appellant.
Clause (v) of the proviso.
to sub section (1 ) of section 3 of the principal Act expressly stated that no duty shall be leviable on units of energy consumed by, or in respect of, or.
sold for con sumption in any mine, as defined in the Indian Mines Act, or industrial undertakings, except to the extent specified in the Second Schedule.
The appellant is admittedly an industrial undertaking, and as such, was not liable.
to pay electricity duty under the principal Act.
The case of the respondentS is that the bar to the levy of the said duty was removed and the levy of the duty on the appellant was, put on a sound legal basis as a result of the amendment made.
in the principal Act by the amending Act of 1963.
The amending Act, we find, satisfies the require ments of clause (2) of article 288.
According to that clause, the legislature of a State may by law impose, or authorise the imposition of, any tax mentioned in clause (1) of that article, but no such law shall have any effect unless it has, after having been reserved for the consider ation of the President, received his assent; and if any such law provides for the fixation of the rates and other inci dents of such tax by means of rules or orders to.
be made under the law by any authority,, the law shall provide for the previous consent of the President being obtained to the making of any such rule or order.
The amending Act of 1963, as already mentioned, received the assent of the President before its publication.
The exemption which was granted to mines and industrial undertakings from payment of elec tricity duty under the principal Act was withdrawn under the amending Act, except to some extent with which we are not concerned.
The new schedule, substituted for the old sched ule by the amending Act, prescribed the rates of duty for mines and industrial undertakings, and it was provided that the rate of duty shall be such rate or rates not exceeding 2 naya paise per unit of energy as may, from time to time, be fixed by the State Government with the previous consent of the President, by order in this behalf.
It has been argued by Dr. Singhvi on behalf of the appellant that the scheme of article 288 is to grant general exemption from the levy of tax in respect of any water or electricity stored, generated, consumed, distributed or sold ' by any authority established by any, existing 123 law or any law made by Parliament for regulating or develop ing any inter State river or river valley.
If any law made by a State legislature, according to the submission, seeks the imposition of any such tax, such law should contain clear indication to that effect before it receives the assent of the President.
The amending Act of 1963, :ac cording to the learned counsel, did not contain any such indication.
This contention, in our opinion, is wholly devoid of force.
Under proviso (v) to section 3(1) of the principal Act, mines and industrial undertakings were exempt from levy of duty.
This exemption stood withdrawn as a result of, substitution of new section 3 for the old sec tion by the amending Act.
The new charging section 3 (1 ) roped in all industrial undertakings, including the Damodar Valley Corporation, for the purpose of levy of duty.
Clause (e) of sub section (2) of new section 3 which was introduced by the amending Act of 1963.
expressly granted exemption from levy of electricity duty on units of energy consumed by the appellant corporation for the generation, transmission or distribution of electricity by that corporation.
This provision.
containing express reference to the appellant corporation, clearly warrants the inference that in respect of units of energy not covered by clause (e) of sub section (2) of section 3 the exemption would not be available to the appellant.
The contention advanced on behalf of the appel lant that the amending Act did not contemplate or contain indication regarding the imposition of electricity duty upon the appellant is plainly untenable, for it would have the effect of Tendering clause (e) of sub section (2) of sec tion 3 to be wholly redundant.
The courts, it is well settled, should be loath to accept an argument which would have the effect of rendering redundant the provision of a statute.
Lastly, it has been argued that though there has been an amendment of section 3 of the principal Act by its substitu tion by a new section under the amending Act of 196.3, there has been no amendment of section 4 with the assent of the President.
As such, no liability to pay electricity duty can be fastened upon the appellant.
This submission too is bereft of force.
Section 3, as inserted by the 'amending Act of 19 '63, is the charging section.
According to clause (1) of that section, subject to the provision of sub section (2), there shall be: levied and paid to the State Government on the: 'units of energy consumed or sold, excluding losses of energy in transmission and transformation, a duty at the rate or rates specified in the Schedule.
The section thus deals with the incidence of duty, and makes it clear that such duty h.as.
to be paid on the units of energy consumed or sold and at the rate or rates specified in the schedule.
It is further made clear by the section that the duty is to be levied and paid to the State Government.
As the duty is to.
be levied on the units of energy consumed or sold, it would follow that the duty would have to be paid by the consumer or seller,, as the case may be.
Section 4 of the principal Act merely provides for the manner and mode of payment of the duty, and we find no substance in the conten tion that unless section 4 of the principal Act was also re enacted with the assent of the President, the liability for payment of duty cannot be fastened upon the appellant.
124 What is required by clause (2) of article 288 is that the law made by the State legislature for imposing or authorising the imposition of tax mentioned in clause (1) shall have effect only if after having been reserved for the consideration of the President, it receives his assent.
Another requirement of that clause is that if such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority, the law shall. provide for the previ ous consent of the President being obtained to the making of any such rule or order.
It is, however, not the effect of that Clause that even if the above mentioned two require ments are satisfied, the provisions which merely deal with the mode and manner of the payment of the aforesaid tax should also receive the assent of the President and that in the absence of such assent, the provisions.
dealing with the incidence of tax, which have received the assent of the President, would remain unenforceable.
Some other aspects were also dealt with by the High Court, but in the light of the view we have taken in the matter, it is not necessary to deal with those aspects.
The appeal consequently fails and is dismissed but in the circumstances without costs.
P.B.R. Appeal dis missed.
|
The proviso (v) to section 3(1) of the Bihar Electricity Duty Act, 1948 provided that no duty shall be leviable on units of energy consumed by, or in respect of, or sold for con sumption in any mine or industrial undertaking except to the extent specified in the Second Schedule.
In 1963 section 3 of the Act was amended and a new section 3 was.
substituted for the old section 3.
Sub section (2)(e) of the new section states that no duty shall be leviable on units of energy consumed by the Damodar Valley Corporation for the generation, trans mission or distribution of electricity by that Corporation.
Item A of the First Schedule, as amended in 1963 states that for a mine or an industrial undertaking the duty leviable shall be at such rate or rates not exceeding 2 naya paise per unit of energy fixed by the State Government with, the previous consent of the president.
The Amending Act re ceived the assent of the President.
In response to notices issued by the Superintendent of Commercial Taxes calling upon the appellant to pay elec tricity duty under the Act as amended, the appellant contended that it enjoyed immunity from payment of tax under cl.
(1) of article 288 of the Constitution, no law satisfying the requirement of cl.
(2) of article 288.
having been made.
warranting the levy of such duty.
The High Court dismissed the appellant 's writ petition.
Dismissing the appeal to this Court, HELD: (1) What is required by cl.
(2) of article 288 is that the law made by the State legislature for imposing, or authorising the imposition of tax mentioned in cl.
(1) shall have effect only if (i) after having been reserved for the consideration of the President, it receives his assent, and (ii) that if such law provides for the fixation of the rates and other incidents of such tax by means of rules or orders to be made under the law by any authority, the law shall provide for ,the previous consent of the, President being obtained to the making of any such rule or order.
It is, however, not the effect of that clause that even if these two requirements are satisfied, the provisions which merely deal with the mode and manner of the payment of the tax should also receive the assent of the President and that in the absence of such, assent, the provisions dealing with the incidence of tax, which have received the assent of the President, would remain unenforceable.
[123 H; 124 A B] (2) The contention of the appellant that the amending Act did not contemplate or contain any indication regarding the, imposition of electricity duty upon the appellant is plain ly, untenable, for it would have the effect of rendering section 3(2)(e) to be wholly redundant.
Under proviso (v) to section 3(1) of the Principal Act, mines and industrial undertakings were exempt from levy of duty.
This exemption stood with drawn as a result of substitution of new section 3 for the old section by the amending Act.
The new charging section 3(1) roped in all industrial undertakings, including the Damodar Valley Corporation, for the purpose of levy of duty.
Section 3(2)(e), introduced by the Amending Act of 1963, expressly granted exemption from levy of electricity duty on units of energy consumed by the appellant for the, generation, transmission or distribution of electricity by that Corpora tion.
This provision, containing express reference to the appellant Corporation, dearly warrants the inference that in respect of units of energy not covered by section 3(2)(e) the exemption would not be available to the appellant.
[123 A B] 119 (3) There is no substance in the contention that unless section 4 of the principal Act was also re enacted with the assent of the President, the liability for payment of duty cannot be fastened upon the appellant.
Section 3 of the Amending Act which deals with the incidence of duty makes it clear that such duty has to, be paid on the units of energy consumed or sold and at the rate or rates specified in the schedule.
As the duty is to be levied on the units of energy consumed or sold, it would follow that the duty would have to be paid by the consumer or seller as the case may be.
Section 4 of the.
principal Act merely provides for the manner and mode of payment of the duty.
[123 F G]
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ION: Criminal Appeal No. 52 of 1955.
Appeal from the judgment and order dated the 15th February, 1955, of the Calcutta High Court in Criminal Appeal No. 40 of 1955 arising out of the 751 judgment and order dated the 22nd January, 1955, of the Additional Sessions Judge, 24 Parganas, Alipore, in Trial No. 1 of January Sessions for 1955.
A. C. Roy Choudhari, K. R. Choudhari and Sukumar Ghosh, for the appellant.
A. C. Mitra, K. B. Bagchi and P. K. Bose, for the respondent.
October 24.
The following Judgment of the Court was delivered by SINHA J.
This appeal on a certificate granted by the High Court at Calcutta, under article 134(1)(c) of the Constitution, is directed against the order of a Division Bench of that Court, dated February 15, 1955, summarily dismissing an appeal from the judgment and order dated January 22, 1955, passed by the learned Second Additional Sessions Judge of Alipore, accepting the unanimous verdict of guilty returned by the jury holding the appellant guilty under section 376 of the Indian Penal Code, for having committed rape on a young girl, named Sudharani Roy, said to be about 14 15 years of age.
The learned trial judge, accepting the unanimous verdict of the jury and agreeing with it, imposed a " deterrent punishment " of rigorous imprisonment for 5 years, in view of the fact that he was in loco parentis to the large number of girls who were the inmates of the Nari Kalyan Ashram of which the appellant had been the secretary for a pretty long time.
The learned counsel for the State of West Bengal raised a preliminary objection that the certificate granted by the Bench of the Calcutta High Court presided over by the learned Chief Justice, was bad on the face of the judgment given by him while granting the certificate.
We have, therefore, first to examine whether the preliminary objection is sound.
As already stated, the Division Bench before which the appeal came up for admission, summarily dismissed it without giving any reasons.
Apparently, the Bench was not satisfied that there was any error of law or mis direction in the learned Sessions Judge 's charge to the jury which had returned a unanimous verdict of 752 guilty against the appellant.
On March 7, 1955, the Bench consisting of Chakravarty C. J. and section C. Lahiri J. passed the order to the effect that having heard the argument on behalf of the applicant for the certificate of fitness for the proposed appeal to this Court on March 4, they had the opportunity of reading through the charge delivered by the learned trial judge, and that they had " come to feel that before the application is disposed of, we should see the depositions in full.
" Accordingly, they directed the records of the original trial to be called for and placed before them.
The case, therefore, stood adjourned till the arrival of the records.
The matter was heard again on March 17, and on March 18, the learned Chief Justice delivered a judgment which appears at pages 220 to 231 of the record.
It is a full judgment giving the facts and history of the case and the evidence adduced on behalf of the prosecution.
The learned Chief Justice, in the course of his very elaborate judgment, observed that the " learned Judge delivered an exhaustive charge to the jury from which he does not appear to have omitted any part of the evidence which was of any materiality whatsoever.
The jury appear to have applied their minds critically. .
Having examined the grounds taken in the appeal as presented to the High Court, he made the following observations: " I have gone through the grounds taken in the petition of appeal to this Court and I have no hesitation in saying that if those were the grounds urged before the learned Judges, no one need be surprised that their Lordships saw nothing arguable or worth attention in the case.
Except one, not one of the grounds urged by Mr. Roy Choudhury before us is to be found in the petition of appeal. . ." On an examination, in great detail, of the grounds urged before the Bench hearing the application for certificate, the learned Chief Justice observed: " Mr. Roy Choudhury, however, urged before us six several points.
Except one, in respect of which there is something to be said, none of them impresses me.
" 753 It was not clearly indicated in the judgment what that single ground was.
The penultimate paragraph of the order passed by the learned Chief Justice, contains the following: " We are oppressed by the feeling that there were arguable points, although they might not bear examination and the accused has not had the satisfaction of feeling that he has been fully heard by the Court of appeal.
I would therefore grant him the leave he asks for, not because we take any view in his favour of the evidence in the case, but because justice should also appear to have been done and therefore the evidence ought to have received a full consideration by the appellate Court, although the result might be to confirm the conviction.
" We have set out the findings of the learned Chief Justice while granting "leave to appeal" to this Court, in his own words, to appreciate the reasons for granting " leave to appeal ".
It appears that the learned Chief Justice and his brother judge, contrary to the legal position that one Bench of the High Court has no jurisdiction to sit in judgment on the decision of another Division Bench, have, in fact, done so.
But in the instant case, the learned Chief Justice has gone further and observed that the summary dismissal of the appeal by the Criminal Bench, has not given satisfaction to the appellant that he had been fully heard, and that it did not appear to him that justice had been done.
Such observations are not conducive to the maintenance of a healthy atmosphere for the administration of justice in the highest Court in the State.
Furthermore, the observation almost amounts to a condemnation of the practice of summary dismissal of appeals, especially against orders passed in a case tried by a jury where the appellant has to make out clear grounds of law.
Such a practice prevails, so far as we know, in almost all the High Courts in India and has the sanction of the statute law as contained in the Code of Criminal Procedure.
This Court has repeatedly called the attention of the High Courts to the legal position that under 754 article 134(1)(c) of the Constitution, it Is not a case of granting leave" but of "certifying that the case is a fit one for appeal to this Court.
" Certifying " is a strong word and, therefore, it has been repeatedly pointed out that a High Court is in error in granting a certificate on a mere question of fact, and that the High Court is not justified in passing on an appeal for determination by this Court when there are no complexities of law involved in the case, requiring an authoritative interpretation by this Court.
On the face of the judgment of the learned Chief Justice, the leave granted cannot be sustained vide the case of Haripada Dey vs The State of West Bengal (1), and a number of decisions of this Court referred to therein.
In view of those authorities of this Court, it is clear that the certificate granted by the High Court is not a proper one.
The preliminary objection is, therefore, upheld.
But the appeal having been placed before this Court, we have to satisfy ourselves whether there are any grounds on which this Court would have granted special leave to appeal under article 136 of the Constitution.
In order to appreciate the grounds raised in support of the appeal by the learned counsel for the appellant, it is necessary to state the following facts: The appellant was the honorary secretary of a large institution for receiving and looking after young girls and women who had no homes of their own or had gone astray.
It is called the ' Nari Kalyan Ashram ' and is located in one of the quarters of the city of Calcutta.
The appellant in his capacity as the secretary, used to come to the Ashram daily in the evening at about 7 p.m., and stay there till mid night or past mid night.
In his office room, there was a bed stead with a bedding spread thereon.
He used to occupy the bed and requisition the services of girls to massage his body.
Between January and April, 1954, the accused who was in the 'habit of calling the girls named Sudharani, Narmaya, Kalyani and others, for that purpose, is said to have committed rape on those girls.
The subject matter of the charge in this case is the offence of rape said to have been 755 committed on the two girls Narmaya and Sudharani, one after the other, on the night of April 20, 1954.
On April 29, 1954, at about 10 p.m., the officer in charge of the Maniktala police station, accompanied by Sub Inspector Nirmal Chandra Kar, went to the Ashram in connection with collecting information regarding the escape of some girls from the Ashram.
Narmaya and Sudharani are said to have given information to the said officer in charge of the police station, alleging rape on them.
They also pointed out a steel locker in the room of the secretary, where, it was alleged, he used to keep rubber sheaths used by him before he had sexual intercourse with each of them.
The police officers aforesaid obtained the key from the appellant, with which the steel locker was opened and a leather bag inside the locker was pointed out by the girls.
The bag was found to have contained a rubber sheath along with other articles.
After recording the information, the police officer in charge of the Maniktala police station, investigated the case and submitted a charge sbeet against the appellant.
After the preliminary inquiry by a magistrate, the appellant was committed for trial to the Court of Session on a charge of rape upon the two girls, under section 376, Indian Penal Code.
The defence of the appellant was that the case against him was completely false and had been concocted by the police with the help of the inmates of the Ashram and the Assistant Secretary, Tarun Kumar Sarkar who was one of the prosecution witnesses.
At the trial, the prosecution examined 23 witnesses, in support of the case against the accused.
The two victims of the alleged outrage by the appellant, were examined, namely, Sudharani Roy, P.W. 2 and Narmaya, P.W. 5, who both deposed that the appellant used to come to the Ashram in the evening at about 7 p.m., and used to stay there till after mid night in his special room which contained a bedstead and a bedding and a steel almirah and other pieces of furniture.
On the &ate of the occurrence in question, first Narmaya was called in by the appellant and then Sudharani, and the appellant is said to have committed rape first on 96 756 Narmaya and then on Sudharani, in the presence of both of them, against their will and without their consent.
They further deposed that the appellant had intercourse with them after putting on the sheath.
In between the two acts, he had a cup of tea with which he swallowed " a black pill " which is suggested to have been an aphrodisiac.
The accused paid them each eight annas and warned them not to divulge those acts on pain of being severely dealt with, if they disclosed the same.
Kalyani, P.W. 19, is another young girl who was an inmate of the Ashram on the material dates.
She is a girl who was both deaf and dumb, and her intelligence was below normal.
As she was feeble minded, she was not allowed to continue her studies at the school.
She has given evidence by signs which were interpreted by the principal of the Deaf and Dumb School, who had taught her at that school.
Her evidence, if accepted, would be a corroboration of the testimony of the victims aforesaid of the outrageous act of the appellant.
Besides this direct oral testimony, there was also evidence tending to show that the appellant was in the habit 'of having himself massaged at night by the girls of the Ashram, and that the police found a rubber sheath in his bag kept in the steel locker inside his special room.
There was also the evidence of a woman employee of the Ashram that she had been asked by the ' appellant to keep a number of rubber sheaths which she had buried underground, and which on her pointing out, had been discovered by the police.
There was also the evidence of a complaint made the next day by the victim girls to the assistant secretary when be came to the Ashram in connection with his work there.
The prosecution also led evidence to show the age of the girl Sudharani to be below 16.
It produced the register of the girls in the Ashram which has a column for mentioning the age of the inmates.
The estimate of her age by medical evidence, was given after X ray examination and the stage of ossification and other indicia for determining the age of a person.
The medical estimate of her age was that she was between 13 and 757 14 years on the date of the X ray examination, that is May 19, 1954.
That, in barest outline, is the prosecution case and the evidence adduced in support of it.
Beyond cross examining the prosecution witnesses and pointing out contradictions and omissions in their evidence, the accused did not adduce any positive evidence in support of his defence.
The appellant was tried by a jury assisted by the learned Additional Sessions Judge at Alipore.
The jury returned a unanimous verdict of guilty against the accused in respect of the charge of committing rape on Sudharani and a unanimous verdict of riot guilty in respect of the charge of rape on Narmaya.
The jury answered the judge 's question as regards the charge with respect to Narmaya in these words: "Not guilty as we found with consent and she is above 16 years of age." As the jury did not give any such clue in respect of their verdict of guilty so far as rape on Sudharani was concerned, it is difficult to say whether they found consent in her case also, and returned a verdict of guilty because they were of the opinion that she was under 16 years of age.
In this Court, the learned counsel for the appellant raised a large number of contentions, but as most of them concerned the appreciation of evidence with reference to omissions and contradictions, it is not necessary to deal with those arguments.
It is only necessary to notice the following points raised, namely, (1) that the learned judge refused permission to counsel for the appellant to read out the written statement filed on behalf of the appellant at the Sessions stage, (2) that there was a serious misdirection in respect of corroboration of the testimony of the alleged victims of rape, and (3) that the direction as to the age of the girl Sudharani was not complete.
In our opinion, there is no substance in any one of these contentions.
Firstly, as regards the refusal to permit the written statement of the accused being placed before the jury, it has to be observed that there is no provision in the 758 Code of Criminal Procedure for such a written statement being filed at the Sessions stage.
Section 256(2) which occurs in Chapter XXI, headed " Of the trial of Warrant Cases by Magistrates ", does contain the specific provision that if the accused person puts in a written statement, the magistrate shall file it with the record.
But there is no corresponding provision in the Code, requiring a Sessions Court to accept a written statement at that stage on behalf of the accused.
But the accused has the right to make a statement under section 342 of the Code, which has to be considered by the Court for what it is worth.
In a jury trial, the Court has got to be circumspect to see that nothing is allowed to be placed before the jury which is not evidence.
It is not necessary to decide whether in the case of a Sessions trial without a jury, such a statement is receivable.
But if such a written statement is allowed to be used at a Sessions trial by a jury, it may throw the door open to irrelevant and inadmissible matter and, thus, throw an additional burden on the presiding judge to extricate matter which was admissible from a mass of inadmissible statements which may have been introduced in the written statement.
In view of these considerations, in our opinion, the learned Sessions Judge rightly refused to allow the written statement put in by the appellant, to be read out before the jury.
On the question of corroboration, the learned judge in his charge to the jury, has, at more than one place, pointed out the necessity of corroboration of the evidence of the victims of the alleged crime.
Referring to the evidence of Kalyani, P.W. 19, aforesaid, the learned judge has charged the jury in these terms: ". whether her evidence is a corroboration with respect to the committing of rape by accused on Sudharani Roy on 20th April, 1954.
If the evidence of Kalyani appears unreliable to you or the evidence of Tarun, there remain the uncorroborated testimonies of Sudharani and Narmaya.
The rule of prudence demands that it is unsafe to convict an accused on the uncorroborated testimony of an accomplice or accomplices.
But I must tell you, gentlemen, that it 759 is within your legal province to convict upon such unconfirmed evidence, provided you can come to the conclusion in the particular circumstances of this case that corroboration can be dispensed with.
" It will be noticed that if the learned judge has made any mistake, the mistake is in favour of the accused and.
not against him in so far as the learned judge refers to the evidence of the two girl victims as that of accomplices.
A girl who is a victim of an outrageous act is, generally speaking, not an accomplice though the rule of prudence requires that the evidence of a prosecutrix should be corroborated before a conviction can be based upon it.
Hence, the girl Sudharani was not exactly in the position of an accomplice though the judge may, as a rule of prudence, warn the jury that such a rule of prudence required corroboration of the testimony of the prosecutrix, but that it was open to the jury to convict even on the uncorroborated testimony of the prosecutrix if the jury, in the particular circumstances of the case before it, came to the conclusion that corroboration was not essential to conviction.
Hence, the learned Sessions Judge was fully justified in telling the jury that there was no rule of law or practice that there must be corroboration in every case, before a conviction for rape.
If the jury had been apprised of the necessity, ordinarily speaking, of corroboration of the evidence of the prosecutrix, it is for the jury to decide whether or not it will convict on the uncorroborated testimony of a prosecutrix in the particular circumstances of the case before it.
In other words, insistence on corroboration is advisable but is not compulsory in the eye of law.
In the instant case, apart from the evidence of the two victims aforesaid, there was the evidence of the deaf and dumb girl, Kalyani, and the other circumstantial evidence in support of the prosecution case.
It is well established that the nature and extent of corroboration, necessary, vary with the circumstances of each case.
The nature of the corroborative evidence should be such as to lend assurance that the evidence of the prosecutrix can be safely acted upon.
See, in this connection, the observations of this Court in the case 760 of Rameshwar vs The State of Rajasthan (1) to the following effect: "The only rule of law is that this rule of prudence must be present to the mind of the judge or the jury as the case may be and be understood and appreciated by him or them.
There is no rule of practice that there must, in every case, be corroboration before a conviction can be allowed to stand.
" Lastly, we do not find anything basically wrong with the direction in the charge to the jury as regards the age of the girl Sudharani and as to the nature of the evidence to prove her age.
The learned judge pointed out the several items of evidence which had been adduced by the prosecution bearing on the question of the girl 's age.
The only conclusive piece of evidence may be the birth certificate, but, unfortunately, in this country such a document is not ordinarily available.
The Court or the jury has to base its conclusions upon all the facts and circumstances disclosed on examining all the physical features of the person whose age is in question, in conjunction with such oral testimony as may be available.
The girl 's father was dead.
Her mother apparently has left her to her own fate, and according to the evidence of the police, the mother 's whereabouts were not traceable.
It was sought to be argued that the police officer who himself made the inquiry, should have been examined, otherwise, the result of the inquiry is a mere hearsay.
An inquiry whether made by one or the other police officer, would, almost in every case, be the result of hearsay.
The girl is said to be a displaced person.
The difficulty of tracing evidence of the parents of such a person is all the greater.
Hence, in all the circumstances of the case, the learned Sessions Judge has not committed any error in this part of his charge to the jury.
On this part of the case, the learned judge gave the following concluding directions: " In criminal trial the accused must get the benefit of doubt and there should not be any conviction unless it can be clearly and unequivocally said that (1) 761 the age of the girl was below 16.
But, gentlemen, in this case you have seen the girls, you have heard the evidence of the experts and you should also take into consideration the various factors found out in cross examination and in considering all these facts you can arrive at the conclusion that Sudharani Roy was under 16 years of age on the night of the occurrence on 20th April, 1954, taking into consideration the facts that ossification test is not a sure guide, even in spite of this, you can come to the conclusion that Sudharani Roy was under 16 years of age on the night of the occurrence, i.e., on 20th April, 1954.
1 would tell you, gentlemen, that the question of consent would be immaterial." In our opinion, the learned Sessions Judge placed the evidence pro and con very fairly and fully, and left it to the jury to come to their own conclusion.
According to the medical evidence, Sudharani was between 13 to 14 years of age on the relevant date, whereas the other girl in respect of whom, the accused was acquitted, was found by the medical test to be between 15 and 16 years.
The jury, therefore, took the commonsense point of view and appeared to have come to the conclusion that Narmaya may well have been above 16, and that, therefore, the accused could not be convicted for rape on her.
In respect of the girl Sudharani, they may have come to the conclusion that she was not above 16, and that, therefore, the prosecution had succeeded in bringing the charge home to the accused.
We have read the charge of the learned judge to the jury more than once, and, in our opinion, it is a very fair and full charge, erring more on the side of verbosity than of brevity.
In our opinion, there is no merit in the appeal.
It is accordingly dismissed.
Appeal dismissed.
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Appellant was tried by the Sessions judge and a jury on the charge of committing rape.
On the question of the age of the girl expert medical evidence was produced but no birth certificate was available.
The father of the girl could not be examined as he was dead.
According to the Police evidence the whereabouts of the mother were not traceable but the Police Officer who himself made the inquiry was not produced.
As regards the commission of the rape the girl herself was examined and there was the evidence of another girl and some circumstantial evidence.
The 750 accused filed a written statement but the judge refused to read it out to the jury.
The jury returned a unanimous verdict of guilty and the judge, accepting the verdict, convicted the appellant and sentenced him to 5 years rigorous imprisonment.
An appeal to the High Court was summarily rejected.
But the High Court granted "leave to appeal" on the ground that on account of the summary dismissal of the appeal appellant did not have the satisfaction of feeling that he had been fully heard and that justice should also appear to have been done by a full consideration of the evidence by the appellate court.
Held that, the certificate granted by the High Court amounts to a condemnation of the practice of summary dismissal of appeals, especially in jury trials.
Such practice prevails in most High Courts and has the sanction of statute law.
No certificate should be granted on a mere question of fact nor in a case where there are no complexities of law involved requiring an authoritative interpretation by the Supreme Court.
Haripada Dey vs The State of West Bengal, ; , followed.
There is no provision in the Code of Criminal Procedure requiring a Session judge to accept a written statement filed by an accused.
If such a written statement is allowed to be used at a Sessions trial by jury, it may throw the door open to irrelevant and inadmissible matter and cast an additional burden on the judge of separating admissible from inadmissible statements.
The judge had rightly refused the written statement to be read to the jury.
There is no rule of law or practice that there must be cor roboration of the testimony of the prosecutrix, before conviction for rape.
If the jury had been appraised of the necessity of corroboration, it was for the jury to decide whether or not it would convict on the uncorroborated testimony of the prosecutrix in the particular circumstances of the case before it.
Rameshwar vs The State of Rajasthan, , followed.
There was no misdirection on the question of the age of the girl.
The Session judge had pointed out the several items of evidence to the jury.
The failure of the prosecution to examine the Police Officer who actually made inquiry into the whereabouts of the mother does not affect the case as in any case the inquiry would be the result of hearsay.
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538.txt
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Appeal Nos.
491 544 of 1991.
From the Judgement and Order dated 12.12.1990 of the Bombay High Court in W.P. Nos.
2646, 2659, 2651, 2649, 2657, 2664, 2648, 2647, 2666, 2658, 2662, 2663, 2667, 2665, 2691, 2693, 2694, 4091, 4098, 4155, 2743, 2789, 2791, 2790, 2740, 4290, 2824, 2858, 2848, 3052, 2863, 2848, 2844, 2843, 2832, 2852, 4846, 4844, 3312, 5101, 5102, 3313, 3207, 3064, 3005, 3335, 3188, 5123, 3514 and 4844 of 1990.
T.R. Andhyarujana, S.N. Wakharia, P.H. Parekh, D.Y. Chandrachud and Ms. Shalini Soni for the Appellant.
P. Chidambaram, Arun Jaitley, I.R. Joshi, M.N. Shroof, Ms. Indu Malhotra, Ms. Alka Mukhija, Harish N. Salve, Ms. Shireen Jain, J.P. Cama, Mukul Mudgal, Mrs. Urmila Sirur, Dileep Pillai, P. Kesava Pillai, Kailash Vasdev and Vimal Dave for the Respondents.
The Judgement of the Court was delivered by K. RAMASWAMY, J. We have heard the learned counsel on either side and grant special leave to appeal in all the cases.
The quest for just result to save the precious academic years to the students while maintaining the unsullied examination process is the core problem which the facts have presented for solution.
The appeals arise from the common judgement of a Division Bench of the Bombay High Court in Writ Petition No. 2646 of 1990 and batch.
The appellant for short 'the Board ' conducted secondary examinations in the month of March 1990, whereat the marks awarded, after the formalities of valuation by the examiners of the answer sheets in each subject; the random counter check by the moderators and further recounting at the Board, Moderators ' mark sheets sent to Pune for feeding the computer to declare the results were found tampered with the appellant.
Thereon, admittedly, it was found that moderators ' mark sheets relating to 283 examinees which include 53 respondents in these appeals were tampered, in many a case in more than 2 to 8 subjects, and in few cases in one subject.
As a result, 214 examinees have improved their ranking, which would be in some cases exceptionally good.
The declaration of their results were 780 withheld pending further enquiry and the rest declared on June 30, 1990.
Several writ petitions were filed in the High Court against non declaration of the results and the High Court directed to take expeditious action to declare the results of the examination within the specified time.
The Board appointed seven enquiry officers to conduct the enquiry.
Show cause notices were issued to the students on July 30, 1990 informing them of the nature of tampering, the subjects in which the marks were found tampered with, the marks initially obtained and the marks increased due to tampering, and also indicated the proposed punishment, if in the enquiry it would be found that marks were tampered with the knowledge or connivance or at the instance of the candidates or parents or guardians.
They were also informed that they would be at liberty to inspect the documents at the Divisional Board at Bombay.
They were entitled to adduce documentary and oral evidence at the hearing.
They will also be permitted to cross examine the witnesses of the Board, if any.
They would not be entitled to appear through an Advocate, but the parents or guardians would be permitted to accompany the students at the time of enquiry, but they are not entitled to take part in the enquiry.
The candidates submitted their explanations denying the tampering and appeared before the Enquiry Officers on August 8, 9, 10, 20, 21 and 22, 1990.
At the enquiry, each student inspected the record.
A questionnaire was given to be filled in writing.
Every candidate was shown his answer book, marks awarded in the subject/subjects and the tampered marks in the moderators ' mark sheets.
All the candidates admitted that the marks initially awarded by the examiner were tampered in the moderators mark sheets; due to tampering the marks were increased and the increase was to their advantage.
However, they denied that either they or their parents or guardians were privy to the tampering.
The Enquiry Officers submitted their reports holding that the moderators mark sheets have been fabricated and submitted the reports to the Board.
The Standing Committee constituted in this regard considered the records and the reports on August 29, 1990, discussed pros and cons and expressed certain doubts about the possibility of the candidates/parents/guardians committing fabrication.
They sought for and obtained legal opinion in that regard.
On August 30, 1990 the standing committe resolved to with hold, as a measure of punishment, the declaration of the results of their examinations and to debar the 283 students to appear in the supplementary examination to be held in October, 1990 and March, 1991.
The notification was published on August 31, 1990 and submitted the report to the High Court.
There after the High Court considered the cases on merits.
The learned Judges by separate but concurrent judgements allowed the writ petitions.
781 Sugla, J. held that the Standing Committee of the Divisional Board under the Maharashtra Secondary and Higher Secondary Education Board Act of 1965 for short 'the Act ' was devoid of power.
It did not obtain the approval of the Divisional Board, and therefore, the impugned notification was without authority of law.
On merits also it was held that the Standing Committee did not apply its mind in the proper perspective to the material facts.
Therefore, the finding that tampering was done at the instance of the examinees/parents/guardians is perverse.
Bharucha, J. without going into the jurisdictional issue agreed with Sugla, J. and held that the preponderance of the probabilities would show that the examinees were not guilty of the malpractices.
The guilt has not been established.
The examinees might well be innocent.
Accordingly, the impugned notification dated August 31, 1990 was quashed.
Mandatory injunction was issued to Board to declare the results of 253 examinees within two weeks from the date of the judgement and marks were directed to be communicated to the examinees within a period of two weeks thereafter.
The admitted facts are that the mark sheets of the examiners were not tampered.
Only the moderators ' mark sheets were tampered.
As per the procedure, after the marks were scrutinized at the State Board and found the marks tallied and to be correct, the moderators ' mark sheets were sent to the computer at Pune, obviously in sealed packets, for feeding the results.
After the date of recounting the marks in the office of the State Board at Bombay and before the d ate of taking them to feed the computer, moderators ' mark sheets, were tampered.
The individual students were put on notice of the marks they originally obtained and the tampered marks in the subject/subjects concerned.
They were also given the opportunity to lead evidence on their behalf and if the witnesses were examined on behalf of the Board they would be permitted to cross examine them.
They inspected the records.
The questionnaire given to all the examinees at the enquiry were before us at the hearing including the 53 respondents in the appeals.
We have persued the questionnaire.
It is clear from the answers given to the questionnaire that all the examinees admitted the marks they originally got and the tampered marks on the moderators ' mark sheets.
They also admitted that the tampering was to their advantage.
Everyone denied the complicity of either of the candidates or the parents or the guardians.
Thus it is clear that at the enquiry there is no dispute that the moderators ' mark sheets were tampered, though the candidates, obviously and quite expectedly, denied their complicity in that regard.
Due to tampering 214 would have been passed and 69 accelerated their ranking and percentage to seek admis 782 sion into prestigious institutions.
The racket of large scale tampering wading through 80,000 moderators ' mark sheets obviously was done by concerted action.
It is clear that from large body of moderators ' mark sheets, it is not possible to pick the marks sheets of the concerned examinee alone unless there is concerted and deliberate efforts, in conspiracy with some members of the staff entrusted with the duties in this regard, for illegal gratification.
It is also not an innocent act of mere corrections as is sought to be made out by Sri Chidambaram, the learned counsel for the respondents.
We have no manner of doubt that unfair means were used at the final Secondary Examination held in March 1990, by fabricating the Moderators ' mark sheets of 283 examinees, in a concerned manner, admittedly, to benefit the students concerned.
The first question, therefore, is whether the Standing Committee of the concerned Divisional Board has power under the Act and Regulations to enquire into the use of unfair means committed at the final examination conducted under the Act.
Section 4 of the Act declares that the State Board of Secondary and Higher Secondary Education is a body corporate.
Section 18 enumerates the powers and duties of the State Board.
Clause (t) of Sec.
18 empowers the Board to make regulations for the purpose of carrying into effect the provisions of the Act.
Clause (g) empowers the Board to give to the candidates certificates after passing final examination.
Clause (m) empowers to recommend measures and to prescribe conditions of discipline.
Clause (w) gives residuary power to do all such acts and things as many be necessary to carry out the purposes of the Act.
Section 19 gives powers and entrust duties to the Divisional Board of each division.
Clause (f) postulates, "to conduct in the area of its jurisdiction the final examination on behalf of the State Board.
" Clause (1) provides, "to deal with cases of use of unfair means according to the procedure laid down by the State Board.
" Section 23 provides that power of appointments of the Committees by the State Board.
Sub Section (2) thereof provides that: "The State Board may appoint such other Committees as it thinks necessary for the efficient performance of its functions." Equally sub section (3) of Sec.
23 empower thus: "Each Divisional Board shall appoint Committees designated as follows: (d) Examination Committee.
783 Sub Section (5) states thus: "The constitution of every committee appointed by the State Board or a Divisional Board, the term of office of its members and the duties and functions to be discharged by it shall be such as may be prescribed.
" Section 36 empowers the State Board to make regulations for the purpose of carrying into effect the provisions of the Act.
Sub section (2) thereof states that: "In particular and without prejudice to the generally of the foregoing power, such regulations may provide for all or any of the following matters, namely: (a) the constitution, powers and duties of the Committees.
appointed under section 23; . . (f) the arrangement for the conduct of final examinations by the Divisional Board and publication of results; . . (n) any other matter which is to be or may be prescribed under this Act.
" Sub section (3) provides: "No regulation made under this section shall have effect until the same has been sanctioned by the State Government" Thus it is clear that the State Board is empowered to constitute the Divisional Boards and the Standing Committees.
The State Board is also empowered to make regulations to conduct examinations and also to deal with the use of unfair means at the final examination conducted by the Board.
The Divisional Board is empowered to conduct within its area the final examinations on behalf of the State Board.
The Divisional Board is also empowered to deal with the cases of unfair means according to the procedure laid down by the State Board.
The State Board made regulations named as Maharashtra Secondary and Higher Secondary Education Board Regulations 1977 which came into force with effect from July 11, 1977.
Regulation 9(2) (xviii) read thus: 784 "to lay down the procedure and specify the penalties to be followed by the Divisional Boards, in dealing with cases of use of unfair means by persons seeking admission to or appearing at the examinations conducted under the authority of the State Board.
" Under Regulations 14 the Standing Committee of the Divisional Board was to be constituted under sub regulation (1) thereto.
Sub regulation (2) provides: "Subject to the provisions of the Act and the Regulations, the Standing Committee shall have the following duties and functions, namely . . (x) to deal with cases of use of unfair means by persons seeking admission to or appearing at the final examinations, according to the procedure laid down by the State Board.
" By a resolution passed at the meeting of the State Board held on October 26, 1985, Exhibit 'z ' provides the procedure for enquiry.
Clause 3(f) defines 'misconduct ' as follows: "Misconduct" shall mean any illegal or wrongful act or conduct which is alleged to have been resorted to by any candidate and/or any member of staff, at, for or in respect of the final examination and, without prejudice to the generality of the foregoing, shall include. . tampering with the documents issued by the Board or otherwise howsoever changing a candidate 's results in any manner whatsoever and generally acting in such a manner so as to affect or impede the conduct of the final examinations and fair declaration of results thereof.
" Clause (4) empowers to conduct an enquiry either suo moto or on a complaint about any misconduct and the procedure in that regard so that the Chairman of the Divisional Board may entrust the enquiry into the alleged misconduct to any member or members of the Divisional Board other than the members of the Standing Committee.
Clause (5) empowers to entrust the enquiry.
The Enquiry Officer shall give a notice in writing to the candidate . setting forth the nature of the misconduct alleged against the candidate and call upon the candi 785 date to show cause within the time specified therein.
It also empowers to set out the punishment proposed to be imposed on a candidate.
Clause 5(b) gives an opportunity to the candidates to inspect the relevant documents proposed to be relied upon at the enquiry.
Clause 6 gives opportunity to the delinquent to submit an explanation; to produce his witnesses as well as documentary evidence and to be heard in person, if he/she so desires, but shall not be entitled to be represented by an Advocate or any other persons.
The delinquent shall be bound to answer truthfully to all questions relevant to the subject of enquiry that may be put to him/her by the Enquiry Officer .
Clause (10) provides that the concerned Enquiry Officer shall submit the report in writing including the findings and the proposed punishment.
Clause 11 provides thus: "The Standing Committee shall consider the report and decide the case as it may deem fit.
The Standing Committee will take the decision in the same meeting.
" Clause (12) states thus: "The Standing Committee shall not be bound to give detailed reasons in support of its order or decision but shall record its reasons if it disagrees with the findings of recommendations of the inquiry officer and under such circumstances the Standing Committee need not give hearing to the delinquent concerned." Other clauses are not relevant for the purpose of this case.
Hence omitted.
The Board also in its meeting held on October 26, 1985 framed rules in Appendix 'A ' providing under different heads the nature of the offence and the quantum of punishment, the relevant item 16 reads thus: "Tampering with the Secondary/Higher Secondary School Certificate and/or statement of marks or their copies and any other documents issued by the Board.
" Cancellation of performance of the Examination and debarring the candidate for five more examinations and/or to lodge complaint by the concerned institution/Authority to Police Department.
Thus a conspectus of these relevant provisions of the Act, regulations 786 and resolutions clearly cover the entire field of operation regarding the use of unfair means at the final examinations specified the competent authorities and the procedure to deal with the same.
The Divisional Board undoubtedly has been empowered under Sec.
19 of the Act to deal with the use of unfair means at the final examination.
It may be made clear at this juncture that the Standing Committee consists of six members of the Divisional Board and none of them associated with the enquiry.
Enquiry Officers are also the members of the Divisional Board.
The regulations provide the procedure in this regard.
It is undoubtedly true as contended by Shri Chidambaram, that the Act empowers the Divisional Board to deal with the use of unfair means at the final examination.
But to give acceptance to the contention that the Standing Committee is an alien body to the Divisional Board is to do violence to the scheme of the Act and Regulations.
It is seen that under the scheme of the Act and Regulations the State Board is empowered to constitute the Standing Committee.
Equally the Divisional Board is empowered to constitute the committees which include the Examination Committee.
The members thereof are only members of the Divisional Board.
Equally the Inquiry Officers are also the members of the Divisional Board other than the members of the Education Standing Committee.
The Standing Committee is an executive arm of the Divisional Board for the efficient and expeditious functioning of the Board as adumbrated under the Act itself.
It is not a foreign body.
Therefore, when the Divisional Board is acting in conducting the examinations and dealing with the use of unfair means at the final Examination, it is acting on behalf of the State Board as its agent.
When the enquiry was conducted by some members and the Standing Committee was taking the decision thereon, it is acting on behalf of the Divisional Board.
There is no dichotomy but distribution of the functions.
Therefore, when the Standing Education Committee takes the decision its decision is on behalf of the Divisional Board to which they are members and the decision of the Divisional Board to which they are members and the decision of the Divisional Board in turn is on behalf of the State Board.
This is the integral scheme woven by the Act and Regulations.
Thus under the scheme of the Act, for the efficient and expeditious function of the concerned Boards; implementation of the provisions of the Act, and to prevent use of unfair means at the final examination including tampering the result of the examination, the Standing committee is clearly within its power to take final decision.
On a fair and harmonious reading of the relevant provisions and given their due scope and operational efficiency, we are of the considered view that the Examination Standing Committee of the Divisional Board itself a statutory body acted on behalf of the Divisional Board and is not a delegate of the Divisional Board.
787 In State of U.P. vs (Batuk Deo Pati Tripathi & Anr.,) the respondent was appointed as a Munsif in the State Judicial Service and was later promoted as a District Judge.
The Administrative Committee of the High Court reviewed the service and the Committee recommended to the State Government and communicated to all the Judges of the recommendation to compulsarily retire the respondent from service.
The Govt.
accordingly retired the respondent compulsarily which was challenged in a writ petition.
A Full Bench of the Allahabad High Court held that the District Judge cannot be retired from service on the opinion formed by the Administrative Committee and all the Judges should have considered and made recommendation.
Accordingly, the order was set aside.
On appeal, the Constitution Bench of this Court held that article 235 of the Constitution provides control over the District Judges and the Court subordinate thereto shall be vested in the High Court.
It is open to the High Court to make rules to exercise the power of control feasible, convenient and effective.
Accordingly the High Court regulated the manner of appointment of a Committee to screen the service record.
Thus, the rules framed prescribed the manner in which the power has to be exercised.
Truely, it is regulatory in character and the powers were exercised by the Committee and recommended to the State Govt.
to compulsarily retire the respondent and it amounts to taking a decision on behalf of the High Court.
In (Khargram Panchayat Samiti vs State of West Bengal & Ors.,) [1987] 3 SCC 82 at p. 84 the facts were that the cattle fairs run by the two rival organisations would be held on specified different dates which were impugned in the jurisdiction to pass such a resolution.
The High Court held that the Samiti was vested with power to grant licence to hold the fair under Sec. 117 of West Bengal Panchayat Act, 1973.
In the absence of any rules framed in that regard it had no power to specify dates on which such Hat or fair shall be held.
While reversing the High Court 's judgement, this Court held that the general administration of the local area vested in the Samiti which had power to grant licences to held fair or hat under Sec. 117 of the Act.
Necessarily it carries with it the power to supervise, control and manage such a hat or fair within its territorial jurisdiction.
The conferment of the power to grant a licence for holding of a hat or a fair includes the power to make incidental or consequential order for specification of a date on which such a Hat or fair shall be held.
Accordingly, the resolution of the Samiti was upheld.
In (Baradakanta Misra,) vs (High Court of Orissa & Anr.,) [1976]B Suppl.
SCR 561 relied on by Sri Chidambaram, the facts were that then appel 788 lant while acting as a District Judge, an enquiry into certain charges was held against him, and was reduced to Addl.
District Magistrate (Judicial).
He refused to join the duty.
Fresh proceedings were initiated against him and after enquiry the High Court dismissed him on the ground that he was convicted on a charge of a criminal attempt.
An appeal was filed to the Governor and a Writ petition followed thereafter filed in the High Court were dismissed, while allowing the appeal filed under Article 136.
The scope of the words "control" and "deal" used in Article 235 were interpreted at page 576 P&G and held that the word 'control ' includes something in addition to the disciplinary jurisdiction.
The control is with regard to conduct and discipline of the District Judges and Subordinate Courts and includes right to appeal against the order of the High Court in accordance with the condition or service includes an order passed thereon.
The word 'deal ' also includes the control over disciplinary and not mere administrative jurisdiction.
The control which is vested in the High Court is complete control subject only to the power of the Governor in the matter of appointment including initial posting and promotion of the District Judge and dismissal, removal and reduction in rank of the District Judges within the exercise of the control vested in the High Court.
The High Court can hold enquiries, impose punishments other than dismissal or removal subject, however, to the conditions of service to a right of appeal, if granted by the conditions of service, and to the giving of an opportunity of showing cause as required by Clause (2) of article 311 unless such an opportunity is dispensed with by the Governor acting under the provisos (b) and (c) to that clause.
The High Court alone could make enquiries into disciplinary conduct.
It was held that the High Court had no jurisdiction to dismiss the District Judge.
Accordingly it was quashed.
That ratio has no application to the facts in this case since the Act, Regulations and the Resolutions empowered the Divisional Board and its Standing Committee to deal with use of unfair means at final examinations including fabrication of documents issued by the Board as an integral part of the power of the Divisional Board.
Similarly, the ratio in (Taj Pal Singh (dead) through Lrs) vs State of U.P. & Anr., also is inapplicable to the facts of this case.
In that case, the facts were that while the appellant was working as the District and Sessions Judge, the Stage Govt.
moved the High Court to his premature retirement.
The Administrative Judge agreed with Government 's proposal to retire the appellant after giving him three months ' notice, the Governor passed the impugned order compulsorily retiring the appellant.
Three days thereafter the Administrative Committee had approved the opinion of the Administrative Judge which was transmitted to the Government.
789 Assailing the action of the Government the writ petition was filed which was dismissed by the High Court, but on appeal this Court held that the Administrative Judge was not competent to recommend to the Governor or compulsorily retire the District and Sessions Judge and the order of the Government made pursuant thereto was declared illegal.
This Court reiterated that the High Court has power under article 235 to make rules for its administrative convenience, but since the impugned action was not in pursuance of that rule, the action was not upheld.
That ratio also renders little assistance to the respondents for the reasons that the Standing Committee, as stated earlier is an integral part of while exercising the powers, under article 226 or article 136 of the Constitution, by the High Court or of this Court, are not sitting Committees (domestic enquiry body), nor have power to evaluate the evidence as an appellate Court and to come to its own conclusions.
If the conclusions reached by the Board can be fairly supported by the evidence on record then the High Court or this Court has to uphold the decision, though as appellate Court of facts, may be inclined to take different view.
The contention of M/s. Chidambaram, Jaitley, Salve and Cama, the learned counsel for the students, is that the students were minors; neither the parents nor anybody like an Advocate was permitted to assist the students.
Answers to the questionnaire were extracted from the students to confess their guilt.
No adequate opportunity was given to the students at the enquiry.
No one on behalf of the Board acquainted with the Divisional Board.
Accordingly the Board must be deemed to have passed the impugned notification as per the scheme of the provisions of the Act and the Regulations.
Therefore, the finding of the learned Judge Sugla, J. that the Standing Committee had no power to take the impugned decision, etc.
without approval of the Divisional Board is clearly illegal and cannot be sustained.
The question then is whether the candidates or their parents or guardians are privy to the fraudulent fabrication.
Since we are informed that investigation in this regard by the Police is in progress, we refrain to express any final opinion in this regard.
Suffice to state that the records clearly establish that there was a fraudulent fabrication of the moderators ' marks sheets of 283 candidates including the respondents herein.
The question, therefore, emerges whether the conclusion reached by the Standing Committee that the fabrication was done at the behest of either the candidate or the parents or the guardians to 790 their advantage is based on records.
We remind ourselves that the facts was examined to explain as to how the moderators ' sheets were dealt with after the board screened the marks, but before taking to Pune to feed the computer, nor an opportunity was given to cross examine them.
The evidence without subjecting it to cross examination is of no value.
Enquiry report is not a report in the eye of law.
It does not contain any statement of facts, nor reasons recorded.
It merely records conclusions.
When seven members were appointed it is not expected that all of them would submit uniform stereo typed reports to the Standing Committee.
The Standing Committee did not apply its mind to the facts, nor recorded reasons in support of its conclusions that the examinees/parents/guardians were parties to the fabrication and the fabrication was done at their behest.
Sri Chidambaram further contended that the Board should establish the guilt of the examinees beyond all reasonable doubts.
Shri Jaitley, Sri Cama and Sri Salve though did not support Sri Chidambaram that the standard of proof must be beyond all reasonable doubt, they argued that Standard of proof must be a high degree akin to trial in a criminal case.
The Board did not discharge its duty, on the other hand the Board had presumed that fabrication was done for the benefit of the examinees.
The test of benefit to an examinee is preposterous.
There is no presumption that the fabrication was done at the behest of either the examinees/parents/guardians.
It must be established by the Board as of fact that the examinees/parents/guardians were responsible for fabricating the Moderators ' mark sheets.
Thus no evidence was placed on record, nor wait proved; that, therefore, the findings of the Standing Committee are clearly based on no evidence.
The learned Judges of the High Court were justified in reaching the conclusion that the Board had not established that the fabrication was done at the behest of the examinees/parents/guardians.
This was resisted by Sri T.R. Andhyarujana, learned counsel appearing for the Board.
It was his contention that all the examinees admitted in answers to the questionnaire that tampering was done and it was to their advantage.
In view of the admission, the need to examine any person from the concerned section was obviated.
Fabrication cannot be done except to benefit the examinees.
The fabricator had done it for reward in concert with outside agencies.
Therefore, the inference from these facts drawn by the Standing Committee that the examinees/parents/guardians were responsible to fabricate the moderators ' marks sheets is based on evidence.
Proper enquiry was conducted giving reasonable opportunity to the candidates.
Show cause notices set out the material facts on which the Board intends to place reliance.
The examinees submitted their explanations and also answered the questionnaire.
On consideration 791 thereof the Standing Committee had reached the conclusions of the guilt of the examinees/parents/guardians.
This is based on record.
It is not open to High Court to evaluate the evidence to come to its own conclusions.
Thereby the High Court has committed manifest error of law warranting interference by this Court.
article 51A of the Constitution enjoins every citizen, as a fundamental duty, to promote harmony and spirit of common brotherhood among the people, to develop the scientific temper, humanism and the spirit of inquiry and reform; to strive towards excellence in all spheres of individual and collective activity so that the nation constantly rises to higher levels of endeavour and achievement.
article 29(2) declares education as fundamental right.
The native endowments of men are by no means equal.
Education means a process which provides for intellectual, moral and physical development of a child for good character formation; mobility to social status; an opportunity to scale equality and a powerful instrument to bring about social change including necessary awakening among the people.
According to Bharat Ratna Dr. Ambedkar education is the means to promote intellectual, moral and social democracy.
In D.M.K. Public School vs (Regional Joint Director of Hyderabad,) AIR 1936 (A.P.) 204 one of us (K. Ramaswamy, J.) held that education lays foundation of good citizenship and a principal instrument to awaken the child to intellectual and cultural pursuits and values in preparing the child for latter professional training and help him to adjust to the environment.
In nation building activities, education is a powerful level to uplift the poor.
Education should, therefore, be co related to the social, political or economic needs of our developing nation fostering secular values breaking the barriers of casteism, linguism, religious bigotry and it should act as an instrument of social change.
Education system should be so devised as to meet these realities of life.
Education nourishes intellectual advancement to develop dignity of person without which there is neither intellectual excellence nor pursuit of happiness.
Education thus kindles its flames for pursuit of excellence, enables and ennobles the young mind to sharpen his/her intellect more with reasoning than blind faith to reach intellectual heights and inculcate in him or her to strive for social equality and dignity of person.
Teacher occupies pride of place next below the parents as he/she imparts education and disciple the students.
On receiving salary from public exchequer he/she owes social responsibility and accountability 792 to disciple the students by total dedication and sincere teaching.
It would appear that their fallen standards and rectitude is also a contributory factor to the indiscipline among the students.
The students, too, instead of devoting his or her precious time to character building and to pursue courses of study studiously and diligently in the pursuit of knowledge and excellence, dissipate their precious time and many indulge in mass copying at the final examinations or use unfair means.
Some even do not hesitate to threaten the dutiful invigilators with dir consequences.
In G.B.S. Omkar vs Shri Venkateswara University, AIR 1981 A.P. 163 P.A. Choudhary, J., in the context of finding the student guilty of mal practices held, that "I regretfully note that standards of discipline and education presently detaining in many Universities in our country leave a good lot to be desired.
They are low and falling lower every day.
the fall out of these low standards of university education on liberal profession is proving to be nearly catastrophic . .
It is no wonder that some of our Universities have ceased to be centres of learning and have grown into battle fields for warring Caste groups.
" It was held that what the Writ Court under article 226 need to consider is whether fair opportunity had been given to a petitioner and he had been treated squarely and whether the student had a fair deal with the University.
Once the procedural formalities are complied with, in the absence of any allegation of mala fide, it must be presumed that the University had acted bona fide and honestly so long as there is the evidence justifying the inference arrived at without there being a serious procedural irregularity.
The Writ Court would not interfere with an order of educational institution.
Therefore, what the writ court needs to do is to find whether fair and reasonable opportunity has been given to the students in the given facts.
From this background the question emerges whether the impugned notification is vitiated by any procedural irregularity under the provisions of the Act, regulations and the Resolutions referred hereinbefore or violative of the principles of natural justice.
The students involved at the examination of secondary education are by and large minors but that by itself would not be a factor to hold that the students were unfairly treated at an inquiry conducted during the domestic inquiry.
Assistance of an Advocate to the delinquent at a domestic enquiry is not a part of the principles of natural justice.
It depends on the nature of the inquiry and the peculiar circumstances and facts of a particular case.
The regulations and the rules of enquiry 793 specifically excluded the assistance of an Advocate at the inquiry.
Therefore, the omission to provide the assistance of a counsel at the inquiry is not violative of the principles of natural justice.
The show cause notice furnished wealth of material particulars on which the tampering was alleged to be founded and given the opportunity to each student to submit the explanation and also to adduce evidence, oral or documentary at the inquiry.
Each student submitted the explanation denying the allegation.
At the inquiry the questionnaire in the proforma was given to each student.
It is undoubted that the allegation of fabrication was stated to have been done at the behest of either the student/parents or guardians and the parents or guardians were not permitted to participate in the inquiry.
Inspection of documents was given.
Their answer sheets and marks secured were perused by the students and were asked to testify whether the answer books belongs to him or her and to identify the marks awarded by the examiner to each answer to the question and the total marks awarded.
It was also asked to verify and state whether the moderator 's mark sheets were tampered in the concerned subject or subjects as the case may be.
The student could easily identify and in fact identified his or her answer books and verified the marks awarded and answered positively that the marks were fabricated in the moderators ' mark sheets.
The questionnaire was also given to indicate their educational background in the previous school years and also the marks they expected at the final examinations.
The need of the assistance of the parents/guardians was thus absolutely nil.
Further question in the proforma was to ascertain from the students, due to tampering, whether or not the marks were increased to his or her advantage.
It could be answered by a mere look at the marks.
No outside assistance is needed.
All the students have admitted that the answer books belong to them.
They also admitted the marks initially awarded by the examiner or added or subtracted, if any, by the moderators.
They also admitted that the fabrication in the moderators ' mark sheets in the subject or subjects and the marks were increased to their advantage.
They also denied the complicity of him or her or of parents or guardians.
It is not the case of the respondents that they were coerced to answer the questions in a particular manner.
It is obvious from the record that they had prior consultations with the counsel.
Thus it could be seen that the procedure adopted at the inquiry is fair and just and it is not vitiated by any procedural irregularity nor is violative of the principles of natural justice.
The absence of opportunity to the parents or guardians, in this background does not vitiate the legality or validity of the inquiry conducted or decision of the Committee.
794 It is true, as contended by Sri Chidambaram and reiterated by other counsel, that the Inquiry Report does contain only conclusions bereft of the statement of facts and reasons in support thereof.
As pointed out by Sri Cama that in some of the reports, the body was written in the hand writing of one or other person and it was signed by the Inquiry Officer concerned.
But when an inquiry against 283 students was conducted, it is not expected that each Inquiry Officer alone should write the report under his/her hand.
In the circumstances the Inquiry Officer obviously had the assistance of the staff in the office to write the body or the conclusions to his/her dictation and he/she signed the report.
The reports cannot be jettisoned on the ground that the Inquiry Officer mechanically drew the conclusions in the reports without applying his/her mind to the facts.
The Enquiry Reports are not, therefore, bad in law.
In (Union of India) vs (Mohan Lal Capoor & Ors.,) this court speaking through M.M. Beg, J., for a Bench of two Judges held in paragraph 28 at page 854 that the reasons are the links between the materials on which certain conclusions are based to the actual conclusions.
They disclose how mind is applied to the subject matter for a decision, whether it is purely administrative or quasi judicial.
They would reveal nexus between the facts considered and the conclusions reached.
This view was reiterated in (Gurdial Singh Fijji) vs (State of Punjab & Ors.,) ; Those two cases relied on by Sri Chidambaram, the rules/regulations required recording of reasons in support of the conclusion as mandatory.
Unless the rule expressly or by necessary implications, excludes recording of reasons, it is implicit that the principles of natural justice or fair play does require recording of reasons as a part of fair procedure.
In an administrative decision, its order/decision itself may not contain reasons.
It may not be the requirement of the rules, but at the least, the record should disclose reasons.
It may not be like a judgement.
But the reasons may be precise.
In S.N. Mukherjee vs Union of India, J.T. the Constitution Bench of this Court surveyed the entire case law in this regard, and we need not burden the Judgement to reiterate them once over and at page 643 in paragraph 40 it held that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi judicial functions is required to record the reasons for its decision.
In para 36 it was further held that recording of reasons excludes changes of arbitrariness and ensure a degree of fairness in the process of decision making.
The said principle would apply 795 equally to all decisions and its applications cannot be confined to decisions which are subject to appeal, revision or judicial review.
"It is not required that the reasons should be as elaborate as in the decision of a Court of law.
" The extent and nature of the reasons would depend on particular facts and circumstances.
What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given the consideration to the points in controversy.
The need for recording reasons is greater in a case where the order is passed at the original stage.
The appellate or revisional authority, if it affirms such an order, need not give separate reasons.
If the appellate or revisional authority disagrees, the reasons must be contained in the order under challenge.
Thus it is settled law that the reasons are harbinger between the mind of the maker of the order to the controversy in question and the decision or conclusion arrived at.
It also exclude the chances to reach arbitrary, whimsical or capricious decision or conclusion.
The reasons assure an inbuilt support to the conclusion/decision reached.
The order when it effects the right of a citizen or a person, irrespective of the fact, whether it is quasi judicial or administrative fair play requires recording of germane and relevant precise reasons.
The recording of reasons is also an assurance that the authority concerned consciously applied its mind to the facts on record.
It also aids the appellate or revisional authority or the supervisory jurisdiction of the High Court under article 226 or the Appellate jurisdiction of this Court under article 136 to see whether the authority concerned acted fairly and justly to meet out justice to the aggrieved person.
From this perspective, the question is whether omission to record reasons vitiates the impugned order or is in violation of the principles of natural justice.
The omnipresence and omniscience of the principle of natural justice acts as deterrence to arrive at arbitrary decision in flagrant infraction of fair play.
But the applicability of the principles of natural justice is not a rule of thumb or a straight jacket formula as an abstract proposition of law.
It depends on the facts of the case nature of the inquiry and the effect of the order/decision on the rights of the person and attendant circumstances.
It is seen from the record and is not disputed, that all the students admitted, the factum of fabrication and it was to his or her advantage and that the subject/subjects in which fabrication was committed belong to him or her.
In view of these admissions the Inquiry Officer, obviously did not find it expedient to reterate all the admissions made.
If the facts are disputed, necessarily the authority or the Inquiry Officer, on consideration of the material on record, should record reasons in support of the conclusion reached.
Since the facts are admitted, the need to their 796 reiteration was obviated and so only conclusions have been stated in the reports.
The omission to record reasons in the present case is neither illegal, nor is violative of the principles of natural justice.
Whether the conclusions are proved or not is yet another question and would need detailed consideration.
In Khardah Co. Ltd. vs Their Workmen, ; at p. 514 the ratio that the Enquiry Report must contain reasons in support of the findings drawn neatly and briefly is of no assistance for the aforestated facts of this case.
The ratio in A.K. Roy, etc.
vs Union of India & Ors.
, ; that the aid of friend could be taken to assist the detenu and in Pett vs Grehound Racing Association Ltd., [1968] 2 All Eng.
Reports 545 the right to appoint an Agent to represent the case of the petitioner are also of no assistance since the rule expressly excluded such a representation.
The ratio in Union of India vs H.C. Goel, ; also does not help the respondents for the reason that it is not a case of no evidence and the conclusions were reached on the basis of the admission made by the respondents.
The ration in M/s. Bareilly Electricity Supply Co. Ltd. vs The Workmen & Ors., ; also does not apply to the facts of this case for the reasons that the need to examine the witnesses on behalf of the Board was obviated by the admissions made by the examinees.
The ratio in Shanti Prasad Jain vs The Director of Enforcement, is equally of no assistance to the respondents since the contention that the circumstances under which the fabrication of the moderators ' mark sheets came to be made is not a relevant fact.
Therefore, there is no need to examine the concerned officials in the State Board to explain as to how and who dealt with the papers from the time recounting was done in the office till the moderators ' mark sheets were sent to Pune to feed the computer.
The ratio in Merla Ramanne vs Nallaparaju & Ors, and Kashinath Dikshita vs Union of India & Ors., also do not assist the respondents for the reason that the answer books of the concerned students, the marks awarded by the examiners or addition or alteration, if any, made by the moderators and fabrication of the moderators ' mark sheets were admittedly given for personal inspection to the concerned students and given them an opportunity to inspect the record and thereafter they made admission.
The further contention of Sri Cama that the Standing Committee did not deal individually the answers given by each student and the decision was not based on evidence is without force as the conclusions are based on the admissions.
Equally the need to consider each case on merits is obviated by the admission made by every student.
The ratio in (Government medi 797 cal Store Depot, Karnal) vs (State of Haryana & Anr.,) ; at p. 454 that the charges are vague is also of no assistance to the facts of this case.
The ratio in (M/s. Kesoram Cotton Mills Ltd.,) vs (Gangadhar & Ors.,) ; at p. 825 that the documents must be supplied at least 48 hours in advance is also of no help to the respondents in view of the admissions made by the respondents.
The ratio in Tej pal Singh 's case (supra) that mere inspection of the documents will not cure the defect of procedure or violation of principles of natural justice also does not apply to the facts of his case.
The ratio in (State of Punjab) vs (Bhagat Ram) ; that the supply of synopsis of the material is not sufficient compliance with the principle of natural justice, also does not render any assistance to the respondents.
The ratio in (Gujarat Steel Tubes Ltd.,) vs (Gujarat steel Tubes Mazdoor Sabha,) ; at p. 202 that the conclusion and the findings are in different hand writings, which would show the non application of the mind to the facts and it violates the principle of natural justice also does not apply to the facts of this case.
The ratio in (Union of India & Ors.) vs (Mohd. Ramzan Khan,) JT also does not apply to the facts in this case as the report is solely based on the admission made by the examinees and no new material has been relied upon by the Enquiry Officers.
Undoubtedly, it is settled law that the right to life includes right to reputation and livelihood and that the individual as an entity is entitled to the protection of article 21, but in view of the facts of this case the ratio in (Vishwa Nath) vs (State of Jammu & Kashmir,) and (Ogla tellis & Ors.,) etc.
vs (Bombay Municipal Corporation & Ors., etc.,) ; also do not help the respondents.
The further contention of Sri Salve that the order must be a speaking order preceded by a fair enquiry and the report must be based on cogent evidence, and in this case all the requirements are lacking is also an argument of despair.
Therefore, for the reasons given earlier, the argument stands rejected.
The next contention that the notification is vitiated for the reasons that the Standing Committee itself did not record any reason in support of its conclusion that the examinees or the parents or the guardians are parties to the fabrication cannot be sustained for the reason that the regulation itself postulates that if the Committee disagrees with the Inquiry Officer then only it is obligatory to record reasons.
Since the Committee agreed with the report, there is no need, on their part, to record the reasons.
The impugned notification, therefore, is not vitiated by violation of rules of natural justice.
The crucial question, therefore, is whether the conclusions 798 reached by the authorities that the examinees, their parents or guardians were parties to the fabrication and whether their complicity was established from record and whether the evidence was sufficient to support such conclusion reached by the Standing Committee or the Enquiry Officer.
Counsel on either side generated considerable debate on "the standard of proof" in a domestic enquiry.
Mr. Jaitely placed reliance on paragraph 18 of Vol.
17 of Halsbury 's Law of England, Fourth Edition, at page 16, which reads thus "To succeed on any issue the party bearing the legal burden of proof must (1) satisfy a judge or jury of the likelihood of the truth of his case by adducing a greater weight of evidence than his opponent, and (2) adduce evidence sufficient to satisfy them to the required standard or degree of proof.
The standard differs in criminal and civil cases.
In civil cases the standard of proof is satisfied on a balance of probabilities.
However, even within this formula variations in subject matter or in allegations will affect the standard required; the more serious the allegation, for example fraud, crime or professional misconduct, the higher will be the required degree of proof, although it will not reach the criminal standard.
In criminal cases, the standard required of the prosecution is proof beyond reasonable doubt.
This standard is also requisite in case of committal for contempt, and in pension claims cases.
In matrimonial cases it seems that proof on balance of probabilities is sufficient.
Once a matter is established beyond reasonable doubt it must be taken for all purposes of law to be a fact, as there is no room for a distinction between what is found by inference from the evidence and what is found as a positive face." and contended that the standard of proof of fabrication of record in a domestic inquiry does not differ from criminal charge and it must be of a higher degree.
In the Board of High School and Intermediate Education U.P. vs Bagleshar Persad & Ors., relied on by Sri Andhyarjuna the facts were that the appellant Board accepting the findings of the committee that the respondents used unfair means in answering the subjects, cancelled the declaration of the results of the respondent in the High School Certificate Examination held in 1960.
The charges were based on the facts that in the Hindi paper the 799 respondent gave wrong answers to a particular question in the same way in which the answers have been given by another candidate who was having consecutive number.
The High Court held that the findings of the Committee were based on no evidence and quashed the cancellation of the results.
On appeal, this Court held that the respondent admitted that the mistakes in answers in the two papers were identical and he pleaded that he could not say anything as to why this happened.
The proof of charges was inferred that as either the respondent copied from the answer book of the candidate or that both of them had copied from any other source.
It was accordingly held that is would amount to the adoption of unfair means.
The High Court, therefore, committed error in assuming that there is no evidence in proof of it.
At page 774 this Court further held that in dealing with question as to whether the Committee was justified in arriving at its conclusion against the respondent it would not be reasonable to exclude from the consideration of the circumstances on which the whole enquiry came to be held and the general background of the atmosphere in the examination hall.
It was also further held at page 775 that educational institutions like the universities set up enquiry committees to deal with the problem of adoption of unfair means by candidate and normally it is within the jurisdiction of such domestic tribunals to decide all relevant questions in the light of the evidence adduced before them.
In the matter of the adoption of unfair means direct evidence may sometime be available but cases may arise where direct evidence is not available and the question will have to be considered in the light of the probabilities and circumstantial evidence.
This is the problem with the educational institution.
How to face it, is a serious problem and unless there is justification to do so, court should be slow to interfere with the decisions of domestic tribunal appointed by the education body like universities.
In dealing with the validity of the impugned order passed by the universities under article 226 the High Court is not sitting in an appeal over the decision on this question.
Its jurisdiction is limited and though it is true that if the impugned order is not supported by any evidence, the High Court may be justified to quash the order.
But the conclusion that the impugned order is not supported by any evidence must be reached after considering the question as to whether the probabilities and circumstantial evidence do not justify the said conclusion.
The enquiry held by domestic tribunals in such cases must, no doubt be fair and the students must be given adequate opportunity to defend themselves and holding such enquiries, the tribunal must follow the rules of natural justice.
Accordingly, it was held that the appeal was allowed and the order of the High Court was set aside and 800 that of the domestic tribunal was confirmed.
In (Bihar School Examination Board) vs (Subhash Chandra Sinha & Ors.,) ; this Court emphasised that the essence of an examination is that the worth of every person is appraised without any assistance from an outside source.
The academic standards require that the authority 's appreciation of the problem must be respected.
A full fledged judicial inquiry was not required.
It is not necessary to conduct an inquiry in each individual case to satisfy itself who are the candidates that have adopted unfair means when the examination as whole had to go.
It was further held at p. 968 E to H that "while we do not wish to whittle down the requirement of natural justice and fair play in case where such requirement may be said to arise, we do not want that this court should be understood as having stated that an enquiry with a right to representation must always precede in every case, however, different.
The universities are responsible for their standard and conduct of the examination.
The universities are responsible for their standard and conduct of the examination.
The essence of the examination is that the worth of every person is appraised without any assistance from an outside source.
It cannot be held that a detailed quasi judicial enquiry with right to its alumini to plead and lead evidence, etc. is preceded before the result are withheld or examinations cancelled.
If there is sufficient material on which it could be demonstrated that the Authority was right in its conclusion that the examination ought to be cancelled then academic standards require that the Authority 's appreciation of the problem must be respected.
It would not be for the courts to say that we should have examined all the candidates or even their representatives with a view to ascertaining whether they had received assistance or not.
To do this, would encourage indiscipline, if not also prejury.
It is true as stated by Sri Chidambaram that the above ratio was laid in the context of the cancellation of examination of the entire centre.
But the general principles must be kept in view while dealing with the problem faced by the academic institutions.
In (Seth Gulabchand) vs (Seth Kudilal and Ors.,) ; this Court held that there is no difference between cases in which charges of a fraudulent or criminal character are made and cases in which such charges are not made.
While striking the balance of probability, the court would keep in mind the presumption of honesty and innocence or the nature of the crime or fraud charged.
The rules applicable to circumstantial evidence in criminal cases would not apply to civil cases.
The ordinary rules governing civil cases of balance of probabilities will continue to apply.
801 In (Ghazanfar Rashid) vs (Board, H.S. & I. Edn. U.P. & Ors.,) AIR 1970 Allahabad 209 a full Bench, speaking through ours learned brother K.N. Singh, J. (as he then was) dealing with the standard or proof of the charge of use of unfair means at the examination, it was held that it was the duty of the Examination Committee, etc., to maintain purity of examination and if examinee is found to have used unfair means at the examination, it is the duty of the Examination Committee to take action against the erring examinees to maintain the educational standard.
Direct evidence is available in some cases but in a large number of cases, direct evidence is not available.
In that situation the Examination Committee as of necessity to rely on circumstantial evidence which may include the answer given by the examinee, the report of the Superintendent of the centre, the invigilator and the report of the experts and other attending circumstances.
The Examination Committee, if relies upon such evidence to come to the conclusion that the examinee has used unfair means in answering questions then it is not open to the High Court to interfere with that decision, merely because the High Court may take a different view on re assessment of those circumstances.
While it is open to the High Court to interfere with the order of the quasi judicial authority, if it is not supported by any evidence or if the order as passed in contravention of the statutory provisions of the law or in violation of the principles of natural justice, the court has no jurisdiction to quash the order merely on the ground that different view could possibly be taken on the evidence available on the record.
The Examination Committee has jurisdiction to take decision in the matter of use of unfair means not only on direct evidence but also on probabilities and circumstantial evidence.
There is no scope for importing the principles of criminal trial while considering the probative value of probabilities and circumstantial evidence.
the Examination Committee is not bound by technical rules of evidence and procedure as are applicable to Courts.
We respectfully agree with the ratio.
In Miller vs Minister of Pensions, [1947] All Eng.
Law Reports 372 at p. 374 Denning J., as he then was, reiterated that the evidence against the petitioner must have the same degree of cogency as is required to discharge a burden in a civil case.
It must carry a reasonable degree of probability, but not so high as is required in a criminal case.
If the evidence is such that the tribunal can say: "We think it more probable than not the burden is discharge but, if the probabilities are equal, it is not discharged." 802 In State of Uttar Pradesh vs Chet Ram & Ors., relied on by Sri Chidambaram, this Court dealt with the proof of guilt of the accused at a criminal trial.
This Court held that when two views are plausible, the view being taken must have some content of plausibility in it and without the same, the other view cannot be countenance in law as a plausible alternative.
It must be remembered that at a criminal trial the burden of proof is always on the prosecution.
It must establish the guilt of the accused beyond all reasonable doubts.
If there exist a plausible alternative view, its benefit must be extended only to the accused and not to the prosecution.
Therefore, the ratio therein is inapplicable to a proceeding either in the civil case or in an enquiry before a domestic tribunal.
State of U.P. vs Krishna Gopal & Anr., ; at p. 314 also relates to criminal trial.
In paragraph 26 in assessing the evidence adduced by the prosecution, this Court laid that the concept of probability, and the degrees of it, cannot obviously be expressed in terms of units to be mathematically enumerated as to how many of such units constitute proof beyond reasonable doubt.
There is an unmistakable subjective element in the evaluation of the degree of probability and the quantum of proof.
Forensic probability must, in the last analysis, rest on the robust common sense and, ultimately, on the trained institutions of the Judge.
In evaluating the circumstantial evidence in Hanumant vs The State of Madhya Pradesh, [1952] SCR 1091 at p. 1097 the Court approved the statement of Baron Alderman in Reg vs Hodge, that: "The mind was apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts, of one connected whole; and the more ingenious the mind of the individual the more likely was it, considering such matters, to over reach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete.
" It was held that in evaluating the evidence of circumstantial nature it is the duty of the prosecution that all the circumstances must be fully established circumstances should be consistent only with the hypothesis of the guilt of the accused.
This standards of proof also is not relevant not to be extended to consider the evidence in an inquiry by the domestic tribunal.
The ratio in (Bank of India vs J.A.H. Chinoy,) AIR 1950 PC 90 that the appellate court would be reluctant to differ from conclusion of the trial Judge if his conclusion is based on 803 the impression made by a person in the witness box is also not germane for the purpose of this case.
It was laid therein that inferences and assumptions founded on a variety of facts and circumstances which, in themselves, offer no direct or positive support for the conclusion reached, the right of the appellate court to review this inferential process cannot be denied.
While dealing with proof of fraud it was held that speculation is not enough to bring home a charge of fraudulent conspiracy.
In Khwaja vs Secretary of State, [1983] 1 All Eng.
Law Reports 785 (H.L.) dealing with the functions of the Immigration Authorities and of the Courts, Lord Wilberforce at p. 7877, laid the law that the allegation that permission to enter into the country by an immigrant was obtained by fraud or deceit being of a serious character and involving issues of personal liberty requires a corresponding degree of satisfactory evidence.
If the Court is not satisfied with any part of the evidence, it may remit the matter for reconsideration or itself receive further evidence.
It should quash the detention order where the evidence was not such as the authority should have relied on or where the evidence received does not justify the decision reached or, of course, for any serious procedural irregularity.
At p.784 Lord Scarman held that it is not necessary to import in the civil proceedings of judicial review the formula devised by Judges for the guidance of juries in criminal cases.
The reviewing court will, therefore, require to be satisfied that the facts which are required for the justification of the restraint put on liberty do exist.
The flexibility of the civil standard of proof suffices to ensure that the court will require the high degree of probability which is appropriate to what is at stake.
The nature and gravity of an issue necessarily determines the manner of attaining reasonable satisfaction of the truth of the issue.
Therefore, the civil standard of flexibility be applied to deal with immigration cases.
In Sodhi Transport Co. & Anr., etc.
vs State of U.P. & Anr., etc.
, [1986] 1 SCR 939 at p. 954 this Court dealing with rebutable presumption held that: "A presumption is not in itself evidence but only makes a prima facies case for party in whose favour it exists.
It is a rule concerning evidence.
It indicates the person on whom the burden of proof lies.
When presumption is conclusive, it obviates the production of any other evidence to dislodge the conclusion to be drawn on proof of certain facts.
But when it is rebuttable it only points out the party on whom 804 lies the duty of going forward with evidence on the facts presumed, and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of presumption is over.
Then the evidence will determine the true nature of the fact to be established, the rules of presumption are reduced from enlightened human knowledge and experience and are drawn from the connection, relation and coincidence of facts and circumstances.
" Bhandari vs Advocates Committee, [1956] All Eng.
Law Reports 742 (PC) is also a case concerning the professional misconduct.
In proof of the charge it was held that it is the duty of the professional domestic tribunal investigating the allegation to apply a high standard of proof and not to condemn on a mere balance of probabilities.
In Glynn) vs (Keele University & Anr., [1971] 2 All Eng.
Law Reports, 89 (Chancery Division) relied on by Sri Salve, the question arose whether failure to give an opportunity to the students before the suspension is violative of the principles of natural justice.
It was held that the student did not deny commission of the offence, therefore, it was held that the student suffered no injustice by reason of the breach of the rules.
Further while dealing with the scope of the inquiry by the domestic tribunal, it was held that the society is charged with the supervision and upbringing of the pupil under tution, be the society, a university or college or a school.
Where this relationship exists it is quite plain that on the one hand in certain circumstances the body or individual acting on behalf of the society must be regarded as acting in a quasi judicial capacity expulsion from the society is the obvious example.
On the other hand, there exists a wide range of circumstances in which the body or individual is concerned to impose penalties by a way of domestic discipline.
In those circumstances the body or individual is not acting in a quasi judicial capacity at all but in a ministerial capacity, i.e. in the performance of the rights and duties vested in the society as to the upbringing and supervision of the members of the society.
No doubt there is a moral obligation to act fairly, but this moral obligation does not, lie within the purview of the court in its control over quasi judicial acts.
The ratio relied on by Shri Salve, far from helping the respondents, is consistent withour view.
The ration in In Re: An Advocate ; also concerned with professional misconduct of an Advocate and higher standard of proof of the charge of misconduct was insisted upon.
Equally so in Shri Krishan vs The Kurukshetra University, Kurukshetra.
; , These decisions relied on by Sri Jaitley also do not assist us.
805 The contention of Sri Cama placing any reliance on Shivajirao Nilangekar Patil vs Dr. Mahesh Madhav Gosavi & Ors. and vice versa, that the Vice chancellor would not have done what he did except with the instructions of the Chief Minister who was to be benefitted by getting his daughter passed in M.D. was not accepted by this Court and that it was further contended that the benefit test is preposterous one and the preponderence of probabilities is not possible to be deduced from the test, does not appear to be sound.
This Court noted that the Chief Minister was not prepared, as suggested by the Division Bench, to face an inquiry and that, therefore, substituted to the findings of the Division Bench, in the penultimate paragraph of the judgment that the court would be cognizant of the steep decline of public standards, public moral and public morale which have been contaminating the social environment and emphasised that "where such situation cry out the Court should not and cannot remain mute and dumb" and it is necessary to cleanse public life.
It is thus well settled law that strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings or domestic tribunal.
It is open to the authorities to receive and place on record all the necessary, relevant, cogent and acceptable material facts though not proved strictly in conformity with the Evidence Act.
The material must be germane and relevant to the facts in issue.
In grave cases like forgery, fraud, conspiracy, misappropriation, etc.
seldom direct evidence would be available.
Only the circumstantial evidence would furnish the proof.
In our considered view inference from the evidence and circumstances must be carefully distinguished from conjectures or speculation.
The mind is prone to take pleasure to adapt circumstances to one another and even in straining them a little to force them to form parts of one connected whole.
There must be evidence direct or circumstances to deduce necessary inference in proof of the facts in issue.
There can be no inferences unless there are objective facts, direct or circumstantial from which to infer the other fact which it is sought to establish.
In some cases the other facts can be inferred with as much practical as if they had been actually observed.
In other cases the inferences do not go beyond reasonable probability.
If thee are no positive proved facts, oral, documentary or circumstantial from which the inferences can be made the method of inference fails and what is left is mere speculation on conjecture.
Therefore, when an inference of proof that a fact in dispute has been held established there must be some material facts or circumstances on record from which such an inference could be drawn.
The standard of proof is not proof beyond reasonable doubt 806 "but" the preponderance of probabilities tending to draw an inference that the fact must be more probable.
Standard of proof cannot be put in a straight Jacket formula.
No mathematical formula could be laid on degree of proof.
The probative value could be gauged from facts and circumstances in a given case.
The standard of proof is the same both in civil cases and domestic enquiries.
From this legal setting we have to consider whether the inference deduced by the Education Standing Committee that the fabrication of moderators ' mark sheets was done at the behest of either the examinee or the parent or guardian is based on the evidence on record.
It is already found that the examinees admitted the forgery of their concerned moderators ' mark sheets resulting the increase of marks to their advantage.
The fabrication of the moderators 'mark sheets was done after the scrutiny by the concerned officials in the office of the State Board at Bombay and before the moderators ' mark sheets were taken out to Pune to feed the computer.
Why one is expected or interested to wade through eighty thousand moderators ' marks sheets to locate only the 283 examinees mark sheets and add marks by fabrication? Unless either the examinee or parent or guardian approached the fabricator; given the number and instructed him/them to fabricate the marks, it would not be possible to know their number to fabricate.
The act of fabrication is an offence.
Merely it was done in one subject or more than one makes little difference.
Its gravity is not mitigated if it is committed in one subject alone.
This is not an innocent act or a casual mistake during the course of performance of the official duty as is sought to be made out.
It was obviously done as a concerted action.
In view of the admitted facts and above circumstances the necessary conclusion that could unerringly be drawn would be that either the examinee o r the parent or guardian obviously was a privy to the fabrication and that the forgery was committed at his or her or parent 's or guardian 's behest.
It is, therefore clear that the conclusion reached by the Education Standing Committee that the fabrication was done at the instance of either the examinees or their parents or guardians is amply borne out from the record.
The High Court in our view over stepped is supervisory jurisdiction and trenched into the arena of appreciation of evidence to arrive its own conclusions on the specious plea of satisfying 'conscience of the court '.
The question then is whether the rules relating to mode of punishment indicated inthe Appendix 'A ' to the resolution are invalid.
We have given our anxious thought to the contention and to the view of the High Court.
In our view the punishments indicated in 807 the last column is only the maximum from which it cannot be inferred that it left no discretion to the disciplinary authority.
No axiomatic rule can be laid that the rule making authority intended that under no circumtances, the examination Committee could award lesser penalty.
It depends on the nature and gravity of the misconduct to be dealt with by the disciplinary authority.
In a given case, depending on the nature and gravity of the misconduct lesser punishment may be meted out.
So by mere prescription of maximum penalty rules do not become invalid.
We have no hesitation to conclude that when the evidence justified the examination Standing Committee to record the finding that the examinees, parents or guardians are parties to the fabrication, it is not open to the High Court under article 225 to itself evaluate the evidence and to interfere with the finding and to quash the impugned notification.
This Court under article 136 has to correct the illegalities committed by the High Court when it exceeded its supervisory jurisdiction under article 226.
In view of the fair attitude adopted by the counsel for the Board, it is not necessary to go into the question of quantum of punishment.
In the light of the above finding, normally the appeals are to be allowed, the judgement of the High Court is set aside and the impugned notification dated August 31, 1990 upheld in toto.
But we modify the High Court 's order as per the directions given in our order dated January 30, 1991, wherein we accepted the signed statement by the counsel for the Board without prejudice to their contention and directed the Board (a) to allow all the candidates referred to in the Notification of August 31, 1990 to appear at the S.S.C. examination to be conducted in March, 1991 by the Board; and (b) to declare the untampered results of nine named candidates therein.
The failed candidates covered by the notification and willing to appear in ensuing examination of March 1991, there applications will be accepted if the same are submitted on or before 13th February, 1991 through Heads of their respective schools.
So far as the other candidates are concerned, their results shall not be declared, but they will be permitted to appear in the ensuing examination of the Board to be held in March, 1991 in case their applications are received before 13th February, 1991, through Heads of their respective schools.
In this regard the Board shall inform all the concerned schools and will also give due publicity in the two local newspapers within 3 days.
The Board was further directed to consider the cases of such candidates out of 283 who are similar to the nine named candidates other than respondent 808 No. 17, Deepa V. Agarwal and in their cases also the untampered result shall be declared on or before 6th February, 1991 and we are informed that results of 18 more candidates were declared.
The notification dated August 31, 1990 is upheld subject to above modification and shall be operative between the parties.
Before parting with the case we impress upon the appellant to have indepth investigation made expeditiously, if need be, with the assistance of C.B.C.I.D., of the racket of fabrication and bring the culprit to justice.
The appeals are allowed accordingly, but in the circumstances parties are directed to bear their own costs.
R.S.S. Appeals allowed.
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The appellant Board conducted secondary examinations in the month of March 1990.
During recounting of the marks obtained by the candidates it was found that moderators mark sheets relating to 283 examinees, which included the 53 respondents, had been tampered with.
The declaration of their results was withheld pending enquiry.
Several writ petitions were filed against non declaration of the results and the High Court directed the appellant to the expeditious action to declare the results.
The Board appointed seven enquiry officers to conduct the enquiry.
Show cause notices were issued to the students informing them of the nature of tampering, the subjects in which the marks were found tampered with, the marks initially obtained and the marks increased due to tampering, and also indicated the proposed punishment, if in the enquiry it would be found that marks were tampered with the knowledge or connivance or at the instance of the candidates or parents or guardians.
They were also informed that they would be at liberty to inspect the documents at the Divisional Board at Bombay; they were entitled to adduce documentary and oral evidence at the hearing; they would also be permitted to cross examine the witnesses of the Board, if any; they would not be entitled to appear through an advocate, and the parents or guardians would be permitted to accompany the students at the time of enquiry, but they would not be entitled to take part in the enquiry.
All the candidates admitted that the marks initially awarded by 773 the examiners had been tampered with in the moderators mark sheets; and due to tampering the marks were increased and the increase was to their advantage.
However, they denied that either they or their parents or guardians were privy to the tampering.
The Enquiry Officers submitted their reports holding that the moderators mark sheets had been fabricated and submitted the reports to the Board.
The Standing Committee constituted in this regard considered the records and the reports and resolved to withhold, as a measure of punishment, the declaration of the results of their examinations and to debar the students to appear in the supplementary examination.
The notification to that effect was published on 31.8.1990 and the report submitted to the High Court.
The High Court allowed the writ petitions.
One Hon 'ble Judge held that the Standing Committee was devoid of power, and because it did not obtain the approval of the Divisional Board, the impugned notification was without authority of law.
On merits, the learned Judge held that the Standing Committee did not apply its mind in the proper perspective to the material facts, and therefore, the finding that tampering was done at the instance of the examinees/parents/guardians was perverse.
The other Hon 'ble Judge held that the examinees were not guilty of the mal practices and their guilt had not been established.
Before this Court, it was contended on behalf of the respondents that the Act empowered that Divisional Board to deal with the use of unfair means at the final examination, and the Standing Committee was an alien body to the divisional Board; the students were minors and neither the parents nor anybody like an advocate was permitted to assist the students; answers to the questionnaire were extracted from the students to confess their guilt: no adequate opportunity was given to the students at the enquiry; the evidence without subjecting it to cross examination was of no value; the Standing Committee did not apply its mind to the facts, nor recorded reasons in support of its conclusion that the examinee/parents/guardians were parties to the fabrication; the Board should establish the guilt of the examinees beyond all reasonable doubts; the standard of proof ought to be of a high degree akin to trial in a criminal case; the test of benefit to an examinee was preposterous; no evidence was placed on record, nor was it proved and hence the findings of the Standing Committee were clearly based on no evidence; the Enquiry Report contained only conclusions bereft of the statement of facts and reasons in support thereof; and the order ought to have been a speaking order preceded by a fair enquiry and the report must 774 be based on cogent evidence.
On behalf of the Board, it was inter alia contended that all the examinees admitted in answers to the questionnaire that tampering was done and it was to their advantage, and that in view of the admission, the need to examine any person from the concerned section was obviated.
Allowing the appeals, upholding the notification subject to modifications, this Court, HELD: (1) there is no manner of doubt that unfair means were used at the final Secondary Examination by fabricating the Moderators ' mark sheet of the examinees, in concerted manner, admittedly to benefit the students.
[782C] (2) The State Board is empowered to constitute the Divisional Boards and the Standing Committees.
The State Board is also empowered to make regulations to conduct examinations and also to deal with the use of unfair means at the final examination conducted by the Board.
The Divisional Board is empowered to conduct within its area the final examination on behalf of the State Board.
The Divisional Board is also empowered to deal with the cases of unfair means according to the procedure laid down by the State Board.
[783F G] (3) The Standing Committee is an executive arm of the Divisional Board for the efficient and expeditious functioning of the Board as adumberated under the Act itself.
It is not a foreign body.
When the Standing Education Committee takes the decision its decision is on behalf of the Divisional Board, and the decision of the Divisional Board in turn is on behalf of the State Board.
[786E F] (4) On a fair and harmonious reading of the relevant provisions of the Act and the Maharashtra Secondary and Higher Secondary Education Board, Regulation, 1977 the Examination Committee of the Divisional Board is itself a statutory body which acted on behalf of the Divisional Board and is not a delegate of the Divisional Board.
[786H] State of U.P. vs Batuk Deo Pati Tripathi & Anr., ; Kargram Panchayat Samiti & Anr.
vs State of West Bengal & Ors., [1987] 3 S.C.C. 82; Baradakanta Misra vs High Court of Orissa & Anr., and Tej Pal Singh (dead) through L.rs.
vs State of U.P. & Anr., , referred to.
775 (5) The Standing Committee is an integral part of the Divisional Board and its acts are for and no behalf of the Divisional Board.
Accordingly, the Board must be deemed to have passed the impugned notification as per the scheme of the provisions of the Act and the Regulations.
Therefore, the finding of the learned Judge that the Standing Committee had no power to take the impugned decision, etc.
without approval of the Divisional Board is clearly illegal and cannot be sustained.
[789B C,F] (6) While exercising the powers under Article 226 or Article 136 of the Constitution, the High Court or this Court, is not sitting as a Court of Appeal on the findings of facts recorded by the Standing Committee (Domestic Enquiry Board) nor have power to evaluate the evidence as an appellate Court and to come to its own conclusions.
If the conclusions reached by the Board can be fairly supported by the evidence on record then the High Court or this Court has to uphold the decision, though as appellate Court of facts, it may be inclined to take a different view.
[789C] (7) Fabrication cannot be done except to benefit the examinees.
The fabricator had done it for reward in concert with outside agencies.
Therefore, the inference from these facts drawn by the Standing Committee that the examinees/parents/guardians were responsible to fabricate the moderators ' mark sheets is based on evidence.
[790G] (8) It is not open to the High Court to evaluate the evidence to come to its own conclusions.
Thereby the High Court has committed manifest error of law warranting interference by this Court.
[791A] (9) The Writ Court would not interfere with an order of educational institution.
Therefore, what the writ Court needs to do is to find whether fair and reasonable opportunity has been given to the students in the given facts.
[792F] D.M.K. Public School vs Regional Joint Director of Hyderabad, A.I.R. 1986 A.P. 204; G.B.S. Omkar vs Shri Venkateswara University, A.I.R. 1981 A.P. 163.
(10) Assistance of an Advocate to the delinquent at a domestic enquiry is not a part of the principles of natural justice.
It depends on the nature of the inquiry and the peculiar circumstances and facts of a particular case.[792H] 776 (11) The regulations and the rules of enquiry specifically excluded the assistance of an advocate at the inquiry.
Therefore, the omission to provide the assistance of a counsel at the inquiry is not violative of the principles of natural justice.
[793A] (12) The procedure adopted at the inquiry was fair and just and it was not vitiated by any procedural irregularity nor was violative of the principles of natural justice.
The absence of opportunity to the parents or guardians, in this background, did not vitiate the legality or validity of the inquiry conducted or decision of the Committee.
[793G H] (13) Unless the rule expressly or by necessary implications, excluded recording of reasons, it is implicit that the principles of natural justice or fair play does require recording of reasons as a part of fair procedure.
In an administrative decision, its order/decision itself may not contain reasons.
It may not be the requirement of the rules, but at the least, the record should disclose reasons.
It may not be like a judgement.
But the reasons may be precise.
[794F] Union of India vs Mohan Lal Capoor & Ors. ; Gurdial Singh Fiji vs State of Punjab & Ors. ; and S.N. Mukherjee vs Union of India, J.T. , referred to.
(14) The omnipresence and omniscience of the principle of natural justice acts as deterrence to arrive at arbitrary decision in flagrant infraction of fair play.
But the applicability of the principles of natural justice is not a rule of thumb or a straight jacket formula as an abstract proposition of law.
It depends on the facts of the case, nature of the inquiry and the effect of the order decision on the rights of the person and attendant circumstances.
[795F] (15) In the instant case, since the facts are admitted, the need to their reiteration was obviated and so only conclusions have been stated in the reports.
The omission to record reasons is neither illegal, nor is violative of the principles of natural justice.
[795H 796A] Khardah Co. Ltd. vs Their Workmen, ; ; A.K. Roy etc.
vs Union of India & Ors.
[1982] 1 S.C.C. 271; Pett vs Grehound Racing Association Ltd., [1968] 2 ALL Eng.
Reports 545; Union of India vs H.C. Goel, ; ; M/s. Bareilly Electricity Supply Co. Ltd. vs The Workmen & Ors. ; ; Shanti Prasad Jain vs The Director of Enforcement, ; Merla Ramanna vs Nallaparaju & Ors., ; 777 Kashinath Dikshita vs Union of India & Ors., [1986] 3 S.C.C. 229; Government Medical Store Depot, Karnal vs State of Haryana & Anr.
, ; ; M/s. Kesoram Cotton Mills Ltd. vs Gangadhar & Ors., ; ; State of Punjab vs Bhagat Ram, ; Gujarat Steel Tubesl Ltd. vs Gujarat Steel Tubes Mazdoor Sabha,, ; ; Union of India & Ors.
vs Mohd. Ramzan Khan, J.T. ; Vishwa Nath vs State of Jammu & Kashmir, ; Olga Tellis & Ors.
vs Bombay Municipal Corporation, etc.; , , referred to.
(16) Court should be slow to interfere with the decisions of domestic tribunals appointed by the education bodies like universities.
[799F] (17) In dealing with the validity of the impugned order passed by a University under Article 226 the High Court is not sitting in an appeal over the decision on this question.
Its jurisdiction is limited and though it is true that if the impugned order is not supported by any evidence the High Court may be justified to quash the order but the conclusion that the impugned order is not supported by any evidence must be reached after considering the question as to whether the probabilities and circumstantial evidence do not justify the said conclusion.
The enquiry held by domestic tribunals in such cases must no doubt be fair and the students must be given adequate opportunity to defend themselves and holding such enquiries, the tribunal must follow the rules of natural justice.
[799F G] Board of High School and Intermediate Education U.P. vs Sagleshar Persad & Ors., and Bihar School Examination Board vs Subhas Chandra Sinha & Ors. ; referred to.
(18) The examination committee has jurisdiction to take decision in the matter of use of unfair means not only on direct evidence but also on probabilities and circumstantial evidence.
There is no scope for importing the principles of criminal trial while considering the probative value of probabilities and circumstantial evidence.
The Examination committed is not bound by technical rules of evidence and procedure as are applicable to Courts.
[801E F] Seth Gulabchand vs Seth Kudilal & Ors., [1966] 3 S.C.R. 623; Ghazanfer Rashid vs Board H.S. & I. Edn.
U.P., A.I.R. 1970 Allahabad 209; Miller vs Minister of Pensions, [1947] All.
E.L.R. 372; State of Uttar Pradesh vs Chet Ram & Ors., , referred to.
778 (19) There is an unmistakable subjective element in the evaluation of the degree of probability and the quantum of proof.
Forensic probability must, in the last analysis, rest on the robust common sense and, ultimately, on the trained institutions of the Judge.
[802D] (20) Strict rules of the Evidence Act, and the standard of proof envisaged therein do not apply to departmental proceedings of domestic tribunals.
It is open to the authorities to receive and place on record all the necessary, relevant, cogent and acceptable material facts though not proved strictly in conformity with the Evidence Act, the material must be germane and relevant to the facts in issue.
In grave cases like forgery, fraud, conspiracy, misappropriation, etc.
seldom direct evidence would be available.
Only the circumstantial evidence would furnish the proof.
Inference from the evidence and circumstances must be carefully distinguished from conjectures or speculation.
[805D E] State of U.P. vs Krishna Gopal & Anr.,, ; ; Hanumant vs The State of Madhya Pradesh, [1952] S.C.R. 1091; Reg.
vs Hodge, ; Bank of India vs J.A.H. Chinoy, A.I.R. 1950 P.C. 90; Khwaja vs Secretary of State, [1983] 1 All E.L.R. 765 (H.L.); Sodhi Transport Co. & Anr.
vs State of U.P. & Anr.
etc., [1986] 1 S.C.R. 939; Bhandari vs Advocates Committee, [1956] A.E.L.R. 742 (P.C.); Glynn vs Keale University & Anr.
; In Re: An Advocate; , ; Shri Krishan vs The Kurukshetra University, Kurukshetra, A.I.R. and Shivajirao Nilangekar Patil vs Dr. Mahesh Madhav Gosavi & Ors. & Vice Versa, ; , referred to.
(21) The standard of proof is not beyond reasonable doubt "but" the preponderance of probabilities tending to draw and inference that the fact must be more probably.
Standard of proof cannot be put in a straight jacket formula.
No mathematical formula could be laid on degree of proof.
The probative value could be gauged on facts and circumstances in a given case.
The Standard of proof is the same both in civil cases and domestic enquiries.
[805H 806B] (22) The conclusion reached by the Education Standing Committee that the fabrication was done at the instance of either the examinees or their parents or guardians is amply borne out from the record.
The High Court over stepped its supervisory jurisdiction and trenched into the arena of appreciation of evidence to arrive its own conclusion on the specious plea of satisfying 'conscience of the Court '.
[806G]
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6689.txt
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Appeal No. 407/61.
908 Appeal by special leave from the judgment and order dated August 23, 1960, of the Orissa High Court in O.J.C. No. 103 of 1959.
N.O. Chatterjee and P. K. Chatterjee, for the appellant, C. K. Daphtary, Solicitor General of India, B. R. L. Iyengar and P. D. Menon, for the respondents.
B.M. Patnaik, section N. Andley, Rameshwar Nath and P. L. Vohra, for the Intervener.
March 16.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave against the judgment of the Orissa High Court.
The brief facts necessary for present purposes are these.
The appellant made an application to the State Government of Orissa in 1949 for grant of a mining lease for manganese ore over an area comprising 5400 acres situated in the district of Keonjhar.
The appellant was the first applicant for the lease of the aforesaid area, and subsequently other persons applied for lease of the same area including Messrs. Tata from and Steel Company Limited hereinafter referred to as Tatas), the intervener in the present appeal.
The Government of Orissa decided to grant the in favour of Tattas and in January 1956 referred the matter to the Central Government for its approval under r. 32 of the Mineral Concession Rules, 1949 hereinafter referred to as the Rules), which lays down that if more than one application regarding the same, land is received, preference shall be given to the application received first, unless the State Government, for any special reason, and with the prior approval of the Central Government decides to the contrary.
The appellant made a representation to the Central Government against the recommendation of the 909 State Government.
Eventually, on April 9, 1957, the Central Government turned down the recommendation of the State Government about the grant of the mining lease to Tatas.
It also directed that the applications received prior to the application of Tatas should be considered according to the Rules but added that in case the Government of Orissa desired to work the area on a departmental basis, the Central Government would have no objection to consider a proposal for that purpose.
Thereafter the State Government rejected the application of the appellant in December 1957 on the ground that the State Government proposed to arrange for the exploitation of the area in the public sector.
This was followed by an application for review to the 'Central Government under r. 57 of the Rules.
This application was rejected by the Central Government in June 1969.
Thereupon the appellant filed a petition under article 226 of the Constitution in the High Court in July 1959.
This petition was dismissed by the High Court on the ground that it had no jurisdiction to deal with the matter under article 226 as the final order in the case was passed by the Central Government which was located beyond the territorial jurisdiction of the High Court.
The appellant then applied to the High Court for a certificate to appeal to this Court, which was rejected.
He then asked for special leave from this Court, which was granted; and that how the matter has come up before us.
The main question raised before us is the limit of the jurisdiction of the High Court under article 226 in circumstances like those in the present case.
The contention on behalf of the appellant is that as the Central Government bad merely dismissed the review petition, the effective order rejecting the appellant 's application for the mining lease was that of the State Government and therefore the High Court would have jurisdiction to grant a writ 910 under article 226, and that the principle laid down in Election Commission India vs Saka Venkata Subba Rao(l) would not apply.
Reliance in this connection has been placed on the decision of this Court in The State of Uttar Pradesh vs Mohammed Nooh(2).
It is well settled by a series of decisions of this Court beginning with Saka Venkata Subba Rao 's case(1) that there is two fold limitation on the power of the High Court to grant a writ under article 226.
These limitation are firstly that the power is to be exercised throughout the territories in relation to which the High Court exercise jurisdiction, that is to say, the writs issued by the High Court cannot run beyond the territories subject to its jurisdiction, and secondly, that the person or authority to whom the High Court is empowered to issue such writs must be within those territories, which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories.
The view taken in this case has been recently reaffirmed by this Court in Lt. Col.
Khajoor Singh vs Union of India.
(3) Prima facie, therefore, as the final order in this case was passed by the Central Government which is not located within the territories over which the High Court has jurisdiction, the High Court will have no power to grant a writ in this case.
Learned counsel for the appellant however relies on the decision in Mohd. Nooh 's case (2) where it was held that it was not correct to say that an order of dismissal passed on April 20, 1948, merged in the order in appeal therefrom passed in May 1949, and the two orders in turn merged in the order passed in revision on April 22, 1,950, or that the original order of dismissal only became final on the passing of the order in revision.
It was further held that the order of dismissal was operative on its 1. ; 2. ; 3. ; 911 own strength and therefore no relief under article 226 could be granted against the order of dismissal passed in 1948 as article 226 was not retrospective in operation.
It is urged that if the order of dismissal in that case did not merge in the final order of revision which was passed in April 1950, after the Constitution came into force, there was no reason why the order of the State Government should be taken to have merged in the order of the Central Government in this case so as to deprive the appellant of his remedy in the High Court under article 226.
We are of opinion that the principle of Mohd. Nooh 's Case(1) cannot apply in the circumstances of the present case.
The question there was whether the High Court would have power to issue a writ under article 226 in respect of a dismissal which was effective from 1948, simply because the revision against the order of dismissal was dismissed by the State Government in April 1950 after the Constitution came into force.
It was in those circumstances that this Court held that the dismissal having taken place in 1948 could not be the subject matter of an application under article 226 of the Constitution for that would be giving retrospective effect to that Article.
The argument that the order of dismissal merged in the order passed in appeal therefrom and in the final order of revision was repelled by this Court on two grounds.
It was held (firstly) that the principle of merger applicable to decrees of courts would not apply to orders of departmental tribunals, and (secondly) that the original order of dismissal would be operative on its own strength and did not gain greater efficacy by the subsequent order of dismissal of the appeal or revision, and therefore the order of dismissal having been passed before the Constitution would not be open to attack under article 226 of the Constitution.
We are of opinion that the facts in Mohd. Nooh 's case (1) were of a special kind and (1) ; 912 the reasoning in that case would not apply to the facts of the present case.
Further, in A. Thangal Kunju Musaliar vs M. Venkitachalam Potti (1), though this Court was considering a matter in which the question which is before us was not directly in issue, it had occasion to consider certain decisions of certain High Courts which dealt with oases similar to the present case : (see p. 1213).
In those decisions orders had been passed by certain inferior authorities within the territories subject to the jurisdiction of the High Courts concerned, but they had been taken in appeal before superior authorities which were located out.
side the territories subject to the jurisdiction of the High Courts concerned.
In those circumstances the High Courts had held that the order of the inferior authorities had merged in the orders of the authorities.
This Court apparently approved of the view taken by the High Courts in those cases on the ground that a writ against the inferior authority within the territories could not be of any avail to the petitioners concerned in those oases and could give them no relief for the orders of the superior authority outside the jurisdiction would remain outstanding and operative against them.
Therefore, as no writs could be issued against the outside authorities, this Court was of the view that the High Courts were right in dismissing the petitions, as any writ against the inferior authority which is within the jurisdiction of the High Court, in view of the orders of the superior authority, would be infructuous.
The position in the present case is similar to that envisaged above.
The Orissa Government rejected the application of the appellant for grant of the mining lease.
The appellant being aggrieved by that order went in review to the Central Government under the Rules and that review petition was dismissed so that in effect the Central (1)[1955] 2 S.C.R. 1196, 913 Government also rejected the application of the ,appellant for grant of the mining lease to him.
It is not in dispute that if the Central Government was so minded it could have allowed the review and directed the Orissa Government to grant mining lease to the appellant.
Therefore when the Central Government rejected the review petition, it in effect rejected the application of the appellant for the grant of the mining lease to him.
This order of the Central Government in effect rejecting the application of the appellant for the grant of the mining lease to him and confirming the rejection of the application of the appellant by the Orissa Government is clearly not amenable to the jurisdiction of the High Court of Orissa under Art 226 in view of the fact that the Central Government is not located within the territories subject to the jurisdiction of the Orissa High Court.
It would therefore have been useless for the Orissa High Court to issue a writ against the Orissa Government for the Central Governments order rejecting the review petition and therefore in effect rejecting the application of the appellant for grant of the mining lease would still stand This is made clear by r. 60 of the Rules, which provides that "the order of the Central Government under Rule 59 and subject only to such order, any order of a State Government under these rules, shall be final".
Clearly therefore r. 60 provides that where there is a review petition against the order passed in the first instance by the State Government, the order of the Central Government passed in review would prevail and would be the final order dealing with an application for a mining lease under the Rules.
Therefore, quite apart from the theoretical question of the merger of the State Government 's order with the Central Government 's order, the terms of r.60 make it perfectly clear that whenever the matter is brought to the Central Government under r. 59, it is the order of the Central Government which is effective and final.
In these 914 circumstances we are of opinion that the High Court was right in holding that it had no jurisdiction to issue a writ under article 226 in the present case as the final order in this case was that of the Central Government which was not situate within the territories over which the High Court has jurisdiction.
Our attention in this connection was drawn to Shivji Nathubhai vs The Union of India (1).
In that case a mining lease had been granted by the State Government to a particular person and there was a review petition against the grant of that mining lease.
The order granting the mining lease was set aside on review without notice to the person to whom the lease had been granted.
In that connec tion a question arose whether the person to whom the State Government had granted the lease had any interest to enable him to make an application under article 226.
It was then pointed out by this Court that under the Rules the order of the State Government would be effective as there was no re quirement that it was not final until confirmation by the Central Government.
That case however is of no assistance to the appellant for where there is a review petition and the Central Government passes an order on such petition one way or the other it is the Central Government 's order that prevails and the State Government 's order must in those circumstances merge in the order of the Central Government.
The observations in that case on which the appellant relies were made in another connection and can have no bearing on the question before us, where an order has been passed by the Central Government on review and it is that order which is made final by r. 60 and which stands in the way of the appellant.
There is therefore no force in this appeal and it is hereby dismissed with costs.
Appeal dismissed.
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The State Government of Orissa rejected the application of the appellant who had applied for grant of a mining lease in December 1957 on the ground that the State Government proposed to arrange for the exploitation of the area in the public sector.
The appellant made an application for review to the Central Government under r. 57 of the rules of Mineral Concession Rules, 1949.
This application was rejected by the Central Government in June 1959.
Thereupon the appellant filed a petition under article 226 of the Constitution in the High Court of Orissa.
This petition was dismissed by the High Court on the ground that it had no jurisdiction to deal with the matter under article 226 as the final order in the case was passed by the Central Govern ment, which was located beyond the territorial jurisdiction of the High Court.
The appellant came up by special leave to appeal to the Supreme Court.
The main question is as to the limit of the jurisdiction of the High Court under article 226.
The appellant contended that as the Central Government had merely dismissed the review petition, the effective 907 order rejecting the, appellant 's application for the mining lease was that of the State Government and therefore the High Court would have jurisdiction to grant a writ under article 226.
that the High Court was right in holding that it had no Jurisdiction to issue a writ under article 226 in the present case as the final order in this case was that of the Central Government which was not situate within the terri tories over which the High Court had jurisdiction.
This order of the Central Government in effect rejecting the application of the appellant.
for the grant of the mining lease to him and confirming the rejection of the application of the appellant by the Orissa Government is clearly not amenable to the jurisdiction of the High Court of Orissa under article 226 in view of the fact that the Central Government is not located within the territories subject to the jurisdiction of the Orissa High Court.
It would therefore have been useless for the Orissa High Court to issue a writ against the Orissa Government for the Central Government 's Order rejecting the application of the appellant for the grant of the mining lease would still stand.
Held, further that quite apart from the theoretical question of the merger of the State Government 's Order with the Central Government 's Order, the terms of r. 60 of the Mineral Concession Rule 1949 make it perfectly clear that whenever the matter is brought to the Central Government under r. 59, it is the order of the Central Government which is effective and final.
So where there is a review petition and the Central Government passes an order on such petition one way or the other it is the Central Government 's Order that prevails and the State Government 's Order must in those circumstances merge in the order of the Central Government.
Election Commission India vs Saka Venkata Subba Rao, ; , Lt. Col. Khajoor Singh vs Union of India, ; , A. Thangal Kunju Musaliar vs M. Venkitachalam Potti ; relied on.
Shivji Nathubhai vs The Union of India, ; , referred to.
The State of Uttar Pradesh vs Mohammad Nooh (1958) S.C.R. 595, not applicable.
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APPELLATE JURISDICTION: Writ Petition No. 49 of 1973.
Under Article 32 of the Constitution and Civil Appeals Nos. 43 and 44 of 1973 Appeals by Special Leave from the Judgment and order dated the 27th October 1972 of the Rajasthan High Court in D. B.
Civil Writ Petition Nos. 398/72 and 1 885/71 respectively.
A. K. Sen, B. Sen and H. K. Puri for the Appellants.
section T. Desai, section M. lain and section K. Jain for the Respondents.
J. We have before us a petition under Article 32 of the Constitution and two appeals by Special leave from the judgment of the High Court of Rajasthan between the same parties.
The three cases before us raise the same question of law.
It is: Do the goods called "Rayon tyre Cord Fabric" sold by the Delhi Cloth & General Mills Co. Ltd. to manufacturers of tyres, who use it for the purpose of impregnating it with rubber, fall under entry 18 of the Schedule of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as 'the Act ' ) ? The schedule mentioned above gives a list of goods on the sale or purchase of which no tax is payable under the Act. "The relevant entry 18, which was omitted in 1973, reads as follows: "18.
All cotton fabrics, rayon or artificial silk fabrics, woollen fabrics, sugar and tobacco, as defined in the Additional Duties cf Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)".
Section 2(C) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, lays down: "2 (C) the words and expressions 'sugar ', 'tobacco ', 'cotton fabrics ', 'silk fabrics ', 'woollen fabrics ' and rayon or artificial silk fabrics shall have the meanings respectively assigned to them in Items Nos. 1, 4, 19, 20, 21 and 22 of the First Schedule to the Central Excise and Salt Act, 1944".
The Writ Petition of the Delhi Cloth and General Mills Co. Ltd. states that "rayon tyre cord fabric" is "manufactured out of rayon yarn and cord".
It goes on to explain that this fabric is "a textile consisting of rayon threads in the warp and cotton threads in the weft and is manufactured on weaving looms in the same manner as in other ordinary textile".
It is also stated there: "The fabric consists of more than 60% by weight of rayon and is unprocessed.
The weft threads are not used merely for tying the warp threads together for the purpose of convenient transport or storage but form an integral part of the whole fabric".
500 The petitioners state that the manufacturers of tyres to whom the fabric is supplied "impregnate the fabric with rubber and weave it into a fabric in the same way as is being done by the first petitioner".
Thus, the petitioners allege that they manufacture "a textile" and also that it serves as part of raw material for what ultimately also goes into the manufacture of a fabric.
After indicating the manner in which and the substance out of which "rayon tyre cord fabric" is made and its composition, the petition sets out item 22 of the first schedule of the Central Excises and Salt Act, 1941, as the applicable entry covering the goods manufactured by the petitioner.
This item reads as follows: "Rayon or artificial silk fabrics 'means all varieties of fabrics manufactured either wholly or partly from rayon or artificial silk and includes embroidery in the piece, in strips or in the motifs and fabrics impregnated or derivatives or of other artificial plastic materials, but does not included any such fabrics: (i) If it contains 40% or more by weight of wool.
(ii) lf it contains 40% or more by weight of silk.
(iii)If it contains cotton and less than 60% by weight of rayon or artificial silk; or (iv) If it contains no cotton and less than 40% by weight of wool and less than 40% by weight of rayon or artificial silk".
The petitioners assert that, from years 1966 to 1969, the respondent Commercial Tax officer was not subjecting the goods of this description to sales tax and accepted the case of the petitioners that they were exempt from taxation.
The reasoning of the Commercial Tax Officer, in exempting these goods, is also mentioned.
It is then stated that, as some questions were put in the Rajasthan State Legislative Assembly, on or about 20th April, 1971, asking for the reason why this particular type of goods of the petitioners were exempted from Sales tax, the Commissioner of Commercial Tax issued a letter to the Commercial Tax Officer to levy Sales tax on the "rayon cord fabric" manufactured by the petitioner.
Thereafter, notices under the proviso to section 12(1) of the Act were issued for the years 1965 to 1969 with a view to reopening the assessments on the ground that the sales of these goods had wrongly escaped assessment.
but these were dropped due to some preliminary 501 objections.
Fresh notices were then issued and proceedings for subsequent assessment years were also taken.
By orders passed on various dates, the Commercial Tax officer rejected the petitioners ' objections to Sales tax on "rayon tyre cord fabric".
The petitioners have, however, come up to this Court directly against the order and provisional assessment dated 21 st November, 1 972.
It also appears from the writ petition that proceedings fol the assessment year 1972 73 arc still pending before the Commercial Tax officer.
Civil Appeals Nos.
43 of 1973 and 44 of 1973 by special leave are directed against a common judgment of a Division Bench of the High Court of Rajasthan, given on 27.10.1972, dismissal, the appellants ' Writ Petitions against the assessment order dated 26th March, 1971, for the years 1968 69 and 1969 70 made by the Commercial Tax officer.
The view of the Commercial Tax Officer, questioned by the petitioners, was that the goods now sought to be taxed are not the "end product".
The High Court did not go into the merits of the case.
It accepted the preliminary objection of the State of Rajasthan that the petitioner should first resort to alternative remedies provided Under the Act so that the appellate authority under Section 13 of the Act may go into the whole evidence and decide disputed questions of fact.
There is also provision for revision by the Board of Revenue under Section 14 when moved by the assessing authority.
The High Court did not find any error "apparent upon the face of the record" The taxing authorities have the.
jurisdiction to decide the question before them either rightly or wrongly.
In any case, its view was that, until the statutory remedies had not been exhausted, leaving some "error apparent on the face of the record" still to be rectified by the High Court, a case for interference under Article 226 of the Constitution will not arise.
It is urged on behalf of the Delhi Cloth Mills that no disputed question of fact arises.
It is submitted that, on admitted facts, it could be decided whether the "tyre cord fabric" is an exempted "fabric" or not.
We think that this view over looks several matters, indicated below, including the admission on behalf of the Delhi Cloth Mills that, in the case before us, the "tyre cord fabric" manufactured by it is woven by its purchasers "into a fabric in the same way as is being done by the first petitioner".
This certainly means that the tyre cord fabric serves as raw material for another fabric which ultimately emerges by subjecting the goods manufactured by Delhi Cloth Mills to a process of impregnating with rubber.
502 A sample of the tyre cord fabric was actually produced before us.
It is said that the "fabric" is manufactured in the same way as cloth is woven on looms.
It consists of cords which could be said to constitute warps, running length wise, and wefts, running breadth wise.
But, the spaces left between them are so wide, presumably for purposes of impregnation with rubber, that it may not pass for an ordinary "fabric '.
Like one of those mentioned in entry 19 of the first schedule to the , such as "tussors", "corduroy", "gaberdine", "denim` '.
Indeed, if the "lyre cord fabric" is so well established a category of rayon "fabric", it could have found mention specifically in item 22 in the same way as the numerous varieties of cotton fabrics are mentioned in item 19.
In answer to this argument, it could be urged that, for some reason, entry No. 22 does not enumerate rayon and silk fabrics in the same fashion as the cotton fabrics are specified by name in item 19.
It is certainly a question which appertains to the knowledge of technical aspects of textile weaving and production to determine at what stage threads or cords forming warps and wefts really amount to a "fabric".
It is true that the term fabric has a wide meaning.
Its first meaning given in the Oxford English Dictionary is: "A product of skilled workmanship".
The first example of such a product is: "An edifice, a building".
The fourth example of the first meaning is: I "a manufactured material; now only a 'textile fabric ', a woven stuff".
We think that we are necessarily concerned here only with "textiles" as fabrics.
This is clear from entries 19 to 22(D) of the first Schedule of the .
Entry 22AA is "textile fabrics not elsewhere specified".
This residuary entry and the descriptions in preceding entries seem to us to make it abundantly clear that we are dealing here only with "textile fabrics".
The case of the Delhi Cloth Mills also is that the product is a. "textile".
There fore, the essential question to determine is the stage at which the goods under consideration become a 'textile fabric".
The meaning of the term "textile", given in the Oxford Dictionary, is: "A woven fabric; any kind of cloth".
It must acquire a body and a texture.
Presumably it is not just the skeleton of a textile.
Apparently, it is more than that.
But, against pushing this point of view too far it may be urged that in the technical and commercial parlance we are dealing with a "fabric".
It is, therefore, difficult to find fault with the view of the High Court that there is no error apparent on the face of the record and 503 that the taxing authorities should be left to determine whether the "tyre cord fabric" is more correctly capable of being described as a fabric or as merely cord pretending to pass off as ar textile fabric This is really a technical question.
In any case, it is a question on which two views seem possible on apparent facts.
And, neither of the two views can be rejected outright as untenable.
It requires careful consideration of the technical processes of manufacturing, of the composition of the "tyre cord fabric ', and an evaluation of opinion of experts on the subject, to be able to decide the question satisfactorily rt may also require some examination of commercial usage and terminology or the language of the market in goods of this type.
We, therefore, think that the High Court was right in not interfering with the decisions of the taxing authorities at this stage.
We also think that for the same reason we could not interfere under Article 32 with the decision of the Commercial Tax officer.
Indeed, no fundamental right is shown to be affected by a mere determination of the question indicated above.
There is no absence of jurisdiction of the taxing authorities who had the power to decide the question either rightly or wrongly.
It has been urged, on behalf of the Delhi Cloth Mills that the High Court should have interfered as the question whether the tyre cord fabric is the end product or not in the final manufacture of an other fabric was quite irrelevant.
It was submitted that, so far as the Delhi Cloth Mills is concerned, the goods under consideration constitute the "end product" which they sell in the market.
The example given was that of cloth which is the "end product" for the mills which manufacture cloth, but, it becomes the raw material for tailors and for those who make ready made clothes to sell them.
This argument overlooks that it is not so much the point of manufacture at which the Mills sell their own product which determines the nature of goods which are entitled to exemption, but it is the stage reached by this product, in the process of manufacture of fabrication of a "textile", which should decide the question.
As we have already indicated, the context in which the entry occurs shows that it is meant for "textile" fabrics and not for any kind of fabric.
Therefore even if the tyre cord fabric may be the end product for the Delhi Cloth Mills, the crucial question is: Does this product constitute a fabric which is a textile? A textile fabric does not cover everything which could be made into a fabric.
Mere cord does not become a textile fabric just because it requires some skill to make it.
The rather wide dictionary meanings of the term "fabric" do not appear to us to give the exact meaning of the term "fabric" as 504 used in the relevant entries entitled to exemption.
In the entries, it evidently means a fabric which is also a textile.
The question, therefore, to be determined by the Tax authorities themselves is whether the product for which the Delhi Cloth Mill claims exemption Is a textile fabric and not any other kind of fabric.
Having indicated the nature of the enquiry which must by undertaken by the taxing authorities, we find that there is no sufficient reason for overriding and discarding the High Court 's view that, on what appeared to the High Court to be a question Of fact, it should not decide whether the product under consideration constitutes a fabric entitled to exemption.
There was no appeal by the State of Rajasthan.
It does not, therefore, seem propel.
for us to finally decide, on merits, the question argued before us in the appeals by the Delhi Cloth Mills which are before us unless we could have decided the matter in favour of the appellant.
We could have only done that if we were of opinion that the taxing authorities had committed error apparent on the face of the record.
But, as already indicated above, we are not of this opinion.
For all the reasons given above, we think that the Writ Petition as well as the appeals by special leave are liable to be dismissed, and, we hereby dismiss them with one set of costs.
P. B. R. Appeal dismissed.
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Rayon tyre cord fabric which is a textile consisting of rayon threads in the warp and cotton threads in the weft is manufactured on weaving looms in the same manner as any other ordinary textile.
The tyre manufacturers to whom the product is supplied.
impregnate the fabric with rubber and weave it into fabric.
Under Entry 18 of Schedule of the Rajasthan Sales Tax Act, 1954, rayon fabrics were exempt from sales tax.
When the Commercial Tax officer rejected the petitioners ' objections to sales tax being levied on rayon tyre cord fabric, the e petitioners filed a petition under Article 32 of the Constitution alleging breach of Fundamental Rights.
In respect of certain earlier assessment years, however, the view of the Commercial Tax officer was that the goods were not the end product.
when, the matter was taken to the High Court, it held that, until the statutory remedies had been exhausted, no case for interference under article 226 arose.
It did not find any error apparent on the face of the record.
Hence, the appeals by special leave.
E In the write petition as well as in the appeals it was contented that the goods constituted the end product which the petitioners sell in the market and, therefore, were exempt from sales tax.
Dismissing the petition and appeals.
^ HELD: (1)(a) It is difficult to find fault with the view of the, High Court there was no error apparent on the face of the record and that the taxing authorities should be left tb determine whether the tyre cord fabric is more correctly capable of being described as a fabric or as merely cord passing of as a textile fabric.
This is really a technical question.
In any case.
it is a question on which two views may be possible.
[503C] (b) The fact that the tyre cord fabric manufactured by the petitioners is woven by its purchases into a fabric in the same way as is being done by the petitioners means that the tyre cord fabric serves also as raw material for another fabric which ultimately emerges by subjecting the goods to a process of impregnating it with rubber.
The essential question to determine is the stage at which the goods under consideration became textile fabrics if they do become that at all.
[502C; 503A] (2) This Court cannot interfere under article 32 with the decision of the Commercial Tax Officer, because no Fundamental Right is shown to be affected by the mere determination of the question.
There was no absence of jurisdiction of the taxing authorities who had the power to decide the question either rightly or wrongly.
[503E] 34 833 SUP CI/76 498 ARGUMENTS For the petitioners Respondent No. 1 did not produce or get any evidence from the commercial community dealing with rayon tyre yarn and cord and rayon tyre fabric for the purpose of controverting the conclusive evidence produced by the petitioners to the effect that in the commercial community dealing with the said goods these goods were different both from the point of view of manufacture and also from the point of view of ultimate end product and are considered to be different by the commercial community, which heats rayon tyre cord fabric as fabric.
There was no evidence on the contrary to come to the conclusion that the rayon tyre fabric was not fabric.
The High Court wrongly relied on 25 STC 407 which had no application in the present case, ignoring the decision in 22 STC 470 and 28 STC 431.
It was therefore not a case of disputed question of fact, but a case of admitted fact by the commercial community against which there was no evidence before the respondent.
The alternative remedy of appeal is not at all efficacious in the facts and circumstances of the present case inasmuch as the Commissioner and the State Government having already made up their mind to levy tax, no relief could be expected by the appellants from him and the High Court should have interfered under articles 226 and 227.
Further ill this case there was no question of disputed facts.
The sample was admitted.
There was uncontradicted evidence that the product of the petitioners is known as rayon cord fabric by the commercial community and by common parlance.
The case is a misdirection of law on the part of the assessing authority.
For the respondents There was no error of law apparent on the face of the record as contended by the petitioners.
The High, Court rightly rejected the writ petitions on the ground that there were disputed facts and there are alternative remedies and full and adequate machinery under the Act itself.
The assessee mills, when paying excise duty, paid it only as on yarn under entry 18 of the First Schedule to the Central Excise and Salt Act.
The mills did not pay additional duty under the Additional Duties of Excise (Goods of Special Importance) Act 1956 on the ground that the material was not fabric.
When it suited the mills the material wag said to be yarn and in case of sales tax it contended that it was fabric.
This fact itself was a strong indication that this was a disputed question of fact.
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Civil Appeal No. 334 of 1978.
From the Judgment and Order dated 14.2.1977 of the Punjab and Haryana High Court in Civil Writ Petition No. 1860 of 1975.
WITH Civil Appeal No. 833 of 1977.
414 From the Judgment and Order dated 14 2.1977 of the Punjab and Haryana High Court in Civil Writ Petition No. 1172 of 1974.
Anil Dev Singh, P.P. Rao, O.P. Sharma, Janinder Lal, N.S. Das Bahl, R.C. Gubrela, R.S. Suri, R.S. Sodhi (NP) and M.S. Dhillon (NP) for the appearing parties.
The Judgment of the Court was delivered by PUNCHHI, J.
These two allied appeals arising from a common judgment of the Punjab and Haryana High Court at Chandigarh, in Civil Writ Petitions Nos.
1172 of 1974 and 1860 of 1975, on grant of special leave, can appropriately be disposed of by a common judgment.
In order to recruit 71 officers in the Punjab Civil Services (Executive Branch) and Allied services, the Punjab Public Service Commission, at the behest of the State of Punjab, held a competitive examination in December, 1972.
As advertised 12 vacancies were for the Punjab Civil Services and the remaining for Allied Services.
The applying candidates as per the requirement of the Punjab Civil Service (Executive Branch) Rules, 1930 (for short the Rules) specified the posts in order of preference in their respective applications.
The result of those who were declared qualified was published in the daily Tribune dated September 21, 1973.
Out of the 71 candidates declared successful Shri V.M. Bansal, the appellant in Civil Appeal No. 833 of 1977 was declared successful for a post in the Punjab Civil Service and Shri Jaswant Singh Nerwal, the appellant in Civil Appeal No. 334 of 1978 for the post of Tehsildar in the Allied services.
Some of the unsuccessful candidates challenged this selection in its entirety on various grounds before the High Court through Civil Writ Petition No. 1722 of 1974.
On the other hand challenge in Civil Writ Petition No. 1860 of 1975 was made by Nerwal against Bansal for the latter having been allowed in the meantime substituted preference for the posts to the ones given in the first instance in his application, and which led to his becoming a Punjab Civil Services Officer and Nerwal to be a Tehsildar, in the Allied services and had the substitution not been allowed the position would have been that Nerwal would have been in the P.C.S. and Bansal an Excise & Taxation Officer.
The challenge thus was to the Commission having allowed substitution of the preference.
The High Court negatived the challenge of Nerwal and his claim to be declared successful to a post in the Punjab Civil Service 415 in preference to Bansal and thus dismissed Civil Writ Petition No. 1860 of 1975.
Simultaneously Writ Petition No. 1172 of 1974 preferred by the unsuccessful candidates was allowed in part inasmuch as the selection of Bansal as a Punjab Civil Service Officer and his consequential appointment was quashed.
The High Court, however, did not disturb the selection of the remaining 70 successful candidates but required Bansal to compete again by issuing the following direction: "However, he is entitled to compete with the other unsuccessful candidates for securing place in the merit and we, therefore, direct that Shri V.M. Bansal (respondent No. 8) along with the other unsuccessful candidates be again interviewed by the members of the Commission except Shri J.R. Bansal (respondent No. 4) and whosoever is selected on merits shall have to be appointed against the post for which he is selected in accordance with the Rules.
We may, however, observe that if Shri J.R. Bansal (respondent No. 8) is again selected on merits, he will be entitled to his original seniority and all other benefits of the Service which he would have enjoyed had his selection not been quashed.
If in any case, no candidate is selected against the post of P.C.S. Cadre in accordance with the Rules, any of the other selected candidates may then make representation to the Government for being appointed to the post of P.C.S. in accordance with the Rules.
" Bansal is here before us to have the aforesaid direction quashed and Nerwal to have the place of Bansal as a Punjab Civil Service Officer.
We heard learned counsel for the respective parties on every aspect of the case at great length.
The High Court was goaded to issue the above direction regulating selection between Bansal and other unsuccessful candidates, as also the consequence thereof, on applying the decision of this Court in A.K. Kraipak & Ors. etc.
vs Union of India & Ors., to neutralise Bansal 's father Shri J. R. Bansal being a member of the Public service Commission.
And even though he had not participated in the deliberations of the Commission, when Bansal had been interviewed, his brooding presence was held negatively to have influenced the selection and the possible ouster of a possibly successful candidate.
Kraipak 's case was one where one of the persons, who sat as a member of the selection board, was himself, one of the persons to be considered for selection.
He participated in the 416 deliberations of the selection board when the claims of his rivals were considered.
He participated in the decisions relating to the preference in seniority.
He participated at every stage in the deliberations of the selection board where there was conflict between his interest and duty.
In such set of facts this Court unhesitatingly came to the conclusion that there was a reasonable likelihood of bias and therefore the principles of natural justice had got violated.
But this Court in Javid Rasool Bhat & Ors.
vs State of Jammu & Kashmir & Ors.
, ; did not vitiate the selection of a candidate to admission in a medical college on the ground of presence in the selection board of the father of one of the candidates.
In this case, the Principal of Medical College, Srinagar whose daughter was a candidate for admission to the Medical College informed the Selection Committee at the very outset about this fact and told them that he would not have anything to do with a written test and would not be present when his daughter would be interviewed.
The other members of the Selection Committee agreed to the proposal.
The procedure adopted by the Selection Committee and the members concerned was in accord with the generally accepted and well known procedure adopted by the Public Service Commissions every where in the country, as it was not unusual for candidates related to members of the Service Commission and selection Committees to seek employment.
In such a situation the practice generally in vogue is for the member concerned to excuse himself when the particular candidate is interviewed and such a selection is beyond challenge, unless, of course, mala fide.
See this Court 's decision in S.N. Nagarajan & Ors.
vs State of Mysore & Ors., , also.
Then we have the momentous decision of this Court in Ashok Kumar Yadav and Ors.
vs State of Haryana & Ors. etc.
etc., [1985] (Supp.) SCR 657 which without whittling down the salutary principle evolved in Kraipak 's case (supra) has put the Public Service Commissions, being creatures of the Constitution, at a higher pedestal.
At pages 686 87, it was ruled as follows: "But the situation here is a little different because the selection of candidates to the Haryana Civil Service (Executive) and allied services is being made not by any Selection Committee constituted for that purpose but it is being done by the Haryana Public Service Commission which is a Commission set up under Article 316 of the Constitution.
It is a Commission which consists of a Chairman and a specified number of members and is a Constitutional Authority.
We do not think that the princi 417 ple which requires that a member of a selection committee whose close relative is appearing for selection should decline to become a member of the selection committee or withdraw from it leaving it to the appointing authority to nominate another person in his place, need be applied in case of a Constitutional Authority like the Public Service Commission, whether Central or State.
If a member of a Public Service Commission were to withdraw altogether from the selection process on the ground that a close relative of his is appearing for selection, no other person save a member can be substituted in his place.
And it may sometimes happen that no other member is available to take the place of such member and the functioning of the Public Service Commission may be affected.
When two or more members of a Public Service Commission are holding a viva voce examination they are functioning not as individuals but as the Public Service Commission.
Of course, we must make it clear that when a close relative of a member of a Public Service Commission is appearing for interview, such member must withdraw from participation in the interview of that candidate and must not take part in any discussion in regard to the merits of that candidate and even the marks or credits given to that candidate should not be disclosed to him.
" It was the admitted case before the High Court that Bansal 's father did participate in the deliberations of the Commission when the viva voce test of other candidates appearing before the Commission had been taken and he had accordingly awarded marks to the candidates otherwise competing with his own son.
The High Court has still deduced that inspite of the afore suggested bias the candidates who got selected against the posts (except his son) got their due unbiased and therefore their selection cannot be questioned.
Taking this deduction to be correct, the High Court before issuing the direction under challenge, had further to find that there was bias in excluding the unsuccessful candidates.
We do not find this to have engaged the attention of the High Court.
It is noticeable that besides Bansal 's father there were four other members of the Public Service Commission and who had functioned as a Commission.
As is evident there was a long list of as many 540 candidates to be interviewed and the interviews went on from 24 9 1973 uptill 30 10 1973.
In the nature of things, there was no material before the High Court, and none has been pointed to us, from which it could be concluded that the members 418 of the commission could keep track of the comparatives of each of those 540 candidates so as to manipulate a favourable result to Bansal.
We have not been shown any material to entertain the doubt that Bansal 's father being a member of the Public Service Commission, per se had the effect of other members keeping track of comparatives in order to single out Bansal 's as a successful candidate.
And lastly there is not a word of mala fide suggested against the other members of the Public Service Commission, of having shared the supposed animus of Bansal 's father.
Thus, in the facts and circumstances of this case, we do not find any reason to sustain the judgment of the High Court on this aspect of the case.
Bansal 's father did what was expected of him, in having declined to participate in the deliberations of the commission when Bansal went for the viva voce test.
Our view in this regard is further strengthened by the manner in which the viva voce test is conducted and which the High Court even has not disapproved.
It appears that out of a total of 825 marks, 625 marks have been allotted for written tests and the remaining 200 marks for viva voce test.
These viva voce marks are distributed in various heads as enumerated by the High Court.
What is significant is that each member individually gets 25 marks but on actual working, if one of them is not attending, the share of marks are divided in the present members.
Further these marks are strictly not divided as 25 marks for each member but each member allots marks to each candidate out of 125 marks and these when added are divided by 5 or by the actual number of members present and participating in the interview.
We may not be taken to be commending such a system of division of marks out of the allocated marks for the viva voce test but it seems this is the practice in which they are actually worked out.
Similarly the provision of 200 marks for viva voce test cannot meet our approval because of the percentage now authoritatively fixed in Ashok Kumar Yadav 's case (supra).
On these particulars and for these reasons no single member can possibly usurp to himself the total functioning of the commission and jealous as human nature is, no other member can be expected to have abdicated his powers to another, at that level, and to oblige another.
These circumstances do not give rise to the likelihood of Bansal 's father espousing the cause of his son to the other four members of the commission and monitor the performance of 540 candidates to be interviewed, the results of written examination of which, he was not alleged to be aware beforehand.
In these circumstances, we find it difficult to uphold the view of the High Court requiring Bansal to be interviewed again so as to rub against the unsuccessful candidates and suffer the consequence.
419 On the grant of special leave to Bansal, operation of the judgment and order of the High Court appealed against, was on 27th July, 1977, stayed.
Bansal has stayed put and working as an Officer in the Punjab Civil Service and his displacement at the present stage would otherwise be inequitous serving nobody 's purpose due to the time lag.
The unsuccessful candidates cannot possibly now, at this stage, due to age and other supervening factors, be fit for the viva voce test, so as to elbow out Bansal.
The obedience of the directions of the High Court at this late stage would overly be counter productive and thus not worth sustaining.
This brings us to the claim of Nerwal for displacement of Bansal from the post in the Punjab Civil Service in substitution to that held by him as a Tehsildar.
The facts as found by the High Court are that initially Shri V.M.Bansal 's first preference was for the post of Excise & Taxation Officer, but on December 4, 1973, he had intimated to the Commission that he required change of his preference so that his first preference was of Punjab Civil Service (Executive Branch).
The intimation was received in the office of the commission on December 4, 1974 itself and the Chairman of the commission on the same date allowed the change.
That such change was permissible before the declaration of the result is beyond dispute.
What was urged before the High Court was that since Bansal 's application did not form part of all like applications sent in a bundle by the commission to the state Government on 11th December, 1973 and had rather been sent separately later on December 20, 1973, that by itself raised a doubt as to the authenticity thereof.
The High Court negatived the contention.
It held that this circumstance alone did not conclusively prove that the change of preference was intimated to the commission after the declaration of the result on December 7, 1973 as alleged.
Though the High Court went on to observe that there was no statutory rule that no change in preference could be made after the result is communicated by the commission to the State Government, we are not obliged to go into that question.
In face of the finding of the High Court that circumstantially it was established on the record that the preference had been changed by Bansal on 4 12 73, before the declaration of the result, it is difficult to take a contrary view.
The High Court had even seen the original record to come to that view.
Such like inferences drawn are in the realm of facts and we have not been persuaded to take a different view.
Once this is established that the change of preference could be made and it was intimated and appproved timely, the conclusion is inescapable that Bansal 's first preference to a post in the Punjab Civil 420 service ranked superior to Nerwal 's preference, because of their interse ranking in the examination results.
Thus,the appeal of Jaswant Singh Nerwal has no substance deserving rejection.
Resultantly for the views afore expressed, Civil Appeal No. 833 of 1977 preferred by Shri V.M. Bansal is allowed and the Civil Writ Petition No. 1172 of 1974 before the High Court would stand dismissed and Civil Appeal No. 334 of 1978 of Shri Jaswant Singh Nerwal would stand dismissed affirming the dismissal of his Writ Petition No. 1860 of 1975 before the High Court, but without any order as to costs in both appeals.
D.R.L. C.A. No.334/78 dismissed C.A. No.833/77 allowed.
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For the recruitment of 71 officers in the Punjab Civil Services (Executive Branch) and Allied Services, the Punjab Public Service Commission, at the behest of the State of Punjab, held a competitive examination.
As per the requirement of the Punjab Civil Services (Executive Branch) Rules, 1930, the applying candidates specified the posts in order of preference in their respective applications.
One such candidate, appellant V.M. Bansal, who had initially indicated his first preference for the post of Excise & Taxation Officer, intimated to the Commission, but undisputedly before the declaration of the result, that he wanted change of his preference so that his first preference was of Punjab Civil Service (Executive Branch).
This change was allowed by the Commission.
Bansal 's father, who was a member of the Commission, did not participate in the deliberations of the Commission when Bansal was interviewed.
Of the 71 candidates declared successful, Bansal was declared successful for a post in the Punjab Civil Service, and appellant jaswant Singh Nerwal for the post of Tehsildar in the Allied Services.
Some of the unsuccessful candidates challenged the entire selection on various grounds before the Punjab and Haryana High Court by means of a writ petition.
On the other hand, Nerwal, through a separate writ petition, challenged the change of preference allowed by the Commission to Bansal which led to Bansal becoming a Punjab Civil Service Officer and Nerwal a Tehsildar, and claimed that he be declared successful to a post in the Punjab Civil Service in preference to Bansal.
The High Court by a common judgment rejected the claim of Nerwal and dismissed his writ petition, but allowed the writ petition preferred by the unsuccessful candidates in part inasmuch as the selection of Bansal as a Punjab Civil Service Officer and his consequential appointment was quashed.
The High Court however did not disturb the selection of the remaining 70 successful candidates but 412 required Bansal to compete again with the other unsuccessful candidates as per its direction extracted in the judgment.
The High Court in issuing the aforesaid direction applied the decision of this Court in A. K. Kraipak & Ors. etc.
V. Union of India & Ors., , to neutralise Bansal 's father being a member of the Commission.
And even though Bansal 's father had not participated in the deliberations of the Commission, when Bansal was interviewed, his brooding presence was held negatively to have influenced the selection and the possible ouster of a possibly successful candidate.
Hence these two appeals by special leave, one by Bansal and the other by Nerwal, against the judgment of the High Court.
Allowing the appeal of Bansal and dismissing the one filed by Nerwal, the Court, HELD: (1) Besides Bansal 's father, there were four other members of the Public Service Commission and who had functioned as a Commission.
There was a long list of as many 540 candidates to be interviewed and the interviews went on from 24.9.1973 uptil 30.10.1973.
[417G] (2) Bansal 's father did what was expected of him, in having declined to participate in the deliberations of the Commission when Bansal went for the viva voce test.
[418C] (3) No material has been shown to entertain the doubt that Bansal 's father being a member of the Public Service Commission, per se had the effect of other members keeping track of comparatives in order to single out Bansal as a successful candidate.
There is not a word of mala fide suggested against the other members of the Public Service Commission, of having shared the supposed animus of Bansal 's father.
There is therefore no reason to sustain the judgment of the High Court on this aspect of the case.
[418A B] A.K. Kraipak & Ors. etc.
vs Union of India & Ors., [19701 1 SCC 457, distinguished; Javid Rasool Bhat & Ors.
vs State of Jammu & Kashmir & Ors.
, ; , affirmed; B.N. Nagarajan & Ors.
vs State of Mysore & Ors.
, [ , referred to.
Ashok Kumar Yadav & Ors.
vs State of Haryana & Ors. etc.
, [1985] Supp.
SCR 657, relied upon.
(4) The manner in which the viva voce test is conducted, no single 413 member can possibly usurp to himself the total functioning of the Commission and jealous as human nature is, no other member can be expected to have abdicated his powers to another, at that level, and to oblige another.
These circumstances do not give rise to the likelihood of Bansal 's father espousing the cause of his son to the other four members of the Commission and monitor the performance of 540 candidates to be interviewed, the results of written examination of which, he was not alleged to be aware before hand.
In these circumstances, it is to uphold the view of the High Court requiring Bansal to be interviewed again so as to rub against the unsuccessful candidates and to suffer the consequence.
[418C H] In the instant case, the system of division of marks out of the allocated marks for the viva voce test amongst the actual number of members present and participating in the interview, was not however commended by the Court, nor did the Court approve the provision of 200 marks for the viva voce test because of the percentage now authoritatively fixed in Ashok Kumar Yadav 's case.
[418F] (5) Bansal has stayed put and working as an Officer in the Punjab Civil Service and his displacement at the present stage would otherwise be inequitous serving nobody 's purpose due to the time lag.
The unsuccessful candidates cannot possibly now, at this stage, due to age and other supervening factors be fit for the viva voce test, so as to elbow out Bansal.
The obedience of the directions of the High Court at this late stage would overly be counter productive and thus not worth sustaining.
[419A B] (6) Once it is established that the change of preference could be made and it was intimated and approved timely, the conclusion is inescapable that Bansal 's first preference to a post in the Punjab Civil Service ranked superior to Nerwal 's preference, because of their interse ranking in the examination results.
Thus the appeal of Nerwal has no substance and deserves rejection.
[419H 420A]
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6669.txt
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Civil Appeal No. 481 of 1971.
From the Judgment and Decree dated the 22nd December, 1969 of the Allahabad High Court in Writ Petition .
No. 210 of 1967.
S.T. Desai and H.S. Parihar for the Appellant.
Harbans Lal, Miss A. Subhashini and V.B. Saharya for the Respondent.
Mrs. Shobha Dikshit for Respondent.
No. 3.
The Judgment of the Court was delivered by 532 AMARENDRA NATH SEN, J.
Whether the order of the Central Government taking over the management of the Sugar Mill of the Appellant under Rule 125A of the Defence of India Rules and appointing an authorised Controller of the said Mill thereunder is valid, is the principal question which falls for determination in this appeal by certificate.
The main contention of Mr. section T. Deasi, learned Counsel for the appellant, is that on a proper construction of Rule 125A of the Defence of India Rules (hereinafter referred to as the Rules) the order taking over the management of the Sugar Mill under this rule is invalid, as on the date of the order the Sugar Mili was closed and the appellant had no intention of re opening the same.
It has not been disputed that if the order of the take over of the management is held to be valid the appellant will not be entitled to any relief and the appeal must fail.
We may observe that the question whether the Mill was closed or not on the date the order taking over the management and appointing an authorised Controller under Rule 125 was passed, is in serious dispute.
However, for the purpose of deciding the question raised in this appeal it does not become necessary to go into any dispute with regard to the facts.
We propose to proceed on the basis that the Mill had remained closed and the appellant had shut it down permanently on the date the order came to be passed, as, in our opinion, the order in question, even if the same be held to have been passed at the time when the Mill was lying so closed, must be held to be perfectly valid on a proper interpretation of Rule 125A.
As in our opinion, on a proper interpretation of Rule 125A, the order in question is lawful and justified even if we accept the submission of Mr. Desai that the Mill was factually so closed, it does not become necessary for us to advert to the facts of this particular case.
The real question is one of interpretation of Rule 125A. Rule 125A was introduced by an amendment and inserted by G. section R. 1813 dated 28th December, 1962.
The provisions of this Rule relevant for the purpose of this appeal are contained in subrules (1) and (2) which provide as follows: "125A (1).
In this rule unless the context otherwise requires, 'undertaking ' means (a) any undertaking (including an undertaking vested in.
533 or controlled or managed by, a local authority) which is engaged in the production, generation, supply, distribution or provision of water, transport, fuel, light electricity or other power, or any other thing or service which is notified by the Government as essential to the life of the community; (b) any system of public conservancy and sanitation and any hospital or dispensary; and also includes any part or property of an undertaking.
(2) If it appears to the Central Government or the State Government that for maintaining supplies and services essential to the life of the community, it is necessary to take over the management of any undertaking, that Government may, by notified order, authorise any person or body of persons to take over the management of any undertaking specified in the order and thereupon such undertaking shall be managed in accordance with the provisions of that order; Provided that powers under this sub rule shall be exercised by the State Government in respect of a company to which the applies.
Mr. Desai referring to sub rule (1) (a) of Rule 125A of the Rules has argued that the Mill of the Appellant was not an undertaking within the meaning of this Rule, as the Mill on the date of the order was not engaged in production, generation, supply, distribution, or provision of water, transport, fuel, light, electricity or other power or any other thing or service which is notified by the Government as essential to the life of the community because the Mill had been lying closed.
It is his argument that an order under Rule 125A can only be validly passed in respect of an undertaking within the meaning of the Rule and in terms of the definition of 'undertaking ' in the rule, an undertaking to which this rule may apply, must be one which is engaged in the production, generation, supply, distribution or provision of water, transport, fuel, light, electricity or other power or any other thing or service 534 which is notified by the Government as essential to the life of the community.
He contends that the Mill had been closed and had not been functioning and therefore, the Mill was not engaged in the production, generation, supply or distribution of any sugar or any other thing or service essential to the life of the community.
It is his contention that as the appellant had long before the passing of the order and even before sugar was declared to be an essential commodity completely stopped the running of the Mill with no intention to start it again, the Mill had ceased to be engaged in the manufacture or production of sugar and there was therefore, no undertaking within the meaning of Rule 125A and the order passed under Rule 125A which was not attracted must be held to be bad and invalid.
He has submitted that an order under Rule 125A can only be passed in respect of an undertaking which is actually engaged in the activity of production at the time the order is passed.
In support of the submissions made, Mr. Desai has referred to the decision of this Court in R. C. Cooper vs Union of India( ') and also to the decision of the Delhi High Court in the case of National Projects Construction Corporation Ltd. vs Commissioner of Wealth Tax.
Delhi(2).
On behalf of the Union of India, it has been submitted that stoppage of production and non functioning of the Mill even with an intent to close it down permanently does not, in any way, affect the power to take over the management under Rule 125A and the jurisdiction and authority to pass an order even in respect of an undertaking closed and intended to be permanently shut down, can validly be exercised under rule 125A.
The submission is that merely because an undertaking has been shut down with no intention of being reopened it will not on that ground only cease to be an undertaking within the meaning of the rule.
The learned counsel argues that for a proper appreciation of the true import and meaning of the word 'undertaking ' and for understanding the true scope and effect of rule 125A, it is necessary to refer to rule 125.
It is his argument that in the light of the provision contained in rule 125, rule 125A which was introduced by way of amendment to confer further power of take over of the management of an undertaking will have to be understood and construed; and on proper interpretation it is clear that in the larger public interest.
535 the power and authority conferred under rule 125A can undoubtedly be exercised in respect of an undertaking which may not be functioning and may have even been closed with intent of not reopening the same.
The relevant provisions of rule 125 read: "125.
General control of industry, etc. (1) In this rule, unless the context otherwise requires, (a) any reference to any article or thing shall be construed as including a reference to electrical energy; (b) the expression 'undertaking ' means any undertaking by way of any industry, trade or business and includes the occupation of handling, loading or unloading of goods in the course of transport.
(2) If the Central Government or the State Government is of opinion that it is necessary or expedient so to do for securing the defence of India and civil defence, the efficient conduct of military operations or the maintenance or increase of supplies and services essential to the life of the community or for securing the equitable distribution and availability of any article or thing at fair prices, it may, by order, provide for regulating or prohibiting the production, manufacture, supply and distribution, use and consumption of articles or thing and trade and commerce therein or for preventing any corrupt practice or abuse of authority in respect of any such matter.
(3) Without prejudice to the generality of the powers conferred by sub rule (2), an order made thereunder may provide (a) for regulating by licences, permits or otherwise the production, manufacture, treatment, keeping storage, movement, transport, distribution, disposal, acquisition, use or consumption of articles or things of any description whatsoever; 536 (aa) for regulating or prohibiting any class of commercial or financial transactions in respect of any article or thing which in the opinion of the Government are, or, if not regulated or prohibited, are likely to be, detrimental to any of the purposes specified in subrule(2) (b) for prohibiting the with holding from sale, either generally or to specified persons or classes of persons, of articles or things ordinarily kept for sale and for requiring articles or things ordinarily kept for sale to a be sold either generally or to specified persons or class or classes of persons or in specified circumstances; (c) for requiring any person holding in stock any article or thing to sell the whole or a specified part of the stock to the Government or to an officer or agent of the Government or to such other person or class or classes of persons and in such circumstances as may be specified in the order and if the order relates to food grains, at such prices as may be specified in the order having regard to; (i) the maximum price, if any, fixed by order under clause (e) or by or under any other law for the time being in force, for the grade or variety of food grains to which the order this clause applies; and (ii) the price for that grade or variety of food grains prevailing or likely to prevail during the post harvest period in the area to which the order applies; (d) for securing the production or manufacture of specified articles or things in specified quantities and for effecting modification in the pattern of production or manufacture of such articles or things; (dd) for securing the production, manufacture supply or sale according to the prescribed standards and specifications, of any article or thing appearing to the Government essential to any of the purposes specified in sub rule (2); 537 (ddd) for the minimum and maximum stock of any article or thing appearing to the Government essential to any the purposes specified in sub rule (2), to be held by any consumer or by any producer, manufacturer, distributor, dealer or other person; (e) for controlling the prices or rates at which articles or things of any description whatsoever may be sold or hired or for relaxing any maximum or minimum limits otherwise imposed on such prices or rates; (f) for controlling the rates at which any vessel registered in India may be hired and the rates at which persons or goods may be carried in or on any such vessel; (g) for requiring any employers or class or classes of employers to supply to all or any class of their employees or to any class of dependants of such employees such articles or things in such quantities and at such price as may be specified in the order and to provide such accommodation and other facilities for taking meals at or near the place of employment as may be so specified; (h) for controlling the recruitment and employment of labour in such areas as may be specified in the order with a view to securing that efficient workers are available for undertakings which, in the opinion of the Government, are essential undertakings; (i) for regulating the carrying on of any undertaking engaged in or capable of doing, work appearing to the Government essential to any of the above mentioned purposes, and, in particular: (i) for requiring work to be done by an under taking; (ii) for determining the order of priority in which, and the period or periods within which work shall be done by an undertaking; (iii) for controlling or fixing the charges which may be made by undertaking in respect of the doing of any work by it; 538 (iv) for requiring, regulating or prohibiting the engagement in the undertaking of any employees or class or classes of employees; (v) for requiring the undertaking to provide adequate safeguards against sabotage; (j) for requiring persons engaged in the production, manufacture, supply or distribution of or trade and commerce in any article or thing, to maintain and produce for inspection such books, accounts and records relating to their business and to furnish such information relating thereto and to employ such accounting and auditing staff as may be specified in the order; (k) for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters; (i) for requiring persons carrying on any industry, trade or business or employed in connection with any undertaking to produce to such authority as may be specified in the order, any books, account or other documents relating thereto; and for requiring such persons to furnish such authority as may be specified in the order such estimates returns or other information relating to any industry.
trade or business or any undertaking as may be specified in the order or demanded thereunder; (m) for the grant or issue of licences, permits or other documents, the charging of fees therefor, the deposit of such sum, if any as may be specified in the order as security for the due performance of the conditions of any such licence, permit or other document, the forfeiture of the sum to deposited for any part thereof for contravention of any such conditions, and the adjudication of such forfeiture by such authority.
539 as may be specified in the order; * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * (4) If it appears to the Central Government or the State Government that in the interests of the defence of India and Civil defence, or the efficient conduct of military operations, or for maintaining supplies and services essential to the life of the community, it is necessary to exercise control over the whole or any part of an existing undertaking, that Government may by order authorise any person (hereinafter referred to as an authorized controller) to exercise, with respect to the undertaking or any part thereof specified in the order, such functions of control as may be provided by the order; and so long as an order made under this sub rule is in force with respect to any undertaking or part of an undertaking (a) the authorised controller shall exercise his functions in accordance with any instructions given to him by the Central Government or the State Government, so, however, that he shall not have power to give any directions inconsistent with the provisions of any Act or other instrument determining the functioning of the undertakers except in so far as may be specifically provided by the order; and (b) the undertaking or part shall be carried on in accordance with any directions given by the authorised controller in accordance with the provisions of the order, and any person having any function of management in relation to the undertaking or part shall comply with any such directions; (5) The Central Government, so far as it appears to it to be necessary or expedient for securing the defence of India and civil defence or the efficient conduct of military 540 operations, or for maintaining supplies and services essential to the life of the community, may direct the employment of persons subject to the or the , or the (a) in any public utility service as defined in section 2 of the , or (b) in any undertaking or part thereof, (i) which is being carried on by the Central or a State Government, or (ii) which in the opinion of the Central Government is engaged in any trade or business essential to the life of the community, or (iii) with respect to which an order made under subrule (4) is in force.
and thereupon it shall be the duty of every person so subject to obey any command given by any superior officer in relation to such employment and every such command shall be deemed to be a lawful command within the meaning and for the purpose of the , or , or the , as the case may be.
(6) A direction under sub rule (5) may be made with or without the consent of the person carrying on the undertaking or part thereof to which the direction relates but if made without his consent shall be communicated to such person who shall thereupon be deemed to have contravened an order made under this rule if he obstructs or fails to facilitate the employment of persons subject to the , or the or the , in pursuance of the direction.
" Sub rule (2) of rule 125 makes it clear that for securing the defence of India and civil defence, efficient conduct of military operations or the maintenance or increase of supplies and services essential to the life of the community or for seeking equitable distribution and availability of any article or thing at fair prices very wide powers which are indicated in sub section(3) without prejudice to the generality of the powers conferred by this sub section have 541 provided for regulating or prohibiting production, manufacture, supply and distribution, use and consumption of articles or things and trade and commerce and for preventing any corrupt practice or abuse of authority in respect of any such matter.
Rule 125(1)(b) which defines an undertaking makes it clear that the expression 'undertaking ' means any undertaking by way of any industry, trade or business and includes the occupation of handling, loading or unloading of goods in the course of transport.
Sub rule 3(i) of rule 125 makes provision for regulating the carrying on of an undertaking engaged in, or capable of doing work appearing to the Government essential to any of the purposes mentioned above in sub rule (3) and in particular (i) for requiring work to be done by an undertaking and (ii) for determining the order of priority in which, and the period or periods within which the work shall be done by an undertaking.
It has to be noted that the expression undertaking has been given a very wide meaning in rule 125(1)(b) and is not limited to any undertaking which is functioning, or is a going concern.
Sub rule 3(i) confers powers and jurisdiction for regulating the carrying on of any undertaking not only engaged in but also capable of doing, work appearing to the Government essential and this provision makes this position abundantly clear.
In the larger interest of the country and particularly for the purpose specifically mentioned in rule 125, power of general control of very wide amplitude is conferred under rule 125 and there is nothing to indicate in the said rule that the powers conferred under rule 125 cannot be exercised over any undertaking which has stopped functioning.
Indeed, such a construction is clearly unwarranted on a plain reading of the section which clearly provides that such powers can be exercised not only in respect of an undertaking engaged but also capable of doing the kind of activity contemplated in the rule.
Such a narrow construction is likely to defeat the very purpose for which the rule has been enacted.
Although rule 125 confers very wide powers for general control of an undertaking, there is no provision in the said rule to take over the management of any undertaking.
Orders and directions under rule 125 to exercise general control over an undertaking were not considered to be sufficient and the authority felt that further power to take over the management of an undertaking in appropriate cases was necessary, when such general control may not prove effective particularly in respect of certain undertakings.
Rule 125A by way of amendment was, therefore, inserted to confer 542 further power of taking over the management of particular undertakings and of appointing authorised controllers for running such undertakings.
The meaning of the word 'undertaking ' in rule 125A has to be understood in this background and context.
Rule 125A makes it clear that the rule 125A is not intended to apply to each and every undertaking within the meaning of rule 125.
Special provision is made in rule 125A in respect of particular undertakings.
Only Rule 125A describes and particularises the undertakings to which this rule will be applicable.
The provision in this rule that "in this rule unless the context otherwise requires an 'undertaking ' means any undertaking (including an undertaking vested in or controlled or managed by, a local authority) which is engaged in the production, generation, supply, distribution or provision of water, transfer, fuel, light, electricity or other power or any other thing or service which is notified by the Government as essential to the life of the community", is merely descriptive of the undertaking to which this rule is applicable.
The words "which is engaged in the production * * *" merely describes the kind of undertaking by referring to the nature of the activity of the undertaking for bringing it within the purview of rule 125A and they have no bearing on the question whether the activities are in the process of being carried on or have been stopped.
The expression any undertaking which is 'engaged in ' has been used to describe the nature of business of the undertaking and is merely descriptive of the undertaking to which this rule will apply.
The take over of the management of an undertaking to which rule 125A is applicable may become all the more necessary in larger public interest and for effectively serving the purposes for which this rule has been incorporated, particularly when an undertaking engaged in any kind of activity coming within the purview of this rule stops functioning, to enable tee undertaking to function for achieving the purposes for which these provisions have been made.
The construction contended for by Mr. Desai will be inconsistent with the provisions of the rule and will defeat the purposes which this rule seeks to serve.
The decisions relied on by Mr. Desai are of no assistance as the expressions 'undertaking ' and 'engaged ' which came to be considered in these cases, were used in different status and in entirely different context.
We must, therefore, hold that the taking over of the management of the sugar mill of the appellant and the appointment of 543 the authorised controller were perfectly valid and lawful and the act done by the authorised controller in the course of management by virtue of the provisions of these rules must be held to be binding on the appellant.
The appeal, therefore, fails and is dismissed with no order as to costs.
N.V.K. Appeal dismissed.
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The management of the Sugar Mill of the Appellant was taken over under Rule 125 of the Defence of India Rules 1962 and an Authorised Controller was appointed.
In the appeal by certificate to this Court, it was contended on behalf of the Appellant that long before passing of the order and even before sugar was declared to be an essential commodity, the appellant had completely stopped the running of the Mill with no intention to start it again, there was, therefore, no undertaking within the meaning of Rule 125A and the order passed under Rule 125A which was not attracted must be held to be bad and invalid.
On behalf of the Union of India, it was contended that Rule 125A confers jurisdiction and authority to pass an order even in respect of an undertaking closed and intended to be permanently shut down.
Dismissing the appeal, ^ HELD : The taking over of the management of the sugar mill of the appellant and the appointment of the authorised controller were perfectly valid and lawful and the act done by the authorised controller in the course of management is binding on the appellant.
[553A] 531 2.
Although Rule 125 confers very wide powers for general control of an undertaking, there is no provision in the said rule to take over the management of any undertaking.
Rule 125A by way of amendment was, therefore, inserted to confer further power of taking over the management of particular undertakings and of appointing authorised controllers for running such undertakings.
[541G, 542A] 3.
Rule 125A makes it clear that the rule was not intended to apply to each and every undertaking within the meaning of Rule 125.
Special provision is made in Rule 125A in respect of particular undertakings only.
Rule 125A describes and particularizes the undertakings to which this rule will be applicable.
[542B] 4.
The provision in Rule 125A that "in this rule unless the context otherwise requires, an 'undertaking ' means any undertaking (including an undertaking vested in or controlled or managed by, a local authority) which is engaged in ", is merely descriptive of the undertaking to which this rule is applicable.
The words "which is engaged in the production" merely describes the kind of undertaking by referring to the nature of the activity of the undertaking for bringing it within the purview of Rule 125A and they have no bearing on the question whether the activities are in the process of being carried on or have been stopped.
The expression any undertaking which is 'engaged in ' has been used to describe the nature of business of the undertaking and is merely descriptive of the undertaking to which this rule will apply.
[542C E]
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4800.txt
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Appeals Nos.
1017, to 1027, 1029 to 1032, 1034 to 1037, 1901 to 1906 and 854 of 1968.
Appeals from the judgment and order dated January 30, 1967 of the Orissa High Court in O.J.Cs.
329 of 1965 etc.
C. B. Agarwala end R. N. Sachthey, for the appellant (in all the appeals) H. R. Gokhale, Santosh Chatterjee and G. section Chatterjee, for the respondents (in all the appeals).
The Judgment of the Court was delivered by Shah, J.
The State of Orissa has appealed to this Court against the judgment of the State High Court declaring "unconstitutional and invalid" Chapter IV of the Orissa Land Reforms (Amendment) Act 15 of 1965.
The Orissa Land Reforms Act 16 of 1960 (hereinafter called the principal Act) received the assent of the President on October 17, 1960.
By section 1(3) of the principal Act it was provided that the Act shall come into force in whole or in part, on such or date or dates as the Government may from time to time by notification appoint and different dates may be appointed for different provisions of the Act.
By a notification issued on September 25, 1968 certain provisions of the principal Act other than those contained in Chs.
III and IV were brought into force.
By a notification dated December 9,.1965 Ch.
III (sections 24 to 37 dealing with resumption for personal cultivation of any land held by a tenant and related matters) was brought into force.
But Ch.
IV (sections 38 to 52 dealing with ceiling of holdings of land and disposal of excess land) was not brought into operation.
The Legislature of the State of Orissa amended the principal Act by Act 13 of 1965.
By Act 13 of 1965 amendments were made in the principal Acts : the expressions "ceiling area" and "privileged raiyat" were defined by clauses (5) & 24 of section 24 and the expression "classes, of land" was defined in section 2(5 a).
The original Chs.
III and IV of the principal Act were deleted and were substituted by fresh provisions.
Nothing need be said about the amendments made in Ch.
III because in these groups of appeals the validity of these provisions is not in issue.
It may suffice to say that Ch.
III (sections 24 to 36) as amended 595 deals with the right of the landlord to resume land for personal cultivation, the extent of that right, and the proceedings for resumption of land.
Chapter IV as amended deals with ceilings and disposal of excess land.
By section 37 it is provided : "(1) No person shall hold after the commencement of this Act lands as landholder or raiyat under personal cultivation in excess of the ceiling area determined in the manner hereinafter provided.
By section 3 8 the Government is authorised to grant exemption from the operation of the ceiling in respect of certain classes of land Section 39 deals with the principles for determining the ceiling area.
Sections 40, 41 & 42 deaf with the filing of returns in respect of lands in excess of the ceiling area on the date of commencement of the Act and the consequences of failure to submit the return. ' Section 43 provides for the preparation and publication of draft statements showing ceiling and surplus lands by the Revenue Officer and section 44 provides for the publication of the final statement of ceiling and surplus lands after hearing objections, if any, received and after making enquiries as the Revenue Officer may deem necessary.
Section 45 provides that : "With effect from the beginning of the year next following the date of the final statement referred to in sub section (3) of section 44 the interests of the person to whom the surplus lands relate and of all landholders mediately or immediately under whom the surplus lands were being held shall stand extinguished and the said lands shall vest absolutely in the Government free from all encumbrances.
Section 46 provides for determination of compensation.
Section 47 sets out the principles for determining compensation.
It provides that the compensation in respect of the interest of the land holders mediately or immediately under whom the surplus lands are being held as a landholder or raiyat shall be fifteen times the fair and equitable rent.
It also provides for payment of in market value of tanks, wells and of structures of a permanent nature situate in the land, determined on the basis of fair rent in the manner prescribed therein.
Sections 48 and 49 deals with the preparation and publication of draft compensation assessment roll and the final compensation assessment roll.
By section 51 provision was made for settlement of surplus lands vested in the Government under section 45 with persons as raiyats in the order of priority mentioned therein and section 52 imposes a ceiling on future acquisitions.
It is provided thereby: 5 96 "The foregoing provisions of this Chapter shall, A mutatis mutandis, apply where lands acquired and held under personal cultivation subsequent to the commencement of this Act by any person through inheritance, request, gift, family settlement, purchase lease or otherwise, together with the lands 'in his personalcultivation at the time of such acquisition exceeds his ceiling limit.
By the amendment made in the Constitution by the 17th Amendment Act the principal Act is incorporated in the Ninth Schedule to the Constitution with effect from june 20, 1964.
The Act is therfore not liable to be attacked on the plea that it is inconsistent with or takes away or abridges any of the fundamental rights conferred by Part III Constitution.
But the power to repeal or amend the Act incorporated in the Ninth Schedule is not thereby taken away.
the enactment of the of the of the competent Legislature to amending Act passed after the (Seventeenth Amendment) Act, 1964 does not therefore qualify for the protection of article 31 B. See Ramanlal Gulabchand Shah etc.
vs etc.
vs State of Gujarat & Ors.(1) Sri Ram Ram Narain Medhi vs The State of Bombay(2) This position is not disputed.
Chapter IV in the principal Act by orissa Act 13 of 1965 when brought into force is liable to be challenged the ground that it is inconsistent with or takes away orabridges any of the fundamental rights conferred by Part III of the Constitution, It was urged however, and that plea has found favour with the High Court, that section 47 incorporated by Act 13 of 1965 which provided for compensation not based on the market value of the land but at fifteen times the fair and equitable rent is in consistent with article 3 1 A, proviso 2, and is on that account viod.
To appreciate the contention the constitutional provisions relating to protection guaranteed by the Constitution against compulsory acquisition of property may be noticed.
By Ar.
31(2) as amended by the Constitution (Fourth Amendment) Act, 1955, insofar as it is material, it is, provided : "No property shall be compulsory acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which the compen (1)[1969] 1 S.C.R. 42.
(2)[1959] Supp.
1 S.C.R. 489, 597 sation is to be determined and given; Clause (2A) of article 31 which in substance defines the expression "law" providing for compulsory acquisition enacts that: "Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property." By article 31(2) read with article 31(2A) property may be compul sorily acquired only for a public purpose and by authority of a law which provides for compensation for the property so acquired and either fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given.
In order that property may be validly acquired compulsorily the law must provide for the transfer of ownership or right to possession of any property to the State or to a corporation owned or controlled by the State.
By virtue of section 45 of the principal Act "the interests of person to whom the surplus lands relate and of all land holders mediately or immediately under whom the surplus lands were being held . stand extinguished and the lands.
. vest absolutey in the Government free from all encumbrances.
" This is clearly compulsory acquisition of land within the meaning of article 31(2) of the Constitution and the compensation determined merely at fifteen times the fair and equitable rent may not, prima facie, be regarded as determination of compensation according to the principles specified by the Act.
But article 31A which applies to the statute in question provides by the first clause: "Notwithstanding anything contained in Article 13 no law providing for (a)the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, or (b) (c) (d) (e) shall be deemed to be void on the ground that it is tent with, or takes away or abridges any of the ferred by article 14, article 19 or article 31 598 The principal Act 16 of 1960 and the amending Act 13 of 1965 were both Acts enacted for ensuring agrarian reform, and the lands held by the petitioners were "estates" within the meaning of article 31 A.
By section 45 the rights of the land holders were sought to be extinguished or modified.
But to the operative part of article 31 A by section 2 of the Constitution (Seventeenth Amendment) Act, 1964, the second proviso was added.
The second proviso enacts : "Provided further that where any law makes any provision for the acquisition by the State of any estate and where any land comprised therein is held by a person under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of compensation at a rate which ,hall not be less than the market value thereof." By the Constitution (Seventeenth Amendment) Act, 1964, it was clearly enacted that under any law which provides for the acquisition of any land in an estate under the personal cultivation of the holder, compensation shall not be less than the market value of the land if such land be within the ceiling limit applicable to the holder under any law for the time being in force.
Before the High Court it was urged on behalf of the landholders that when the principal Act was enacted it became law in force, and the ceiling limit prescribed thereby became effective, even though Ch.
IV was not extended by a notification under section 1(3) of the Act, and since the subsequent legislation seeks to restrict the ceiling limit and to vest the surplus land in the Government under section 45 as amended, there is compulsory acquisition of land which may be laid only if the law provides for payment to the landholder for extinction of his interest, the market value of that part of the surplus land which is within the ceiling limit under the principal Act.
This argument found favour with the High Court.
In their view the expression "law in force" must be "construed only in the constitutional sense and not in the sense of its actual operativeness", and on that account it must be held that "there was a ceiling limit already provided by the principal Act as it was 'law in force ' within the meaning of that expression as used in the second proviso to article 31 A".
They proceeded then to hold that section 47 of the Act as amended provided for payment of compensation at a rate which is less than the market value of the land falling within the ceiling limit as originally fixed under of 1960, and the guarantee of the second proviso to article 31 A of the Constitution is on that account infringed.
We are unable to accept this process of reasoning.
The right to compensation which is not less than the market value under any law providing for the acquisition by the State of any land in an estate in the personal cultivation of a person is guaranteed by the second Proviso only where the land is within the ceiling limit applicable to him under any law for the time being in force.
A law cannot be said to be in force unless it is brought into operation by legislative enactment, or by the exercise of authority by a delegate empowered to bring it into operation.
The theory of a statue being "in operation in a constitutional sense" though it is not in fact in operation has, in our judgment, no validity.
Again Ch.
IV of the principal Act was repealed by the Amending Act 15 of 1965.
Article 31 A proviso 2 guarantees to a person, for compulsory acquisition of his land, the right to comPensation which is not less than the market value, when the land is within the ceiling limit applicable to him under a law for the time being in force.
On the plain words of the proviso the law prescribing the ceiling limit must be in force at the date of acquisition.
In the present case the law relating to the ceiling limit viz.
IV of the principal Act was never made operative by a notification, and was repealed by Act 15 of 1965.
The ceiling limit under section 47 of the principal Act was on that account inapplicable to the landholders who challenged the validity of section 45 of the amending Act.
The decision of this Court A. Thangal Kunju Mudaliar vs M. Venkatachalam Potti and Anr.
(1) on which the High Court relied lends no support to the views expressed by them.
In that case the Travancore State Legislature enacted Act 14 of 1124 M.E to provide for investigating cases of evasion of tax.
The Act was to come into force by section 1(3) on the date appointed by the State Government by notification.
The States of Travancore and Cochin merged on July 1, 1949 and formed the United State of Travancore and Cochin.
By Ordinance I of 1124 M.E. all existing laws of the Travancore State were to continue in force in the United State.
By a notification the Government of the United State brought the Travancore Act 14 of 1124 (M.E.) into force, and referred cases of certain tax payers for investigation to the Commission appointed in that behalf.
The tax payers challenged the authority of the Commission to investigate the cases.
They contended that the Travancore Act 14 of 1124 (M.E.) not being a law in force when the United State was formed, the notification bringing the Act into force was ineffective.
The Court rejected that plea.
Section 1(3) of Travancore Act 14 of 1123 (M.E.) was (1) ; L14 Sup.
C.I./69 9 600 existing law on July 1, 1949, and continued to remain in force by virtue of Ordinance 1 of 1124 (M.E.).
The notification issued in exercise of the power under section 1(3) of the Travancore Act 14 of 1124 (M.E.); the reference of the cases of the petitioners, the appointment of the authorised officials and the proceedings under the Act could not be questioned because section 1(3) was existing law on July 1, 1949.
In A. Thangal Kunju Mudaliar case(1) the contention that Travancore Act 14 of 1124 (M.E.) was not law in force until a notification was issued bringing into operation the provisions of the Act, authorising the appointment of a Commission, and referring the cases of tax payers to the Commission, was rejected.
The Court held that section 1(3) was in operation on July 1, 1949 and the power to bring into force the provisions of the Travancore Act was exercisable by the successor State.
It was not held that the other provisions of the Act were in force even before an ap propriate notification was issued.
In the case in hand section 1(3) of the principal Act was in force, but Ch.
IV of the Act was not brought into force.
The argument that provisions of the Act which by a notification could have been but were not brought into force, must still be deemed to be law in force, derives no support from the case relied upon.
Section 1(3) of Act 16 of 1960 is undoubtedly a law in force, but until the power is exercised by the State Government to issue an appropriate notification, the provisions of Ch.
IV could not be deemed to be law in force, and since no notification was issued before Ch.
IV of the principal Act was repealed, there was no ceiling limit applicable to the landholders under any law for the time being in force which attracted the application of the second proviso to article 31 A.
The appeals must, therefore, be allowed, and the order pass ed by, the High Court declaring Ch.
IV of Act 13 of 1965 amending Act 16 of 1960 ultra vires, be set aside.
The State will get its costs in this Court from the respondents.
There will be one hearing fee.
There will be no order as to costs in the High Court.
R.K.P.S. (1) ; Appeals allowed.
|
The Constitution of India, article 31 A, proviso 2, guarantees to a person for compulsory acquisition of his land, the right to compensation which is not less than the market value when the land is within the ceiling limit applicable to him under a law for the time being in force.
Section 1(3) of the Orissa Land Reforms Act, 1960, provided that the Act was to come into force in whole or in part on such dates as the Government may from time to time by notification appoint.
Certain provisions of the Act were brought into force by notifications.
But Chapter IV of the Act dealing with ceiling of holdings of land was not brought into force.
The Act was amended by Act 13 of 1965.
The amending Act deleted Chapter IV and substituted fresh provisions.
Chapter IV as amended dealt with ceiling and disposal of excess land and provided for compensation at fifteen times the fair and equitable rent.
In the High Court the respondent land holders urged that when Act 16 of 1960 was enacted it became law in force and the ceiling limit prescribed thereby became effective even though Chapter IV was not brought into force by notification under section 1(3) of the Act that since the Amending Act 15 of 1965 sought to restrict the ceiling limit and to vest the surplus land in the government there was compulsory acquisition of land which could be valid only if the law provided for payment to the land holder the market value of that part of the surplus land which was, within the ceiling limit under Act 16 of 1960.
The High Court accepted the contention and struck down Chapter IV of the Act as unconstitutional and invalid.
It was of the view, relying on this Court 's decision in Thangal Kunju Mudaliar 's case, that the expression "law in force ' had to be "construed only in the constitutional sense and not in the sense of its actual operativeness." In appeal by the State, HELD : Allowing the appeal ' A law cannot be said to be in force unless it is brought into operation by legislative enactment or by the exercise of authority by a delegate empowered to bring it into operation.
The theory of a statute being " operation in a constitutional sense" has no validity.
The decision of this Court in Thangal Kunju Mudaliar ends no support to the view expresse by the High Court.
There this Court held that section 1(3) of Travancor Act 14 of II 24 (M.E.) was an "existing law" on the date of the merge of the States of Travancore and Cochin and the power to bring into fore the provisions of the Travancore Act was exercisable by the successor State It was not held that the other provisions of the Act were in force eve before an appropriate notification was issued.
[599 B C; 600 C D] 594 In the present case the law relating to the ceiling limit, viz., Chapter IV of Act 16 of 1960 was never operative by a notification and was repealed by Act 15 of 1965.
Therefore there was no ,ceiling limit applicable to the land holders under any "law for the time being in force" which attracted the application of the second proviso to article 3 1 A. [600 E] Thangal Kunju Mudaliar vs M. Venkitachalam Potti, ; ; explained.
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2634.txt
|
No. XLII of 1950.
Appeal from the judgment of the Calcutta High Court (Harries C.J. and Chakravarthi J.) in Appeal from Original Order No. 78 of 1948.
N.C. Chatterjee (B. Sen, with him), for the appellants.
A.N. Grover, for the respondents.
November 30.
The judgment of Fazl Ali and Patanja li Sastri JJ. was delivered by FAZL ALI J.
This is an appeal from a judgment of a Bench of the High Court of Judicature at Calcutta in West Bengal, reversing the decision of a single Judge of that Court, who had refused to set aside an award given by the arbitration tribunal of the Bengal Chamber of Commerce on a submission made by the respondents.
The facts of the case are as follows.
On the 25th January, 1946, the appellants entered into a contract with the respondents for the sale of 5,000 mounds of jute, which was evidenced by a "sold note" (Exhibit A), which is in the form of a letter addressed to the respond ents, commencing with these words: "We have this day sold by your order and for your account to the undersigned, etc.
" The word "undersigned" admittedly refers to the appellants, and, at the end of the contract, below their signature, the word "brokers" is written.
On the same day, a "bought note" (Exhibit B) was addressed by the appellants to the Bengal Jute Mill Company, with the following statement: "We have this day bought by your order and.
for your account from the undersigned, 794 etc.
" In this note also, the word "undersigned" refers to the appellants and underneath their signature, the word "brokers" appears, as in the "sold note" There are various provisions in the sold note, relating to delivery of jute, non delivery of documents, nonacceptance of documents, claims, etc., but the most material provisions are to be found in paragraphs 10 and 11.
paragraph 10 provides that the sellers may in certain cases be granted an extension of time for delivering the jute for a period not exceeding thirty days from the due date free of all penalties, and if the contract is not implemented within the extended peri od, the buyers would be entitled to several options, one of them being to cancel the contract and charge the sellers the difference between the contract rate and the market rate on the day on which the option is declared.
In the same para graph, there is another provision to the following effect: "Sellers shall notify Buyers that goods will or will not be shipped within such extended period referred to in (a) and in the case of sellers intimating that they will be unable to ship within the extended time Buyers shall exercise their option within 5 working days of receiving notice and notify Sellers.
In the absence of any such notice from Sellers it shall be deemed that the goods have not been shipped and Buyers shall exercise their option within 5 working days after expiration of extended date and notify Sellers.
" The 11th paragraph provides among other things that "all matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection and/or in consequence of or relating to this Contract whether or not obligations of either or both parties under this contract be subsisting at the time of such disputes and whether or not this contract has been terminated or purport ed to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted.
" 795 It is common ground that the respondents delivered 2,256 maunds of jute under the contract, but the balance of 2,744 maunds could not be delivered within the stipulated period, and, by mutual agreement, time was extended up to the 30th June, 1946.
On the 2nd July, 1946, the respondents addressed a letter to the appellants stating that the balance of jute could not be despatched owing to lack of wagons, and "exten sion" was requested for a period of one month.
In reply to this letter, which was received by the appellants on or about the 3rd July, 1946, time was extended till the 31st July, 1946.
On the same day on which the reply was received by the respondents, i.e., on the 9th July, 1946, they ad dressed a letter to the appellants pointing out that the extension of time had not been intimated within the 5th working day as provided in the contract and therefore the contract was automatically cancelled.
After this letter, some further correspondence followed between the two par ties, and finally a bill of difference amounting to Rs. 4,116 was submitted by the appellants to the respondents, who, in their turn, denied their liability to pay the sum.
The appellants thereupon claimed arbitration under clause 11 of the sold note and submitted the dispute between them and the respondents to the Bengal Chamber of Commerce.
On the 6th February, 1947, the Tribunal of Arbitration made an award to the effect that the due date of contract had been extended by mutual agreement up to the 31st July, 1946, and accordingly the respondents should pay to the appellants a sum of Rs. 4,116 together with interest at the rate of 4% per annum from the 10th August, 1946, until the date of the award.
A sum of Rs. 210 was also held to be payable by the respondents on account of costs.
Nearly a year later, on the 19th February, 1949, a petition was presented by the re spondents under the Indian , to the High Court at Calcutta, in its ordinary original civil jurisdiction, praying inter alia that the award may be adjudged to be without jurisdiction and void and not binding on the respondents, and that it may be set aside.
The main point raised by the 796 respondents in the petition was that it was not open to the appellants to invoke the arbitration clause, as the Bengal Jute Mill Company and not the appellants were the real party to the contract and the appellants had acted as mere bro kers.
The appellants asserted in reply that the allegation made by the respondents in regard to there being no privity between them and the appellants was wrong, and in paragraph 16 of their affidavit they stated as follows : "With regard to paragraph 7 of the petition I crave reference to the said contract for its true construction and effect.
I say as I have already stated that according to the custom or usage or practice of the trade the respondent is entitled to charge brokerage and also to enforce the terms of the said contract.
" The case was heard by Sinha J., who dismissed the peti tion on the ground that the contract was directly between the respondents and the appellants.
The learned Judge also observed that if the right of the appellants to enforce the contract depended upon the existence of custom it would have been necessary to take evidence and the arbitrators would have had jurisdiction to decide the question of the exist ence of custom.
The respondents being dissatisfied with the judgment of Sinha J., preferred an appeal, which was heard and disposed of by a Division Bench of the High Court consisting of the learned Chief Justice and Chakravarthi J.
The learned Judges held that having regard to the fact that the appellants ' own contention was that they had entered into the contract as brokers and were entitled to enforce its terms by reason of the usage or custom of the trade, it was not open to Sinha J. to treat them as principals, and the award was liable to be set aside on the ground that the arbitration tribunal had no jurisdiction to make an award at the instance of a per son who was not a principal party to the contract.
The appellants thereafter having obtained a certificate from the High Court under section 109 (c) of the Code of Civil Proce dure, preferred this appeal.
797 It seems to us that this appeal can be disposed of on a short ground.
We have carefully read the affidavit filed on behalf of the appellants in the trial court, and we are unable to hold that their case was that they were not par ties to the contract or that they had asked the court to proceed on the sole ground that they were entitled to en force the contract by virtue of the custom or usage of the trade.
In our opinion, the position which was taken up by them may be summed up as follows : (1) They did not accept the allegations made by the respond ents that they were not parties to any arbitration agreement with the respondents.
(2) They asked the Court to construe the contract and its effect and asserted that they were entitled to enforce it.
(3) They also stated that they were entitled to enforce the contract according to the custom or usage of the trade.
The principal dispute raised in this case was whether the extension of time for delivery was granted within the time limited in the contract.
That dispute is certainly covered by the arbitration clause.
The further dispute that the brokers (appellants) were not parties to the contract in their own right as principals but entered into the contract only on behalf of the Bengal Jute Mill Company does not appear to have been raised until the matter went to the arbitrators.
Assuming that at that stage it was open to the respondents to raise such an objection, after the other dispute which clearly fell within the arbitration clause was referred to the arbitrators, this further dispute is also one which turns upon the true interpretation of the con tract, so that the respondents must have recourse to the contract to establish their claim that the appellants were not bound as principals while the latter say that they were: If that is the position, such a dispute, the determination of which turns on the true construction of the contract, would also seem to be a dispute, under or arising out of or concerning the contract.
In a 798 passage quoted in Heyman vs Darwins Ltd.(1), Lord Dunedin propounds the test thus: " If a party has to have recourse to the contract, that dispute is a dispute under the con tract ".
Here, the respondents must have recourse to the contract to establish their case and therefore it is a dispute falling within the arbitration clause.
The error into which the learned Judges of the appellate Bench of the High Court appear to have fallen was their regarding the dispute raised by the respondent in respect of the position of the appellants under the contract as having the same consequence as a dispute as to the contract ever having been entered into.
If, therefore, we come to the conclusion that both the disputes raised by the respondents fail within the scope of the arbitration clause, then there is an end of the matter, for the arbitrators would have jurisdiction to adjudicate on the disputes, and we are not concerned with any error of law or fact committed by them or any omission on their part to consider any of the matters.
In this view, it would not be for us to determine the true construction of the contract and find out whether the respondents ' contention is correct or not.
Once the dispute is found to be within the scope of the arbitration clause, it is no part of the province of the court to enter into the merits of the dispute.
In the result, we allow this appeal, set aside the judgment of the appellate Bench of the High Court and re store the order of Sinha J.
The appellants will be entitled to their costs throughout.
MAHAJAN J. I agree with my brother Fazl Ali that this appeal be allowed with costs.
Appeal allowed.
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The appellants, a firm of brokers, entered into a contrct for the sale and purchase of a quantity of jute under a "sold note" addressed to the respondents which they signed as "A & Co., brokers" and a "bought note" of the same date and for the same quantity of jute addressed to a third person in which also they signed as "A & C0.
, brokers ".
The" sold note" contained the usual arbitration clause under which all matters, questions, disputes, differences and/or claims, arising out of and/or concerning, and/or in connec tion and/or in consequence of, or relating to, the contract . . shall be referred to the arbitration of the Bengal Chamber of Commerce.
" A dispute having arisen with regard to a matter which admittedly arose out of the contract evidenced by the sold note, the appellants referred the dispute for arbitration.
The respondents raised before the arbitrators the further contention that as the appel lants were only brokers they were not entitled to refer the matter to arbitration.
The arbitrators made an award in favour of the appellants.
The respondents made an applica tion to the.
High Court under the Indian Arbitration Act for setting aside the award: Held that, assuming that it was open to the respondents to raise this objection at that stage, inasmuch as this further dispute 793 was also one which turned on the true interpretation of the contract and the respondents must have recourse to the contract to establish their claim, this was also a dispute arising out of or concerning the contract and as such fell within the arbitration clause, and the award could not be set aside under the Indian , on the ground that it was beyond jurisdiction and void.
Heyman vs Darwins Ltd. ([1942.] A.C. 356) referred to.
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87 of 1957.
Petition under article 32 of the Constitution of India for enforcement of fundamental rights.
B. D. Sharma, for the petitioner.
N. section Bindra, R H. Dhebar and T. M. Sen, for the respondents.
March 7.
The Judgment of the Court was delivered by MUDHOLKAR, J.
In this petition under article 32 of the Constitution the petitioner contends that the provisions of the (XXXI of 1950) and in particular those of section 2 (d) and sub section
(4) of section 40 are unconstitutional.
According to him the effect of the order passed against him by the Custodian of Evacuee Properties under sub section
(4) of section 40 of the Act is to take away his 191 property without the authority of law.
He further contends that the order of the Custodian amounts to discrimination in practice against the petitioner.
These are the two main heads under which the arguments advanced before us could be classified.
The relevant facts may now be stated.
The petitioner purchased 195 51 acres of land in the former Bhopal State from one Babu Rehmatullah on June 23, 1950, for a consideration of Rs. 3,500.
Rehmatullah was declared to be an intending evacuee by the Assistant Custodian of Evacuee Property.
Eventually he left India for Pakistan on June 20, 1951.
On June 12, 1951, the Assistant Custodian of Evacuee Property issued a notice to the petitioner to show cause why the land which he had purchased from Rehmatullah should not be declared to be "evacuee property".
After hearing the petitioner the property was declared to be evacuee property on August 8, 1951.
The petitioner challenged that order in appeal as well as in revision as provided in the Act but was unsuccessful.
A writ petition preferred by him before the Judicial Commissioner, Bhopal, was dismissed in limine on July 14, 1954.
He has, therefore, come up to this Court under article 32 of the Constitution.
The first point pressed 'before us by Mr. B. D. Sharma, on behalf of the petitioner is that the provisions of the Evacuee Property Act and particularly those of sections 2 (d) and 40 (4) are unconstitutional, because they enable the State to take away property without paying any compensation therefore as required by article 31 (2) of the Constitution.
The short answer to this contention is that the provisions of a law made in pursuance of any agreement entered into between the Government of India and the Government of any other country or otherwise With respect to property declared by law to be evacuee property will not be affected by the provisions of cl. 2 of article 31.
This is clear from the provisions of article 31(5)(b)(iii) which rules is thus: "Nothing in clause (2) shall affect 192 (b) the provisions of any law which the State may hereafter make (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other country, or otherwise, with respect to property declared by law to be evacuee property.
Mr. Sharma, however, contends that the protection afforded by the aforesaid clause must be limited to a law which itself declares any property to be evacuee property and not to a law which empowers an authority to declare any property as evacuee property.
We cannot accept the contention.
The words "property declared by law to be evacuee property" would necessarily include property which could be declared as evacuee property.
A law relating to evacuee property would concern itself with laying down the criteria for determining what property is to be considered as evacuee property and could not be expected to specify the particular properties which are to be treated as evacuee properties.
The protection afforded by the constitutional provision which we have quoted above is not restricted as suggested by Mr. Sharma but extends to a law which provides for the determination of the criteria for declaring property to be evacuee property.
The next argument of learned counsel is that the property in question is not evacuee property and that the provisions of article 31(1) of the Constitution are a bar against taking it away.
It is difficult to appreciate the argument.
What article 31(1) prohibits is "deprivation of property save by authority of law".
No doubt the petitioner can say that he is deprived of his property because of the declaration made by the Custodian that it is evacuee property.
But then this declaration has been made in pursuance of a law enacted by Parliament.
If, as contended by him, we had held that the law is unconstitutional the position would have been different.
The next contention of learned counsel is that cls.
(a) and (c) of section 40, sub section
(4) are ultra vires because 193 they confer arbitrary power upon the Custodian.
The reason for raising the contention is that an application made by the petitioner to the Custodian under section 40 for confirming the sale in his favour was rejected by him on the ground that the evacuee did not act , in good faith in effecting the sale.
Sub section
(4) of section 40 P.reads thus: "The Custodian shall hold an inquiry into the application in the prescribed manner and may reject the application, if the is of opinion that: (a) the transaction has not been entered into in good faith or for valuable consideration, or (b) the transaction is prohibited under any law for the time being in force, or (c) the transaction ought not to be confirmed for any other reason.
" We are concerned here only with cl.
(a) of section 40(4) to which the Custodian resorted and not with cl.
We would, therefore, limit our remarks to el.
Subsection (4) of section 40 enables the Custodian to hold an inquiry regarding the genuineness or validity of a transaction sought to be confirmed and cl.
(a) empowers him to refuse to confirm it if he finds that it was not entered into in good faith.
According to learned counsel the words "good faith" are vague and "slippery" and do not furnish any standard or a norm which has to be conformed to by the Custodian.
Apart from the fact that the words "good faith" occur in a number of statutes and have acquired a definite meaning in courts of law, it may be pointed out that the power conferred by sub section
(4) of section 40 is in the nature of a judicial power and, therefore, the absence of a standard for the determination of the question would not render the provision unconstitutional.
Learned counsel wanted to contend that the absence of good faith on the part of the transferee was not sufficient and could not be regarded as a ground for refusing recognition to the transfer and that unless it is shown that the transferee was also lacking in good faith the transfer had to be confirmed under sub section
(4) of section 40.
He, however, did not press the contention 194 when it was pointed out to him that in Rabia Bai vs The Custodian General of Evacuee Property (1), this Court has upheld the order of the Custodian refusing to confirm the transfer on the ground that the evacuee had effected it in bad faith.
The last contention of learned counsel is that he has been discriminated against by the Custodian in the matter of confirmation of the transaction.
He said that prior to the sale of the land to him by Rehmatullah, the latter had sold a house to some nurses and that sale was found to be for inadequate consideration but in spite of that it was confirmed by the Custodian while the sale in his favour, though found to be for an adequate consideration was not confirmed.
We would repeat that the order of the Custodian is a judicial order and merely because he may have gone wrong in dealing with one case we cannot hold that the petitioner has been discriminated against.
The petition is wholly without basis and is accordingly dismissed without costs.
Petition dismissed.
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The petitioner purchased some land from R. R. was declared to be an intending evacuee and be left for Pakistan.
The Assistant Custodian issued a 'notice to the petitioner to show cause why the land should not be declared to be evacuee property, and after hearing the petitioner he declared the land to be evacuee property.
An appeal and a revision against the order were unsuccessful.
The petitioner also applied to the Custodian under section 40 Of the , for confirmation of the sale but his application was rejected under section 40(4)(a) on the ground that the evacuee did not act in good faith in effecting the sale.
The petitioner contended that section 2(d) of the Act defining evacuee property and section 40(4) empowering the custodian to reject an application for confirmation violated article 31(2) as they enabled the State to take away property without the authority of law.
Held, that the provisions Of SS. 2(d) and 40(4) were not affected by article 31(2) in view of article 31(5)(b)(iii) of the Constitution.
The protection of article 31 (5)(b)(iii) was not limited to a law which itself declared any property to be evacuee property but extended to a law which empowered an authority to declare any property as evacuee property and laid down the criteria for the declaration.
Section 40(4)(a) of the Act which empowered the Custodian to reject an application for confirmation on the ground that the transaction had not been entered into in good faith could not be challenged as conferring arbitrary powers on the Custodian.
The power was in the nature of a judicial power and the absence of a standard for the determination of the question could not render the provision unconstitutional.
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1163.txt
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Civil Appeal Nos.
1237 1238/1970.
From the Judgment and Order dated 15 12 1969 of the Punjab and Haryana High Court in Civil Writ Appeal Nos.
444/68 and 2975/67.
Hardayal Hardy, Mahinder Narain and Rameshwar Nath for the Appellants in both the Appeals.
section M. Ashri and M. N. Shroff for the Respondents in both the Appeals.
The Judgment of the Court was delivered by KAILASAM, J.
These two appeals are by certificate granted by the Punjab and Haryana High Court at Chandigarh in C. W. No.444/1968 and C. W. No. 2975 of 1967 respectively.
The petitions were disposed of by a full Bench of the High Court on 15 12 1969.
The appellants who were the petitioners before the High Court prayed for a writ of certiorari or mandamus or any other appropriate writ for quashing the resolution No. 6 dated 21st July, 1965 of the Municipality and letter of the Government of Haryana to the President of the Municipal Committee Bahadurgarh dated 30 10 1967.
The facts of the case briefly are as follows: The Municipal Committee of Bahadurgarh, Respondent No. 2, established Mandi Fateh in Bahadurgarh Town, with a view to improve trade in the area.
The Municipal Committee decided that the purchasers of the plots for sale in the Mandi would not be required 696 to pay octroi duty on goods imported within the said Mandi.
In pursuance of this decision, resolution No. 8 dated 20 12 1916 was passed by the Municipality.
Handbills were issued for the sale of the plots on the basis of the resolution and it was proclaimed that Fateh Mandi would remain exempt from payment of octroi.
Subsequently by resolution No. 4 dated 20 5 1917, the Municipal Committee decided that the term No. 14 to the conditions of sale, namely, that the plots would not be required to pay octroi, be amended to the effect that the Mandi shall remain immune from payment of Octroi Duty for ever.
When the resolution was received by the Commissioner of Ambala, in paragraph 3 of his letter dated 26 6 1917 marked as Annexure A in the writ petition, he noted: "I note that by its resolution No. 4 of 20 5 1917, the Municipal Committee has undertaken that Octroi shall never be imposed in the Mandi.
This is ultra vires, the Municipal Committee cannot make such an undertaking and this should be explained to the purchasers of sites before they begin building so that if they wish they may withdraw from the purchase".
Of course, it is unlikely that Octroi will be imposed." On receipt of this letter, the President of the Municipal Committee made representations that if octroi duty was to be levied, there will be no purchasers for the plots and the entire scheme will fall through.
On receipt of this representation on 20 9 1917 (Annexure B), the Commissioner revised his view and stated that he was cancelling para 3 of his letter dated 26 6 1917, that is to say, "that in deference to the strong views of the Municipal Committee and to your own opinion that the market will collapse if I insist upon it, I withdraw my objection to the undertaking made by the Municipal Committee that Octroi will not be imposed on the market.
As soon as the market is established it will be necessary to consider what form of taxation is best to cover the market share of Municipal expenses".
The Municipal Committee on 10 3 1919 imposed house tax of Rs. 3 14 6 per cent per annum on the shopkeepers to cover the expenditure of the market.
This state of affairs continued till 4 9 1953 when the Municipal Committee by notification No. 9697 C 53/63830 dated 4 9 1953 included Fateh Mandi, Bahadurgarh, within the Octroi limits.
The Examiner of Local Funds pointed out that the Municipal Committee is under obligation to charge octroi on goods imported into Fateh Mandi.
The President of the Municipal Committee made a representation to the Deputy Commissioner on 24 2 1954.
The Municipal Committee again passed another resolution No. 1 dated 2 3 1954 that the 697 Fateh Mandi will remain free from octroi duty according to the terms of the proclamation of the sale relating to the sale of plots.
The matter was referred to the Punjab State which after thoroughly examining the whole matter, confirmed Resolution No. 1 passed by the Municipal Committee on 2 3 1954.
Subsequently, the Municipal Committee changed its mind and by its resolution dated 8 5 1954, resolved that octroi duty should also be levied on the goods imported into Fateh Mandi.
But this resolution was annulled by the Punjab Government under section 236 of the Punjab Municipal Act.
The Examiner of Local Funds Accounts in the meantime insisted on the levy of octroi duty on the goods imported into Fateh Mandi and the Punjab Government after discussing the issue on 9 4 1956 informed the President of the Municipal Committee that the Government 's action in confirming the resolution No. 1 of 2 3 1954 of the Municipal Committee, Bahadurgarh exempting goods imported into Fateh Mandi from levy of octroi duty under section 70(2) (c) of the Municipal Act, 1911, is quite in order and that no separate notification to this effect was necessary under the rules.
Again on 21 7 1965, the Municipal Committee Bahadurgarh resolved that the Government be requested to cancel Resolution No. 1 dated 2 3 1954.
The State of Haryana Respondent No. 1 which came into existence on 1 11 1964 under the Punjab Reorganisation Act, by its memo dated 13 10 1967 approved the resolution No. 6 dated 21 7 1965 of Municipal Committee and cancelled the Municipal Resolution No. 1 of 2 3 1954.
As a result of the decision of the Government, the Municipal Committee started charging octroi duty on the goods imported into the Mandi.
On these facts, the petitioners submitted that the resolution No. 6 of the Municipal Committee dated 21 7 1965 (Annexure G) and the approval granted by the Haryana State as per its order dated 30 10 1967 (Ann.
H) are illegal and ultra vires and without jurisdiction.
A Full Bench of the High Court rejected the petition mainly on three grounds, Firstly, it found that the State Government is entitled under section 62 A of Punjab Act, 48/1953 to direct the Municipal Committee to impose octroi duty and as such even if the municipality is found to have erred in imposing the Octroi Duty, the legislative powers of the State cannot be questioned.
Secondly, it found, that it was not within the competence of the Municipality to grant any exemption from payment of octroi duty and this act is ultra vires of its powers and cannot be enforced.
Thirdly, it found that the Court cannot go into the question as to whether the petitioners ' plea based on equity that the Municipality is bound, cannot be gone into for want of adequate facts.
698 Dealing with the first contention, relating to the legislative powers of the State, it will be seen that Punjab Act 48/1953, introduced s.62A which runs as follows: "62 A. (1) The State Government may, by special or general order notified in the official Gazette, require a Committee to impose any tax mentioned in S.61, not already imposed at such rate and within such period as may be specified in the notification and the Committee shall thereupon act accordingly.
(2) The State Government may require a Committee to modify the rate of any tax already imposed and thereon the committee shall modify the tax as required within such period as the State Government may direct.
(3) If the Committee fails to carry out any order passed under Sub section (1) or (2) the State Government, may by a suitable order notified in the official gazette, impose or modify the tax.
The order so passed shall operate as if it were a resolution duly passed by the Committee and as if the proposal was sanctioned in accordance with the procedure contained in S.62.
" It is admitted that the State Government is empowered under section 62A to require the Municipal Committee to impose octroi Duty and under sub section
(3) if the Committee fails to carry out the order of the Government, the State Government may impose octroi Duty.
Under section 70(2) (c), a Municipal Committee by a resolution passed at a special meeting and confirmed by the State Government may exempt in whole or in part from the payment of any such tax any person or class of persons or any property or description of property.
In exercise of these powers, the State Government had by its order dated 4 5 1954 confirmed resolution No. 1 passed by the Municipal Committee in its special meeting held on 2 3 1954 regarding the exemption of goods imported into Fateh Mandi from levy of Octroi Duty.
Subsequently, in reply to the objection raised by the Examiner of Local Funds, the Government pointed out by its letter dated 9 4 1956 (Ann. F) that the Government 's action confirming the resolution No. 1 dated 2 3 1954 of the Municipal Committee exempting Goods imported into Fateh Mandi, under section 70(2) (c) of the Punjab Municipal Act, 1911, is quite in order.
By the impugned order dated 20 10 1967 the Government approved the resolution No. 6 of the Municipal Committee dated 21 7 1965 and permitted the Municipality to levy the Octroi Duty.
The action taken by the State Government is strictly in conformity with the powers conferred on it under section 70(2) (c) of the 699 Act.
It exempted the petitioners from payment of Octroi Duty for a particular period and ultimately withdrew the exemption.
The action of the Government cannot be questioned as it is in exercise of its statutory functions.
The plea of estoppel is not available against the State in the exercise of its legislative or statutory functions.
The Government have powers to direct the Municipality to collect the Octroi Tax if the Municipality fails to take action by itself under section 60(A) (3).
Further, even on facts, this plea is not available as against the Government as it is not the case of the petitioners that they acted on the representation of the Government.
We, therefore, agree with the view of the Full Bench that the plea of estoppel is not available against the Government for questioning the validity of the impugned Government order.
The second contention is that the Municipality is estopped from levying or recommending the levy of the tax to the Government as in the proclamation of sale it was notified that no Octroi Duty will be levied and it was only in pursuance of such representation, the petitioners purchased the property.
We feel this plea should also fail, because the Municipal Committee had no authority to exempt the Fateh Market from the levy of Octroi Duty.
If the Municipal Committee had passed a resolution or issued a notification that no Octroi Duty will be levied, it will be ultra vires of the powers of the Municipal Committee.
When a public authority acts beyond the scope of its authority the plea of estoppel is not available to prevent the authority from acting according to law.
It is in public interest that no such plea should be allowed.
The third contention that was raised by the learned counsel for the appellants before the High Court and reiterated before us, is that the Municipality and its successors are bound by the doctrine of promissory estoppel and as such are estopped from levying the Octroi Duty.
The High Court rejected the plea on the following grounds: 1.
The Petitioners are not the original purchasers of the plots in Fateh Mandi.
They are either descendants of or transferees from the original purchasers of the plots.
No sale deed was executed by the Municipal Committee in favour of the original purchasers undertaking that no octroi duty will be levied.
No allegation has been made that the original purchasers would not have purchased the plots, if condition No. 14 about immunity from payment of Octroi had not been there.
The learned counsel by reference to the names of the list of the purchasers was able to satisfy us that some of the appellants are the 700 original purchasers and as such the first objection raised before the High Court is not sustainable.
Again, regarding the third objection, that there is no allegation that the original purchasers would not have purchased the plots if condition 14 about immunity from payment of Octroi had not been there, it was submitted as erroneous as in the affidavit filed in support of the writ petition, the petitioners had pleaded in paragraph 2 that on the faith of the representation, the petitioners purchased the plots and constructed establishments.
The learned counsel is, therefore, right in his submission that the third objection raised before the High Court is without substance.
But the High Court was right in pointing out that none of the sale deeds executed by the Municipal Committee in favour of the purchasers was produced before the Court.
These circumstances would show that the contract between the parties have not been proved to have been reduced in writing and executed in the manner prescribed under section 47 of the Act.
Strictly, therefore, under the terms of the Municipal Act, the appellants are not entitled to any enforceable legal right.
But it was submitted that even though the contract had not been executed in due form, the appellants would be entitled to relief under, the doctrine of promissory estoppel.
The question that arises for consideration in these cases is whether the proclamation of sale which notified that there would be no octroi levy in the market relying on which statement the petitioners bid at the auction, would estop the Municipality by operation of the doctrine of promissory estoppel from recommending to the Government and the Government levying octroi duty under section 61 of the Punjab Municipal Act.
To answer this question it is necessary to examine at some length the rights and liabilities of the State under a contract entered into by it with third parties and in transactions carried on by it in exercise of its executive and statutory functions.
article 299 (1) of the Constitution of India provides that all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
This Article in the Constitution corresponds to section 175(3) of the Government of India Act, 1935.
In cases, that arose out of section 175(3) of the Government of India Act, 1935, this Court starting from Seth Bikhraj Jaipuria vs Union of India, has 701 repeatedly held that the provision is mandatory and not directory, that the provision is enacted as a matter of public policy, that the State should not be saddled with liability for unauthorised contracts and that the provision is enacted in the public interest.
In Mulamchand vs State of M. P., the earlier decisions of this Court were relied on and it was held that the reasons for enacting the provision is not for the sake of some form but for safeguarding the Government against unauthorised contracts.
The provisions are embodied on the ground of public policy on the ground of protection of general public and these formalities cannot be waived or dispensed with.
The Court clearly observed that if the plea of the respondent regarding estoppel or ratification is admitted that would mean, in effect, the repeal of an important constitutional provision intended for the protection of the general public.
That is why the plea of estoppel or ratification cannot be permitted in such a case." (emphasis Ours) It was contended before this Court in Karamshi Jethabhai Somayya vs State of Bombay, that in an agreement entered into under the Act by statutory authority in pursuance of a statutory power, that consequences provided under the statute would follow and would not fall within the ambit of section 175(3) of the Government of India Act.
This Court after examining the terms of the contract found that it did not fall within the provisions of the Act and, found it unnecessary to deal with the contention.
The scope of the doctrine of equitable estoppel arose for consideration before this Court in Collector of Bombay vs Municipal Corporation of the City of Bombay and Ors.
In 1865, the Government of Bombay called upon the predecessor in title of the Corporation of Bombay to remove some markets from a certain site and vacate it, and on the application of the then Municipal Commissioner the Government passed a resolution approving and authorising the grant of another site to the Municipality.
The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community".
The Corporation gave up the sites on which the old markets were situated and spent a sum of over 17 lacs in erecting and maintaining markets on the new site.
In 1940, the Collector of Bombay, overruling the objection of the Corporation, assessed the new site under S.8 of the Bombay City Land Revenue Act to land revenue rising from Rs. 7,500/ to Rs. 30,000/ 702 in 50 years.
The Corporation sued for a declaration that the order of assessment was ultra vires and that it was entitled to hold the land for ever without payment of assessment.
The Supreme Court held by a majority of four Judges to one that the Government was not entitled to assess land revenue for the land in question.
Three of the Judges who were parties to the majority judgment found that the Corporation had taken possession of the land in terms of the Government resolution and continued in such possession openly, uninterruptedly and as of right for over 70 years and acquired limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent, but only for the purpose of a market and for no other purposes.
The right acquired included as part of it an immunity from payment of rent which constituted a right in limitation of the Government 's right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of S.8 of the Bombay City Land Revenue Act.
Before the Court there was considerable discussion as to the scope and effect of the principle of equity enunciated in Ramsden vs Dyson, as to whether such principle should be extended to the facts of the case and as to whether the facts of the case attract the application of the equity established in Ramsden vs Dyson or attract the equity established in Maddison vs Alderson, and Walsh vs Lonsdale, and finally as to whether the decision of the Privy Council in Ariff vs Jadunath the equity in Ramsden vs Dyson can prevail against the requirement of formalities laid down in the Victorian Statute referred to above any more than the equity in Maddison vs Alderson can do against the requirements of the Transfer of Property Act.
The majority of the judges did not express any opinion on this question but decided the appeal on a narrower and shorter ground stated above.
One of the judges, Chandrasekhara Aiyar, J. constituting the majority expressed his view thus: "Whether it is the equity recognised in Ramsden 's case, or it is some other form of equity, is not of much importance.
Courts must do justice by the promotion of honesty and good faith so far as it lies in their power.
As pointed out by Jenkins C. J. in Dadoba Janardhan 's case a different conclusion would be opposed to what is reasonable, to what is probable and what is fair.
" The other judges of the Court who spoke for the Court refrained from going into this question.
The view of Chandrasekhara Aiyer, J. 703 being the view of one of the judges of the majority, cannot be taken as the view of the Court.
Patanjali Sastri, J. as he then was dissented with the majority and stated: "The principle of Ramsden vs Dyson cannot prevail against statutory requirements regarding disposition of property or making of contract by Government * * *The right to levy land revenue is no part of the Government 's right to property but a prerogative of the Crown and adverse possession of the land could not destroy the Crown 's prerogative to impose assessment on the land.
" A Bench of four judges of this Court in a decision Excise Commissioner.
U. P. Allahabad vs Ram Kumar, after examining the case law on the subject observed that "it is now well settled by a catena of decisions that there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers.
" The earlier decisions of this Court in M. Ramanathan Pillai vs State of Kerala, and State of Kerala and Anr.
vs The Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd. were followed.
It may, therefore, be stated that the view of this Court has been that the principle of estoppel is not available against the Government in exercise of legislative, sovereign or executive power.
On behalf of the petitioners, it was submitted that a liberal view was taken by this Court in the decision Union of India vs M/s. Indo Afghan Agencies Ltd. which recognised the principle of promissory estoppel and held that whether the agreement is executive or administrative in character, the courts have power in appropriate cases to compel performance of the obligations imposed by the schemes upon the departmental authorities.
At this decision is relied on as the sheet anchor of the doctrine of promissory estoppel, the facts of the case and the decision rendered therein, have to be examined carefully.
Indo Afghan Agencies Ltd. the respondents before this Court exported woollen goods to Afghanistan and were issued an Import Entitlement Certificate by the Textile Commissions not for the full F. O. B. value of the goods exported, but for a reduced amount.
By virtue of the powers conferred under S.3 of the Imports and Exports (Control) Act, 1947, the Central Government issued the Imports (Control) Order, 1955 setting out the policy governing the grant of import and export licence.
During the relevant period, it provided for the grant to an exporter, certificates to import raw materials of a 704 total amount equal to 100% of the F. O. B. value of his exports.
Cl.10 of the Scheme provided that the Textile Commissioner could grant an import certificate for a lesser amount if he is satisfied after holding an enquiry that the declared value of the goods is higher than the real value of the goods.
It was contended, amongst other grounds, that the Government on grounds of executive necessity was the sole judge of the validity of its action in matters relating to import and export policy, because the policy depended upon the economic climate and other related matters and had to be in its very nature flexible with power in the Government to modify or adjust it as the altered circumstances necessitate.
It was pleaded that if the Government was held bound by every representation made by it regarding its intentions, it would amount to holding the Government as being bound by contractual obligations even though no formal contract in the manner required by article 299 of the Constitution was executed.
Regarding the objection on the ground of contravention of article 299 of the Constitution, the Court held that the respondents were not seeking to enforce any contractual right but were seeking to enforce compliance of the obligation which is laid upon the Textile Commissioner by the terms of the Scheme and the claim of the respondents was founded upon the equity which arose in their favour as a result of the representation made on behalf of the Government in the Export Promotion Scheme.
(emphasis supplied).
It may be noted that no finding was recorded by the Textile Commissioner, that there was any infringement which entitled him to reduce the quota under Cl.
10 of the scheme.
The facts of the case disclose that the defence of the executive necessity was not relied upon in the affidavit filed on behalf of the Union of India.
It was also not pleaded that the representation in the Scheme was subject to an implied term that the Union of India will not be bound to grant the import certificate for the full value of the goods if they deem it inexpedient to grant the certificate.
The Court after referring to earlier decisions of this Court accepted the view expressed in those decisions that reduction in the amount of import certificate may be justified on the ground of misconduct of the exporters in relation to goods exported or on such considerations as the difficult foreign exchange position or other matters which have a bearing on the general interest of the State (emphasis supplied).
Summing up the law laid down by the earlier cases, the Court found that in each of the three cases this Court held that it was competent to grant relief in appropriate cases, if, contrary to the Scheme, the authority declined to grant a licence or import certificate or the authority acted arbitrarily and that the Union of India and its Officers are not entitled at their mere whim to ignore the promises made by the Government (emphasis 705 supplied).
It rejected the plea on behalf of the Government that the Textile Commissioner is the sole judge of the quantum of the import licence to be granted to an exporter and that the Courts were powerless to grant relief if the promised import licence is not given to an exporter who has acted in his prejudice relying upon the representation.
The decision is, therefore, an authority for the proposition that in the absence of a plea of executive necessity, the Court in appropriate cases is entitled to compel performance of the obligations imposed by the Scheme on the departmental authority.
The right of the Government on relevant considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, to reduce the amount of import certificate was recognised.
But the authorities have to act according to the terms of the scheme and not arbitrarily or at their mere whim to ignore the promises made by the Government (emphasis supplied).
On the facts of the case, the Court gave relief as the authorities declined to act according to the terms of the Scheme and acted arbitrarily and at their mere whim ignoring the promises made by the Government.
The question as to the applicability of the doctrine of promissory estoppel against the legislative or executive acts of the Government did not strictly arise in the case.
The decision was thus generally understood as stated above is seen from the view expressed by Mr. H.M. Seervai on Constitution of India, 2nd Edn.
I, paragraph 11 at para 146 B, p. 433: "The authorities considered by the Supreme Court, and the conclusions drawn from them, by Shah, J. in the present case, merely affirm the proposition that the Government could not go back upon promises made in the exercise of discretionary power as embodied in a scheme, merely on a whim (emphasis by Mr. Seervai) x x x x x X A promissory estoppel cannot stand on a higher footing than a contract entered into between a citizen or subject and a public authority and it is settled by numerous decisions that no public authority entrusted with discretionary power to be exercised for the public can bind itself by a contract not to exercise that discretion when the public good demands its exercise".
It is only in public interest that it is recognised that an authority acting on behalf of the Government or by virtue of statutory powers cannot exceed his authority.
Rule of ultra vires will become applicable when he exceeds his authority and the Government would not be bound by such action.
Any person who enters into an arrangement 706 with the Government has to ascertain and satisfy himself that the authority who purports to act for the Government, acts within the scope of his authority and cannot urge that the Government is in the position of any other litigant liable to be charged with liability.
In refuting the contention that the contract is unenforceable on the ground that there had been no strict compliance of the requirement of article 299 of the Constitution, the Court observed that the respondents were not seeking to enforce any contractual rights but were seeking to enforce compliance with the obligation which was laid upon the Textile Commissioner by the terms of the Scheme.
Thus, the relief that was granted by the Court was by enforcing the compliance of the obligation which was laid upon the Textile Commissioner by the terms of the Scheme.
The Court proceeded to state that the claim of the respondents is appropriately founded upon the equity (emphasis ours) which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it.
Thus the equity which the Court was enforcing was to direct compliance of the obligation which is laid upon the Textile Commissioner by the terms of the scheme.
The equity cannot be understood as barring the authority from modifying the scheme on special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State (vide p. 380).
The purport of the judgment is made clear by its own observation: "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot be some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.
" The observations of the Court that the claim of the respondents is properly founded on the equity should be understood on the facts and findings of the Court in the case.
The Court relying on the observations of Chief Justice Jenkins, observed that even though the case does not fall within the terms of S.115 of the Evidence Act, it is still open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the from of a formal contract as required by the Constitution.
The Court 707 would be bound when the officer made the promise within the scope of his authority and failed to act upon it at his mere whim and acted arbitrarily on some undefined and undisclosed grounds of necessity.
Before proceeding further with the case, we will refer briefly to the purport of the doctrine of promissory estoppel.
The doctrine of promissory estoppel burst into sudden blaze in 1946 when Denning.
J. sitting in the Court of Kings Bench delivered the judgment in Central London Property Trust Ltd. vs High Trees House Ltd. which has now become famous as the High Trees Case.
The facts of the case are: During the war many people left London owing to bombing.
Flats were empty.
In one block, where the flats were let on 99 years leases at $ 2,500/ a year, the landlord agreed to reduce it by half and to accept $ 1,250/ a year.
When the bombing was over, and the tenants came back, the landlord sought to recover the full rent at $ 2,500/ a year.
Denning, J. held that the landlord could not recover the full amount for the time when the flats were empty.
The lease was a lease under seal which according to English Common Law, could not be varied by an agreement by parole, but only by deed.
The learned judge invoked equity to his aid and said that if there has been a variation of a deed by simple contract the courts may give effect to it.
The counsel for the lessee pleaded that the lessor had agreed though without consideration to accept the rent at a reduced rate, and set up a plea of estoppel by way of defence to the claim for arrears of rental calculated at the full rate.
Faced with Foakes vs Beer, if the defence was raised as a matter of contract and Jorden vs Money, if it was raised as estoppel.
Denning.
J. held that the estoppel sustained although based on an assurance as to the future, because the promisor intended to be legally bound and intended his promise to be acted upon, with the result that it was so acted upon.
In Jordan vs Money (supra), the House of Lords held that a promise to pay a smaller sum of money in discharge of larger amount which was due, was void since such a promise was without consideration.
Denning, J. relying on Fenner vs Blake, Re: Wickhem William Porter & Co. Ltd. and Buttery vs Pickard observed that they were cases of estoppel in the strict sense.
They are really promises promises intended to be binding intended to be acted upon, and in fact acted on and in the circumstances the plaintiff company will be bound by the arrangement in its letter.
Though the observations of 708 Denning, J. in High Trees case were in the nature of obiter dicta, the decision became the starting point of the several shades of opinion regarding the scope of promissory estoppel.
It is unnecessary for our purpose to go into the development of law of promissory estoppel starting from High Trees case.
It is sufficient to state that since the High Trees decision was rendered, many elaborations and glosses have appeared in the reports.
Turner in his book Estoppel by Representation, has a separate chapter dealing with promissory estoppel.
The doctrine, as observed by the author at the conclusion of the chapter, "burst out into sudden blaze in 1946 has ever since continued to smoulder, and that its original author has constantly maintained his interest in its further development, now in this direction, now in that".
But there has been high places counselling conservatism *** Lord Hailsham of St. Marylebone, has expressed his views in Woodhouse Ltd. vs Nigerian Produce Ltd. as follows: "I desire to add that the time may soon come when the whole sequence of cases based on promissory estoppel since the war *** systematically explored".
This subject though interesting may not be relevant in administering Indian Law.
section 63 of the Contract Act provides that when a creditor accepts a lesser sum in satisfaction of the whole debt, the whole debt become discharged.
This provision is a wide departure from the English Law and the discussion about Jordan vs Money wherein it was held that a promise to accept a smaller sum is devoid of consideration, becomes pointless.
So also the doctrine of estoppel referred to in the High Trees case is, to some extent taken care of by Ss. 65 and 70 of the Indian contract Act.
S.65 provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it, to the person from whom he received it.
Under section 70 of the Contract Act, an obligation is cast on the person enjoying benefit of a non gratuitous act to compensate the person who lawfully performed the act.
As to whether the provisions of section 65 and 70 of the Indian Contract Act, are applicable to contract which is not according to section 175 of the Government of India Act and article 299 of the Constitution of India, there is a difference of opinion.
Sir Maurice Gwyer expressed his view that when a contract is void, recourse to S.70 cannot be had.
Later, the Supreme Court held in State of West Bengal vs B. K. Mondal & Sons, that S.70 was applicable to such a case.
This decision was 709 followed in New Marine Coal Co. Ltd. vs Union, and in later cases by the Supreme Court.
In discussing the scope of the doctrine of promissory estoppel, and its applicability against the Government and Government Officers in their dealings with the subject, Lord Denning J. in Robertson vs Minister of Pensions observed : "The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded.
Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
That doctrine was propounded by Rowlett J., in Redariaktiebolaget Amphtrite vs The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention.
Rowlett, J., seems have been influenced by the cases on the right of the Crown dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reilly vs The King (1954) A. C. 176, 179) *** In my opinion the defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract." Lord Denning was dealing with a case of a serving army officer who wrote to the War Office regarding a disability and received a reply that his disability had been accepted as attributable to "military service".
Relying on that assurance, he forbore to obtain an independent medical opinion.
The Minister of Pensions took the view that appellant 's disability could not be attributed to war services.
Lord Denning held that between the subjects such an assurance would be enforceable because it was intended to be binding, intended to be acted upon, and it was in fact acted upon; and the assurance was also binding on the Crown because no term could be implied that the Crown was at liberty to revoke it.
The decision in Robertson 's case is quoted with approval in the Indo Afghan case but before we revert to the Indo Afghan case, we will follow the course which Robertson 's case took.
The correctness of the case came up for consideration before the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. The appeal was preferred to the 710 House of Lords from the Court of Appeal against the judgment of Bucknil, Singhleton and Denning, L.JJ.
In his judgment in the Court of Appeal, Denning L. JJ.
pressed the principle in the following terms: "Whenever Government Officers, in their dealings with a subject, take on themselves to assume authority in a matter with which he is concerned, the subject is entitled to rely on their having the authority which they assume.
He does not know and cannot be expected to know the limits of their authority, and he ought not to suffer if they exceed it.
That was the principle which I applied to Robertson vs Minister of Pensions, and it is applicable in this case also.
" Commenting on the view taken by Denning, L. J. Lord Simonds observed : "My Lords, I know of no such principle in our law nor was any authority for it cited.
The illegality of act is the same whether or not the actor has been misled by an assumption of authority on the part of a government officer however high or low in the hierarchy.
*** The question is whether the character of an act done in face of statutory prohibition is affected by the fact that it has been induced by a misleading assumption of authority.
In my opinion, the answer is clearly "no".
Such an answer may make more difficult the task of the citizen who is anxious to walk in the narrow way, but that does not justify a different answer being given.
" Lord Normand referred to the principle laid down by Denning L. J. and observed : "As I understand this statement, the respondents were in the opinion of the learned Lord Justice, entitled to say that the Crown was barred by representations made by Mr. Thompson and acted on by them from alleging against them a breach of the statutory order, and further that the respondents were equally entitled to say in a question with the appellant that there had been no breach.
But it is certain that neither a Minister nor any subordinate officer of the Crown can by any conduct or representation bar the crown enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of the contract.
" The view expressed by the House of Lords and the Privy Council has been followed in English cases.
711 The Privy Council in Antonio Buttigieg vs Captain Stephen H. Cross and Ors, has ruled that it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises, that it cannot by contract hamper its freedom of action in matters which concern the welfare of the State.
The competent Military Authority approached the appellant for opening a club for officers serving in his Majesty 's forces.
The appellant stated his willingness to take on lease certain premises and asked the Military authorities to procure him a licence to continue the club after the termination of the war.
The military authorities failed to obtain a licence and the appellant was informed of their inability to obtain the licence and an officer on behalf of the military authorities stated that the appellant should have a guarantee seeing that the war was not likely to come to an end quickly and that the club would be kept open throughout the war.
The rules for the conduct of the club were drawn up and were approved by the Military Authorities.
Rule 18 provided that the club should endure during the time when the said hostilities existed.
The club was placed out of bounds for service members by order of the Military Authorities because the club was being mismanaged by the sale of liquor long after permitted hours.
As the club was a purely Service Club, it was subsequently wound up.
The appellant complained of the loss to which he had been put by placing the club out of bounds and sought to hold the Military Authorities responsible for such loss.
The Court of Appeal while giving judgment in favour of the Military Authorities observed : "It is a settled principle and it has been constantly held by this Court and in local case law, that those two functions of the civil or the military Government are totally distinct.
The Military Authorities could not have renounced those rights, in as much as it would have been immoral and against every fundamental principle of Constitutional Law if the Authorities, in order to open a club, which is a purely administrative act were to sacrifice interests which are far more important and therefore of a much higher order, whether political, moral or affecting public order.
Consequently when, within the administrative sphere, the Government enters into a contract with a private individual, the Government is bound to respect that contract, but it does not thereby deprive itself of its political power to issue orders that may become necessary by reason of public order, jure imperii even though, in consequence of such orders, the contract itself becomes impossible of fulfilment.
" 712 During the arguments before the Privy Council, it was conceded on behalf of the appellant taking into consideration the decision in Adams vs London Improved Motor Coach Builders and Redariaktiebolaget Amphtrite vs The King, that it was not open to the Crown to bind itself not to close the club if that course became necessary in the public interest and the order placing the club out of bounds was justified in the circumstances which existed.
Having thus observed the Privy Council quoted the following passage from the Judgment of Rowlatt, J. in Rederiaktiebolaget Amphtrite case that "it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises.
It cannot by contract hamper the freedom of action in matters which concern the welfare of the State" and stated that these words appear to their Lordships to cover that aspect of the present case.
While House of Lords in Howell 's case disagreed with the observations of Lord Denning J. in Robertson 's case, the Privy Council approved the law laid down by Rowlatt, J. in Rederiaktiebolaget Amphtrite case which was dissented to by Denning, J. in Roberston 's case.
It may be noted that in Indo Afghan case, the Court quoted the passage from Denning 's judgment which did not approve the view of Rowlatt, J. The Privy Council approved the view taken by Rowlatt, J. in Rederiaktiabolaget Amphtrita case.
In William Cory & Son Ltd. vs London Corporation, London Corporation acting as sanitary authority under the Public Health (London) Act, 1936 made a contract with the claimants, barge and lighter owners, for the removal of refuse from a wharf in the City of Horn church, Essex, where it was to be dumped.
In April, 1948, the Corporation acting as port health authority for the Port of London, sealed by laws concerning the disposal of refuse in the area of the port one of which relating to co amings and coverings of barges, was far more onerous on the claimants than the requirements in the contract of 1936.
It was provided that this by law was not to come into effect until November 1, 1950.
It was contended by the claimants that by the provisions of the contract of 1936, there was an implied or an express term that the corporation should not impose more onerous burden on the claimants as to the coamings and coverings of their barges than those contained in the contract of 1936.
The plea of the claimants was rejected and the Court held relying on a decision in York Corporation vs Henry Leethem & Sons Ltd. that the Corporation being under a 713 duty under the Act of 1936, expressed in imperative language, to make by laws for the disposal of refuse within the area of the port, the term for which the claimants contended, whether express or implied was ultra vires the corporation.
In York Corporation vs Henry Leetham & Sons (supra), the Corporation made two contracts with the defendants to which they agreed to accept, in consideration of the right to navigate the Oues, a regular annual payment of $ 600/ per annum, in place of the authorised tolls.
It was held that the contracts were ultra vires and void because under them the corporation had disabled itself whatever emergency might arise, from exercising its statutory powers to increase tolls as from time to time might be necessary.
The decision was based on the incapacity of a body charged with statutory powers for public purpose to divest itself of such powers or to fetter itself in the use of such powers.
In Commissioner of Crown Lands vs Page, in 1945, the Minister of Works, acting on behalf of the Crown and in exercise of powers conferred by the Defence (General) Regulations, 1939 requisitioned premises which had been demised in 1937 by the Commissioners of Crown Lands for a term of 25 years.
The premises were derequisitioned on September 5, 1945 until July 5, 1955 and the landlord brought proceedings claiming arrears of rent.
The lessee alleged that she had been evicted by the requisitioning and that, accordingly, payment of rent has been suspended.
It was conceded that the Crown was one and indivisible as lessor and requisitioning authority.
It was held that since the entry was by the Crown in the proper exercise of its executive authority, it did not amount to an eviction and rent, accordingly, continued to be payable.
The view expressed by Lord Denning, J. in Robertson vs Minister of Pensions (supra) that in the present day age no distinction should be drawn as to the legal effect of its or their actions between the Crown and the ordinary subjects, so that the effect of a representation made by the Crown could no longer be qualified so as to be subject to the future exercise by the Crown of its Executive authority, was relied on.
Lord Evershet M. R. while observing that the facts of the case were different held that the general proposition laid down by Denning L. J. was not accepted by the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. (supra).
Devlin, J. stated the principle in the following terms : "When the Crown, or any other person, is entrusted, whether by virtue of the prerogative or by statute, with discretionary powers to be exercised for the public good, it does not when making a private contract in general terms, undertake (and 714 it may be that it could not even with the use of specific language validly undertake) to fetter itself in the use of those powers, and in the exercise of the discretion.
" Referring to the view of Denning, L. J. in Robertson vs Minister of Pension (supra), the learned Judge observed : "The observations of Denning, L. J. in Robertson vs Minister of Pensions on the doctrine of `executive necessity ', were I think, directed to a case of that sort.
Here we are dealing with an act done for a general executive purpose, and not done for the purpose of achieving a particular result under the contract in question.
" In Southend on Sea Corporation vs Hodgson (Wickford) Ltd. a company wished to establish a builder 's yard and found suitable premises.
They wrote to the borough engineer, a Chief Official employed by the local planning authority asking for a lease of the premises for 20 years for the purpose of establishing a builders yard.
The engineer replied that the premises had an existing user right as a builders ' yard and that no planning permission was, therefore, necessary.
Relying on the borough engineer 's letter, the company bought the premises and started to use them as builder 's yard.
They would not have done so if, as a consequence of the letter, they had not thought that no further planning permission was required.
Later, the local planning authority notified the company that a considerable amount of evidence had been presented to them showing that the premises had not been used as a builder 's yard and had no existing user as such; that they had decided that the premises could not be used without planning permission.
The Court on the above facts held that assuming that the statement that the premises had an existing user right as a builder 's yard was a pure representation of fact, estoppel could not operate to hinder or prevent the exercise by the local planning authority of their statutory discretion under section 23 of the Act in deciding whether to serve an enforcement notice, since this discretion was intended to be exercised for the benefit of the public or section thereof.
The decisions of the English Courts referred to above clearly indicate that the English Courts did not accept the view of Denning, J. in Robertson vs Minister of Pensions (supra).
The house of Lords in Howell vs Falmouth Boat Construction Co. Ltd. disagreed with the view of Lord Denning, J holding that there could not be an estoppel against express provisions of the law nor could the State by its action waive its rights to exercise powers entrusted to it for the public good.
The 715 Privy Council in Antonio Buttigieg 's case approved the view of Rowlatt.
J. in Raderiaktiabolaget Amphtrits 's case with which Denning, J. did not agree.
We may now revert back to Indo Afghan Agencies case.
The Court after quoting a passage from Rowlatt, J. in Rederiakiabolaget Amphtrte vs The King (supra) agreed that the view expressed by Anson 's English Law of Contract 22nd Ed.
p. 174 that the observation is clearly very wide and it is difficult to determine its proper scope.
The Court quoted the passage of Denning, J. at p. 231 wherein the learned Judge expressed the disagreement with the view of Rowlatt, J : "The Crown cannot escape by saying that estoppel do not bind the Crown for that doctrine has long been exploded.
Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
The doctrine was propounded by Rowlatt, J. in Rederiaktiebolaget Amphitrite vs The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention.
Rowlatt, J., seems to have been influenced by the cases on the right of the Crown to dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reilly vs The King , 179).
In my opinion the defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract." After quoting the above passage, the Court summarised the facts and decision rendered by Denning, J.
The decision of the House of Lords in Howell 's case or that of the Privy Council was not brought to the notice of the Court.
The law laid down by the House of Lords in Howell 's case has been accepted as correct by this Court in recent decision of this Court by a Bench of four Judges in Excise Commissioner, U. P. Allahabad vs Ram Kumar.
The respondents before this Court were the highest bidders in an auction for exclusive manufacture and selling of liquor in the State of U. P. Before holding the auction, the rates of excise duty and prices of different varieties of country liquor and also the conditions of licence were announced.
No announcement was made as to whether the exemption from sales tax in respect of sale of country liquor granted by the notification dated 6 4 1959 was or was not likely 716 to be withdrawn.
On the day following the day when the licences were granted, the Government of U. P. issued a notification under section 3A and 4 of U. P. Sales Tax Act, 1948 superseding the earlier notification exempting the payment of sales tax and imposing sales tax on the turnover in respect of country liquor at the rate of 10 paise per rupee.
The respondents challenged the validity of the notification issued under the Sales Tax Act on the ground that the State Government did not announce at the time of the earlier auction that the earlier notification was likely to be withdrawn.
This Court on a consideration of the question whether the State Government is estopped from levying the Sales Tax, after referring to the earlier decisions of this Court held that the State Government is not estopped or precluded from subjecting the sales of liquor to tax if it felt impelled to do so in the interest of revenue of the State.
The Court followed two earlier decisions of this Court viz. M. Ramanathan Pillai vs State of Kerala (supra) and State of Kerala vs The Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd. (supra).
In Ramanathan Pillai 's case, Ray, Chief Justice while dealing with the question whether the Government has a right to abolish a post in the service, observed that the power to create or abolish a post is not related to the doctrine of pleasure.
It is a matter of governmental policy.
Every sovereign Government has this power in the interest and necessity or internal administration.
The creation or abolition of a post is dictated by policy decision, exigencies of circumstances and administrative necessity.
The creation, the continuance and the abolition of post are all decided by the Government in the interest of administration and general public.
The learned Chief Justice after quoting a passage in American Jurisprudence 2d.
at p. 783, paragraph 123, observed that the estoppel alleged by the appellant Ramanathan Pillai was on the ground that he entered into an agreement and thereby changed his position to his detriment.
The High Court rightly held that the Courts exclude the operation of the doctrine of estoppel, when it is found that the authority against whom estoppel is pleaded has owed a duty to the public against whom the estoppel cannot fairly operate.
In State of Kerala vs Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd. (supra), Palekar, J. who delivered the opinion with which Krishna Iyer, J. and Bhagwati, J. agreed, rejected the contention that an agreement entered into by the Government with the parties, excluded the legislation on the subject.
The plea of equitable estoppel was put forward on the ground that the company established itself in Kerala for the production of rayon cloth pulp on an understanding that the Government would bind itself to supply the raw material.
Later Government was unable to supply the raw material and by an 717 agreement undertook not to legislate for the acquisition of private forests for a period of 60 years if the company purchased forest lands for the purpose of its supply of raw materials.
Accordingly, the company purchased 30,000/ acres of private forests from the Nilabhuri Kovila Kanna Estate for Rs. 75 lacs and, therefore, it was argued that the agreement would operate as equitable estoppel against the State.
This Court agreed with the High Court that the surrender by the Government of its legislative powers to be used for public good cannot avail the company or operate against the Government as equitable estoppel.
In Assistant Custodian of E. P. and Ors.
vs Brij Kishore Agarwala, it was pleaded that the first respondent made an enquiry from the Assistant Custodian whether the property was evacuee property and was told that it was not.
As the first respondent acted on this representation, it was pleaded that the Assistant Custodian was estopped from contending that the property was evacuee property.
Thus, dismissing this plea, the Court observed : "We do not consider that the fact that the 1st respondent had made an enquiry from the Assistant Custodian whether the property in question was an evacuee property and was told that it would not make any difference to the question." Reliance was placed on the observations of Denning L. J. in Robertson vs Minister of Pensions (supra), holding that the letter by the war office which assured that the appellant 's disability had been accepted as attributable to the military service, was binding on the Crown and through the Crown the Minister of Pensions.
The Court pointed out that the decision in Robertson vs Minister of Pensions had been disapproved by the House of Lords in Howell 's case.
After referring to the passage from the judgment of Lord Denning, Lord Simonds and Lord Normand which have been extracted earlier, this Court expressed its opinion that the view taken by the House of Lords it correct and not that is taken by Lord Denning.
In Excise Commissioner U. P., Allahabad vs Ram Kumar (supra), the Court after consideration of the case law on the subject, held that it was settled by a catena of cases that there could be no question of estoppel against the legislative and sovereign functions.
A passage in American Jurisprudence 2d.
at page 783 paragraph 123 was extracted by Ray C. J. in Ramanathan Pillai 's case and Jaswant 718 Singh J. in Excise Commissioner 's case.
The passage at p. 123 is as follows : "Generally, a State is not subject to an estoppel to the same extent as an individual or a private corporation.
Otherwise, it might be rendered helpless to assert its powers in Government.
Therefore, as a general rule the doctrine of estoppel will not be applied against the State in its Governmental, Public or sovereign capacity.
An exception however arises in the application of estoppel to the State where it is necessary to prevent fraud or manifest injustice.
" But the learned Judges did not include the last sentence : "An exception however arises in the application of estoppel to the State where it is necessary to prevent fraud or manifest injustice.
" In Bihar Eastern Gangetic Fisherman Co operative Society Ltd., vs Sipahi Singh & Ors.
this Court held that the respondent could not invoke the doctrine of promissory estoppel because he was unable to show that relying on the representation of the Government, he had altered his position to his prejudice.
The Court accepted the view of this Court expressed in Ram Kumar 's case and held that there cannot be any estoppel against the Government in the exercise of its sovereign, legislative or executive functions.
The leading case of the Supreme Court of the United States cited and relied upon in Ram Kumar 's case (supra), is Federal Crop Insurance Corporation vs Marril, in which the United States Supreme Court observed as follows : "It is too late in the day to urge that the Government is just another private litigant, for the purposes of charging it with liability, whenever it takes over a business theretofore conducted by private enterprises or engages in competition with private ventures * * * Whatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority * * * And this is so even though, as here, the agent himself may have been unaware of the limitations upon his authority* * * `Men must turn square corners when they deal with the Government ' does not reflect a callous outlook.
It merely 719 expresses the duty of all courts to observe the conditions defined by congress for charging the public treasury".
The Court also relied on the views of the text book writer Melville M. Bigelow and concluded that the plea of estoppel does not operate against the Government or its assignees.
The extract from the American Jurisprudence which summarises the American Law, and the decision in Federal Crop Insurance Corporation case, make it clear that the plea of estoppel is not available against the Government and its legislative or executive functions except for preventing fraud or manifest injustice.
It was submitted that the cases cited above cannot be relied on as an authority for the proposition that the doctrine of promissory estoppel is not applicable against the Government in the exercise of its legislative and statutory functions as they were in the nature of obiter dicta and that on the facts the present case could be distinguished.
The Indo Afghan Agencies, Century Spinning and Manufacturing Co. and Turner Morisson Co. Ltd. vs Hungerford Investment Trust Ltd., were strongly relied on.
We have pointed out that all that the Indo Afghan Agencies case laid down was, that a public authority acting on behalf of the Government cannot on its own whim and in an arbitrary manner seek to alter the conditions accepted by him to the prejudice of the other side.
The decision in terms accepts the view expressed in earlier cases that after taking into consideration the exigencies and change of circumstances, the authority can modify the conditions in exercise of his powers as a public authority.
In Century Spinning and Manufacturing Co. Ltd. and Anr.
vs The Ulhasnagar Municipal Council and Anr.
, the facts of the case is set out in the head note and may be briefly stated.
The State of Maharashtra on the representation made by certain manufacturers proclaimed the exclusion of the Industrial Area from the Municipal Jurisdiction.
The Municipality made representations to the State requesting that the proclamation be withdrawn, agreeing to exempt the factories in the industrial area from payment of octroi from the date of levy.
The State acceded to the request of the Municipality.
The appellants expanded their activities relying on the Municipality 's assurance.
The Maharashtra Municipalities Act was enacted and the municipality took over the administration.
Thereafter, the Municipality sought to levy octroi duty on the appellant amounting to about Rs. 15 lacs per 720 annum.
The High Court dismissed the petition in limini filed by the Industrialists against the levy of octroi.
In an appeal to this Court it was held that the High Court had not given any reason for dismissing the petition in limini and that on a consideration of the averments in the petition and the materials placed before the High Court, the appellants were entitled to have its grievance heard against the action of the Municipality which was prima facie unjust.
In remanding the matter to the High Court, this Court observed : "A representation that something will be done in future may involve an existing intention to act in future in the manner represented.
If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law; if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting thereupon but the law is not powerless to raise in appropriate cases an enquiry against him to compel performance of the obligation arising out of his representation".
In dealing with the question as to how far the public bodies are bound by representation made by them on which other persons have altered their position to their prejudice, the Court held that the obligation arising against an individual out of his representation amounting to a promise may be enforced ex contractu by a person who acts upon the promise; when the law requires that a contract enforceable at law against a public body shall be in certain form or be executed in the manner prescribed by statute, the obligation may be if the contract be not in that form be enforced against it in appropriate case in equity.
The Court read the decision in Union of India and Ors.
vs Indo Afghan Agencies (supra) as holding that the Government is not exempt from the equity arising out of the acts done by citizens to their prejudices, relying upon the representations as to its future conduct made by the Government.
This observation will have to be read alongwith the conditions that were laid down in the Indo Afghan case and cannot be read as holding that the rule of estoppel will be applicable against the Government in the exercise of its legislative and statutory powers.
The Court quoted the following passage from Denning J. : "Crown cannot escape by saying that estoppel do not bind the Crown for that doctrine has long been exploded.
Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action".
721 and observed that the Court in Indo Afghan case held that it was applicable to India.
It may be noted that apart from not noticing Howell 's case, the Court in Indo Afghan case did not say that the law as extracted from Denning J 'section judgment was applicable to India.
The Court after considering the Indo Afghan case and Howell 's case, expressed thus : "If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted.
A public body is, in our judgment, not exempt from liability to carry out its obligation arising out of representation made by it relying upon which a citizen has altered his position to his prejudice".
The third decision on which reliance was placed, for the proposition that doctrine of promissory estoppel is applicable against the State acting in exercise of its legislative or executive function is Turner Morrison and Co. Ltd. vs Hungerford Investment Trust Ltd. (supra).
The case related to the payment of tax due from Hungerford by Turner Morrison.
The Court observed that if for any reason Turner Morrison had not undertaken any responsibility to discharge the liability of Hungerford, the latter could have taken recourse to voluntary liquidation.
Hence there could be no doubt that acting on the basis of the representation made by Turner Morrison, Hungerford placed itself in a disadvantageous position.
Hungerford raised the plea that the resolution was of the company, afforded a good basis for raising a plea of promissory estoppel.
This plea was accepted by the Court relying on the observations of Denning J. in High Trees case (supra).
The later decision of the House of Lords in Howell 's case which disapproved Lord Denning 's judgment was not brought to its notice.
The scope of the plea of doctrine of promissory estoppel against the Government may be summed up as follows : (1) The plea of promissory estoppel is not available against the exercise of the legislative functions of the State.
(2) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law.
(3) When the officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available.
The doctrine of ultra vires will come into operation and the Government cannot be held bound by the unauthorised acts of its officers.
(4) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation 722 and a person acting on that representation puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation.
The Officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position.
(5) The officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State.
Before we conclude, we would refer to a recent decision of this Court in M/s. Moti Lal Padampat Sugar Mills Co. (P.) Ltd. vs State of Uttar Pradesh and Ors.
It has been held that there can be no promissory estoppel against the exercise of legislative power and the legislature cannot be precluded from exercising its legislative functions by resort to the doctrine of promissory estoppel.
It has also held that when the Government owes a duty to the public to act differently, promissory estoppel could not be invoked to prevent the Government from doing so.
The doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law.
The Government would not be bound by the acts of its officers and agents, who act beyond the scope of their authority.
A person dealing with an agent of the Government must be held to have noticed all the limitations of his authority.
With respect, we are in complete agreement with the law as stated above but we find the judgment is not in accordance with the view consistently taken by this Court in some respects.
We have read the Judgment of Bhagwati, J. with considerable care and attention which it deserves.
Firstly, with great respect we are unable to construe the decision in Union of India & Ors.
vs M/s. Indo Afghan Agencies Ltd. case in the manner in which it has been done.
As pointed out by us, all that the case purports to lay down is that the court can enforce an obligation incurred by an authority on which another has acted upon and put himself in a disadvantageous position, when the authority resiles arbitrarily or on mere whim or on some undefined and undisclosed grounds of necessity.
With respect, we feel we are unable to agree with the interpretation put by Bhagwati, J. Bhagwati, J. states "The defence of executive necessity was thus clearly negatived by this Court and it was pointed 723 out that it did not release the Government from its obligation to honour the promise made by it, if the citizen acting in reliance on the promise, had altered his position.
The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be defeated by invoking the defence of executive necessity.
" The same view has again been reiterated at page 682 where it is stated" The law may, therefore, now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promises and in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution.
" These observations would be right if they are read with the qualifications, laid down in the Indo Afghan Agencies case and other cases.
The further observations of the learned Judge that: "Every one is subject to the law as fully and completely as any other and the Government is no exception.
It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned, the former is equally bound as the latter." Again "but if the Government makes such a promise and the promises acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual do not appear to convey the true effect of the decision.
" The decision of this Court in Century Spinning and Manufacturing Co. Ltd. and Anr.
vs The Ulhashagar Municipal Council and Anr.
(supra) was understood by Justice Bhagwati as refusing to make a distinction between the private individual and public body so far as the doctrine of promissory estoppel is concerned.
These observations would be correct only if they are read with the exceptions recognised by Justice Bhagwati himself elsewhere in his judgment along with other restrictions imposed by Judgments of this Court.
We find ourselves unable to ignore the three decisions of this Court, two by Constitution Benches M. Ramanatha Pillai vs The State of Kerala and Anr.
(supra) and State of Kerala and Anr.
vs The Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd. etc.
(supra) and the third by a Bench of four Judges of this Court in Excise Commissioner, U. P. Allahabad vs Ram Kumar (Supra) on the ground that the observations are in the nature of obiter dicta and that it cannot be insisted as intend 724 ng to have laid down any proposition of law different from that enunciated in the Indo Afghan Agencies case.
It was not necessary for this Court in the cases referred to above to refer to Union of India and Ors.
vs M/s. Indo Afghan Agencies Ltd., or if properly understood it only held that the authority cannot go back on the agreement arbitrarily or on its mere whim.
We feel we are bound to follow the decisions of the three Benches of this Court which in our respectful opinion have correctly stated the law.
We are also unable to read the case of the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. (supra) as not having overruled the view of Denning, J and as not having expressed its disapproval of the doctrine of promissory estoppel against the Crown nor overruled the view taken by Denning, J in Robertson vs Minister of Pensions that "the Crown cannot escape the obligation under the doctrine of promissory estoppel.
" We find ourselves unable to share the view of the learned Judge that the Constitution Bench of this Court in Ramanathan Pillai 's case (supra) heavily relied upon the quotation from the American jurisprudence para 123 p. 873 Vol. 28.
Again we feel to remark that "unfortunately this quotation was incomplete and had overlooked perhaps inadvertently" is unjustified (emphasis supplied).
We feel we are in duty bound to express our reservations regarding the "activist" jurisprudence and the wide implications thereof which the learned Judge has propounded in his judgment.
The first part of the judgment relates to the development of law relating to promissory estoppel in England following the High Trees case.
As pointed out by us earlier the doctrine of promissory estoppel is not very helpful as we are governed by the various provisions of the Indian Contract Act Sections 65 and 70 provide for certain reliefs in void contracts and in unenforceable contracts where a person relying on a representation has acted upon it and put himself in a disadvantageous position.
Apart from the case in Robertson vs Minister of Pensions, the House of Lords in Howell 's case and the Privy Council in Antonio Buttigieg 's case and the other English Authorities do not agree with the view that the plea of promissory estoppel is available against the Government.
Further we have to bear in mind that the Indian Constitution as a matter of high policy in public interest, has enacted Article 299 so as to save the Government liability arising out of unathorised acts of its officers and contracts not duly executed.
The learned Judge has considered at some length the doctrine of consideration and how it has thwarted the full development of the new equitable principle of promissory estoppel.
After discussing the American Law on the subject, he has observed that the leading text book 725 writers view with disfavour the importance given to "consideration".
The learned Judge proceeds to observe that : "having regard to the general opprobrium to which the doctrine of consideration has been subjected to by eminent jurists, we need not be unduly anxious to project this doctrine against assault of erosion nor allow it to dwarf or stultify the full development of the equity of promissory estoppel or inhibit or curtail its operational efficacy as a justice device for preventing injustice.
" Here again we have to bear in mind that the Indian Contract Act regulates the right of parties, and expressly insists on the necessity for lawful consideration which cannot be dispensed with by invoking some equitable doctrine.
Section 10 of the Contract Act provides : "All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
" It will be seen that for a contract to be valid, it should be for a lawful consideration.
Section 25 of the Contract Act provides that an agreement made without consideration is void unless it satisfies one of the conditions mentioned in this section.
The learned Judge has held that if the Government is to resist its liability it will have to disclose to the Court what are the facts and circumstances on account of which the Government claims to be exempted from the liability and it would be for the Court to decide whether these facts and circumstances are such as to render it inequitable to enforce the liability against the Government.
This statement will have to be read with the exceptions stated by the Learned Judge himself and those recognised by the decisions of this Court.
In C. Sankaranarayanan vs State of Kerala it was held that the power of the Government under Article 309 to make rules regulating the conditions of service of Government employees or of teachers of aided schools cannot in any way be effected by any agreement.
Rule of estoppel against Government cannot be invoked in such cases.
In Narendra Chand Hem Ram and Ors.
vs Lt. Governor Administrator Union Territory, Himachal Pradesh and Ors., this Court has laid down that the power to impose tax is undoubtedly a legislative power and that no Court can issue mandate to a legislature to enact a particular law and similarly no Court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact.
Again in State of Tamil 726 Nadu and Ors.
vs section K. Krishnamurthi etc.
this Court held that the policy of State to nationalise text books cannot be challenged by the publishers on the ground that the rules were in derogation of their rights.
It was held that the rules were in the nature of Departmental instructions and do not confer any right on the publishers nor are they designed to safeguard the interest of publishers and that the policy of nationalisation was conceived in public interest and as the Government is at liberty to change the text books and delete from and add to the list of approved text books and the publishers can have no grievance.
In M/s. Andhra Industrial Works vs Chief Controller of Imports and Ors., a four judges Bench of this Court held that an applicant for a permit under Import Trade Policy has no absolute right to the grant of import licence and that the applicant cannot complain that the existing instructions or orders made in pursuance of the Import and Export Control Act place "unreasonable restrictions" on the petitioners ' right to carry on trade or business.
These restrictions obviously have been imposed in the interests of the general public and national economy and with the development of imports, regulating foreign exchange have necessarily to be appropriately controlled and regulated.
Professor section A. De Smith in his Judicial Review on Administrative Action, 3rd Edn.
p. 279 sums up the position thus: "Contracts and Covenants entered into by the Crown are not to be construed as being subject to implied terms that would exclude the exercise of general discretionary powers for the public good: On the contrary they are to be construed as incorporating an implied term that such powers remain exercisable.
This is broadly true of other public authorities also.
But the status and functions of the Crown in this regard are of a higher order.
The Crown cannot be allowed to tie its hands completely by prior undertakings is as clear as the proposition that the Courts cannot allow the Crown to evade compliance with ostensibly binding obligations whenever it thinks fit: If a public authority lawfully repudiates or departs from the terms of a binding contract in order to exercise its overriding discretionary powers, or if it is held never to have been bound in law by an ostensibly binding contract because the undertakings would improperly fetter its general discretionary powers, the other party to the agreement has no right whatsoever to damages or compensation under the general law, no matter how serious the damages that party may have suffered." Professor H. W. R. Wade in Administrative Law Fourth Edn.
329 330 has pointed out that the doctrine of estoppel cannot be allowed to impede the proper exercise 727 of public and statutory functions by the State and public authorities.
In Public Law the most obvious limitation on the doctrine of estoppel is that it cannot be invoked so as to give an authority powers which it does not in law possess.
In other words, no estoppel can legitimate action which is ultra vires.
As has been amply illustrated the Court is normally extremely careful to prevent any legal doctrine from impeding the exercise of statutory discretion in the public interest.
On a consideration of the decisions of this Court it is clear that there can be no promissory estoppel against the exercise of legislative power of the State.
So also the doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law.
The Government would not be bound by the act of its officers and agents who act beyond the scope of their authority and a person dealing with the agent of the Government must be held to have notice of the limitations of his authority.
The Court can enforce compliance by a public authority of the obligation laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of the Government.
It would be open to the authority to plead and prove that there were special considerations which necessitated his not being able to comply with his obligations in public interest.
In a fervent plea for the doctrine to speak in all its activist magnitude the learned Judge observes "that is no reason why this new principle, which is a child of equity brought into the world with a view to promoting honesty and good faith and bringing law closer to justice should be held in fetters and not allowed to operate in all the activist magnitude, so that it may fulfil the purpose for which it was conceived and born".
It is no doubt desirable that in a civilised society man 's word should be as good as his bond and his fellow men should be able to rely on his promise.
It may be an improvement if a cause of action would be based on a mere promise without consideration.
The law should as far as possible accord with the moral values of the society, and efforts should be made to bring the law in conformity with the moral values.
What are the moral values of the Society ? This is a very complex question because the concept of moral values amongst different persons and classes of persons is not always the same.
The concept of moral values is not static one.
It differs from time to time and from society to society.
It is hazardous for a Court to attempt to enforce what according to it is the moral value.
As pointed out by Roscoe Pound: "It leads to an attempt to enforce overhigh ethical standards and to make legal duties out of moral duties which are not sufficiently, tangible to be made effective by the machinery of the legal order.
A more serious difficulty is that the attempt to identify 728 law and morals gives too wide a scope to judicial discretion".
The question is how should it be brought about.
The learned Judge says that it should be the constant endeavour of the Courts and the legislature to close the gap between the law and morality and bring about as near an approximation between the two as possible.
Lord Denning might have exhorted the Judges not to be timorous sours but to be bold spirits, ready to allow a new cause of action if justice so requires.
These are lofty ideals which one should steadfastly pursue.
But before embarking on this mission, it is necessary for the Court to understand clearly its limitations.
The powers of the Court to legislate is strictly limited.
"Judges ought to remember that their office is jus dicere and not jus dare to interpret law, and not to make law or give law." Chandrachud, C. J. Speaking for a Constitution Bench in Shri Gurbaksh Singh Sibbia etc.
vs State of Punjab, has clearly pointed out the limited powers of the Courts to make laws in construing the provisions of the statutes.
The Learned Chief Justice has observed: "The true question is whether by a process of construction, the amplitude of judicial discretion which is given to the High Court and the Court of Session, to impose such conditions as they may think fit while granting anticipatory bail, should be cut down by reading into the statute conditions which are not to be found therein *** Our answer, clearly and emphatically is in the negative.
" Again the Learned Chief Justice warned "Judges have to decide cases as they come before them, mindful of the need to keep passions and prejudices out of their decisions.
And it will be strange if, by employing judicial artifices and techniques, we cut down the discretion so wisely conferred upon the Courts, by devising a formula which will confine the power to grant anticipatory bail within a strait jacket.
" "Therefore, even if we were to frame a 'code for the grant of anticipatory bail ', which really is the business of the legislature, it can at best furnish broad guide lines and cannot compel blind adherence".
The Courts by its very nature are most ill suited to undertake the task of legislating.
There is no machinery for the Court to ascertain the conditions of the people and their requirements and to make laws that would be most appropriate.
Further two Judges may think that a particular law would be desirable to meet the requirements whereas another two Judges may most profoundly differ from the conclusions arrived at by two Judges.
Conscious of these handicaps, the law requires that even an amendment of the Supreme Court Rules which 729 govern the procedure to be adopted by it for regulating its work, can only be effected by the whole Court sitting and deciding.
The result is that so far as the recommendation of the Municipal Committee to the Government to levy octroi duty, is concerned though it is contrary to the representation it made to the buyers of the sites in the Mundi, the Municipality is not estopped as the representation made by it was beyond the scope of its authority.
The levy of tax being for a public purpose i.e. for augmenting the revenues of the Municipality as laid down in Ram Kumar 's case, the plea of estoppel is not available.
The order of the Government directing the levy of octroi in pursuance of the resolution of the Municipality cannot also be challenged as it is in the exercise of its statutory duty.
The result is both the appeals fail and are dismissed with costs of one set to be borne equally by the two appellants.
section R. Appeals dismissed.
|
The Municipal Committee of Bahadurgarh, respondent No. 2 established Mandi Fateh in Bahadurgarh Town with a view to improve trade in the area.
The Municipal Committee decided that the purchasers of the plots for sale in the Mandi would not be required to pay octroi duty on goods imported within the said Mandi.
A resolution (No. 8) dated 20 12 1916 was passed by the Municipality to this effect.
Hand bills were issued for the sale of the plots on the basis of the resolution and it was proclaimed that Fateh Mandi would remain exempt from payment of octroi.
Subsequently by resolution No. 4 dated 20 5 1917, the Municipal Committee decided that the term No. 14 to the conditions of sale, namely, that the purchasers of plots would not be required to pay octroi, be amended to the effect that the Mandi shall remain immune from payment of octroi duty for ever.
When the resolution was received by the Commissioner of Ambala, in paragraph 3 of his letter dated 26 6 1917, he minuted that the undertaking by the Municipal Commissioner never to impose octroi duty in the Mandi was ultra vires and therefore the purchasers of the plots should be informed so that they may withdraw from the purchases.
On receipt of this letter the President of the Municipal Committee made representations that if octroi duty was to be levied, there would be no purchasers for the plots and the entire scheme would fall through.
On this, the Commissioner revised his earlier view and withdrew his objection by further observing that "as soon as the market is established it will be necessary to consider what form of taxation is best to cover the market share of municipal expenses".
The Municipal Committee on 10 3 1919 imposed house tax of Rs. 3 14 6 per cent per annum on the shopkeepers to cover the expenditure of the market.
This state of affairs continued till 4 9 1953 when the Municipal Committee by notification No. 9697 C 53/63830 dated 4 9 1953 included Fateh Mandi, Bahadurgarh, within the octroi limits.
The Examiner of Local Funds pointed out that the Municipal Committee is under obligation to charge octroi on goods imported into Fateh Mandi.
The President of the Municipal Committee made a representation to the Deputy Commissioner on 24 2 1954.
The Municipal Committee again passed another resolution No. 1 dated 2 3 1954 that the Fateh Mandi will remain free from octroi duty according to the terms of the proclamation of the sale relating to the sale of plots.
The matter was referred to Punjab State which after thoroughly examining the whole matter, confirmed Resolution No. 1 passed by the Municipal Committee on 2 3 1954, Subse 690 quently, the Municipal Committee changed its mind and by its resolution dated 8 5 1954, resolved that octroi duty should also be levied on the goods imported into Fateh Mandi.
But this resolution was annulled by the Punjab Government under section 236 of the Punjab Municipal Act.
The Examiner of Local Funds Accounts in the meantime insisted on the levy of octroi duty on the goods imported into Fateh Mandi and the Punjab Government after discussing the issue on 9 4 1956 informed the President of the Municipal Committee that the Government 's action in confirming the resolution No. 1 of 2 3 1954 of the Municipal Committee, Bahadurgarh exempting goods imported into Fateh Mandi from levy of octroi duty under section 70(2)(c) of the Municipal Act, 1911, is quite in order and that no separate notification to this effect was necessary under the rules.
Again on 21 7 1965, the Municipal Committee Bahadurgarh resolved that the Government be requested to cancel Resolution No. 1 dated 2 3 1954.
The State of Haryana Respondent No. 1 which came into existence on 1 11 64 under the Punjab Reorganisation Act, by its memo dated 13 10 1967 approved the resolution No. 6 dated 21 7 65 of the Municipal Committee and cancelled the Municipal Resolution No. 1 of 2 3 1964.
As a result of the decision of the Government, the Municipal Committee started charging octroi duty on the goods imported into the Mandi.
On these facts, the petitioners submitted that the resolution No. 6 of the Municipal Committee dated 21 7 1965 (Annexure 6) and approval granted by the Haryana State as per its order dated 30 10 1967 (Ann.
H) were illegal and ultra vires and without jurisdiction.
A Full Bench of the High Court rejected the petition mainly on three grounds.
Firstly, it found that the State Government is entitled under section 62 A of Punjab Act, 48/1953 to direct the Municipal Committee to impose octroi duty and as such even if the municipality is found to have erred in imposing the Octroi Duty, the legislative powers of the State cannot be questioned.
Secondly, it found, that it was not within the competence of the Municipality to grant any exemption from payment of octroi duty and this act was ultra vires of its powers and cannot be enforced.
Thirdly, it found that the Court cannot go into the question as to whether the petitioners ' plea based on equity that the Municipality is bound, cannot be gone into far want of adequate facts.
The High Court however granted certificates to the appellants.
Dismissing the appeal, the Court ^ HELD: 1.
Under section 62 A of the Punjab Municipal Act.
1911 as amended by Punjab Act 43/1958 the State Government is empowered to impose octroi duty and under sub clause (b) if the committee fails to carry cut the order of the Government, the State Government may impose octroi Duty.
Under section 70(2)(c), a Municipal Committee by a resolution passed at a special meeting and confirmed by the State Government may exempt in whole or in part from payment of any such tax any person or class of persons or any property or description of property.
In exercise of those powers, the State Government had by its order dated 4 5 1954 confirmed resolution No. 1 passed by the Municipal Committee in its special meeting held on 2 3 1954 regarding the exemption of goods imported into Fateh Mandi from levy of octroi Duty.
Subsequently, in reply to the objection raised by the Examiner of Local Funds, the Government pointed out by its letter dated 9 4 1956 (Ann. F) that the Government 's action confirming the resolution No. 1 dated 2 3 1954 of the Municipal Committee exempting Goods imported into Fateh Mandi, under section 70(2)(c) of 691 the Punjab Municipal Act, 1911, was quite in order.
By the impugned order dated 20 10 1967 the Government approved the resolution No. 6 of the Municipal Committee dated 21 7 1965 and permitted the Municipality to levy the octroi Duty.
Therefore, the action taken by the State Government is strictly in conformity with the powers conferred on it under section 70(2)(c) of the Act.
It exempted the petitioners from payment of octroi Duty for a particular period and ultimately withdrew the exemption.
The action of the Government cannot be questioned as it is in exercise of its statutory functions.
The plea of estoppel is not available against the State in the exercise of its legislative or statutory functions.
The Government have power to direct the Municipality to collect the octroi Tax if the Municipality fails to take action by itself under section 60(A) (3).
Further, even on facts, this plea is not available as against the Government as it is not the case of the petitioners that they acted on the representation of the Government.
[698 E H, 699 A C] 2.
The Municipality is not estopped from levying or recommending the levy of the tax to the Government even though in the proclamation of sale it was notified that no octroi duty would be levied and it was only in pursuance of such representation the appellants purchased the property because the Municipal Committee had no authority to exempt the Fateh Market from the levy of Octroi duty.
If the Municipal Committee had passed a resolution or issued a notification that no octroi duty will be levied, it will be ultra vires of the powers of the Municipal Committee.
When a public authority acts beyond the scope of its authority the plea of estoppel is not available to prevent the authority from acting according to law.
It is in public interest that no such plea should be allowed.
Further, in the instant case, the appellants are not entitled to any enforceable legal right under the terms of the Municipal Act, since non production of any sale deed executed by the Municipal Committee in favour of the purchasers raises the only presumption that the contract between the parties have not been proved to have been reduced in writing and executed in the manner prescribed under section 47 of the Municipality Act, 1911 (Act 3 of 1911).
[699 C E 700 B D] 3.
Article 299(1) of the Constitution of India corresponding to Section 175 (3) of the Government of India Act, 1935 provides that all contracts made in the exercise of executive powers of the Union or of a State shall be expressed to be made by the President or by the Governor of the State, as the case may be, and all such contracts and assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
The provisions of this Article is mandatory and not directory, is enacted as a matter of public policy that the State should not be saddled with liability for unauthorised contracts and is enacted in the public interest.
The provisions are embodied on the ground of public policy on the ground of protection of general public.
[700 F H, 701 A B] Seth Bhikraj Jaipuria vs Union of India, ; ; Mulam Chand vs State of M.P., Karamshi Jethabhiai Samrayya vs State of Bombay, ; ; referred to.
The scope of the plea of doctrine of promissory estoppel against the Government is as follows: (a) The plea of promissory estoppel is not available against the exercise of the legislative or executive functions of the State.
There could not be estoppel 692 against express provisions of the law nor could the State by its action waive its rights to exercise powers entrusted to it for the public good.
[721 F] Antonio Buttigieg vs Captain Stephen H. Cross and ors.
AIR 1907 PC; Adants vs London Improved Motor Coach Builders, [821] 1 K.B. 495, York Corporation vs Henry Leethan and Sons Ltd., ; William Cory and Sons Ltd. vs London Corporation, ; Howell vs Falmouth Boat Construction Co. Ltd., ; Commissioner of Crown Lands vs Page, ; South end on Sea Corporation vs Hodgson (Wickrord) Ltd., ; Federal Insurance Corpn.
vs Marril, 382 U.S. 380; quoted with approval.
Robertson vs Minister of Pensions, dissented from.
Assistant Custodian of E.P. and ors.
vs Brij Kishore Agarwala, ; ; Bihar Eastern Gangetic Fishermen Cooperative Society vs Sipahi Singh & ors. ; ; applied.
Union of India vs Indo Afghan Agencies, ; ; Century Spinning & Manufacturing Co. Ltd. and Anr.
vs Ulhas Nagar Municipal Council and anr., [1970] 3 SCR 854; Turner Morrison Co. Ltd. vs Hungerford Investment Trust Ltd., ; ; explained and distinguished.
Collector of Bombay vs Municipal Corporation of the City of Bombay and ors.
,[1952] SCR p. 43; Excise Commr.
U.P., Allahabad vs Ram Kumar, [1976] Supp.
SCR 532; M. Ramanatha Pillai vs State of Kerala, ; ; State of Kerala and Anr.
vs The Gwalior Manufacturing (Wvg.) Co. Ltd.; , ; followed.
(b) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law.
[721 G] (c) When an officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available.
The doctrine of ultra vires will come into operation and the Government cannot be held bound by the unauthorised acts of its officers.
[721 G H] (d) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the Courts is entitled to require the officer to act according to the scheme and the agreement or representation.
The officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position.
[721 G H, 722 A B] Union of India vs Indo Afghan Agencies Ltd., ; ; discussed and followed.
(e) The officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State.
[722 B C] Union of India vs M/s Indo Afghan Agencies Ltd., ; applied.
693 5.
It is only in public interest that it is recognised that an authority acting on behalf of the Government or by virtue of statutory powers cannot exceed his authority.
Rule of ultra vires will become applicable when he exceeds his authority and the Government would not be bound by such action.
Any person who enters into an arrangement with the Government has to ascertain and satisfy himself that the authority who purports to act for the Government, acts within the scope of his authority and cannot urge that the Government is in the position of any other litigant liable to be charged with liability.
[705 G H, 706 A] 6.
The doctrine of estoppel which burst out into sudden blaze in 1946 and ever since continuing to smoulder due to the consistent maintenance of the original author 's interest in its further development, now in this direction and now in that, though interesting is not relevant in administering Indian Law.
Section 63 of the Contract Act which provides that when a creditor accepts a lesser sum in satisfaction of the whole debt, the whole debt becomes discharged is a wide departure from the English law as laid down in Jordan vs Monye.
The doctrine of estoppel referred to in High Trees case is to some extent taken care of by section 65 and 70 of the Indian Contract.
Section 65 provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it, to the person from whom he received it.
Under section 70 of the Contract Act.
an obligation is cast on the person enjoying benefit of a non gratutious act to compensate the person who lawfully performed the Act.
[707 A, 708 B, D F] Foakes vs Beer, ; ; Jordan vs Money, [1854] 5 H.L. Cas 185; Fenner vs Blake, ; Woodhouse Ltd. vs Nigerian Produce Ltd., , In Re. Wickham William Porter and Co. Ltd., [1937] 2 All.
E.R. 361; Central London Property Trust Ltd. vs High Trees House Ltd., ; referred to.
The provisions of Section 70 of the Indian Contract Act are applicable to contract which is not according to Section 175 of the Government of India Act and Article 299 of the Constitution of India.
[708 G H] State of West Bengal vs B. K. Mondal and Ors., [1962 Supp.
SCR p. 876; New Marine Coal Co. Ltd. vs Union of India.
; ; referred to.
All that the Indo Afghan Agencies case laid down was that a public authority acting on behalf of the Government cannot on its own whim and in an arbitrary manner seek to alter the conditions accepted by him to the prejudice of the other side.
The decision in terms accepts that after taking into consideration the exigencies and change of circumstances the authority can modify the conditions in exercise of his powers as a public policy.
Apart from not noticing Howell 's case, the Court in Indo Afghan 's case did not say that the law as extracted from the judgment in Robertson 's case by Denning J. was applicable to India.
[719 D E, 721 A] 9.
The Judgment in M/s Motilal Padampat Sugar Mills Co. (P) Ltd. vs State of Uttar Pradesh, [1979] 2 SCR p. 641 is not in accordance with the view consistently taken by the Supreme Court in following respects : [722 F] (i) The decision in the case of Union of Indian vs M/s Indo Afghan Agencies Ltd., ; cannot be constructed in the manner in which it was 694 done.
All that the Indo Afghan case purports to lay down is that the Court can enforce an obligation incurred by an authority on which another has acted upon and put himself in a disadvantageous position, when the authority resiles arbitrarily or on mere whim or on some undefined and undisclosed grounds of necessity.
[722 F G] (ii) The decision of this Court in Century Spinning and Manufacturing Co. Ltd and Anr.
vs The Ulhasnagar Municipal Council and Anr., [1970] 3 SCR 854 was understood as refusing to make a distinction between the private individual and public body so far as the doctrine of promissory estoppel is concerned.
[723 F] (iii) The three decisions of this Court, two by Constitution Benches M. Ramanatha Pillai vs State of Kerala, State of Kerala vs The Gwalior Rayon Silk Mfg.
(Wvg.) Co. Ltd. and the third by a Bench of four judges in Excise Commissioner, U.P. Allahabad vs Ram Kumar cannot be ignored on the ground that the observations are in the nature of obiter dicta and that it cannot be insisted as intending to have laid down any proposition of law different from that enunciated in the Indo Afghan Agencies case.
It was not necessary for this Court in the three cases to refer to Union of India & others vs Indo Afghan Agencies.
If properly understood it only held that the authority cannot go back on the agreement arbitrarily or on its own whim.
[723 H, 724 A B] (iv) The case of the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. cannot be read as not having overruled the view of Denning J. and as not having expressed its disapproval of the doctrine of promissory estoppel against the crown in Robertson vs Minister of Pensions.
[724 B C] (v) The Indian Constitution as a matter of high policy in public interest has enacted Article 299 so as to save the Government from liability arising out of unauthorised acts of its officers and contracts not duly executed.
Sections 65 and 70 of the Indian Contract Act provide for certain reliefs in void contracts and in unenforceable contracts where a person relying on a representation has acted upon it and put himself in a disadvantageous position.
The activist jurisprudence and the wide implications thereof, propounded in the Motilal Padampat, Sugar case doubted.
[724 E, F, G] (vii) The Indian Contract Act regulates the right of parties and expressly insists on the necessity for lawful consideration which cannot be dispensed with by invoking some new equitable doctrine.
Under Section 10 of the Contract Act, for a contract to be valid, it should be for a lawful consideration and Section 25 of the Contract Act provides that an agreement made without consideration is void unless it satisfies one of the conditions mentioned in that section.
[725 B C, D] (viii) Sankaranarayan vs State of Kerala, ; ; Narendra Chand Hem Ram and Ors.
vs Lt. Governor Administration, Union Territory of Himachal Pradesh, ; ; State of Tamil Nadu and Ors. etc.
vs section K. Krishnamurthi etc.
; , ; and M/s Andhra Industrial Works vs Chief Controller of Imports and Ors., ; indicate that the Rule of estoppel against Government cannot be invoked against the Government.
What are the moral values of the society is a complex question because the concept of moral values amongst different persons and classes of persons is not always the same.
Being not a state one, it differs from time to time and from society to society.
It is hazardous for a Court to attempt to enforce what according to it is the moral value.
Before embarking on the mission of "closing the gap between the law and morality and bring about as near an approximation between the two as possible", it is necessary for the Court to understand clearly its limitations.
The powers of the Court to legislate is strictly limited.
"Judges ought to remember that their office is jus dicere and not jus dare to interpret the law, and not to make law or give law".
[727 F, G, 728 A C] The courts by its very nature are most ill suited to undertake the task of legislating.
There is no machinery for the Court to ascertain the condition of the people and their requirements and to make laws that would be most appropriate.
Further two judges may think that a particular law would, be desirable to meet the requirements whereas another two judges may most profoundly differ from the conclusions arrived at by two judges.
[728 G H, 729 A] Shri Gurbaksh Singh Sibbia etc.
vs State of U.P., [1908] 3 SCR p. 383 followed.
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4218.txt
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Appeal No. 1040/63.
C.K. Daphtary, Attorney General, M.S.K. Sastri and R.H. Dhebar, for the appellant.
C.B. Agarwala and A.G. Ratnaparkhi, for the respondent.
The Judgment of the Court was delivered by Gajendragadkar, C.J.
The short question of law which arises in this appeal is whether the appellant, the State of Bombay (now Maharashtra), shows that its predecessor State of Madhya Pradesh (hereinafter called the Government) had given a reasonable opportunity to.
the respondent, Narul Latif Khan, to defend himself before it passed the final order on June 6, 1952 compulsorily retiring him under Article 353 of the Civil Service Regulations.
By this order, the respondent was compulsorily retired and in relaxation of article 353, the Government was pleased to allow the respondent to draw a compassionate allowance equal to the pension which would have been admissible to him had he been invalidated.
This order was challenged by the respondent by filing a suit in the Court of the first Additional District Judge at Nagpur.
In his plaint, the respondent alleged that the impugned order whereby he was compulsorily retired, was invalid and he claimed a declaration that it was ultra vires and inoperative.
He also asked for a declaration that he was entitled to be restored to the post which he held on July 6, 1950, and that he should be given all pay, allowances.
increments and promotions to which he would have been entitled if he had been permitted to continue in service.
In the result, the respondent asked for a decree for Rs. 62,237 with interest at 6 per cent per annum from the date of the suit till realisation.
This claim was resisted by the appellant on several grounds.
The principal ground on which the appellant challenged the respondent 's claim, however, was that he had been given a reasonable opportunity to defend himself, and so, the impugned order was perfectly valid, and legal.
Several other pleas were also raised by the appellant.
On these pleas, the learned trial Judge framed appropriate issues.
The issue with which we are concerned in the present appeal, however, centered round the question as to whether the Constitutional provision prescribed by article 311 affording protection to the respondent had been contravened.
The trial Judge made a finding against the respondent on this issue.
He also recorded his findings on the other issues with which we are not directly concerned in the present appeal.
In regard to the money claim made by the respondent, the learned trial Judge made a finding that in case he was held entitled to such relief, a decree for Rs. 37,237 may have to be passed in his favour.
In view of his conclusion that the impugned order was valid, no question arose 137 for making such a decree in favour of the respondent.
The respondent 's suit, therefore, failed and was dismissed.
The respondent then took the matter in appeal before the High Court of Judicature at Bombay, Nagpur Bench.
The High Court has, in substance, held that the constitutional provisions prescribed by article 311 have not been complied with by the appellant before it passed the impugned order against the respondent.
It has found that the departmental enquiry which was held suffered from the serious infirmity that the enquiry officer did not hold an oral enquiry and did not allow an opportunity to the respondent to lead his oral evidence.
It has also held that the second notice served by the appellant on the respondent calling upon him to show cause why the report made by the enquiry officer should not be accepted and appropriate punishment should not be inflicted on him, was defective, and that also made the impugned order invalid.
The High Court appears to have taken the view that the impugned order does not show that the appellant had taken into account the explanation offered by the respondent in response to the second notice issued by the appellant.
As a result of these findings, the High Court has reversed the conclusion of the trial Court on the main question and has found that the impugned order is invalid and inoperative.
On that view, the High Court considered the money claim made by the respondent, and it confirmed the finding of the trial Court that the respondent would be entitled to a decree for Rs. 37,237.
In fact, the alternative finding recorded by the trial Court in respect of the amount to which the respondent would be entitled in case he succeeded in challenging the validity of the impugned order, was not questioned before the High Court.
In the result, the High Court allowed the appeal and passed a money decree for Rs. 37,237 in favour of the respondent in terms of prayer (A) of paragraph 31 of the plaint.
The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that it has brought the present appeal before this Court.
That is how the main question which falls for our decision is whether the constitutional provision prescribed by article 311 has been complied with by the appellant before it passed the impugned order.
At this stage, it may be relevant to refer to some material facts.
The respondent was appointed as Extra Assistant Commissioner in 1926 and since then he had been holding various offices in the State service of the then Madhya Pradesh Government.
In 1950, he was holding the post of a Treasury Officer at Nagpur.
It appears that privilege leave for over a year was due to him and he had applied for four months ' privilege leave.
On June 12, 1950, Government informed him that his request for leave was rejected and he was told that no further application for leave would be entertained in future.
On July 7, 1950, the respondent proceeded 138 on casual leave for two days, and on July 8, 1950 he renewed his application for four months ' leave on medical grounds.
This application was accompanied by a certificate given by Dr. Dange.
Government, therefore, decided to constitute a Medical Board for examining the respondent in order to .decide whether leave on medical grounds should be granted to him.
Accordingly, the respondent appeared before a Special Medical Board on July 22, 1950.
The Medical Board, however, could not come to a decision as to whether the respondent should be granted leave on medical grounds for four months.
It recommended that the respondent should get himself admitted in the Mayo Hospital, Nagpur.
for observation and investigation.
In accordance with this report, Government asked the respondent to get himself admitted in the Mayo Hospital in time, so that the Board could examine him on August 8, 1950.
The respondent refused to, go to the Mayo Hospital and pressed that he should be allowed to go to Calcutta to receive medical treatment from experts.
It appears that on July 26, 1950, the respondent received a telegram from Raipur stating that his daughter was dangerously ill there.
He, therefore, made another application on the same day requesting for ten days ' leave to enable him to go to Raipur and see his ailing daughter.
On July 31, 1950, Government granted the respondent 's request.
Accordingly, the respondent went to Raipur.
From Raipur he renewed his application for four months ' leave on Medical grounds and produced certificates from Dr. Bhalerao and Dr. Kashyap.
That led to a lengthy correspondence between the respondent and the Government which shows that Government insisted on his appearing before the Medical Board and the respondent was not prepared to go to.
Nagpur because he alleged that he was seriously ill and could not undertake a journey to Nagpur.
Ultimately, on September 9, 1950, Government called upon the respondent to resume his duties within three days from the receipt of the said letter failing which he was told that he would be suspended and a departmental enquiry would be started against him.
On October 4, 1950, the respondent wrote a lengthily reply setting forth his contentions in detail.
Since he did not resume his duties, Government decided to suspend him and start a departmental enquiry against him.
Mr. S.N. Mehta, I.C.S., was accordingly appointed to hold the.
enquiry.
On November 29, 1950, Mr. Mehta wrote to the respondent that Government had directed him to conduct the departmental enquiry, and called upon the respondent to attend his office on December 7, 1950, at 11.00 a.m.
The respondent, however.
did not appear before him and wrote to Mr. Mehta that owing to his illness, he was unable to appear before him.
He again pleaded that he was seriously ill.
On January 15, 1951, Mr. Mehta served the respondent with a charge sheet.
Three charges were framed against him.
The first charge was that he had deliberately disobeyed the orders of Government when he was asked to get himself admitted in the Mayo 139 Hospital for observation and investigation.
The second charge was that he had failed to report for duty even though no leave was sanctioned to him by Government and he was specifically ordered by Government to report for duty.
The third charge was that he had persistently disobeyed the orders of Government and he had thereby shown himself unfit to continue as a member of the State Civil Service.
Material allegations on which reliance was placed against the respondent in support of these charges were also specified under the respective charges.
The respondent was, however, not prepared to appear before Mr. Mehta and he raised several technical contentions.
Ultimately, he sent his written statement and denied all the charges.
His case appears to have been that he had not deliberately disobeyed any of the orders issued by Government.
In regard to his getting admitted in the Mayo Hospital, he seems to have taken the plea that when he was allowed to go on casual leave to see his ailing daughter at Raipur, it was clear that he could not have got himself admitted in the Mayo Hospital so as to enable the Medical Board to examine him on August 8, 1950.
In respect of the charge that he had persistently refused to obey the orders of Government, his case was that he was dangerously ill and that he genuinely apprehended that if he undertook a journey to resume his duty, he might even collapse.
He requested the enquiry officer to allow him to appear by a lawyer whom he would instruct to cross examine the witnesses whom the Government would examine against him.
He also stated that he wanted to give evidence of his own doctors who would depose to his ailing condition at the relevant time.
It appears that Mr. Mehta wanted to accommodate the respondent as much as he could and when he found that the respondent was not appearing in person before him, he in fact fixed a date for hearing at Raipur on September 21, 1951 where he happened to be camping.
On that date, the respondent appeared before Mr. Mehta and Mr. Mehta made a note as to what transpired on that date.
The note shows that "the whole case was discussed with the respondent.
His plea was that he should be allowed to appear through a counsel, but it was explained to him in detail that as far as the case can be seen from Government side at present, it does not involve the taking up oral evidence.
He agreed that he would not press for this facility.
He would, however, like to give a detailed answer to the charge sheet.
He also undertook to appear in person regularly in future".
Thereafter, Mr. Mehta required the respondent to file his detailed written statement.
and in fact, the respondent did file his detailed written statement containing the pleas to which we have already referred.
On November 8. 1951, Mr. Mehta wrote to the respondent that he would be glad to hear him in person in case he wished to make an oral statement on November 20, 1951, and when the respondent did not 140 appear on the said date, Mr. Mehta proceeded to examine the documentary evidence showing the failure of the respondent to comply with the orders issued by Government and made his report on November 24, 1951.
He found that the three charges framed against the respondent were proved.
In his report, Mr. Mehta observed that "the conduct of the respondent and the language used by him from time to time in his communications .discloses an attitude of disobedience and insubordination which no Government can tolerate from its subordinate officers".
We may incidentally observe that the comment thus made by Mr. Mehta in regard to the communications addressed by the respondent to him appears to us to be fully justified but, in our opinion, this aspect of the matter cannot have any material bearing on the question with which we are concerned.
The validity of the impugned order must be judged objectively without considering the impropriety of the language used by the respondent or the reluctance shown by him to appear before Mr. Mehta.
In his report, Mr. Mehta has also observed that when the respondent met him, he explained to him that the case did not involve recording of any oral evidence as it was based on documents only.
Mr. Mehta adds that according to the impression he got at that time, the respondent was satisfied that in the circumstances, the assistance of a counsel was unnecessary.
It is, however, plain from the several letters written by the respondent to Mr. Mehta that he was insisting upon an oral enquiry and that he wanted to examine his doctors to show that he was so iII at the relevant time that he could not have resumed his duties.
On March 2, 1951, the respondent wrote to Mr. Mehta stating, inter alia, that he wished to put in the witness box a few high ranking Government officers and the doctors whom he had consulted about his illness.
Earlier on January 20, 1951, he had written to Mr. Mehta requesting him to conduct an oral enquiry as laid down in paragraph 8(iv) G.B. Circular 13.
Similarly, on April 23, 1951, he again informed Mr. Mehta that in his opinion the institution of the departmental enquiry after suspending him was illegal and had caused him grave injury, and he added that oral and documentary evidence will be produced in defence.
It does appear that Mr. Mehta explained to the respondent that so far as Government was concerned, it rested its case merely on documents and did not think it necessary to examine any witnesses, and thereupon the respondent agreed that he need not have the facility of the assistance of a lawyer.
But it is clear from the remarks made by Mr. Mehta in the order sheet on September 21, 1951, and the observations made by him in his report that the only point on which the respondent agreed with Mr. Mehta was that he need not be allowed the assistance of the lawyer in the departmental enquiry.
We have carefully examined the record in 141 this case and we see no justification for assuming that the respondent at any time gave up his demand for an oral enquiry in the sense that he should be given permission to cite his doctors in support of his pica that his failure to resume his duties was due to his ill health.
The charge against him was that he had deliberately disobeyed the Government orders, and it is conceivable that this charge could have been met by the respondent by showing that though he disobeyed the orders, the disobedience was in no sense deliberate because his doctors had advised him to lie in bed; and thus considered, his desire to lead medical evidence cannot be treated as a mere subterfuge to prolong the enquiry.
It is true that the respondent did not give a list of his witnesses; but he had named his doctors in his communications to Mr. Mehta, and in fact Mr. Mehta never fixed any date for taking the evidence of the witnesses whom the respondent wanted to examine.
If Mr. Mehta had told the respondent that he would take the evidence of has witnesses on a specified date and the respondent had failed to appear on the said date with his witnesses, it would have been an entirely different matter.
Therefore, the position is that Mr. Mehta did net hold an oral enquiry and did not give an opportunity to the respondent to examine his witnesses and so, the question which arises for our decision is: does the failure of Mr. Mehta to hold an oral enquiry amount to a failure to give a reasonable opportunity to the respondent within the meaning of article 311 ? The requirements of article 311(2) have been considered by this Court on several occasions.
At the relevant time, article 311(2) provided that no person to whom article 311 applies shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard t9 him.
It is common ground that the impugned order of compulsory retirement attracts the provisions of article 311 (2).
If it appears that the relevant statutory rule regulating the departmental enquiry which was held against the respondent made it obligatory on the enquiry officer to hold an oral enquiry if the respondent so demanded.
then there would be no doubt that the failure of the enquiry officer to hold such an oral enquiry would introduce a serious infirmity in the enquiry and would plainly amount to the failure of the appellant to give a reasonable opportunity to the respondent.
This position is not disputed by the learned Attorney General and is indeed well settled.
So, the narrow question to which we must address ourselves is whether it was obligatory on Mr. Mehta to hold, an oral enquiry and give d reasonable opportunity to the respondent to lead oral evidence and examine his doctors.
We will assume for the purpose of this appeal that in a given case, Government would be justified in placing its case against the charge sheeted officer only on documents and may be under no obligation to examine any witnesses, 142 though we may incidentally Observe that even in such cases, if the officer desires that the persons whose reports or orders are being relied upon against him should be offered for cross examination, it may have to be considered whether such an opportunity ought not to be given to the officer; but that aspect of the matter we will not consider in the present appeal.
Therefore, even if it is assumed that Government could dispense with the examination of witnesses in support of the charges framed against the respondent, does the relevant rule make it obligatory on the Enquiry Officer to hold an oral enquiry and give the respondent a chance to examine his witnesses or not? This question falls to be considered on the construction of rule 55 of the Civil Services (Classification, Control and Appeal) Rules.
This rule reads thus: "Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, no order of dismissal, removal or reduction shall be passed on a member of a service (other than an order based on facts which have led to the conviction in a Criminal Court or by a Court, Martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and. has been afforded an adequate opportunity of defending himself.
The grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges, which shall be communicated to the person charged together with a statement of the allegations on which each.
charge is based and of any other circumstances which it is proposed to take into consideration in passing orders on the case.
He shall be required within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person.
If he so desires or if the authority concerned so direct, an oral enquiry shall be held.
At that enquiry oral evidence shall be heard as to such of the allegations as are not admitted, and the person charged shall be entitled to cross examine the witnesses, to give evidence in person and to have such witnesses called.
as he may wish, provided that the officer conducting the enquiry may, for special and sufficient reason to be recorded in writing.
refuse to call a witness.
The proceedings shall contain a sufficient record of the evidence and a statement of the findings and the grounds thereof.
" It appears that the Government of Madhya Pradesh had issued a Circular explaining this Rule.
The Circular contained Rule 8 which is relevant.
It provides that "particular attention is invited to the provisions regarding oral enquiry.
In case the person charged desires that an oral enquiry should be held, the authority holding the departmental enquiry has no option to refuse it".
The High 143 Court seems to have based its conclusion substantially, if not entirely, on this rule.
We do not propose to adopt that course.
The rule may be no more than a circular issued by Government and we do not propose to examine the question as to whether it has the force of a statutory rule.
Our decision would, therefore, be based on the construction of Rule 55 of the Civil Services Rules which admittedly applied and which admittedly is a statutory rule.
The relevant clause in this Rule provides that the officer charge sheeted shall be required within a reasonable time to put in a written statement of his defence and to state whether he desires to be heard in person.
This clause has been complied with m the present proceedings.
Mr. Mehta gave notice to the respondent to appear before him in person on the 20th November, 1951 and the respondent did net appear on that date.
It is the next clause on which the decision of the present appeal depends.
This clause lays down that if he, that is to say the charge sheeted officer, so desires or if the authority concerned so directs, an oral enquiry shall be held.
In our opinion, it is plain that the. requirement that an oral enquiry shall be held if the authority concerned so directs.
or if the charge sheeted officer so desires is mandatory.
Indeed.
this requirement is plainly based upon considerations of natural justice and fairplay.
If the charge sheeted officer wants to lead his own evidence in support of his plea, it is obviously essential that he should be given an opportunity to lead such evidence.
Therefore.
we feel no hesitation in holding .that once the respondent expressed his desire to Mr. Mehta that he wanted to lead evidence in support of his plea that his alleged disobedience of the Government orders was not deliberate, it was obligatory on Mr. Mehta to have fixed a date for recording such oral evidence and give due intimation to the respondent in that behalf.
It is true that the oral enquiry which the enquiry officer is bound to hold can well be regulated by him in his discretion.
If the charge sheeted officer starts cross examining the departmental witnesses in an irrelevant manner, such cross examination can be checked and controlled.
If the officer desires to examine witnesses whose evidence may appear to the enquiry officer to be thoroughly irrelevant, the enquiry officer may refuse to examine such witnesses; but in doing so, he will have to record his special and sufficient reasons.
In other words, the right given to the charges heated officer to cross examine the departmental witnesses or examine his own witnesses can be legitimately examined and controlled by the enquiry officer; he would be justified in conducting the enquiry in such a way that its proceedings are not allowed to be unduly or deliberately prolonged.
But, in our opinion it would be impossible to accept the argument that if the charge sheeted officer wants to lead oral evidence, the enquiry officer can say that having regard to the charges framed against the officer.
he would not hold any oral enquiry.
In the present case, the witnesse. 144 whom the respondent wanted to examine; would undoubtedly have given relevant evidence.
If the doctors who treated the respondent had come and told the enquiry officer that the condition of the respondent was so bad that he could not resume work, that undoubtedly would have been a relevant and material fact to consider in deciding whether the charges framed against the respondent were proved.
Even if we disapprove of the attitude adopted by the respondent in the course of this enquiry and condemn him for using extravagant words and making unreasonable contentions in his communications to the enquiry officer, the fact still remains that he wanted to examine his doctors, and though he intimated to Mr. Mehta that he desired to examine his doctors, Mr. Mehta failed to give him an opportunity to do so.
That, in our opinion, introduces a fatal infirmity in the whole enquiry which means that the respondent has not been given a reasonable opportunity to defend himself within the meaning of article 311(2).
On that view of the matter, it is unnecessary to consider whether the High Court was right in its other conclusions that the second notice served by the appellant on the respondent was defective and that the final order was also defective inasmuch as it did not appear that the appellant had taken into account the representation made by respondent.
It is not disputed by the learned Attorney General that if we hold that the enquiry conducted by Mr. Mehta contravened the mandatory provision of r. 55, the decision of the High Court could be sustained on that ground alone.
In the result.
the appeal fails and is dismissed with cost.
Appeal dismissed.
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The appellant who was in the service of a State Government asked for long leave which was refused.
Subsequently he asked for ten days ' leave which was granted.
On the expiry of the leave period he did not join duty on the ground that he was seriously ill.
The Government refused to accept the plea and instituted a departmental inquiry against him.
The respondent wanted to produce oral evidence in support of his plea including the evidence of doctors who treated him, but the enquiry officer refused to record oral evidence on the ground that the case against the appellant rested on documents alone and therefore no oral evidence was necessary.
On the report of the enquiry ' officer the State Government ordered the compulsory retirement of the respondent.
The latter filed a suit in which he claimed inter alia that the constitutional provision in article 311 had been contravened.
The trial judge held against him but the High Court decided in his favour.
The State Government appealed to the Supreme Court with certificate.
The narrow question to which the COurt had to address itself was whether it was obligatory on the enquiry officer to give a reasonable opportunity to the respondent to lead oral evidence and examine his doctors.
HELD: (i) The Civil Services (ClassifiCation, Control and Appeal) Rules provide in r. 55 that if the charge sheeted Officer so desires or if the authority concerned so directs an oral enquiry shall be held.
This provision is mandatory and is based on considerations of natural justice and fair play.
Therefore when the respondent expressed his desire to the enquiry officer that he wanted to lead evidence in support of his plea, it was obligatory on the enquiry officer to have fixed a date for recording such oral evidence and give due intimation to the respondent in that behalf.
[143 D F] (ii) Though an enquiry officer would be justified in conducting the enquiry in such a way that its proceedings are not allowed to be unduly or deliberately prolonged, it would be impossible to accept the argument that if the charge sheeted officer wants to lead oral evidence the enquiry officer can say that having regard to the charges against the officer he would not hold any oral enquiry [143 H] (iii) In the present case the witnesses whom the respondent wanted to examine would undoubtedly have given relevant evidence.
He wanted to examine his doctors but the enquiry officer failed to give him an opportunity to do so.
That introduced a fatal infirmity in the whole enquiry as the respondent had not been given a reasonable opportunity to de.fend himself within the meeting of article 311 (2).
The appeal of the State Government had therefore to be dismissed.
[144 A, C] 136
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1919.txt
|
iminal Appeal No. 74 of 1961.
Appeal by special leave from the judgment and order dated May 7, 1957, of the Allahabad High Court in Criminal Misc.
No. 2006 of 1953.
Veda Vyas, section K. Kapur and Ganpat Rai, for the appellant.
G.C. Mathur and C. P. Lal, for the respondent.
April 27.
The Judgment of Gajendragadkar, Sarkar, Wanchoo and Ayyangar, JJ., was delivered by Sarkar, J. Das Gupta, J., delivered a separate Judgment.
SARKAR, J.
The only question that was argued in this appeal is substantially one of construction of section 99D of the Code of Criminal Procedure.
The appellant was the author of two books in Hindi called Sikh Mat Khandan Part 1 and Bhoomika Nazam Sikh Mat Khandan which he had published in April 1953.
On July 30, 1953, the Government of Uttar Pradesh, the respondent in this appeal, made an order under section 99A of that Code forfeiting these books which were thereupon seized and taken away.
That order, so far as material, was in the following terms: "In exercise of its powers conferred by section 99A of the Code of Criminal Procedure. . the 489 Government is pleased to declare the books forfeited to Government on the ground that the said books contain matter, the publication of which is punishable under section 153 A and 295 A of the Indian Penal Code.
" It is the validity of this order that is challenged in the present appeal.
Section 99A under which the order was made, so far as relevant, is in these terms: "Where any newspaper, or book or any document appears to the State Government to contain any seditious matter or any matter which promotes or is intended to promote feelings of enmity or hatred between different classes of the citizens of India or which is deliberately and maliciously intended to outrage the religious feelings of any such class by insulting the religion or the religious belief of that class, that is to say, any matter the publication of which is punishable under section 124A or section 153A or section 295A of the Indian Penal Code, the State Government may, by notification in the Official Gazette stating the grounds of its opinion, declare every copy of such book to be forfeited to Government Two things appear clearly from the terms of this section.
The first thing is that an order under it can be made only when the Government forms a certain opinion.
That opinion is that the document concerning which the order is proposed to be made, contains "any matter the publication of which is punishable under section 124A or section 153A or section 295A of the Penal Code.
" Section 124A deals with seditious matters, section 153A with matters prompting enmity between different classes of Indian citizens and section 295A with matters insulting the religion or religious beliefs of any class of such citizens.
The other thing that appears from the section is that the Government has to state the grounds of its opinion.
The order made in this case, no doubt, stated that in the Government 's opinion the books contained matters the publication of which was punishable under sections 153A and 295A of the Penal Code.
It did not, however, state, as it should have, the grounds of that opinion.
So it is 490 not known which communities were alienated from each other or whose religious beliefs had been wounded according to the Government, nor why the Government thought that such alienation or offence to religion had been caused.
Now section 99B gives the person interested in the books, or documents forfeited, a right to apply to the High Court to set aside the order made under section 99A, and section 99D specifies the High Court 's duty on such an application being made to it.
These two sections will have to be especially considered in this case and so they along with section 99C, are set out below.
section 99B.
Any person having any interest in any newspaper, book or other document, in respect of which an order of forfeiture has been made under section 99A, may, within two months from the date of such order, apply to the High Court to set aside such order on the ground that the issue of the newspaper, or the book or other document, in respect of which the order was made, did not contain any seditious or other matter of such a nature as is referred to in sub section (1) of section 99A. section 99C.
Every such application shall be heard and determined by a Special Bench of the High Court composed of three Judges.
section 99D. (1) On receipt of the application, the Special Bench shall, if it is not satisfied that the issue of the newspaper, or the book or other document, in respect of which the application has been made, contained seditious or other matter of such a nature as is referred to in sub section (1) of section 99A, set aside the order of forfeiture.
We think it fairly clear from these sections that the ground on which an application can be made under section 99B is the ground which, if established, would require the High Court to set aside the order under section 99D.
The appellant bad moved the High Court.
at Allahabad under section 99B to set aside the order of forfeiture of his books.
It seems to have been contended in the High Court that the order of forfeiture should be set aside on the ground that the grounds of the 491 Government 's opinion had not been stated.
With regard to this contention, the High Court observed, "The requirement to state the ground is mandatory.
A mere citation of words of the section will not do.
But as has been held by a Special Bench of this Court in Baijnath vs Emperor (A.I.R. 1925 All. 195), with which we respectfully agree, the High Court in view of the provisions of section 99D of the Code of Criminal 'Procedure is precluded from considering any other point than the question whether in fact the document comes within the mischief of the offence charged.
" In this view of the matter the High Court refused to set aside the order on account of the omission to state the grounds of the opinion.
The High Court then proceeded to examine the books for itself and found that their contents were "obnoxious and highly objectionable" and dismissed the application observing that the appellant had "entirely failed to show that the books did not contain matters which promoted feelings of enmity and hatred between different classes, or which did not (sic) insult or attempt to insult the religion or religious beliefs of the Sikhs".
The present appeal arises out of this order of the High Court.
The High Court was of the view that its duty under section 99D was only to see "whether in fact the document comes within the mischief of the offence charged".
It thought that a document would be within the mischief of the offence charged if, in its own opinion, it contained matters the publication of which would be punishable under either section 124A, or section 153A or section 295A of the Penal Code as mentioned in the order of forfeiture, irrespective of the Government 's opinion on the matter.
Otherwise, it seems to us, the High Court could not uphold the order for the reason that in its view the books offended the Sikhs and the Sikh religion in spite of the fact that there is nothing to show that the Government thought that the books had that effect.
The same view appears to have been taken in certain other cases, namely, Premi Khem Raj vs Chief Secretary (1), N. Veerabrahmam vs State of Andhra Pradesh (2) and Baba Khalil Ahmed vs State of U.P. (3).
(1) A.I.R. (1951) Raj.
(2) A.I.R (1959) A.P. 572.
(3) A.I.R. (1960) All. 715.
492 Apparently, it was thought in these cases that the words "if it is not satisfied that. . the book. . contained seditious or other matter of such a nature as is referred to in sub section (1) of section 99A" in section 99D meant, not so satisfied for any reason whatsoever irrespective of the reasons on which the Government formed its opinion about it.
We are unable to accept this construction of section 99D.
The question is what do the words "matter of such a nature as is referred to in sub section (1) of section 99A" appearing in section 99D mean? Do they mean any matter of that nature as the High Court thought? Or do they mean only those on which the order of forfeiture was based, that is, those which for the reasons stated by it, the Government thought were punishable under one or more of sections 124A, 153A and 295A of the Penal Code mentioned by it?.
It seems to us that the latter is the correct view and follows inevitably if sections 99A, 99B and 99D are read together, as they must.
Now section 99D is concerned with setting aside an order.
That order is one made under section 99A.
An order under that section can be made only when certain things have appeared to the Government and the Government has formed a certain opinion.
The section further requires the Government to state the grounds of its opinion.
It is this order, that is, the order based on the grounds stated, which the party affected has been given by section 99B the, right to move the High Court to set aside.
It would follow that all that section 99B can require the party.
to do is to show that order was improper.
Whether that order was proper or not would, of course, depend onlyon the merits of the grounds on which it was based; whether another order to the same effect could have been made on other grounds is irrelevant, for that would not show the validity of the order actually made; that order would be bad if the grounds on which it is made do not support it.
Two orders, though both saying that a pub lication contains matter which offends the same section of the Penal Code cannot be the same or an identical order if the reasons why they are considered so to 493 offend the section of the Penal Code concerned are different.
Now section 99B says that a person affected by the order may move the High Court to set it aside on the ground that the book "did not contain any seditious or other matter of such a nature as is referred to in sub section (1) of section 99A".
The matter men tioned here must, for the reasons stated, refer only to such matter on which for the grounds stated by it, the Government 's opinion has been based.
We proceed now to a. 99D.
It is concerned with the same order of forfeiture.
An order contemplated by section 99D is made on an application under section 99B.
That order must therefore accept or reject the grounds on which the application under section 99B was made.
These grounds, as we have seen, are confined to challenging the propriety of the grounds on which the Government 's opinion resulting in the order, was based.
The words which we have earlier quoted from section 99B occur substantially in the same form in section 99D.
The scope of the two sections is identical.
The common words occurring in them must, therefore, have the same meaning in both.
They must hence, in section 99D also mean such matters on which for the grounds stated by it the Government 's opinion was based.
They cannot mean, as the High Court thought, any matter whatsoever, irrespective of the Government 's reasons for making the order, which in the High Court 's opinion would have justified it.
This view of the matter also explains why section 99A requires the Government to state the grounds of its opinion.
The reason was to enable the High Court to set aside the order of forfeiture if it was not satisfied of the propriety of those grounds.
If it were not so, the grounds of the Government 's opinion would serve no purpose at all.
This would specially be so as section 99G provides that an order of forfeiture cannot be called in question except in accordance with the provisions of section 99B.
If the order could be upheld, as the High Court seems to have thought, on grounds other than those on which the Government based its opinion, there would have been no need to provide 63 494 that the grounds of the Government 's opinion should be stated; such grounds would then have been wholly irrelevant in judging the validity of the order.
The acceptance of the interpretation put by the High Court would lead to a result which, in our view, would be wholly anomalous.
The order of forfeiture with which section 99D is concerned is indisputably an order under section 99A.
Now, an order under that section is essentially an order of the Government and of no one else.
Take a case where the Government making the order states the grounds of its opinion on which the order is based.
Suppose the Government says that the expression of view A in the book concerned offends the religious beliefs of community X.
Now assume that in an application made to set it aside, the High Court was not satisfied that view A could offend community X but thought that another expression of view in the same book which we will call B, offended the religious beliefs of a different community, say community Y.
If in such a case the High Court upheld the order, which, if the view of the Court below is right, it could do, there would really be an order of forfeiture made by the High Court and not by the Government, because the Government in stating the grounds of its opinion had not, since it did not say so, thought that view B could offend the religious beliefs of community Y.
We think it impossible that the sections concerned contemplated such a result; the Code nowhere provides for an order of forfeiture being made by the High Court.
We are, therefore, of opinion that under section 99D it is the duty of the High Court to set aside an order of forfeiture if it is not satisfied that the grounds on which the Government formed its opinion that the books contained matters the publication of which would be punishable under any one or more of sections 124A, 153A or 295A of the Penal Code could justify that opinion.
It is not its duty to do more and to find for itself whether the book contained any such matter whatsoever.
What then is to happen when the Government did not state the grounds of its opinion? In such a case 495 if the High Court upheld the order, it may be that it would have done so for reasons which the Government did not have in contemplation at all.
If the High Court did that, it would really have made an order of forfeiture itself and not upheld such an order made by the Government.
This, as already stated, the High Court has no power to do under section 99D.
It seems clear to us, therefore, that in such a case the High Court must set aside the order under section 99D, for it cannot then be satisfied that the grounds given by the Government justified the order.
You cannot be satisfied about a thing which you do not know.
This is the view that was taken in Arun Ranjan Ghose vs State of West Bengal (1) and we are in complete agreement with it.
The present is a case of this kind.
We think that it was the duty of the High Court under section 99D to set aside the order of forfeiture made in this case.
We accordingly allow the appeal and set aside the Government 's order of forfeiture dated July 30, 1953.
The appellant will be entitled to a return of all books, documents and things seized under that order.
DAS GUPTA, J.
By a notification dated July 30, 1953 the Uttar Pradesh Government acting under section 99A of the Code of Criminal Procedure declared the books "Sikh Mat Khandan, Part 1" and "Bhoomika Nazam Sikh Mat Khandan" which had been published by the appellant Harnam Das in April 1953, forfeited to government on the ground that these books contained matters the publication of which was punishable under section 153A and 295A of the Indian Penal Code.
The High Court held on an examination of the books that they clearly came within the mischief of section 153A and section 295A of the Indian Penal Code.
Accordingly it held that the order of the State Government forfeiting the two books was eminently just and proper and in that view dismissed the application.
One argument appears to have been raised that the order of forfeiture should be set aside as the notification by which the government made the declaration (1) 496 of forfeiture did not state the grounds of the government 's opinion as required by section 99A.
The High Court rejected this argument being of opinion that in view of the provisions of section 99D of the Code of Criminal Procedure the High Court was "precluded from consideration of any other point than the question whether in fact the document comes within the mischief of the offence charged.
" It is quite clear that the government notification did not state the grounds of the opinion formed by the government that these documents contained matters the publication of which was punishable under section 153A and section 295A of the Indian Penal Code.
The question raised before us is whether the High Court was right in rejecting the argument that the order of forfeiture should be set aside on the ground that grounds of the government 's opinion were not stated in the government notification as required by section 99A.
The view which prevailed with the learned judges in respect of this question was in accord with what had been held by the same High Court in an earlier case of Baijnath vs Emperor (1) and by the Rajasthan High Court in Premi Khem Raj vs Chief Secretary (2).
The same view has later on been taken by the Andhra Pradesh High Court in N. Veerabrahmam vs State Of Andhra Pradesh (3) and by the Allahabad High Court in a later decision in Baba Khalil Ahmad vs State of U. P. (4).
A contrary view appears to have been taken by the Calcutta High Court in Arun Ranjan Ghose vs The State of West Bengal (5).
The material portion of section 99A is in these words: "Where any newspaper, or book. or any document. appears to the Government to contain any seditious matter or any matter which promotes or is intended to promote feelings of enmity or hatred between different classes of the citizens of India or which is deliberately and maliciously intended to outrage the religious feelings of any such class by insulting the religion or the religious belief of that (1) A.I.R. (1925) All. 195.
(2) A.I.R. (1951) Raj.
(3) A.I.R. (1950) An.
(4) A.I.R. (1960) All, 715.
(5) 497 class, that is to say, any matter the publication of which is punishable under section 124A or section 153A or section 295A of the Indian Penal Code, the State Government may, by notification in the Official Gazette stating the grounds of its opinion, declare . every copy of such book. to be forfeited to the government.
" It is clear therefore that before any government makes a declaration forfeiting a book under the provisions of this section it has first to be of opinion that the book does contain a matter the publication of which is punishable under section 124A or section 153A or section 295A of the Indian Penal Code.
Once it forms such an opinion the government has the power to declare the book forfeited.
The section requires that this must be done by a notification in the official gazette and in that notification the government is required to state the grounds on which it formed the opinion.
The legislature however did not make such an order made by the government immune from any attack.
In section 99B it has provided the means by which the aggrieved person may obtain relief against the order if in fact the government was wrong in its opinion and the book did not contain a matter the publication of which is punishable under section 124A, or section 153A or section 295A of the Indian Penal Code.
Section 99B runs thus: "Any person having any interest in any news paper, book or other document, in respect of which an order of forfeiture has been made under section 99A, may, within two months from the date of such order, apply to the High Court to set aside such order on the ground that the issue of the newspaper, or the book or other document, in respect of which the order 'wa s made, did not contain any seditious or other matter of such a nature as is referred to in sub section (1) of section 99A." Section 99D provides that if after hearing the application the High Court is not satisfied that the issue of the document in question contains any seditious matter or any other matter referred to in section 99A, that is to say, any matter the publication of which is 498 punishable under section 124A or section 153A or section 295A of the Indian Penal Code the High Court shall set aside the order of forfeiture.
The necessary result of the provision also is that if the High Court is satisfied that the book in question contains matter the publication of which is punishable under section 124A or section 153A or section 295A of the Indian Penal Code, the High Court will refuse to set aside the order of forfeiture.
It has to be noticed that section 99B in providing for relief to a person aggrieved by an order of forfeiture has limited the grounds on which relief can be applied for to one and one only, viz., that the issue of the newspaper, or the book or other document, in respect of which the order was made, does not contain any seditious matter or other matter of such a nature as is referred to in sub section (1) of section 99A.
The appellant 's contention that the High Court should also examine the notification to find out whether the government had stated the grounds of its own opinion as required by section 99A and set aside the order of forfeiture if it finds that this requirement has note been fulfilled seeks to add an additional ground on which an application can be made under section 99B and relief can be given by the High Court under section 99D.
The question is: Can that be done? It is well to recognise that just as a right of appeal is a creature of statute the right to apply for setting aside an order which is really in the nature of an appeal is equally a creature of statute and when the legislature creates such a right by a statute it may at its option make the right unlimited or may limit it in any manner it likes.
It is settled law that no Court can add to or enlarge the grounds for appeal as laid down in the statute creating the appeal.
The position is exactly the same when the statute creates a right to seek relief by way of application and no court can add to the grounds on which relief can be sought if the statute creating the right to obtain relief is limited to one or more specified grounds.
It is interesting to remember in this connection the right to apply for review granted by O. 47 r. 1 of the Code of Civil Procedure.
After specifying 499 some grounds on which a review can be applied for, the legislature added a further ground in the words "for any other sufficient reason".
The proper interpretation of these words "for any other sufficient reason" has engaged the anxious consideration of the courts and in 1922 the Privy Council after a review of the numerous cases laid down, the rule that "for any other sufficient reason" means a reason sufficient on grounds at least analogous to those specified immediately previously.
If the correct position had been that the court might add to the ground for a review whenever it thought fit, all the discussion as regards the interpretation of "for any other sufficient reason" would have been meaningless and unnecessary.
Indeed the position in law that the courts cannot add to the grounds to which the legislature has limited the right of relief is so very clear and unassailable that the learned counsel for the appellant did not like to suggest that a ground can be added.
To overcome this difficulty that the courts cannot add to the grounds of relief specified in section 99B and section 99D, an ingenious argument has been put forward that in order that the High Court can give proper relief on the very ground mentioned in section 99B and section 99D it is essential that the government 's order should state the grounds of its opinion.
The steps of the argument may shortly be stated thus: The government has formed an opinion.
The High Court has to see that opinion is correct.
In order to do this the High Court must know what weighed with the government in coming to its opinion.
Therefore, without the grounds of the Government 's opinion the High Court cannot be satisfied within the meaning of section 99D that the issue of the newspaper contained the matter complained of.
The fallacy of this syllogistic process is in the un soundness of the premises that in order to determine whether the government 's opinion is correct or not the High Court must know what weighed with the government.
When the application is heard by the High Court and it has to come to a conclusion whether it is or it is not satisfied that the issue of the newspaper, 500 or the book or other document does contain a matter mentioned in section 99A, the one and only way of coming to a conclusion appears to me to be to read the newspaper, or the book or other document.
Arguments of counsel might be of assistance; if the government has stated its grounds for coming to its opinion, that would also help; but the ultimate responsibility of deciding whether or not to be satisfied that the issue of newspaper contains matters as mentioned in section 99A can only be discharged by the High Court by reading the document in question.
It has been suggested that when section 99B and section 99D uses the words "any seditious or other matter of such a nature as is referred to in sub section
(1) of section 99A", they mean only those matters on which the Government based the order of forfeiture; so it is urged, unless the Government stated the ground of its opinion, it will be impossible for the Court to decide the question under section 99D.
I confess I do not think it reasonably possible to conceive of a case, where an order under section 99A will not mention the particular matter referred to in section 99A. (1) The mention of the particular matter out of the several matters referred to in section 99A which in its opinion is contained in the document does not however involve the statement of reasons for forming the opinion.
Suppose a Government states that in its opinion the document contains seditious matters.
It does not cease to be a complete statement on this point merely because the reason for forming the opinion are not also stated.
The formation of the opinion that one or more of the matter,% referred to in the section are contained in a document and the statement that such an opinion has been formed are quite distinct from the statement of the reasons for forming the opinion.
It appears to me clear that where, as in the present case the Government order contains a statement of the particular matter or matters out of the several matters, referred to in section 99A, viz., any seditious matter or any matter which promotes or is intended to promote feelings of enmity or hatred between different classes of the citizens of India or 501 which is deliberately and maliciously intended to outrage the religious feelings of any such class by insulting the religion or the religious beliefs of that class, that is to say, any matter the publication of which is punishable under section 124A or section 153A or section 295A of the Indian Penal Code" which in its opinion the document contains, no difficulty can possibly arise from the fact that the Court has not got before it Government 's grounds for forming such opinion.
But, asks the appellant, why was it necessary then for the legislature to require in section 99A that the Government should state the grounds of its opinion when notifying the order of forfeiture? The real reason, it is urged, was to enable the High Court to set aside the order of forfeiture if it was not satisfied of the propriety of those grounds, and necessarily also when no grounds were stated.
If that were correct, it was reasonable to expect the legislature to make the necessary provision in a. 99B that an order could be challenged on the ground that the grounds of the opinion were not stated, and consequential provisions in section 99D.
I can see no justification for reading into these sections section 99A and section 99D words which are not there, in an attempt to understand why section 99A contains such a requirement for statement of grounds of the opinion.
There can be no doubt that this is a very salutary provision that Government should record the grounds of its opinion.
Such a provision diminishes the risk of government making an arbitrary order of forfeiture.
It was therefore a question of legislative policy for the legislature to require that the government should state its opinion.
To say that there could have been no reason for including such a requirement in section 99A unless the legislature intended the High Court to interfere if grounds of the opinion were not stated, is, in my opinion, wholly unjustified.
It seems clear to me that the duty cast by section 99D on the judges of the High Court is not to see whether in a particular case the grounds stated by 64 502 the government for forming its opinion are correct, but to see whether the opinion formed was correct.
To perform this duty the one and the only way is to examine the document which in the Government 's opinion contains the matter complained of.
The argument that the High Court is not in a position to perform this duty under section 99D satisfactorily in the absence of a statement by the government of the grounds of its opinion appears to me therefore wholly unsound.
In this very case, the learned judges of the High Court of Allahabad felt no difficulty in coming to a conclusion on the question before them even though the government had not stated the grounds of its opinion.
I fail to see any justification for imagining difficulties where there are none.
I have therefore come to the conclusion that the High Court was right in rejecting the argument that the order of forfeiture should be set aside on the ground that the notification did not state government 's grounds for forming the opinion.
The appeal should therefore be dismissed.
By COURT In view of the opinion of the majority, this appeal will be allowed and the order of the High Court, set aside.
The appellant will be entitled to the return of all the books, documents and other things seized from him under the order now set aside.
He will also be entitled to the refund of expenses and costs that he had to pay under the order of the High Court.
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The respondent passed an order under section 99A of the Code of Criminal Procedure forfeiting two books written by the appellant as in its opinion they contained matter the publication of which was punishable under section 153A and 295A of the Indian Penal Code.
The order did not state the grounds on which the respondent had formed this opinion as was required by section 99A.
The appellant applied to the High Court under section 99B of the Code to set aside the order.
Section 99D of the Code provided that the High Court shall set aside the order of forfeiture if it was not satisfied that the book contained seditious or other matter of such a nature as was referred to in sub section
(1) of section 99A.
The High Court was of the view that it could not set aside the order under section 99D for the reason that the order did not set out the grounds on which the Government had formed its opinion and that its duty was only to see whether the books in fact came within the mischief of the offence charged.
Upon examining the books for itself the High Court came to the conclusion that their contents were obnoxious and highly objectionable and dismissed the application.
Held (Per Gajendragadkar, Sarkar, Wanchoo and Ayyangar, jj.
Das Gupta, J. contra) that on the failure of the respondent to set out the grounds of its opinion as required by section 99A of the Code the High Court should have set aside the order under section 99D.
It is the duty of the High Court under that section to set aside the order of forfeiture if it is not satisfied that the grounds on which the Government formed its opinion could justify that opinion.
Where no grounds of its opinion are given at all the High Court must set aside the order for it cannot then be satisfied that the grounds given by the Government justified the order.
Arun Ranjan Ghose vs State of West Benaal, (1955) 59 C.W.N. 495, approved.
Premi Khem Rai vs Chief Secretary, A.I.R. (1951) Raj.
II3, N. Veerabrahmam vs State of Andhra Pradesh, A.I.R. (1959) A. Pr.
572 and Baba Khalil Ahmed vs State of U. P., A.I.R. (1960) All. 715, disapproved.
488 Per Das Gupta, J. The High Court had no power to set aside the order on the ground of failure of the Government to set out the grounds of its opinion in the order.
The duty cast on the High Court is not to see whether the grounds stated by the Government for forming its opinion are correct but to see whether the opinion formed is correct; this can only be done by examining the books.
Section 99B has limited the grounds on which relief can be asked for to one and one only, viz., that the books do not contain any objectionable matter.
It was not permissible for courts to add to that ground.
Baijnath vs Emperor A.I.R. (1925) All. 195, Premi Khem Raj vs Chief Secretary, A.I.R. (1951) Raj. 113, N. Veerabrahmam vs State of Andhra Pradesh, A.I. R. 1959 A. Pr.
572 and Baba Khalil Ahmed vs State of U. P., A.I.R. (1960) All. 715, approved.
Arun Ranjan Ghose vs The State of West Bengal, , disapproved.
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1282.txt
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ivil Appeal Nos.
1370/74 and 1768 of 1975.
From the judgment and order dated the 29th September, 1972 of the Allahabad High Court in Income Tax Reference No. 47 of 1971.
S.T. Desai J.B. Dadachanji and K.J. John for the Appellant in C.A. 1370/74 and for Respondent in C.A. 1768/75.
V.S. Desai, Miss A. Subhashini, K.C. Dua and S.P. Nayar for the Respondent in CA.
1370/74 and for the Appellant in CA.
1768/75.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
These two appeals by certificate one by the assessee and the other by the Commissioner of Income tax, Kanpur are filed against the judgment and order dated September 29, 1972 of the High Court of Judicature at Allahabad in Income tax Reference No. 47 of 1971 under section 256(1) of the Income tax Act, 1961 (hereinafter referred to as 'the Act ') made by the Income tax Appellate Tribunal.
Allahabad Bench, Allahabad (for short 'the Tribunal ').
The two questions which were referred by the Tribunal for the opinion of the High Court were: "(1) Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the properties in dispute were capable of division in definite portions amongst the 10 coparceners as contemplated in Explanation (a) (i) to section 171 of the Income tax Act, 1961 and that even otherwise the mere severance of status was not sufficient to entitle the assessee to succeed in its claim for partial partition ? (2) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the 15 income from the properties in dispute which were accepted to have been partitioned under the Hindu law but with regard to which an order accepting the claim of partial partition was not made was liable to be included in the computation of the assessee 's income ?" The assessee is a Hindu undivided family known as M/s. Kalloomal Tapeshwari Prasad and the year of assessment is 1964.65.
The assessee is governed by the Mitakshara school of law.
The following genealogical tree represents the relationship amongst the members of the family: Phakki Lal ________________________________________________ | | | | | | Chandoolal Bishambhar Nath Sitaram (His Wife Rampiari (dies issueless (wife kripa died on 17.9.63) on 1940 wife Devi) | | | | | | | ______________ | | | | | | | Gopalji Ramji ___________________________________________ | | | | | Jagat Roop Swarup Shyam Bimal Narian Narain Narain Narian Narian During the relevant previous year, the family consisted of Chandoolal, Sitaram and his wife Kripa Devi, Jagat Narain, Roop Narain, Swarup Narain, Shyam Narain and Bimal Narain who were the five sons of Chandoolal and Gopalji and Ramji, the two Sons of Sitaram.
The assessee (Hindu undivided family) was deriving income from various sources such as income from property, income from money lending business, income from speculation business and cloth business etc.
There was a partial partition in the family in the year 1951 when a sum of Rs. 5,00,000 out of its total capital of Rs. 12,85,423 was divided amongst the coparceners at the rate of Rs. 41,666110/8 amongst members of Chandoolal 's branch and at the rate of Rs. 83,333/5/4 amongst the members of Sitaram 's branch.
Kripa Devi did not receive any share at that partition.
The said partial partition was accepted and acted upon by 16 the Income tax Department where after the cloth business was treated as the business of a firm consisting of most of the coparceners as partners.
Again on December 11, 1963 which fell within the previous year relevant for the assessment year in question i.e. 1964 65, according to the assessee, there was another partial partition orally as a result of which its eighteen immovable properties were divided amongst the ten members of the family and that they held those properties as tenants in common from that date.
It was claimed by the assessee in the course of the assessment proceedings that the members of the family had commenced to maintain separate accounts with regard to the income from the said eighteen properties and to divide the net profits amongst themselves according to their respective shares at the end of each year.
The eighteen immovable properties were situated in different places and their valuation was as follows: section No. Municipal number of Value the property 1.
75/2 1,78,875/ 2.
76/162 27,000/ 3.
76/169 45,000/ 4.
47/110 13,500/ 5. 47/26 20,700/ 6. 48/203 16,200/ 7.
55/124 90,000/ 8.
55/36} 9. 55/37} 41,400/ 10.
70/87 1,57,500/ 11.
71/150 8,100/ 12. 71/89 3,600/ 13.
71/112 19,800/ 14.
63/61 7,425/ 15.
51/68 17,100/ 16.
s 51/73 14,400/ 17.
86/37 20,520/ 18.
1/301A 45,000/ 7,26,120/ 17 When required by the Income tax Officer to explain as to why the properties were not divided in definite portions as required by section 171 of the Act, the assessee stated that physical division of the properties in question amongst the ten members was impossible and the only possible way to partition those properties was to define their respective shares and to enjoy the income from them separately.
In support of the above claim the assessee relied upon a copy of an award dated April 15, 1964 made by one S.B. Tandon which was made into a decree in Suit No. 60 of 1964 on the file of the Court of the First Civil Judge, Kanpur dated September 21, 1964.
In that award the arbitrator had stated that the properties did not admit of physical division.
The Income tax Officer did not agree with the assessee 's contention that it was not possible to divide the properties in question in definite portions.
Accordingly he rejected the claim of partial partition in respect of the eighteen immovable properties and proceeded to assess the income derived therefrom in the hands of the assessee.
Against the order of the Income tax Officer, the assessee filed an appeal before the Appellate Assistant Commissioner of Income tax.
During the pendency of that appeal the assessee appointed another arbitrator by the name Lakhsman Swaroop, a retired Chief Engineer to examine the possibility of a physical division of each of the eighteen properties into ten portions and if that was not possible to suggest any other mode or modes to divide them into ten parts in accordance with the share allotted to each of the parties to the partition.
By his award dated February 3, 1965, Lakshman Swaroop stated that the aforesaid properties were "not capable of physical division into ten shares by metes and bounds and that any practical division is that of allocation of proportionate shares in all the 18 properties in question.
" It may be mentioned here that out of the ten shares, six shares were 1/12th each and four shares were 1/8th each.
Chandoomal and his five sons had been allotted 1/12th each and Sitaram his wife and his two sons had been allotted 1/4th each.
Lakshman Swaroop was also examined as a witness before the Appellate Assistant Commissioner by the assessee and cross examined by the Income tax Officer.
The Appellate Assistant Commissioner on a consideration of the material before him including the decree of the court referred to above and the evidence of Lakshman Swaroop held that the case of the assessee that it was not possible to divide the properties physically into ten shares referred to above was not tenable and dismissed the appeal.
The assessee, thereafter took up the matter before the Tribunal in appeal.
The Tribunal also was of the view that the contention of the assessee that if the properties had 18 been divided into ten shares, they would have either been destroyed or would have lost in value was not correct.
Accordingly the claim of the assessee under section 171 of the Act that there was a partial partition was rejected.
Thereupon on an application of the assessee made under section 256(1) of the Act, the two questions set out above were referred by the Tribunal to the High Court for its opinion.
After hearing the parties, the High Court recorded its answer to the first question in the affirmative and in favour of the Department and in reaching that conclusion, it observed thus: "We have seen the evidence of the arbitrator as well as the Chief Engineer, and it is apparent there from that even though the 18 properties could not individually be divided into 10 shares without destroying their utility but after assessing the value of the properties, they could be apportioned between the ten members and the difference in the allocations could be equalised by payment of cash amounts by one to the other.
In our opinion, it cannot, in such a situation, be said that these 18 properties were incapable of physical division in 10 shares, and so, in view of clause (a) (i) of the Explanation, mere severance of status was not sufficient for recording a finding of partition.
" The High Court answered the second question in favour of the assessee holding that the income accruing from the eighteen immovable properties after December 11, 1963 was however not liable to be included in the computation of the joint Hindu family 's income.
In recording this answer, the High Court observed thus: "Sec. 171 of the 1961 Act in essence, is a re actment of Sec.
25A with the difference that it applies not only to cases of total partition but also to cases of partial partition.
There are some incidental changes as well, e.g. sec.
171 applies also for purposes of levying and collecting penalty, fine or interest and in addition requires the Income tax Officer to record a finding as to the date on which total or partial partition took place.
The fact that sec.
171 applies to a partial partition (meaning a partition which is partial as 19 regards the persons or as regards the properties of the family or both) as well shows that a finding of partial partition can be recorded and on such a finding being recorded under sub section (4) the total income of the joint family in respect of the period upto the date of partition is to be assessed as if no partition had taken place and each member of the family was to be liable, notwithstanding anything contained in clause (2) of sec.
10, jointly and severally for the tax on the income so assessed.
Thus sec.
171, like sec.
25A, seeks to nullify the effect of sec.
10 (2) under which a member was not liable to be taxed on the income received as a member of Hindu undivided family.
The section does not entitle the inclusion of income from an asset which has ceased to belong to the joint family, in the assessment of the joint Hindu family.
In the present case, on the findings, the position is that the joint Hindu family stood disrupted in relation to the 18 immovable properties as a result of the oral partition dated 11th December, 1963.
Thereafter the income of these properties belonged to the individual members and not to the joint family.
It could not be included in the assessment of the family.
" Aggrieved by the answer to the first question, the assessee has filed Civil Appeal No. 1370 of 1974 and aggrieved by the answer to the second question, the Revenue has filed Civil Appeal No. 1768 of 197.
It is necessary to refer to the history of the relevant provisions in order to decide the questions raised before us.
Under the Indian Income tax Act, 1922 (for short 'the 1922 Act ') a Hindu undivided family could be assessed on its income.
Section 3 of the 1922 Act laid down that where any Central Act enacted that income tax should be charged for any year at any rate or rates, tax at that rate or those rates should be charged for that year in accordance with and subject to the provisions of that Act in respect of total income of the previous year of every individual, Hindu undivided family etc.
But section 14 (1) of the 1922 Act provided that no tax was payable by an individual assessee in respect of any sum which he received as a member of a Hindu undivided family where such sum had been paid out of the income of the family.
Section 25 A was 20 inserted in the 1922 Act in the year 1928 providing for the machinery for assessment after partition of a Hindu undivided family.
That section immediately before the repeal of the 1922 Act read as follows: "25A. Assessment after partition of a Hindu undivided family (1) Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income tax Officer shall make such inquiry there into as he may think fit, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect: Provided that no such order shall be recorded until notices of the inquiry have been served on all the members of the family.
(2) Where such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vacation, the Income tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member or group of members shall, in addition to any income tax for which he or it may be separately liable and notwithstanding anything contained in sub section (1) of section 14, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it; and the Income tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 23: Provided that all the members and groups of members whose joint family property has been partitioned 21 shall be liable jointly has severally for the tax assessed on the total income received by or on behalf of the joint family as such.
(3) Where such an order has not been passed in respect of Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family".
Section 25 A of the 1922 Act as it stood then (subsequent modifications in it being immaterial for the purposes of this case) came up for consideration by the Judicial Committee of the Privy Council in Sir Sunder Singh Majithia vs The Commissioner of Income tax, C.P. and U.P.
The Privy Council held that section 25 A of the 1922 Act provided that if it be found that the family property had been partitioned in definite portions, assessment might be made, notwithstanding section 14(1) on each individual or group in respect of his or its share of the profits made by the undivided family, while holding all the members jointly and severally liable for the tax.
It was further held that if, however, though the joint Hindu family had come to an end, it be found that its property had not been partitioned in definite portions then the family was to be deemed to continue that is, to be an existent Hindu family upon which assessment could be made on its gains of the previous year.
But it was of the view that section 25 A had nothing to say about any Hindu undivided family which continued in existence never having been disrupted.
Such a case was held to fall outside sub section (3) of section 25 A and in effect, it held that the said section did not apply to cases of partial partition.
In Gordhandas T. Mangaldas vs Commissioner of Income tax, Bombay, Kania, J. (as he then was) who agreed with Beaument, C.J. explained the scheme of section 25 A of the 1922 Act (as it stood then) in his concurring judgment thus: "It is material to bear in mind the scheme of the Income tax Act, in the first instance.
Under sections 2 and 3 the different units stated therein are liable to be taxed as such.
One of them is a joint Hindu family.
In order to avoid double taxation, Section 14 lays down 22 that when the individual member is being assessed, his income as member of a joint family should not be assessed again.
Then comes the stage, what happens when a family, which has once been so assessed, comes to a partition.
To meet that contingency, Section 25 A has been enacted.
In the section, as it existed before the amendment of 1939, in terms the Income tax Officer required proof, (i) that a separation of the members of the joint family had taken place and (ii) that the joint family property had been partitioned amongst the various members or groups of members in definite portions.
On being satisfied on those points he had to record an order to that effect.
The effect of such a recording was that the joint family income would be assessed and recovered in terms of sub section (2).
In the absence of such order, under sub section (3) the joint family continued to be assessed as before." The same view was followed in Waman Satwappa Kalghatgi vs Commissioner of Income tax and in M.S.M.S. Meyyappa Chettiar vs Commissioner of Income tax, Madras.
This Court had to consider the true meaning of section 25 A of the 1922 Act in Lakhmichand Baijnath vs Commissioner of Income tax, West Bengal.
Venkatarama Aiyar, J. speaking for the Court observed in the above case thus: "Now, when a claim is made under section 25 A, the points to be decided by the Income tax Officer are whether there has been a partition in the family, and if so, what the definite portions are in which the division had been made among the members or groups of members.
The question as to what the income of the family assessable to tax under section 23 (3) was would be foreign to the scope of and enquiry under section 25 A.
That section was, it should be noted, introduced by the Indian Income tax (Amendment) Act, 1928 (3 of 1928) for removing a defect which the 23 working of the Act as enacted in 1922 had disclosed.
Under the provisions of the Act as they stood prior to the amendment, when the assessee was an undivided family, no assessment could be made thereon if at the time of the assessment it had become divided, because at that point of time, there was no undivided family in existence which could be taxed, though when the income was received in the year of account the family was joint.
Nor could the individual members of the family be taxed in respect of such income as the same is exempt from tax under section 14 (1) of the Act.
The result of these provisions was that a joint family which had become divided at the time of assessment escaped tax altogether.
To remove this defect, section 25 A enacted that until an order is made under that section, the family should be deemed to continue as an undivided family.
When an order is made under that section, the family should be deemed to continue as an undivided family.
When an order is made under that section, its effect is that while the tax payable on the total income is apportioned among the divided members or groups, all of them are liable for the tax payable on the total income of the family.
What that tax is would depend on the assessment of income in proceedings taken under section 23, and an order under section 25 A would have no effect on that assessment.
" The above view was reiterated by this Court in Kalwa Devadattam and Ors.
vs Union of India and Ors.
in Additional Income tax Officer, Cuddapah vs Thimmayya and Anr.
and in Joint family of Udayan Chinubhai etc.
vs Commissioner of Income tax, Gujarat.
The substance of all these decisions was that under section 25 A of the 1922 Act a Hindu undivided family which had been assessed to tax could be treated as undivided and subjected to tax under the Act in that status unless and until an order was made under section 25 A (1) and if in the course of the assessment proceedings it is claimed by any of the members of the Hindu undivided family that there 24 has been total partition of the family property resulting in physical division thereof as it was capable of, the assessing authority should hold an enquiry and decide whether there had been such a partition or not.
If he held that such a partition had taken place, he should proceed to make an assessment of the total income of the family as if no partition had taken place and then proceed to apportion the liability as stated in section 25 A amongst the individual members of the family.
If no claim was made or if the claim where it was made was disallowed after enquiry, the Hindu undivided family would continue to be liable to be assessed as such.
This was the legal position under the 1922 Act.
The law relating to assessment of Hindu undivided family, however, underwent a change when the Act came into force.
Section 171 of the Act which corresponds to section 25 A of the 1922 Act reads thus: "171.(1) A Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family.
(2) Where, at the time of making an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Income tax Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family.
(3) On the completion of the inquiry, the Income tax Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place.
(4) Where a finding of total or partial partition has been recorded by the Income tax Officer under 25 this section, and the partition took place during the previous year: (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding any thing contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed.
(5) Where a finding of total or partial partition has been recorded by the Income tax Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition has taken place, and the provisions of clause (b) of sub section (4) shall, so far as may be, apply to the case.
(6) Notwithstanding anything contained in this section if the Income tax Officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Income tax Officer shall proceed to recover the tax from every person who was a member of the family before and partition, and every such person shall be jointly and severally liable for the tax on the income so assessed.
(7) For the purposes of this section, the several liability of any member or group of members thereunder shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial.
(8) The provisions of this section shall, so far as may be, apply in relation to the levy and collection of 26 any penalty, interest, fine or other sum in respect of any period up to the date of the partition, whether total or partial, of a Hindu undivided family as they apply in relation to the levy and collection of tax in respect of any such period.
Explanation In this section (a) "partition" means (i) where the property admit of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or (ii) where the property does not admits of a physical division then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition; (b) "partial partition" means a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both." Section 4(1) of the Act which levies the charge of income tax states that where any Central Act enacts that income tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, the Act in respect of the total income of the previous year or previous years, as the case may be, of every person.
The expression 'person ' is defined in section 2(31) of the Act as including within its meaning a Hindu undivided family.
In order to avoid double taxation of the same income under the Act, any sum received by an individual as a member of a Hindu undivided family where such sum has been paid out of the income of the family is required by section 10 (2) of the Act not to be included in computing the total income of a previous year of any person.
This requirement, however, is subject to section 64 (2) of the Act with effect from April 1, 1971.
Then follows section 171 of the Act which 27 provides for the assessment after partition of a Hindu undivided family.
Under Hindu law partition may be either total or partial.
A partial partition may be as regards persons who are members of the family or as regards properties which belong to it.
Where there has been a partition, it is presumed that it was a total one both as to the parties and property but when there is a partition between brothers, there is no presumption that there has been partition between one of them and his descendants.
It is, however, open to a party who alleges that the partition has been partial either as to persons or as to property to establish it.
The decision on that question depends on proof of what the parties intended whether they intended the partition to be partial either as to persons or as to properties or as to both.
When there is partial partition as to property, the family ceases to be undivided so far as properties in respect of which such partition has taken place but continues to be undivided with regard to the remaining family property.
After such partial partition, the rights of inheritance and alienation differ accordingly as the property in question belongs to the members in their divided or undivided capacity.
Partition can be brought about (1) by a father during his lifetime between himself and his sons by dividing properties equally amongst them, (2) by agreement or (3) by a suit or arbitration.
A declaration of intention of a coparcener to become divided brings about severance of status.
As observed by the Privy Council in Appovier vs Rama Subba Aivan" when the members of an undivided family agree among themselves with regard to a particular property, that it shall thenceforth be the subject of ownership, in certain defined shares, then the character of undivided property and joint enjoyment is taken away from the subject matter so agreed to be dealt with, and in the estate each member thenceforth a definite and certain share, which he may claim the right to receive and to enjoy in severalty, although the property itself has not been actually severed and divided".
A physical division of the property which is the subject matter of partition is not necessary to complete the process of partition in so far as that item of property is concerned under Hindu law.
The parties to the partition may enjoy the property in question as tenants in common.
In Approvier 's case (supra) the Privy Council further laid down that "if there be a conversion of the joint tenancy of an 28 undivided family into a tenancy in common of the members of that undivided family, the undivided family becomes a divided family with reference to the property that is the subject of that agreement, and that is a separation in interest and in right, although not immediately followed by de facto actual division of the subject matter.
This may, at any time, be claimed by virtue of the separate right.
" It is thus clear that Hindu law does not require that the property must in every case be partitioned by mates and bounds or physically into different portions to complete a partition.
Disruption of status can be brought about by any of the modes referred to above and it is open to the parties to enjoy their share of property as tenants in common in any manner known to law according to their desire.
But the income tax law introduces certain conditions of its own to give effect to the partition under section 171 of the Act.
Section 171 of the Act applies to a case where there is a Hindu undivided family which had been assessed as such under the Act until a claim is made under section 171(2) that there has been a partition total or partial in it.
The partition contemplated under section 171 of the Act may be either total or partial.
Here there is a departure made from section 25A of the 1922 Act which was concerned with a total partition only.
In sub sections (2) to (5) and (8) of section 171 of the Act, the word 'partition ' is qualified by words 'total or partial '.
The Explanation to section 171 of the Act to which we shall revert again also defines the expression 'partial partition ' as meaning a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both.
Subsection (2) of section 171 provides that where at the time of making an assessment under section 143 or section 144 of the Act it is claimed by or on behalf of any member of a Hindu undivided family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Income tax Officer shall make an inquiry into the said claim after giving notice to all the members of the family.
On the completion of the inquiry, the Income tax Officer is required by sub section (3) of section 171 to record a finding as to whether the claim of partition, total or partial is true or not and if there has been such a partition, the date on which it has taken place.
Sub section (4) of section 171 states that when a finding of total or partial partition has been 29 recorded by the Income tax Officer and the partition had taken place during the previous year the total income of the joint family in respect of the period upto the date of partition shall be assessed as if no partition had taken place and each member or group of members shall in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10 be jointly and severally liable to the tax on the income so assessed Where the finding recorded is that the partition had taken place after the expiry of the previous year then the joint family has to be assessed under sub section (5) of section 171 as if no partition had taken place and the tax shall be recoverable mutatis mutandis as provided in clause (b) of sub section (4) thereof.
The several liability of a member or a group of the undivided family has to be determined under sub section (7) of section 171 according to the share of family property allotted to him or to the group, as the case may be.
Sub section (8) of section 171 extends the above rules of assessment and liability to levy and collection of any penalty, interest, fine etc.
payable by the family upto the date of partition.
Sub section (6) of section 171 which contains a non obstante clause empowers the Income tax Officer to recover the tax due from a family from every member of the family before the partition even if he finds after the completion of assessment that the family has undergone a partition already.
The true effect of this provision is discussed in Govinddas & Ors.
vs Income tax Officer & Anr.
Now we come to sub section (1) of section 171 of the Act which contains a 'deeming ' provision.
It says that a Hindu family hitherto assessed as undivided shall be deemed for the purposes of the Act to continue to be a Hindu undivided family except where and in so far as a finding of partition has been recorded in respect of it under section 171.
Partition referred to here can obviously include a partial partition also either as regards the persons constituting the undivided family or the properties belonging to it or both, in view of the provisions contained in the other sub sections in and the Explanation to section 171.
Where there is no claim that a partition total or partial had taken place made or where it is made and disallowed a Hindu undivided family which is hitherto being assessed as such will have to be assessed as such notwithstanding the fact a partition had in fact taken place 30 as per Hindu law.
A finding to the effect that partition had taken place has to be recorded under section 171 by the Income tax Officer.
He can record such a finding only if the partition in question satisfies the definition of the expression 'partition ' found in Explanation to section 171.
A transaction can be recognised as a partition under section 171 only if, where the property admits of a physical division, a physical division of the property has taken place.
In such a case mere physical division of the income without a physical division of the property producing income cannot be treated as a partition.
Even where the property does not admit of a physical division then such division as the property admits of should take place to satisfy the test of a partition under section 171.
Mere proof of severance of status under Hindu law is not sufficient to treat such a transaction as a partition.
If a transaction does not satisfy the above additional conditions it cannot be treated as a partition under the Act even though under Hindu law there has been a partition total or partial.
The consequence will be that the undivided family will be continued to be assessed as such by reason of sub section (1) of section 171.
At this stage one contention urged on behalf of the assessee needs to be considered.
It is asserted on behalf of the assessee that the fiction contained in section 171(1) of the Act does not at all apply to an undivided family which continues to be in fact an undivided family even after a partial partition as regards some of its properties had taken place.
The argument is that a 'deeming ' provision can operate only where the real state of affairs is different from what the law deems as existing and it can not where the real state of affairs is the same as the one which law by a fiction treats as existing.
It is urged that since the undivided family in fact continues even after a partial partition as regards property, there is no need to enact a rule declaring that it shall be deemed to continue as an undivided family.
Hence section 171(1) of the Act cannot be construed as being applicable to such a case.
In other words, it is urged that where all the members of an undivided family continue to be members of such family owning the remaining properties which are yielding income after a partial partition as regards some properties has taken place, the undivided family is liable to be assessed as such only in respect of the income derived by it from the remaining items of property owned by it and the income derived properties which have gone out of the ownership of the family by reason of the partial partition should be excluded from the total income of the family.
Reliance is placed on the following obser 31 vations of the Privy Council in the case of Sir Sunder Singh Majithia (supra) where sub section (3) of section 25 A of the 1922 Act arose for consideration: "The section has nothing to say about the Hindu undivided family which continues in existence never having been disrupted.
Such a case is outside sub section (3) because it is not within the section at all.
No sub section is required to enable an undivided family which has never been broken up to be deemed to continue.
But it need not have the same assets or the same income in each year and it can part with an item of its property to its individual members if it takes the proper steps.
" It is not necessary to make any comment on these observations as they had held the field until the Act came into force with section 171 inserted in it.
The Parliament enacted section 171 after taking note of the above decision and several other decisions following it which had taken the view that a partial partition did not fall within the scope of section 25 A.
It expressly stated in section 171 of the Act that the said provision was applicable to both kinds of partitions total or partial, It has also defined partial partition as one which is partial as regards persons constituting the undivided family or as regards the properties belonging to the undivided family or both.
Virtually the present provision deals with all kinds of partitions the nature of which sometimes may be difficult to predicate correctly.
Take a joint family consisting of a father, his sons and grandsons as shown in the following genealogical tree: A | | | ______________________________________________ | | | | | | B C D | | | | | | ______________ ___________ ___________ | | | | | | | | | | | | E F G H I J When a partition takes place in the above family there may be a partition when all of them A, B, C, D, E, F, G, H, I and J 32 become divided each of them taking his rightful share in the family property.
In this case there is a total partition.
The second kind of partition may be amongst four groups, the first consisting of A only, the second consisting of B, E and F, the third consisting of C, G and H and the fourth consisting of D, I and J each group taking one fourth share in all the properties and the branch of B, the branch of C, and the branch of D continuing as undivided families.
The third kind of partition may be a partition where any one of the three branches the branch of B, or the branch of C, or the branch of D separates from the rest of the family taking its share thus resulting in two undivided families one family which has gone out of the family and the other consisting of the remaining members.
In these cases the partition can be called partial both as regards persons and as regards properties.
The next kind of partition may be one where all the members divide amongst themselves only some of the family properties and continue as members of an undivided family owning the remaining family properties.
This is called a partial partition as regards property.
Even here the division of the property which is subject matter of partial partition may be groupwise also.
In the case of a partial partition as regards property, one thing noticeable is that after such partition, the property which is the subject matter of partition is held by the members of the family as tenants in common and the rest of the family properties continue to be held by them as members of the undivided family.
This is the very principle which is expounded by the Privy Council in Appovier 's case (supra) in the two passages extracted above.
After a partial partition as regards property, the property divided is held by the members of the undivided family as divided members with all the incidents flowing therefrom and the property not so divided as members of an undivided family.
The fiction enacted in section 171(1) of the Act, therefore, operate in such a case also because the family which has become divided as regards the property which is the subject matter of partial partition is deemed to continue as the owner of that property and the recipient of the income derived from it except where and in so far as a finding of partition has been given under section 171.
In such a case it is obvious the real state of affairs is in fact different from what is created by the fiction and it cannot be said that there is no occasion for the fiction to operate.
That is the true meaning of section 171 (1) of the Act.
In view of the substantial changes that are brought 33 about in section 171, we find it impossible to accept the contention that the fiction in section 171 (1) of the Act does not operate in the case of partial partitions as regards property where the composition of the family has remained unchanged.
The answer to the first question referred to the High Court by the Tribunal depends upon the true construction of sub clause (i) of clause (a) of the Explanation to section 171 of the Act.
The subject matter of partial partition as mentioned earlier, consisted of eighteen items of immovable property.
The value of each of them is given in the earlier part of this judgment.
Under the partial partition in question, six persons were allotted 1/12th share each in these eighteen properties and four persons were allotted 1/8th share each.
The total value of the eighteen properties was Rs. 7,26,120.
Six of the members were, therefore, entitled to properties of the value of Rs. 60,510/ each and four of them were entitled to properties of the value of Rs. 90,765 each.
Before the Tribunal two submissions were made on behalf of the assessee in support of the plea that the arrangement entered into amongst the parties providing for division of the income of the properties in question without resorting to physical division of the properties was a partition as defined by the Explanation to section 171 of the Act.
The first submission was that the word 'property ' occurring in clause (a) (i) of the Explanation to section 171 referred to an individual item of property which is divided and not to all the properties which are divided at the partition total or partial and hence as it had been accepted by the Department that each of the eighteen items of property could not be divided conveniently into ten portion without destroying its utility it had to be held that the properties did not admit of physical division.
The second submission which was urged in the alternative was that even if it was possible to distribute the said properties equitably amongst the shares by asking them to make necessary monetary adjustment to equalise the shares as the Explanation to section 171 did not contemplate any such monetary adjustment, the assessee could not be denied under section 171 the recognition of the partial partition which had taken place as per Hindu law.
In support of this plea the assessee depended upon the opinion of the arbitrator Tandon, on the basis of whose award the decree had been passed and also the evidence of Lakshman Swaroop tendered before the Appellate Assistant Commissioner.
Taking into consideration all the material before them and having regard to the shares allotted to each of the members, the market value, situation, size and the age 34 of each of the items of the property in question, the tax payable in respect of each of them and also the fact whether an item of property is in the occupation of a tenant or not, the Tribunal came to the conclusion that it was possible to divide the properties in question physically into different lots so that each member could take his rightful share in them.
The High Court also has expressed the same opinion.
On the facts and in the circumstances of the case, we approve of the above view of the High Court.
We feel that the properties involved in this case admitted of physical division into the required number of shares and such division would not have adversely affected their utility.
It is common knowledge that in every partition under Hindu law unless the parties agree to enjoy the properties as tenants in common, the need for division of the family properties by metes and bounds arises and in that process physical division of several items of property which admit of such physical division does take place.
It is not necessary to divide each item into the number of shares to be allotted at a partition.
If a large number of items of property are there, they are usually apportioned on an equitable basis having regard to all relevant factors and if necessary by asking the parties to make payments of money to equalise the shares.
Such apportionment is also a kind of physical division of the properties contemplated in the Explanation to section 171.
Any other view will be one divorced from the realities of life.
The case before us is not a case where it was impossible to make such a division.
Nor is it shown that the members were not capable of making payment of any amount for equalisation of shares.
We are of the view that there is no material in the case showing that the assessee ever seriously attempted to make a physical division of the property as required by law.
All that was attempted was to rely upon the arbitrator 's award and Lakshman Swaroop 's evidence which were rightly held to be insufficient by the Tribunal to uphold the claim of the assessee.
The assessee cannot derive any assistance from the decision of this Court in Charandas Haridas Anr.
vs Commissioner of Income tax, Bombay North.
Kutch and Saurarhtra, Ahmedabad, and Anr.
There the item of asset which had to be partitioned was the right in certain managing agency agreements.
The Court upheld the arrangement of division of commission amongst the members among whom the said right was divided as a partition satisfying the test laid down by the income tax law as it was of the view that any physical division of that right meant the dissolution of 35 the managing agency firms and their reconstitution which was not altogether in the hands of the karta of the family.
The Court also was satisfied that the family took the fullest measure possible for dividing the joint interest into separate interests.
In the present case we are satisfied that no such attempt to divide the properties was made.
This case clearly falls under sub clause (i) of clause (a) of the Explanation to section 171 of the Act but does not satisfy the requirement of that sub clause as no physical division of the properties was made even though they could be conveniently so divided.
Sub clause (ii) thereof does not apply to this case at all.
We, therefore, agree with the answer given by the High Court to the first question in the affirmative.
The appeal of the assessee is, therefore, liable to be dismissed.
Having held that the assessee was not entitled to claim a partial partition had taken place under section 171, the High Court fell into an error in holding that the income of the properties which were the subject matter of partial partition could not be included in the total income of the assessee by relying upon the decisions which had been rendered on the basis of section 25 A of the 1922 Act which had been construed as not being applicable to partial partitions.
We have already held that section 171 of the Act applies to all partitions total and partial and that unless a finding is recorded under section 171 that a partial partition has taken place the income from the properties should be included in the total income of the family by virtue of sub section (1) of section 171 of the Act.
To put it in other words what would have been the position of a Hindu undivided family which had claimed in an assessment proceedings under the 1922 Act that a total partition had taken place and had failed to secure a finding to that effect in its favour under section 25 A thereof would be the position of a Hindu undivided family which has failed to substantiate its plea of partial partition as regards property under section 171 of the Act.
The property which is the subject matter of partial partition would continue to be treated as belonging to the family and its income would continue to be included in its total income until such a finding is recorded.
That is the true effect of section 171 (1).
It was, however, urged on the analogy of the income from a family property alienated by a karta in favour of a stranger that the income which was not actually received by the family could not be taxed and in support of 36 this plea reliance was placed on a decision of the Madras High Court in A. Kannan Chetty vs Commissioner of Income tax, Madras In that decision it is observed thus: "For instance, if the karta of a family effects an alienation or even makes a gift.
in so far as the taxing department is concerned it is the income of the members of the Hindu undivided family that can be assessed, and if by reason of an alienation, whether it is binding upon the members of the joint family or not, an item of property ceases to be in the hands of the joint family, it would not be open to the department to say that they would ignore such an alienation, notwithstanding that the possession of the properties and its income may pass into the hands of a stranger.
It may be different in cases where the joint family deals with one or more items of property or converts it into a different estate retaining both possession and income in its own hands.
That may properly be a case where the department may ignore such a transaction.
" It is significant that in the passage extracted above the Madras High Court has distinguished the case of an alienation in favour of a stranger from the case where the joint family deals with one or more items of property or converts it into a different estate retaining both possession and income in its own hands.
We do not consider that such a plea is available to the assessee because the acceptance of such a plea would lead to the nullification of the scheme of section 171 of the Act itself.
As long as a finding is not recorded under section 171 holding that a partial partition had taken place the Hindu undivided family should be deemed for the purposes of the Act to be the owner of the property which is the subject matter of partition and also the recipient of the income from such property.
The assessment should be made as such and the tax assessed can be recovered as provided in the Act.
In the circumstances, the decision of the High Court on the second question has to be reversed.
We accordingly record our answer to the second question in the affirmative and in favour of the Department.
37 In the result, Civil Appeal No. 1370 of 1974 is dismissed and Civil Appeal No. 1768 of 1975 is allowed.
The assessee shall pay the costs of the Department.
Hearing fee one set.
N.V.K. Civil Appeal 1370/1974 dismissed and Civil Appeal 1768/1975 allowed.
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The assessee, a Hindu Undivided Family was deriving income from various sources such as income from property, income from money lending business, income from speculation business and cloth business etc.
There was a partial partition in the family in the year 1951, which was accepted and acted upon by the Income tax department, whereafter the cloth business was treated as the business of a firm consisting of most of the coparceners as partners.
On December 1, 1963 which fell within the assessment year 1964 65 there was another partial partition orally, as a result of which eighteen immovable properties were divided amongst the ten members of the family, who held those properties as tenants in common from that date.
These eighteen immovable properties were situated in different places and their valuation was about Rs. 7 lacs.
In the course of assessment proceedings; the assessee claimed that the members of the family had commenced to maintain separate accounts with regard to the income from the eighteen immovable properties and to divide the nett profits amongst themselves according to their respective shares at the end of the year.
When required by the Income tax Officer to explain as to why the properties were not divided in definite portions as required by section 171 of the Income Tax Act 1961, the assessee stated that physical partition of the properties amongst the ten members was impossible and the only way to partition those properties was to define the respective shares and to enjoy the income from them separately.
In support of his contention that the properties did not admit of physical division the assessee relied on an arbitration award.
The Income tax Officer did not agree with the assessee 's contention that it was not possible to divide the properties in definite portions.
He rejected the claim of partial partition in respect of the eighteen immovable properties and proceeded to assess the income derived therefrom in the hands of the assessee.
10 The assessee filed an appeal before the Appellate Assistant Commissioner.
During the pendency of the appeal the assessee appointed another arbitrator to examine the possibility of physical division of each of the eighteen properties into ten portions.
The arbitrator by his award stated that the properties were not capable of physical division into ten shares by metes and bounds and that any practical division was that of allocation of proportionate shares in all the eighteen properties.
The Appellate Assistant Commissioner held that the case of the assessee that it was not possible to divide the properties physically as untenable and dismissed the appeal.
In further appeal to the Tribunal, the Tribunal held that the contention of the assessee that if the properties had been divided into ten shares they would have been either destroyed or would have lost their values was not correct, and that the claim of the assessee under section 171 of the Act that there was a partial partition was to be rejected.
On an application by the assessee under section 256 (1) of the Act, the Tribunal referred two questions to the High Court : (1) Whether the Tribunal was right in holding that the properties in dispute were capable of division in definite portions amongst the ten coparceners as contemplated in Explanation (a) (i) to section 171 of the Act, and (2) whether the Tribunal was justified in holding that the income from the properties in dispute which were accepted to have been partitioned under the Hindu Law but with regard to which an order accepting the claim of partial partition was not made was liable to be included in the computation of the assessee 's income ? The High Court held : (1) that even though the eighteen properties could not individually be divided into ten shares without destroying their utility but after assessing the value of the properties they could be apportioned between the ten members and the difference in the allocations could be equalised by payment of cash amounts by one to the other and in view of clause (a) (i) of the Explanation to section 171, mere severance of status was not sufficient for recording a finding of partition; and (2) that the income accruing from the eighteen immovable properties after December 11, 1963 was not liable to be included in the computation of the joint Hindu Family 's income.
Dismissing the Assessee 's appeal and allowing the Department 's appeal : ^ HELD : 1.
(i) The law relating to assessment of Hindu undivided family underwent a change when the 1961 Act came into force.
Section 171 of the Act provided for the assessment after partition of a Hindu undivided family.
[24 D] (ii) A finding to the effect that partition has taken place has to be recorded under section 171 by the Income tax Officer.
He can record such a finding only if the partition in question satisfies the definition of the expression 'partition ' found in Explanation to section 171.
A transaction can be recognised as a partition under section 171 only if, where the property admits of a physical division a physical division of the property has taken place.
In such a case mere physical 11 division of the income without a physical division of the property producing income cannot be treated as a partition.
Even where the property does not admit of a physical division then such division as the property admits of should take place to satisfy the test of a partition under section 171.
Mere proof of severance of status under Hindu Law is not sufficient to treat such a transaction as a partition.
If a transaction does not satisfy the above additional conditions it cannot be treated as a partition under the Act, even though under Hindu Law there has been a partition total or partial.
The consequence will be that the undivided family will be continued to be assessed as such by reason of sub section (1) of section 171.
[30 A D] (iii) It is common knowledge that in every partition under Hindu Law unless the parties agree to enjoy the properties as tenants in common, the need for division of the family properties by metes and bounds arises and in that process physical division of several items of property which admit of such physical division does take place.
It is not necessary to divide each item into the number of shares to be allocated at a partition.
If a large number of items of property are there, they are usually apportioned on an equitable basis and if necessary by asking the parties to make payments of money to equalise the shares.
Such a partition is also a kind of physical division of the properties and is contemplated in the Explanation to section 171.
[34 C E] In the instant case no attempt to divide the properties was made.
The case clearly falls under sub clause (i) of clause (a) of the Explanation to section 171 of the Act but does not satisfy the requirement of that sub clause as no physical division of the properties was made even though they could be conveniently so divided.
Sub clause (ii) therefore does not apply to this case.
[35 B] 2.
(i) The High Court having held that the assessee was not entitled to claim that a partial partition had taken place under section 171, fell into an error in holding that the income of the properties which were the subject matter of partial partition could not be included in the total income of the assessee by relying upon the decisions which had been rendered on the basis of section 25A of the 1922 Act which had been construed as not being applicable to partial partition.
[35 D] (ii) The true effect of section 171 (1) is that property, which is the subject matter of partial partition would continue to be treated as belonging to the family and its income would continue to be included in its total income until such a finding is recorded.
[35 G] (iii) Sub section (1) of section 171 contains a 'deeming ' provision.
It says that a Hindu family hitherto assessed as undivided shall be deemed for the purpose of the Act to continue to be a Hindu undivided family except where and in so far as a finding of partition has been recorded in respect of it under section 171.
The partition referred to in the section can include a partial partition also either as regards the persons constituting the undivided family or the properties belonging to it or both, in view of the provisions contained in the other subsections and the Explanation to the section.
[29 F G] 12 (iv) Where there is no claim that a partition total or partial had taken place made or where it is made and disallowed a Hindu undivided family which is hitherto being assessed as such will have to be assessed as such notwithstanding the fact a partition had in fact taken place as per Hindu law.
A finding to the effect that partition had taken place has to be recorded under section 171 by the Income tax Officer.
He can record such a finding only if the partition in question satisfies the definition of the expression 'partition ' found in Explanation to section 171.
The transaction can be recognised as a partition under section 171 only if where the properties admit of a physical division, a physical division of the property has taken place.
In such a case mere physical division of the income without a physical division of the property producing income cannot be treated as a partition.
Even where the property does not, admit of a physical division then such a division as the property admits of should take place to satisfy the test of a partition under section 171.
Mere proof of severance of status under Hindu Law is not sufficient to treat such a transaction as a partition.
If a transaction does not satisfy the additional condition it cannot be treated as a partition under the Act even though under Hindu Law there has been a partition total or partial.
The consequence will be that the undivided family will be continued to be assessed as such by reason of sub section (1) of section 171.
[29 G H,30 A D] Govinddas & Ors.
vs Income tax Officer & Anr., ; Charandas Haridas & Anr.
vs Commissioner of Income tax, Bombay North, Kutch & Saurashtra, Ahmedabad & Anr.
, ; A. Kannan Chetty vs Commissioner of Income tax, Madras, ; referred to.
(v) As long as a finding is not recorded under section 171 that a partial partition had taken place the Hindu undivided family should be deemed for the purposes of the Act to be the owner of the property which is the subject matter of the partition and also the recipient of the income from such property.
The assessment should be made as such and the tax assessed can be recovered as provided in the Act.
[36 F G] 3.
Under section 25A of the 1922 Act, a Hindu undivided family which had been assessed to tax could be treated as undivided and subjected to tax under the Act in that status unless and until an order was made under section 25A (1) and if in the course of the assessment proceedings it is claimed by any of the members of the Hindu undivided family that there has been total partition of the family property resulting in physical division thereof as it was capable of, the assessing authority should hold an enquiry and decide whether there has been such a partition or not.
If he held that such a partition had taken place, he should proceed to make an assessment of the total income of the family as if no partition had taken place and then proceed to apportion the liability as stated in section 25A amongst the individual members of the family.
If no claim was made or if the claim where it was made was disallowed after the enquiry, the Hindu undivided family would continue to be liable to be assessed as such.
[23 G H, 24 A C] 4.
When Parliament enacted section 171 it took note of the decisions which had taken the view that a partial partition did not fall within the scope of section 25A.
It expressly stated in section 171 of the Act that the said provision 13 was applicable to both kinds of partitions total or partial.
It has also defined partial partition as one which is partial as regards persons constituting the undivided family or as regards the properties belonging to the undivided family or both.
It deals with all kinds of partitions, the nature of which sometimes may be difficult to predicate correctly.
[31 D E] Sir Sunder Singh Majithia vs The Commissioner of Income tax.
C.P. & U.P., , Gordhandas T. Mangaldas vs Commissioner of Income tax Bombay, , Waman Satwappa Kalghatgi vs Commissioner of Income tax , M.S.M.S. Meyyappa Chettiar vs Commissioner of Income tax, Madras, , Lakhmtchand Baijnath vs Commissioner of Income tax West Bengal, , Kalwa Devadatta and Ors.
vs Vnion of India and Ors., [1963] 49 I.T.R. [S.C.] 165, Additional Income tax Officer, Cuddapah vs A. Thimmayya and Anr., , Joint Family of Vdayan Chinubhai etc.
vs Commissioner of Income tax, Gujarat, , referred to.
Partition may be several kinds.
It may be a total partition or a partial partition.
A partition can be called partial both as regards persons and as regards properties.
The next kind of partition may be one where all the members divide amongst themselves only some of the family properties and continue as members of an undivided family owing the remaining family properties.
This is called a partial partition as regards property.
Even here the division of the property which is subject matter of partial partition may be groupwise also.
In the case of a partial partition as regards property, one thing noticeable is that after such partition, the property which is subject matter of partition is held by the members of the family as tenants in common and the rest of the family properties continue to be held by them as members of the undivided family.
[31 F H, 32 A E] 6.
After a partial partition as regards property, the property divided is held by the members of the undivided family as divided members with all the incidents flowing therefrom and the property not so divided as members of an undivided family.
Section 171 (1) of the Act can, therefore operate in such a case also because the family which has become divided as regards the property which is the subject matter of partial partition is deemed to continue as the owner of that property and the recipient of the income derived from it except where and in so far as a finding of partition has been given under section 171.
[32 F G] 7.
Partition can be brought about, (1) by a father during his life time between himself and his sons by dividing properties equally amongst them, (2) by agreement, or (3) by a suit or arbitration.
A declaration of intention of a coparcener to become divided brings about severance of status.
[27 E 8.
A physical division of the property which is the subject matter of partition is not necessary to complete the process of partition in so far as the item of property is concerned under Hindu Law.
The parties to the partition may enjoy the property in question as tenants in common.
[27 G Appovier vs Rama Subba Aiyan [1866] 11 M.I.A, 75, referred to.
Hindu Law does not require that the property must in every case be partitioned by metes and bounds or physically into different portions to complete a partition.
Disruption of status can be brought about and it is open to the parties to enjoy their shares of property as tenants in common in any manner known to law according to their desire.[28 C]
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Appeal Nos. 38 and 39 of 1964.
Appeals from the judgment and order dated April 10, 1961 of the Madhya Pradesh High Court in Miscellaneous Civil Case No. 63 of 1961.
C. K. Daphtary, Attorney General, R. Ganapathy Iyer and R. N. Sachthey, for the appellant (for both the appeals).
N. D. Karkhanis, Rameshwar Nath, section N. Andley and P. L. Vohra, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Subba Rao, J.
These two appeals by certificate arise out of the judgment of the High Court of Madhya Pradesh, Jabalpur, in Miscellaneous Case No. 63 of 1961 from a reference under section 66(2) of the Indian Income tax Act, 1922, made by the Income tax Appellate Tribunal, Bombay.
To appreciate the contention of the parties the following genealogy will be useful: Kalooram Todi : : : : Govindram Gangaprasad (d. in January 1943) (d. in 1933) : : : : : Bachhulal : : : : : : Madanlal (predeceased his Nandlal Babulal father) (d. 9 12 1945) (b. 25 1 1935) : : Jankibai Banarsibai : : : : Radheyshyam (predeceased Venkatlal his father) (b. 13 12 1931) : : Shantibai : : Vishwanath (adopted) (b. 13 4 1941) 490 After the death of Kalooram Todi, his two sons by name Govindram and Gangaprasad constituted a joint Hindu family which owned extensive property in Jaora State and a sugar mill called "Seth Govindram Sugar Mills" at Mahidpur Road in Holkar State.
In the year 1942 Bachhulal filed a suit for partition against Govindram and obtained a decree therein.
In due course the property was divided and a final decree was made.
We are concerned in these appeals only with the Sugar Mills at Mahidpur Road.
After the partition Govindram and Bachhulal jointly worked the Sugar Mills at Mahidpur Road.
After the death of Govindram in 1943, Nandlal, the son of Govindram, and Bachhulal, as kartas of their respective joint families, entered into a partnership on September 28, 1943 to carry on the business of the said Sugar Mills.
Nandlal died on December 9, 1945, leaving behind him the members of his branch of the joint family, namely, the three widows and the two minor sons shown in the genealogy.
After the death of Nandlal, Bachhulal carried on the business of the Sugar Mills in the name of "Seth Govindram Sugar Mills".
For the assessment year 1950 51, the said firm applied for registration on the basis of the agreement of partnership dated September 28, 1943.
The Income tax Officer refused to register the partnership on the ground that after the death of Nandlal the partnership was dissolved and thereafter Bachhulal and the minors could be treated only as an association of persons.
On that footing he made another order assessing the income of the business of the firm as that of an association of persons.
Against the said orders, two appeals one being Appeal No. 21 of 1955 56 against the order refusing registration and the other being Appeal No. 24 of 1955 56 against the order of assessment were filed to the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner dismissed both the appeals.
In the appeal against the order of assessment, the Appellate Assistant Commissioner exhaustively considered the question whether there was any partnership between the members of the two families after the death of Nandlal and came to the conclusion that in fact as well as in law such partnership did not exist.
Two separate appeals, being Income tax Appeal No. 8328 of 1957 58 and Income tax Appeal No. 8329 of 1957 58, preferred to the Income tax Appellate Tribunal against the orders of the Appellate Assistant Commissioner were dismissed.
The assessee made two applications to the Tribunal for referring certain questions of law to the High Court, but they were dismissed.
Thereafter, at the instance of the assessee the High Court directed the Tribunal to submit the following two questions for its decision and it accordingly did so: "(1) Whether on the facts and in the circumstances of the case, the status of the assessee, "Seth Govindram Sugar Mills, Mahidpur Road, Proprietor Nandlal Bachhulal, Jaora", is an Association of Persons or a firm within the meaning of Section 16(1)(b) of the Income tax Act.
" 491 "(2) Whether the order of the Appellate Tribunal is illegal on account of the Tribunal having committed an error of record and having omitted to consider the relevant material in the case.
" The High Court, for reasons given in its judgment, held on the first question that in the assessment year 1949 50 the status of the assessee was that of a firm within the meaning of section 16(1),(b) of the Income tax Act and on the second question it held that the Tribunal misdirected itself in law in reaching the conclusion that the parties could not be regarded as partners.
The present two appeals are preferred against the said order.
At the outset we must make it clear that the question of registration could not be agitated in these appeals, as that question was not referred to the High Court.
We shall, therefore, only consider the points raised by the questions referred to the High Court and held by the High Court against the appellant.
Indeed, the only effective question is whether during the assessment year 1950 51 the assesee was a firm or an association of persons.
The first question raised by the learned Attorney General is that on the death of Nandlal the firm of Seth Govindram Sugar Mills was dissolved and thereafter the income of the said business could only be assessed as that of an association of persons.
To appreciate this contention some more necessary facts may be stated.
The deed of partnership dated September 28, 1943, was executed between Nandlal and Bachhulal.
It is not disputed that each of the said two partners entered into that partnership as representing their respect;, joint families.
Under cl.
(3) of the partnership deed, "The death of any of the parties shall not dissolve the partnership and either the legal heir or the nominee of the deceased partner shall take his place in the provisions of the partnership" The question is whether on the death of Nandlal his heirs, i.e., the members of his branch of the family, automatically became to partners of the said firm.
The answer to the question turns upon section 42 of the (Act 9 of 1932).
the material,part of which reads: "Subject to contract between the partners a firm is dissolv ed by the death of a partner.
" While for the appellant the leaned Attorney General contended that section 42 applied only to a partnership consisting of more than two partners, for the respondent Mr. Karkhanis argued that the section did not impose any such limitation and that on its terms it equally applied to a partnership comprising only two partners.
It was argued that the contract mentioned in the over riding clause was a contract between the partners and that, if the parties to the contract agreed that in the event of death of either of them his successor would be inducted in his place, the said contract would be binding 492 on the surviving member.
On the death of one of the partners, it was said, his heir would be automatically inducted into the partnership, though after such entry he might opt to get out of it.
This conclusion the argument proceeded was also supported by section 31 of the Partnership Act.
Section 31 of the Partnership Act reads: "(1) Subject to contract between the partners and to the provisions of section 30, no person shall be introduced as a partner into a firm without the consent of all the existing partners." Converting the negative into positive, under section 31 of the Partnership Act if there as a contract between the partners, a person other than the partners could be introduced as a partner of the firm without the consent of all the existing partners.
A combined reading of sections 42 and 31 of the Partnership Act, according to the learned counsel, would lead to the only conclusion that two partners of a firm could by agreement induct a third person into the partnership after the death of one of them.
There is a fallacy in this argument.
Partnership, under section 4 of the Partnership Act, is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Section 5 of the said Act says that the relation of partnership arises from contract and not from status.
The fundamental principle of partnership, therefore, is that the relation of partnership arises out of contract and not out of status.
To accept the argument of the learned counsel is to, negative the basic principle of law of partnership.
Section 42 can be interpreted without doing violence either to the language used or to the said basic principle.
Section 42(c) of the Partnership Act can appropriately be applied to a ' partnership where there are more than two partners.
If one of them dies, the firm is dissolved; but if there is a contract to the contrary, the surviving partners will continue the firm.
On the other hand, if one of the two partners of a firm dies, the firm automatically comes to an end and, thereafter, there is no partnership for a third party to be introduced therein and, therefore, there is no scope for applying cl.
(c) of section 42 to such a situation.
It may be that pursuant to the wishes of the directions of the deceased partner the surviving partner may enter into a new partnership with the heir of the deceased partner, but that would constitute a new partnership.
In this light section 31 of the Partnership Act falls in line with section 42 thereof.
That section only recognizes the validity of a contract between the partners to introduce a third party without the consent of all the existing partners: it presupposes the subsistence of a partnership; it does not apply to a partnership of two partners which is dissolved by the death of one of them, for in that event there is no partnership at all for any new partner to be inducted into it without the consent of others.
There is a conflict of judicial decisions on this question.
The decision of the Allahabad High Court in Lal Ram Kumar vs 493 Kishori Lal(1) is not of any practical help to decide the present case,.
There.
from the conduct of the surviving partner and the heirs of the deceased partner after the death of the said partner, the contract between the original partners that the partnership should not be dissolved on the death of any of them was inferred.
Though the partnership there was only between two partners, the question of the inapplicability of section 42(c) of the Partnership Act to such a partnership was neither raised nor decided therein.
The same criticism applies to the decision of the Nagpur High Court in Chainkarcin Sidhakaran Oswal v Radhakisan Vishwnath Dixit(2).
This question was directly raised and clearly answered by a Division Bench of the Allahabad High Court in Mt. Sughra vs Babu(3) against the legality of such a term of a contract of partnership consisting of only two partners.
Agarwala, J., neatly stated the principle thus: "In the case of a partnership consisting of only two partners, no partnership remains on the death of one of them and, therefore, it is a contradiction in terms to say that there can be a contract between two partners to the effect that on the death of one of them the partnership will not be dissolved but will continue . .
Partnership is not a matter of status, it is a matter of contract.
No heir can be said to become a partner with another person without his own consent, express or implied.
" This view accords with that expressed by us earlier.
In Narayanan vs Umayal(4).
Ramachandra lyer J., as he then was, said much to the same effect when he observed thus: ". . . if one of the partners died, there will not be any partnership existing to which the legal representatives of the deceased partner could be taken in.
In such a case the partnership would come to an end by the death of one of the two partners, and if the legal representatives of the deceased partner joins in the business later, it should be referable to a new partnership between therein." But Chatterjee J., in Hansraj Manot vs Messrs. Gorak Nath Pandey(5) struck a different note.
His reasons for the contrary view are expressed thus: "Here the contract that has been referred to s the contract between the two partners Gorak Nath and Champalal Therefore, it cannot be said that the contract ceased to have effect because a partner died.
The contract was there.
There was no new contract (1) A.T.R. 1946 All. 259.
(2) A.T.R.1956 nag.
46 (3) A.I.R. 1952 All. 506, 507.
(4) A.I.R, 1959 Mad. 283,284.
(5) , 264.
(N)4SCI 5 494 with the heirs and there was no question of a new contract with the heirs because of the original contract, and by virtue of the original contract the heirs become partners as soon as one of the partners died. . .
As soon as there is the death, the heirs become the partners auto matically without any agreement between the original Partners by virtue of the original agreement between the Partners while they were surviving.
there is no question of interregnums.
As soon as the death occurs the right of somebody else occurs.
The question of interregnums does not arise.
The heirs become partners not because of a contract between the heirs on the one hand and the other partners on the other but because of the contract between the original partners of the firm.
" With great respect to the learned Judge, we find it difficult to appreciate the said reasons.
The learned Judge seems to suggest that by reason of the contract between the original partners, the heirs of the deceased partner enter the field simultaneously with the removal by death of the other partner from the partnership.
This implies that the personality of the deceased partner projects into that of his heirs, with the result that there is a continuity of the partnership without any interregnums.
There is no support either on authority or on principle for such a legal position.
In law and in fact there is an interregnums between the death of one and the succession to him.
We accept the view of the Allahabad and Madras High Courts and reject the view expressed by Nagpur and Calcutta High Courts, The result of the discussion is that the partnership between Nandlal and Bachhulal came to an end on the death of Nandlal on December 9, 1945.
The next question is whether after the death of Nandlal a new partnership was entered into between the representatives of the two branches of the families, i.e., Nandlal 's and Bachhulal 'section Before we consider this question it is as well that we advert to incidental questions of law that were raised.
One is whether the widow of Nandlal could under Hindu law be a karta of the joint Hindu family consisting of three widows and two minors.
There is conflict of view on this question.
The Nagpur High Court held that a widow could be a karta: see Commissioner of Income tax, C. P. & Berar vs Seth Laxmi Narayan Raghunathdas(1); Pandurang Dahke vs Pandurang Gorle(2), The Calcutta High Court expressed the view that where the male members are minors and their natural guardian is the mother, the mother can represent the Hindu undivided family for the purpose of assessment and recovery of taxes under the Income tax Act: see Sushila Devi Rampurla vs Income tax Officer(2); and (3) 495 Sm.
Champa Kumari Singhi vs Additional Member, Board of Revenue, West Bengal(1) The said two decisions did not recognize the widow as a karta of the family, but treated her as the guardian of the minors for the purpose of income tax assessment.
The said.
decisions, therefore, do not touch the question now raised.
The Madras and Orissa High Courts held that coparcenership is a necessary qualification for the managership of a joint Hindu family and as a widow is not admittedly a copartner, she has no legal qualifi cations to become the manager of a joint Hindu family.
The decision of the Orissa High Court in Budhi Jena vs Dhobai Naik(2) followed the decision of the Madras High Court in V.M.N. Radha Ammal vs Commissioner of Income tax, Madras(2) wherein Satyanarayana Rao J., observed: "The right to become a manager depends upon the fundamental fact that the person on whom the right devolved was a copartner of the joint family Further, the right is confined to the male members of the family as the female members were not treated as copartner though they may be members of the joint family.
" Viswanatha Sastri J., said: "The managership of a joint Hindu family is a creature of law and in certain circumstances, could be created by an agreement among the copartner of the joint family.
Coparcenership is a necessary qualification for managership of a joint Hindu family.
" Thereafter, the learned Judge proceeded to state: "It will be revolutionary of all accepted principles of Hindu law to suppose that the senior most female member of a joint Hindu family, even though she has adult sons who are entitled as copartner to the absolute ownership of the property, could be the manager of the family . . . .
She would be the guardian of her minor sons till the eldest of them attains majority but she would not be the manager of the joint family for she is not a copartner.
" The view expressed by the Madras High Court is in accordance with well settled principles of Hindu law, while that expressed by the Nagpur High Court is in direct conflict with them.
We are clearly of the opinion that the Madras view is correct.
Another principle which is also equally well settled may be noticed.
A joint Hindu family as such cannot be a partner in a firm, but it may, through its karta enter into a valid partnership with a stranger or with the karta of another family.
This Court in Kshetra (1) (2) A.I.R. 1956 Orissa 6.
(3) , 230, 232, 233.
496 Mohan Sanyasi Charan Sadhukhan vs C.E.P.T.(1) pointed out that when two kartas of different families constituted a partnership the other members of the families did not become partners, though the karta might be accountable to them.
The question, therefore, is whether after the death of Nandlal the representatives of the two families constituted a new partnership and carried on the business of the Sugar Mills.
Admittedly no fresh partnership deed was executed between Banarsibai, acting as the guardian of the minors in Nandlal 's branch of the family and Bachhulal.
It is not disputed that partnership between the representatives of two families can be inferred from conduct.
Doubtless the accounts produced before the income tax authorities disclosed that Bachhulal was carrying on the business of "Seth Govindram Sugar Mills Ltd." in the same manner as it was conducted before the death of Nandlal.
Therein Kalooram Govindram and Gangaprasad Bachhulal were shown as partners, Govindram having 10 annas share and Bachhulal having 6 annas share.
There were separate current accounts for the two parties.
The Appellate Assistant Commissioner, who examined the accounts with care, gave the following details from the accounts ason November 1, 1948: Joint capital account of Kalooram Govindram and Gangaprasad Bachhulal in the ratio of 10 : 6 Rs. Credit balance 10,78,660 Current Accounts: Gangaprasad Bachhulal Do.
10,46,797 Kalooram Govindram Do.
8,30,348 Profit & Loss Account Debit balance 14,01,669 No profit or loss was adjusted to the current account of the parties.
Thereafter the accounts were closed as on 31 3 1950, when the capital account was squared up by transferring that much loss from the profit and loss account and balance in the profit and loss account was transferred in the ratio of 10:6 to the current accounts of the two parties.
Thus the profit and loss account showed: Net debit balance including current Rs. year 's loss 17,51,992 Loss set off against capital account 10,78,666 . . . .
Rs. 6,73,326 Transferred to partners ' accounts: Messrs. Kalooram Govindram 4,20,829 Messrs. Gangaprasad Bachhulal 2,52,497 6,73,326 . . . .
Balance Nil (1)[1954] S.C.R. 497 The accounts only establish that Bachhulal was doing the business of Govindram Sugar Mills Ltd. But Banarsibai 's name was not found in the accounts.
If she was a partner, her name should have found a place in the accounts.
Not a single document has been produced on behalf of the assessee which supports the assertion that Banarsibai acted as a partner or was treated by the customers of the firm as a partner.
There is not a little of evidence of conduct of Bachhulal, Banarsibai or even of third parties who had dealings with the firm to sustain the plea that Banarsibai was a partner of the firm.
Indeed, the conduct of the parties was inconsistent with any such partnership between Banarsibai and Bachhulal.
After the death of Nandlal, Banarsibai and Shantibai applied to Jaora District Court for the appointment of guardians to look after the properties and the persons of the two minors; and on January 21, 1946, four persons other than these two widows were appointed as guardians of the minors.
If Banarsibai was acting as a guardian of the minors representing the family in the business, she would not have applied for the appointment of others as guardians.
On October 4, 1952, a partnership deed was drawn up between Bachhulal on the one hand and the minors represented by the said four guardians on the other.
If Banarsibai was the representative of the family in the business, this document would not have come into being Banarsibai also had no place in another partnership deed which was executed on March 27, 1953, between Venkatlal represented by the aforesaid guardians and Bachhulal.
The evidence, therefore, demonstrates beyond any reasonable doubt that Banarsibai was nowhere in the picture and that Bachhulal carried on the business of the Sugar mills on behalf of the two families.
Nor is there any evidence to show that from 1943 till the assessment year the guardians of the minors appointed by the District and Sessions Judge, Jaora, in 1946 representing the minors entered into a partnership with Bachhulal.
The partnership deeds of 1952 and 1953 were subsequent to the order of assessment and they contain only self serving statements and they cannot, in the absence of any evidence, sustain the plea of earlier partnership.
Indeed, the guardians were only appointed for the properties situated within the jurisdiction of the District Judge, Jaora, and they could not act as guardians in respect of the properties outside the said jurisdiction.
If they were acting as partners with Bachhulal, their names would have been mentioned either in the accounts or in the relevant documents pertaining to the business.
The conflicting version given by the assessee in regard to person or persons who actually represented the family in the partnership in itself indicates the falsity of the present version.
It must, therefore, be held that the Court guardians did not enter into a partnership with Bachhulal.
But, Venkatlal became a major on December 13, 1949, i.e., during the accounting year 1949 50.
On October 17, 1951, an application for registration was received by the Income tax Officer 498 signed by Venkatlal and Bachulal who are shown as partners representing their respective joint families.
The return of income submitted along with the application for registration was signed by Venkatlal on August 29, 1951.
After Venkatlal became a major, there was no obstacle in his representing his branch of the family, in the partnership.
Indeed, it was conceded in the High Court that there was a partnership from December 13, 1949, when Venkatlal, attained majority.
Having regard to the said circumstances and the concession, we must hold that from December 13, 1949, the business was carried on in partnership between Venkatlal, representing his branch of the family, and Bachhulal, representing his branch of the family.
In the result we set aside that part of the finding of the High Court holding that the partnership business was carried on by the representatives of the two families after the death of Nandlal, but confirm the finding to the extent that such a partnership came into existence only after December 13, 1949.
In this view, we answer the two questions referred to the High Court as under: (1)For the assessment year 1950 51 the status of the, assessee was that of a firm within the meaning of section 16 (1)(b) of the Income tax Act, 1922.
(2)The Tribunal misdirected itself in law in reaching the conclusion that the parties could not be regarded as partners.
In the result the appeals are dismissed.
But as the respondent failed in its main contentions, the parties will bear their own costs in this Court.
Appeals dismissed.
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A joint Hindu family consisting of two branches owned a sugar mill.
After partition, the two kartas entered into a partnership in 1943, to carry on the business of the sugar mill.
The two partners represented the respective joint families, and the partnership deed provided that the death of any of the parties shall not dissolve the partnership and either the legal heir or the nominee of the deceased partner should take his place.
One of the kartas died in 1945 leaving as members of his branch of the family, three widows and two minor sons.
The other partner continued the business of the sugar mill in the firm name.
For the assessment year 1950 51, the assessee (respondent firm) applied for registration on the basis of the partnership agreement of 1943.
The Income tax Officer, Appellate Assistant Commissioner and the Tribunal held that there was no partnership between the members of the two families after the death of one of the kartas.
On a reference to the High Court, it was held that the partner ship business was carried on by the representatives of the two families after the dent), of one of the kartas.
In the appeal to this Court, on the question as , to whether during the assessment year 19 50 51, the assessee, was a firm within the meaning of section 16(1) of the Income tax Act, 1922, or an association of persons.
HELD: The High Court was wrong in its finding.
But, as a result ,of the concession by the appellant, that there was a partnership from 13th December 1949, when one of the minor sons had become a major, the status of the assessee was that of a firm for the assessment year 1950 51.
[498B] A joint Hindu family as such cannot be a partner of a firm, but it may through its karta enter into a partnership with the karta of another family.
[495H] Kshetra Mohan Sanyasi Charan Sadhukhan v, Commissioner of Excess Profits Tax, [19541 S.C.R. 268.
followed.
A widow, though a member of a joint family, cannot become its manager.
[495B] Commissioner of Income tax, C.P. & Berar vs Seth Lakshmi Narayan Raghunathdas, and Pandurang Dakhe vs Pandurang Gorle.
I.L.R. overruled.
Therefore, in the instant case, when one of the kartas died, the partnership had come to an end.
There was no scope for applying section 42(c) of the Partnership Act, 1932, because, the section is applicable only to a partnership with more than two partners.
In such a case.
if one of them dies, the firm is dissolved, but if there is a contract to 488 489 the contrary, the surviving partners will continue the firm.
On the other hand, if there are only two partners and one of them dies, the firm automatically comes to an end and, thereafter, there is no partnership for a third party to be introduced.
Section 31, which deals with the validity of a contract between the partners to introduce a third party into the partnership without the consent of all the existing partners, presupposes the subsistence of a partnership and does not apply to a partnership of two partners, which is dissolved by the death of one of them.
[492E H] Hansraj Manot vs Messrs, Gorak Nath Pandey, , disapproved.
Further, there was no evidence that the representatives of the two families constituted a new partnership and carried on the business of the sugar mill before 13th December 1949, when, it was conceded a new partnership had come into existence.
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1955.txt
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Appeal No. 67 of 1956.
Appeal from the judgment and decree dated March 20, 1950, of the Bombay High Court in first Appeals Nos. 142 and 211 of 1947.
S.P. Varma, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant.
324 H.R. Khanna, R. H. Dhebar and T. M. Sen, for the respondent No. 1.
C.B. Agarwala and Naunit Lal, for the respondents Nos. 2 and 5. 1962.
September 26.
The judgment of the Court was delivered by AYYANGAR, J.
This appeal comes before us on a certificate of fitness granted by the High Court of Bombay under article 133 (1) (a) of the Constitution.
The appeal was heard by us in November last and judgment was reserved on 9/11/1961.
Within a short time thereafter, learned Counsel for the Appellant intimated the Registry that the 2nd respondent had died on November 5, 1961, and that steps were being taken to have the legal representative brought on record.
The certificate under O. XVI r.13 was received by this Court and on its basis substitution was ordered at the end of August 1962.
The appeal was subse quently reported for hearing and we have now heard the learned Counsel for the parties.
The facts giving rise to the appeal are briefly as follows: The plaintiff who is the appellant brought a suit in the Court of the Civil judge at Jalgaon for a declaration that the sale of certain of his lands which were held by the Revenue Authorities in circumstances which we shall detail later was void, and to recover possession of the lands from the defendants who had purchased these lands in revenue auction.
In view of the prayer for the declaration regarding the invalidity of the sale, the Province of Bombay was impleaded as a defendant to the suit.
The plaintiff 's father was an excise contractor and he and the plaintiff were licensees of certain opium shops in 1931 32.
By the end of March 1934 a sum of about Rs. 8,500/ were due to the Government in respect of the excise dues from these opium shops.
For the realisation of these dues the lands 325 belonging to the plaintiff were brought to sale and among others Survey Field No. 35, 40 and 80 in Mauje Therole, Peta Edalabad and a house bearing Survey No, 23A in the village of Kurhe was brought to sale and sold.
The three items of lands were purchased by government at the sale for a nominal bid of Re. 1/ for each item for realisation of these dues.
The sale was confirmed and possession taken by government of these lands.
Later the government sold the land bearing Survey No. 80 to the second defendant for Rs. 2,000/ and Survey Nos. 35 and 40 to the fifth defendant for Rs. 1,750/ .
Possession of these properties was delivered to the respective defendants in 1939.
As substantially the arrears due to government still remained undischarged, because the sales were for nominal amounts, the house property at Kurhe was attached and brought to sale and was sold on November 6, 1940, but the purchase in the case of the house was not by the government but the property was bid for and purchased by the second defendant for Rs. 76/ .
A certificate of sale was issued to him on February 13, 1941.
It was the validity of these sales that was challenged in the suit which has given rise to this appeal.
The suit was substantially decreed in favour of the plaintiff by the trial judge but on appeal the plaintiff 's suit was dismissed in respect of the relief in regard to the three plots above named which were the subject of sale on September 21, 1938, and of the house which was sold on November 6, 1940.
The learned trial judge had held that these sales were not in accordance with the provisions of the Bombay Land Revenue Code and were consequently void.
The learned judges of the High Court, on the other hand, were of the opinion that the sales and the purchase by government for a nominal sum of Re. 1/ for each of the plots were authorized by the Code and were therefore valid and binding on the plaintiff.
It is the correctness of this view of the High Court that is raised for consideration in the appeal.
326 Before dealing with the arguments addressed to us regarding the validity of the sales it is necessary to set out the statutory provisions which bear upon the power of government to effect sales for the realisation of arrears due to them.
Section 34 of the Bombay Abkari Act enables arrears of excise revenue to be recovered as an " arrear of land revenue".
Chapter XI of the Bombay Land Revenue Code lays down the procedure for the realisation of land revenue and other revenue demands.
Among the provisions of this Chapter it is necessary to refer to s.155 reading : "155.
The Collector may also cause the right, title and interest of the defaulter in any immovable property other than the land on which the arrear is due to be sold.
" Section 165 directs the Collector to issue a proclamation, in the vernacular language of the district of the intended sale, specifying the time and place of sale, while the section following requires that a written notice of the intended sale should be affixed in the public offices named therein.
Section 167 enacts that sales shall be made by auction by such persons as the Collector may direct.
Section 171 is the next relevant section and this reads: "When the sale is finally concluded by the officer conducting the same, the price of every lot shall be paid for at the time of sale, or as soon after as the said officer shall direct, and in default of such payment the property shall forthwith be again put up and sold.
On payment of the purchase money the officer holding the sale shall grant a receipt for the same, and the sale shall become absolute as against all per sons whomsoever.
" As some point was made before us of a violation in the instant case of the provisions of sections 172 and 173, we shall read these also 327 "172.
When the sale is.
subject to confirma tion, the party who is declared to be the pur chaser shall be required to deposit imme diately twenty five per centum on the amount of his bid, and in default of such deposit the property shall forthwith be again put up and sold.
The full amount ' of purchase money shall be paid by the purchaser before sunset of the day after he is informed of the sale having been confirmed, or, if the said day be a Sunday or other authorized holiday, then be fore sunset of the first office day after such day.
On payment of such full amount of the purchase money, the purchaser shall be granted.
, a receipt for the same, and the sale shall become absolute as against all persons whomsoever." "173.
In all cases of sale of immovable pro perty, the party who is declared to be the purchaser shall be required to deposit imme diately twenty five per centum on the amount of his bid, and in default of such deposit the property shall forthwith be again put up and sold.
" Section 175 sets out the effect of a default in payment of purchase money and this runs: "175.
In default of payment within the prescribed period of the full amount of pur chase money, whether of movable or immovable property, the deposit, after defraying therefore the expenses of the sale, shall be forfeited to the Provincial Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.
" Section 178 enables sales to be set aside for irregularity and this section runs 328 "178.
At any time within thirty days from the date of the sale of immovable property application may be made to the Collector to set aside the sale on the ground of some material irregularity, or mistake, or fraud, in publishing or conducting it; but, except as is otherwise provided in the next following section, no sale shall be set aside on the ground of any such irregularity or mistake, unless the applicant proves to the satisfaction of the Collector that he has sustained substantial injury by reason thereof.
If the application be allowed, the Collector shall set aside the same and direct a fresh one.
" The consequential provision is in section 179 which reads: "179.
On the expiration of thirty days from the date of the sale, if no such application as is mentioned in the last preceding section has been made, or if such application has been made and rejected, the Collector shall make an order confirming the sale; provided that, if he shall have reason to think that the sale ought to be set aside notwithstanding that no such application has been made, or on grounds other than those alleged in any application which has been made and rejected, he may, after recording his reasons in writing, set aside the sale." and section 182 enacts : "182.
The certificate shall state the name of the person declared at the time of sale to be the actual purchaser; and any suit brought in a Civil Court against the certified purchaser on the ground that the purchase was made on behalf of another person not the certified purchaser, though by agreement the name of the certified purchaser was used, shall be dismissed.
" 329 Section 214 of the Code empowers a State Government by a notification published in the official gazette to make rules not inconsistent with the provisions of the Act to carry out the purposes and objects of the Act and for the guidance of all persons in matters connected with the enforcement of the Act or in cases not expressly provided for therein.
In the Rules framed under the Code Ch.
XVIII is concerned with making provision for sales.
Rule 128 which is the second of the Rules in this Chapter.
prescribes "Where any land or other property is sold by public auction, an upset price shall, if the Collector thinks fit, be placed thereon; Provided that where in the opinion of the Collector difficulty is likely to be experienced in effecting speedy recovery of the arrears or bidders are likely to be deterred from offering bids, no such upset price shall be placed.
" Rule 129 has a new sub r.
(4) added after the sales which are now in controversy were effected reading : "Where in the opinion of the Collector difficulty is likely to be experienced in effecting speedy recovery of the arrears or bidders are likely to be deterred from offering bids, it shall be lawful for the Collector or his nominee to bid at the auctio n and purchase the land or other property for a bid of rupee one.
" We shall now proceed to narrate the proceedings that preceded the impugned sales where are stated to be in contravention of statutory provisions.
Before doing so, however, we might point out that in regard to the sale of the house in the village of Kurhe no irregularity which would vitiate the sale as pointed out, and the only complaint was that the house which was estimated to the worth about Rs. 200/ was sold for an inadequate sum of Rs. 76/ .
Obviously standing alone this could not be a ground for holding 330 the sale void.
In the rest of this judgment, therefore, we shall confine our attention to the sale of the three plots bearing Survey Nos. 35, 40 and 80 which were purchased by the Government for a nominal bid of Re. 1/ .
The relevant facts in relation to the sale of these three plots were these: In January 1934 the Mahalkari of Edalabad brought to the notice of the Collector of East Khandesh that an amount of over Rs. 9,000/ was due in respect of excise transactions from the plaintiff and his father and he pointed out that the amount remained unrecovered notwithstanding that the defaulter 's movable property was put up for sale eighteen times and his immovable property eight times.
He suggested to the Collector that " 'in order to bring home a sense of responsibility to the defaulters and to make them realise the need for quickly paying up the arrears", the procedure laid down in a Government order dated August 30, 1933, might be applied to them.
The procedure indicated was that contained in a Government resolution in the Revenue department bearing No. 474 of 1933 that "if defaulters were contumacious the Collector would have authority to purchase on behalf of Government the defaulter 's property on a nominal bid.
" By this letter the Mahalkari desired to have the permission of the Collector to make a nominal bid of Re. 1/ at the next auction of ' the defaulter 's property.
The principal question raised in this appeal is whether or not the procedure indicated in this resolution is in accordance with the provisions of the Land Revenue Code.
Before continuing the narrative it is necessary to refer to a further resolution No. 4135 of April 16, 1936, which ran "The procedure of purchasing on behalf of Government a defaulter 's property nominal bid should be adopted in order a speedy recovery of Government by offering a order to effect dues in cases where a real difficulty is experienced in making 331 such recoveries and no purchaser is forthcoming to buy the land. .
It should not be adopted except as a last resort when various remedies for the recovery of dues have failed or unless it is clear that bidders are deterred from offering bids by other reasons than purely economic considerations.
" The reason for the adoption of this procedure was stated to be that it would produce a good deterrent effect and would put a stop to any obstructive tactics on behalf of defaulting licensees.
The permission sought was granted by the Collector enabling the Mahalkari to bid at the auction.
Thereafter the Mahalkari intimated the defaulters the plaintiff and his father that if no bidder came forward at the time of the public auction sale and nobody bid, the lands mentioned in the proclamation would be sold at a nominal price of Re. 1/ and it was after this notice that the purchase by Government on the above terms was effected.
The sales were held, no stranger bid at the sale and thereupon the Mahalkari acting under the resolution of Government and the terms of the permission granted by the Collector, made a nominal bid of Re. 1/ for each lot on behalf of the Government and the bids were accepted and thereafter the sales were confirmed.
The validity of the sale was attacked before us on several grounds : (1) that under r. 128 the Collector was bound to have fixed an upset price and that his failure to do so rendered the sale void.
, (2) Rather inconsistently with this that the Collector had actually fixed an upset price and that in the face of this fixation the purchase by the Mahalkari on behalf of the Government for a nominal sum of Re. 1/ was illegal and rendered the sale void.
, (3) that on the terms of section 171, the sale price had to be paid for at the time of the sale and that as this was not done, the sale officer was statutorily bound to have put up 332 the property for sale again, (4) that sections 172 and 173 laid an obligation on the purchaser to deposit 25 per cent of the sale price immediately the bid was knocked down and further required him to pay the balance within 15 days thereafter and also prescribed the consequences of default, viz., the sale shall be avoided and that a resale shall take place and that in the present case the Mahalkari who bid on behalf of the Government, or the Government itself had not made either the deposit or the final payment with the result that the purchase stood automatically cancelled by reason of that default and (5) that the purchase by the Government on a nominal bid of Re.1/ was not a sale by public auction as was contemplated by section 167 of the Code and in consequence the sale was void and that no title passed by reason of that sale.
As regards the first four of the objections set out above, they have, in our opinion, no substance on the facts of the present case.
We do not however consider it necessary to deal with them because they were raised for the first time in this Court and they involve questions of fact which were not the subject of pleading or investigation in the Courts below.
We intimated to the learned Counsel that we would not permit him to urge those grounds before us.
It is only the last of these grounds that therefore requires to be considered.
This raises a question of some importance in the law relating to revenue sales.
The question of the validity of such sales was raised before the High Court of Bombay on an earlier occasion and the judgment of the Court is reported in Pumdu Dhansing vs Government for the Province of Bombay (1).
The Court was then concerned with an auction sale conducted by the Mamlatdar a revenue officer of the Government by which a property of a substantial value belonging to a surety for a toll contractor was sold to the Revenue Patel acting for and on behalf of the government for a nominal sum of Re. 1/ .
The (1) I. L. R. 333 contractor was in default and for the recovery of the amount due from him the provisions of Ch.
XI of the Bombay Land Revenue Code became applicable.
Several attempts were made to sell the property of the defaulter and the reserve prices which were fixed for the lots were never reached.
Subsequently at 'the next auction when no bids were forthcoming, the Patel acting under the orders of the Collector made a bid on behalf of Government, of Re. 1/ for each lot and this was accepted by the Mamlatdar who was conducting the auction, and this sale was confirmed later by the Collector and possession was thereafter taken of the property thus purchased.
It was the validity of this sale that was challenged in a suit filed by the defaulter.
Support for the validity of the sale was sought in the resolutions of the Government of 1933 and 1936 which we have extracted earlier.
On the facts of the case before the Court there were certain special features to which attention was drawn by the learned judges : (1) The first was that the proclamation of sale set out that a reserve price had been fixed and where a sale was subject to such a condition, "the conditions of sale" which are prescribed by the rules made a special provision invalidating the acceptance of bids below the reserve price, (2) there was no evidence that the defaulter had been served with any special notice that the different procedure of the purchase for a nominal price by government would be resorted to.
Though the learned judges pointed out these two features, the reasoning by which they held the sale void rested on wider grounds.
Stone C.J. speaking for the Court said: "The production of the nominal one rupee for all the property, cannot be regarded as bid at an auction sale for property lotted into five lots with a separate reserve price on each.
The word "nominal ' shows that there was nothing of substance about the offer and the endorsements 334 and formalities by which an attempt was made to give some semblance regularity to what was done cannot in my opinion cloak in legal guise that which was nothing better than a device to vest the appellant 's property in a Revenue Officer holding on behalf of Government.
The Bombay Land Revenue Code contains no power either to forfeit or to foreclose a defaulter 's property.
Yet the scheme formulated by the Resolutions referred to at the commencement of this judgment aims in effect at bringing about such a result, for, if effective it would achieve the extinguishment in favour of Government of all the appellant 's rights and ownership in his land.
In my judgment what took place at the alleged auction sale was of no effect and did not give to the Revenue Pail or to Government any right, estate or interest in the appellant 's property.
" When the present appeal was before the learned judges of the Bombay High Court it was pressed before the Division Bench which heard the appeal in the first instance that the reasoning of the decision in Tumdu Dhansing vs Government for the Province of Bombay (1) governed the present case also and entitled the plaintiff to succeed and that the appeal should be dismissed.
The learned judges observed: "It must be conceded that if the decision in Tumdu Dhansing vs Government for the Province of Bombay represents good law, the decision of the trial Court is correct".
They however, went on to say : "With respect however, to the learned judges who decided that case (Tumdu Dhansing vs Government for the Province of Bombay) we find great difficulty in understanding the reason ing and doubt whether the conclusion is correct".
(1) I. L. R. 335 They therefore suggested a reference to a Full Bench for an answer to the question : "Whether when at a sale held under section 153 of the Bombay Land Revenue Code the land is pur chased by the Government under a nominal bid the sale is either void or voidable": The learned Judges of the Full Bench however without deciding whether the decision in Tumdu Dhansing vs Government for the Province of Bombay was right or wrong, upheld the sale in the present case on certain distinguishing features : (1) the sale proclamation in the present case did not fix a reserveprice and therefore there was no purchase for a nominal sum in disregard of the price so fixed, (2) Before the bid for a nominal sum and a sale by the acceptance of such a bid notice had been given to the defaulter stating that the Government intended to pursue that course.
Though on these grounds they held the sale not to be void, the learned judges proceeded to point out that this practice of purchasing property for nominal bids was neither fair nor equitable.
With this answer the case came back to the Division Bench where the appeal by the defendant was allowed.
The question now for our consideration is whether a sale for a "nominal" bid of Re. 1/ is "a sale by auction" within the provisions of the Bombay Land Revenue Code.
Before entering on a discussion of the relevant provisions it is necessary to state that the Government Resolutions of 1933 and 1936 do not purport to have and have no statutory force at all.
They cannot authorise or render valid the transaction if otherwise it lacked a legal basis.
A further matter which requires to be pointed out is that para.
(4) of r. 129, already set out, which authorises the purchase by Government for a nominal price was added only in 1946 long after the sales in the present case and cannot serve as any basis for sustaining the validity (1) I. L. R. 336 of the sale.
In the circumstances it is not necessary to consider the scope or validity of this rule or its legal efficacy for authorising such a sale or purchase.
It is common ground that the power of Government to effect a sale by summary process for the recovery of amounts due to them has to be gathered from the four comers of Ch.
XI of the Code read in conjunction with the relevant rules in Ch.
XVIII.
Section 155 of the Code enables the Collector to cause the right, title and interest of the defaulter in the immovable property to be sold.
The manner in which those sales might take place is provided for by section 167 which enacts that "sales shall be by public auction by such person as the Collector may direct.
" Leaving aside for the moment the provisions which detail the procedure to be followed in the conduct of these sales, the point to be observed is that the realisation of the dues has to be by "sates" by public auction to be held in the manner prescribed.
This therefore does not and cannot authorise a forfeiture of the immovable property of a defaulter because of his contumacious conduct in not paying up his dues when demanded.
Nor does the Land Revenue Code contemplate or provide for any punishment of defaulters because of their conduct in either not paying up their dues or in not facilitating the realisation of the dues payable by them by co operating with the Government and securing a proper price for their property such as would be sufficient for the discharge of their dues.
While on this point it might be interesting to point out that section 58 of the Revenue Sale Law (Bengal Revenue Sale Law) Act 11.
of 1 859 enacts: " 'When an estate is put up for sale under this Act for the recovery of arrears of revenue due thereon, if there be no bid the Collector or other officer as aforesaid may purchase the estate on account of the Government for one rupee . . . . " 337 There is no provision corresponding to this in the Bombay Code.
The question then arises whether a purchase for a predetermined nominal price of rupee one for property, whatever its actual market value, is a sale by public auction within section 167 of the Code.
An auction has been described as " 'the proceeding at which people are invited to compete for the purchase of property by successive offers of advancing sums" and a sale by auction is a means of ascertaining what the thing is worth, viz., its fair market price.
If at the sale there are no bids there cannot be a sale.
A sale for a predetermined nominal sum cannot, in our opinion, be held to be a "sale by public auction" in the absence of any provision for such sales in the statute.
Such a sale appears to us to be somewhat analogous to what Sir Richard Couch described, though in a slightly different context. " 'The offer and acceptance of a rupee was a colorable attempt to obtain a title without paying for the land.
Virtually it was a present which it was not open to the authorities to make".
(vide Luchmeswar Singh vs the Chairman, of the Darbhanga Municipality(1).
It may not also be out of place to point out that it is the Collector who on behalf of Government sets in motion the machinery for the realisation of the arrears by bringing the defaulter 's property to sale and it is he who is by the Land Revenue Code invested with the power to make arrangements for the sale and section 178 constitutes him the authority to determine judicially any allegation about the irregularity in the conduct of the sale.
In these circumstances it looks to us somewhat anomalous that the Collector should of his own motion and without the authority of any statutory power claim the right to bid at the auction which his deputy is conducting on his behalf for the realisation of the dues which he as the executive authority is to recover and particularly when he is constituted the authority to consider the validity or irregularity in the auction conducted at his instance and the purchase made at his instance.
(1) (1890) 1.
R. , 106.
338 The next question for consideration is whether the fact that the defaulter was appraised that Government would bid for a nominal sum of one rupee for the property at the auction renders the sale valid.
We do not find it easy to discover the precise legal basis upon which prior notice to the defaulter would have the effect of validating the sale.
If a sale for a nominal bid of one rupee were "a sale by public auction" within section 167 of the Code, notice to the defaulter that such a procedure would be followed would be legally unnecessary and would not add to the legal efficacy of the sale.
If, on the other hand, such a sale or a sale in such circumstances was not a sale by public auction then notice to the defaulter could be of value only if (a) it operated as a waiver of the requirement of section 167, or (b) created an estoppel which precluded him from questioning the legality of the proceeding.
First as to waiver, the power of Government to effect the sale by summary process is a special provision resting on public grounds and being so very special it is clear that the limitations on the power thus conferred should be strictly construed.
In our opinion, it is an essential condition of the passing of property from the defaulter in invitem that there should be a sale by public auction and if a sale in the manner in which it has been conducted in the present case does not amount to a sale by public auction there is no question of the title to property passing by virtue of such a sale.
The plea of waiver cannot therefore be of any avail.
Nor is there any basis for any argument that by reason of the notice the defaulter is estopped from questioning the legality of the sale.
If waiver cannot cure the defect there is still less scope for invoking the rule as to estoppel, for the essential condition of estoppel, viz., representation by the person sought to be estopped and prejudice to the person seeking the benefit of the rule, would both be absent.
We therefore 339 come to the conclusion that the fact that the defaulter was informed that the Government would make a nominal bid of rupee one and purchase the property is really irrelevant for considering the validity of the sale.
The conclusion we have indicated earlier is in accord with the decision of the Bombay High Court in Tumdu Dhansing vs Government for the Province of Bombay(1) and we consider that that case is correctly decided.
We are further of opinion that the ratio of that decision would also cover the case where notice was served on the defaulter of the Govern ment 's intention to purchase the property for a nominal price.
Learned Counsel for the respondent raised several defenses besides seeking to support the judgment of the High Court on the reasoning of the learned judges and sought to sustain the impugned sale on various grounds.
His first submission was that the sale was at the worst irregular which rendered it voidable and that no suit having been brought within one year of the sale, the suit was barred by article 11 of the Indian Limitation Act.
We consider however that there is no substance in this contention because if, as we hold, a sale of the type now impugned was not authorised by the statutory provision in that regard then it was not a question of any mere irregularity in the conduct of a sale but a case where there was no sale at all with the consequence that no pro perty passed from the defaulter.
It was not disputed that article II of the Indian Limitation Act would only apply to a case where there is need for the setting aside of a sale and that it has no application to cases where no sale as contemplated by law has taken place.
It was next submitted that the appellants ' suit was barred by sections 4 (c) and II of the Bombay Revenue (1) 1.
L. R. 340 jurisdiction Act, 1876.
Section 4(c) runs: "4.
Subject to the exceptions hereinafter ' appearing, no Civil Court shall exercise jurisdiction as to any of the following matters: (a). . . . . . . (b). . . . . . . . (c). . . . . . . . claims to set aside, on account of irregularity, mistake or any other ground except fraud, sales for arrears of land revenue; and section 11 enacts: "11.
No Civil Court shall entertain any suit against the Government on account of any act or omission of any Revenue Officer unless the plaintiff first proves that previously to bringing his suit, he has presented all such appeals allowed by the law for the time being in force, as within the period of limitation allowed for bringing such suit, it was possible to present." As to the applicability of section 4 (c), it would be noticed that resort to the Civil Courts is barred only as regards certain specified classes of suits in which the validity of sales for arrears Land Revenue are impugned.
The classes so specified are those in which the plaintiff seeks to set aside a sale on account of irregularities etc.
, other than fraud.
The provision obviously assumes that there is in existence a sale though irregular under which title has passed to the purchaser and that sale has to be set side, on grounds other than fraud, before the plaintiff can obtain relief.
Where however there is only a purported sale which does not pass title and the suit is for recovery of possession of property ignoring 341 such a sale, the provision and the bar that it creates have no application.
Nor is there any scope on the facts of the present case to attract the application of section 11.
The section is based on the principle that a party must exhaust the remedies provided by the Act before he can seek the assistance of the Civil Court in respect of a claim against the Government.
It therefore posits three matters before its protection could be invoked.
(1) There must be an act or omission of a revenue officer which gives rise to a claim against the Government; (2) the Act must provide for appeals against the said act or omission; and (3) lastly the party should have failed to avail himself of the remedy by way of appeal to obtain redress for his grievance.
The only "act" of which, on the facts, the appellant could be said to complain would be the direction by the Collector anthorising the Mahalkari to offer the nominal bid of Re. 1/ and purchase the property.
The question that next arises is whether the Statute had provided an appeal against this "act" It was admitted that there was no such specific provision.
Learned Counsel for the respondent however drew our attention to section 203 of the Bombay Land Revenue Code.
In the absence of any express provision of this Act or of any law for the time being in force to the contrary, an appeal shall lie from any decision or order passed by a revenue officer under this Act or any other law for the time being in force, to that officer 's immediate superior, whether such decision or order may itself have been passed on appeal from a subordinate officer 's decision or order or not." In the present case however, there was no order by any authority which could be the subject of any appeal under section 203.
The Collector authorised administratively the Mahalkari to offer the bid and that is certainly not " 'a decision" which is capable of 342 appeal within section 203.
No other order which could by any stretch of language be construed to be a decision was pointed out in respect of which an appeal could have been filed.
In fact, there was no decision and except the sale which is complained of as void and of no effect nothing took place.
If section 203 is not attracted it was not suggested that section 1 1 of the Revenue jurisdiction Act created any bar to the entertainment of the present suit.
It was then suggested that the plaintiff was disentitled to any relief by reason of an estoppel raised by section 41 of the Transfer of Property Act.
The basis for this argument was that some time after the sale the second defendant had purchased the plot bearing Survey No. 80 for Rs. 2,600/ from the Government while the fifth defendant similarly purchased plots bearing Survey Nos. 35 and 40 for Rs. 1,750/ and that the inaction of the plaintiff without taking proceedings to set aside the sale constituted a representation to the world that the Government were properly the owners of the property which they had purchased for nominal bids and this was the reasoning by which section 41 of the Transfer of Property Act was sought to be invoked.
The argument has only to be stated to be rejected.
The respondent did not rely on any representation or any act or conduct on the part of the appellant but their belief that Government had acquired title by reason of their purchase at the revenue sale.
If the Government had no title to convey, it is manifest the respondents cannot acquire any.
They would clearly be trespassers.
In the circumstances we consider there is no scope for invoking the rule as to estoppel contained in section 41 of the Transfer of Property Act.
Lastly, it was submitted that the respondents had made improvements to the property since they had purchased them for which they were entitled to compensation under section 51 of the Transfer of Property Act.
But no basis was laid for this plea which is 343 one of pure fact.
No evidence was led and no issues struck before the trial judge and we do not therefore think it proper to entertain this point at this stage.
The Government of Bombay did not file any Written Statement before the trial judge, nor did they seek to support the sale before the High Court.
As we have stated, they were impleaded as the first respondent in the appeal before this Court.
In their statement of the case which they filed they did not oppose the appeal but left it to the Court to decide the matter and they took no part in the hearing except that learned Counsel appearing on their behalf made a statement that no order as to costs might be passed against them.
In the result the appeal is allowed and the suit decreed as regards the three items of land bearing Survey Nos. 35, 40 and 80.
The appeal will however stand dismissed as regards the,house in village Kurhe.
In view of the partial success of the appellant the appellant will be entitled to half of the costs of the appeal here to be paid by the respondents other than the State of Bombay (now Maharashtra).
Appeal partly allowed.
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A sum of about Rs. 9,000 was due from the appellant to the Government on account of excise dues.
The movable and immovable property of the appellant was several times put for sale by auction under Ch.
XI Bombay Land Revenue Code but the amount remained unrecovered and three items of lands remained unsold.
In view of a Government Order dated August, 30, 1933, which prescribed such a course, the Mahalkari sought permission of the Collector to make a nominal bid of Re. 1/for each item of land in the next auction.
The permission was granted and the Mahalkari informed the appellant that if no bidders came forward at the next auction the lands would be sold at the nominal price of Re. 1.
The auction was held and as no stranger came to bid the Mahalkari made the nominal bid of Re. 1 for each item of land.
The bid was accepted and the sales were later confirmed.
Subsequently, the Collector sold these lands for adequate consideration and the purchasers were put in possession.
The appellant filed a suit challenging the validity of these sales.
The purchasers contended that the suit not having been brought within one year of the sales was time barred, that the suit was barred by sections 4(c) and 1 1 of the Bombay Revenue jurisdiction Act and, that the appellant was disentitled to relief on the ground of acquiescence and estoppel.
Held, that the Sales were invalid and the suit was liable to be decreed.
The purchase for a predetermined nominal price of Re 1, irrespective of the actual market value was not a sale by public auction as contemplated by section 167 of the Bombay Land Revenue Code.
An auction is.
a proceeding at which people are invited to compete for purchase of property by successive offers of advancing sums and a sale by auction is a means of ascertaining what the property is worth i.e. its fair 323 market price If at the sale there are no bids there cannot be a sale.
The Government Order had no statutory force at all, and could not authorise or render valid the transaction if otherwise it lacked a legal basis.
There was no provision in the Code which authorised such a course which amounted to forfeiture of the property of a defaulter.
It was anomalous that the Collector who moved the machinery for realisation of arrears by sale and who was constituted the authority to determine judicially allegation of irregularity in the conduct of the sale should, without authority of any statutory power, bid at the auction conducted by his deputy.
The mere fact that the appellant had been informed before hand of the nominal bid did not render the sales valid.
Nor was the appellant estopped from questioning the legality of the sales.
Tumdu Dhansing vs Government for the Province of Bombay, I.L.R. , approved.
The suit was not barred by article 11 of the Limitation Act.
The article was applicable only to cases where there was need for setting aside a sale and not to cases where no sale as contemplated by law had taken place.
The provisions section 4(c) Bombay Revenue jurisdiction Act, 1876 applied to cases where there was a sale and it was sought to be set aside on the ground of irregularities other than fraud.
They did not apply where there was only a purported sale which did not pass title, Section 1 1 barred a suit when there was an appeal provided against the act or omission of a revenue officer and the party failed to avail of the remedy.
in the present case there was no order which was appealable under section 203 and section 1 I could not be applied.
There was no scope for invoking the aid of section 41 Transfer of Property Act.
The purchasers had not relied upon any representation, act or conduct of the appellants but on the belief that Government had acquired a good title to the lands.
If the Government had no title the purchasers could not acquire any.
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1523.txt
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minal Appeal No. 131 of 1959.
Appeal by special leave from the judgment and order dated November 21, 1958, of the Patna High Court in M. J. C. No. 805 of 1958.
G. section Pathak, section C. Banerjee and P. K. Chatterjee, for the appellant.
R. Ganapathy Iyer and B. H. Dhebar, for the respondents.
February 10.
The Judgment of the Court was delivered by DAs GUPTA, J.
On February 20, 1958, there occurred in the Central Bhowra Colliery, in Dhanbad in Bihar an accident as a result of which 23 persons lost their lives.
After an inquiry under.
a. 24 of the , into the causes of and the circumstances attending the accident, and the publication of the report of the inquiry, a complains was prepared by the Regional Inspector of Mines, (Dhanbad, under the direction of the Chief Inspector of Mines, Dhanbad, before the Sub Divisional Officer, Dhanbad, against the appellant for an offence under section 74 of the , for contravention of regulations 107 and 127 of the Coal Mines Regulations, 1957.
The Central 35 Bhowra Colliery belongs, and belonged at the relevant date to a private company, viz., M/s. Central Bhowra Colliery Co., Private Limited.
The appellant is and was a shareholder and a director of this company.
After the Sub Divisional Officer took cognizance of the complaint and issued processes against him, the appellant made an application to the Patna High Court under article 226 of the Constitution, for the issue of an appropriate writ for quashing the criminal proceedings.
This application was summarily dismissed.
It if; against that order of dismissal that this appeal has been filed by special leave obtained from this Court.
The two main grounds on which the prayer for quashing the proceedings was based were: (1) that section 76 of the , in pursuance of which the appellant, who was not himself the owner of the colliery company, but only one of the directors and shareholders has been prosecuted, is void as it violates article 14 of the Constitution; (2) the Coal Mines Regulations, 1957, are invalid having been framed in contravention of a. 59(3) of the .
These two contentions were also urged before us in appeal.
The first contention is based on an assumption that the word "any one" in section 76 means only "one of the directors, and only one of the shareholders".
This question as regards the interpretation of the word "any one" in section 76 was raised in Criminal Appeals Nos. 98 to 106 of 1959 (Chief Inspector of Mines etc.) (1) and it has been decided there that the word "any one" should be interpreted there as "every one".
Thus under section 76 every one of the shareholders of a private company owning the mine, and every one of the directors of a public company owning the mine is liable to prosecution.
No question of violation of article 14 therefore arises.
As regards the other contention that the regulations are invalid the appellant 's argument is that the provisions of section 12 and section 59 of the , are mandatory.
Section 12 provides: "(1) The Central Government may constitute for any part of the territories to which this.
Act extends, (1) ; 36 or for any group or class of mines, a Mining Board consisting of (a) a person in the service of the Government, not being the Chief Inspector or an Inspector, appointed by the Central Government to act as Chairman; (b) the Chief Inspector or an Inspector appointed by the Central Government; (c) a person, not being the Chief Inspector or an Inspector, appointed by the Central Government; (d) two persons nominated by owners of mines or their representatives in such manner as may be prescribed; (e) two persons to represent the interest of miners, who shall be nominated in accordance with provisions laid down in the section.
" Section 59 empowers the Central Government to 'make regulations consistent with the Act for all or any of the purposes mentioned therein, while section 58 empowers the Central Government to make rules consistent with the Act for all or any of the purposes mentioned therein.
Section 59 after providing in its first sub section that the power to make regulations and rules conferred by sections 57 and 58 is subject to the condition of the regulations and rules being made after previous publication provides in its third sub.
section further conditions as regards the making of regulations.
This sub section runs thus: "Before the draft of any regulation if; published under this section it shall be referred to every Mining Board which is, in the opinion of the Central Government concerned with the subject dealt with by the regulation, and the regulation shall not be so published until each such Board has had a reasonable opportunity, of reporting as to the expediency of making the same and as to the suitability of its provisions.
" A similar provision was made in the fourth sub section as regards the making of rules.
By an amendment made in 1959 these two subsections have been combined into one.
It was not disputed before us that when the Regulations were framed, no Board as required under section 12 37 had been constituted, and so, necessarily there had been no reference to any Board as required under section 59.
The question raised is whether the omission to make such a reference make the rules invalid.
As has been recognised again and again by the courts, no general rule can be laid down for deciding whether any particular provision in a statute is mandatory, meaning thereby that non observance thereof involves the consequence of invalidity or only directory, i.e., a direction the non observance of which does not entail the consequence of invalidity, whatever other consequences may occur.
But in each case the court has to decide the legislative intent.
Did the legislature intend in making the statutory provisions that nonobservance of this would entail invalidity or did it not? To decide this we have to consider not only the actual words used but the scheme of the statute, the intended benefit to public of what is enjoined by the visions and the material danger to the public by pro the contravention of the same.
In the present case we have to determine therefore on a consideration of all these matters whether the legislature intended that the provisions as regards the reference to the Mines Board could be contravened only on pain of invalidity of the regulation.
Looking at the language of the section, we find, the legislature, after saying in the first part of sub section
(3), that before any regulation is published, it "shall be" referred to every Mining Board which is, in the opinion of the Central Government concerned with the subject, and goes on to say in the latter part, that the regulation "shall not" be published until each Board has had a reasonable opportunity of reporting as to the expediency and suitability of the provisions.
While it is true that language is only one of the many considerations which have to be taken into account in deciding whether a requirement is directory or mandatory, it is legitimate to note that the language used in this case is emphatic and appears to be designed to express an anxiety of the legislature that the publication of the regulation, which is condition precedent to the making of the regulations, should 38 itself be subject to two conditions precedent first, a reference to the Mining Boards concerned, and secondly, that sufficient opportunity to the Board to make a report as regards the expediency and suitability of the proposed regulations.
The cause of this anxiety becomes patent, when one examines the matters on which regulations can be made, Even a cursory examination of the purposes set out in the 27 clauses of section 57 shows that most Of them impinge heavily on the actual working of the mines.
To mention only a few of these, viz., cl.
(c) under which regulations may be made for prescribing the duties of owners, agents and managers of mines and of persons acting under them; (g) for determining the circumstances 'in which and the conditions subject to which it shall be lawful for more mines than one to be under a single manager; (j) for prohibiting, restricting or regulating the employment of adolescents and women in mines; (k) for providing for the safety of the persons employed in a mine; (m) for providing for the safety of the roads and working places in mines; (n) for the inspection of workings and sealed off fire areas in a mine; (o) far providing for the ventilation of mines; (r) for providing for proper lighting of mines and regulating the use of safety amps therein; are sufficient to show that the very purpose of the Act may well be defeated unless suitable and practical regulations are framed to help the achievement of this purpose, Arbitrary and haphazard regulations without full consideration of their practicability and ultimate effect on the efficient working of the mines, would, apart from, often defeating the purpose of the Act, affect injuriously the general economy of the country.
That we are entitled to presume, is the reason behind the legislature 's anxiety that Mining Boards should have an opportunity of examining regulations, and expressing their opinion before they are finalised.
As has been already mentioned section 12 which deals with the formation of boards provides for representation thereupon of two persons nominated by owners of mines or their representatives and two persons to re.
present the interests of persons employed in mines, in 39 addition to three persons representing the Government.
The constitution is calculated to ensure that all aspects including on the one hand the need for securing the safety and welfare of labour and on the other hand the practicability of the provisions proposed from the point of, view of the likely expense and other considerations can be thoroughly examined.
It is certainly to the public benefit that Boards thus constituted should have an opportunity of examining regulations proposed in the first place, by an administrative department of the government and of express ing their opinion.
It is true that the law does not require concurrence of the Board with the regulations proposed.
It is reasonable to expect however that when a Board has expressed an opinion in favour of the rejection or modification of a proposed regulation, the department would not treat it lightly.
But, even where the opinion expressed by the Board is not accepted the very fact that there has been such an examination by the Board, and a consequent re.
examination by the department is likely to minimise the risks to public welfare.
There can be little doubt therefore that generally speaking strict obedience of the command in sub section
3 of section 59 regarding consultation with the Mining Board is likely to promote public welfare.
Let us now examine the matter from another aspect and ask ourselves the question: what risk there is to the public welfare of an insistence in all cases that the omission of consultation as enjoined in section 59 would invalidate a regulation.
Emergencies may arise, when in order that the public may not suffer.
regulations must be framed with the least possible de lay; and much valuable time may be lost if a reference must be made to all the Mining Boards concerned and opportunity given to them to express their opinion before regulations are made.
In such cases, public interest may well be endangered if regulations, in order to be valid have to conform,to the requirements of previous consultation with, the Mining Boards.
We find however that such cases of emergency have been specially dealt with in a. 60 of the Act, the operative portion of which runs thus: 40 "Notwithstanding anything contained in subsec tions (1), (2) and (3) of section 59, regulations under clause (1) and clauses (k) to (a) excluding clause (1) of section 57 may be made without previous publication and without previous reference to Mining Boards, if the Central Government is satisfied that for the prevention of apprehended danger or the speedy remedy of conditions likely to cause danger it is necessary in making such regulations to dispense with the delay that would result from such publication and reference".
Thus, the apprehended danger to public interest from requiring as a condition of the validity of regulations previous consultation with the Mining Board is averted.
An examination of all the relevant circumstances, viz., the language used, the scheme of the legislation, the benefit to the public on insisting on strict compliance as well as the risks to public interest on insistence on such compliance leads us to the conclusion that the legislative intent was to insist on these provisions for consultation with the Mining Board as a prerequisite for the validity of the regulations.
This conclusion is strengthened by the fact that in section 60 when providing for the framing of regulations in certain cases without following the procedure enjoined in section 59, the legislature took care to add by a proviso that any regulation so made "shall not remain in force for more than two years from the making thereof".
By an amendment made in 1959 the period has been changed to one year.
It is not unreasonable to read this proviso as ex.
pressing by implication the legislature 's intention that when the special circumstances mentioned in section 60 do not exist and there is no scope for the application of that section no regulation made in contravention of s.59 will be valid for a single day.
Strew was laid on behalf of the respondent on the fact that section 59 does not require that regulations must have the concurrence of the Mining Boards; and it was pointed out that this Court in State of U. P. vs Manbodhan Lal Srivastava (2) in holding that article 320(3) (2) ; 41 of the Constitution was not mandatory, relied, inter alia, on the fact that "the requirement of the consultation with the Commission does not extend to making the advice of the Commission, on these matters, binding on the government".
While it is true that this Court did attach weight to this circumstance, we have to remember that this was the only one of the several circumstances, on the total consideration of which, the court decided that the provision for consultation in article 320(3) was not mandatory.
One of these circumstances was that article 320(3) contained a proviso, which gave a clear indication "of the intention of the Constitution makers that they did envisage certain cases or class of cases in Which the Commission need not be consulted".
"If the provisions of article 320(3) were of a mandatory character", observed Sinha, J., (as he then was), while delivering the judgment of the Court, "the Constitution would not have left it to the discretion of the head of the executive government to undo these provisions by making regulations to the contrary".
It has to be noticed, as pointed out above, that section 60 of the , also lays down clear provisions where the consultation as required in section 59 need not take place.
Here, however, the legislature has not left it to the discretion of the executive government "to undo these provisions by making regulations to the contrary".
The legislature itself has given clear guidance as to the cases where such consultation need not be made by the Government.
What is more, the legislature has laid down that regulations made without such consultation would have a limited life.
In Srivastava 's Case (1) this Court quoted with approval the following observations of the Privy Council in Montreal Sirgeet Railway Company vs Nor.
mandin ("): "When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, (1) ; (2) ; , 175.
42 or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done." and applied the principle thus laid down to the case before it.
There is however no scope in the present case of applying this principle in support of the directory nature of section 59(3).
As we have pointed out above, the inconvenience that might be caused by holding regulations made in contravention of section 59(3) invalid is removed by the provisions of section 60; and on the other hand to hold that regulations may be validly made without following the procedure laid down in section 59even in cases not falling within section 60 is likely to be harmful to public interest, and to cause general incon venience.
It is really a converse case of what the Privy Council had to consider in Montreal Street Railway Company 's Case (1) and this Court considered in Srivastava 's Case (2).
For all the reasons given above, we are of opinion that the provisions in section 59(3) of the , are mandatory.
There remains for consideration the question whether these provisions were complied with before the Coal Mines Regulations, 1957, were I framed.
As has been pointed out above, it was not disputed before us that at the time when the regulations were framed no new Mining Board had been constituted under the , and consequently no consultation with any Mining Board constituted under the 1952 Act took place.
It has been stated before us however on behalf of the respondents that the Mining Boards constituted under section 10 of the Mines Act, 1923, were continuing to operate at the time these regulations were framed and that there was full consultation with these Mining Boards before these regulations were framed.
(1) ; , 175.
(2) ; 43 If in fact there was such consultation the further question would arise whether consultation with the Mining Boards constituted under the provisions of the Mining Act, 1923, would be sufficient compliance with the provisions of section 59(3) of the present Act.
Before these questions are decided it is not possible to come to a definite conclusion whether the Coal Mines Regulations, 1957, are valid or not.
As there is not sufficient material before us to decide the question, whether in fact the Mining Boards constituted under section 10 of the 1923 Act were functioning at the date when these regulations were made and whether these Boards were consulted before the regulations were framed, we have not thought fit to consider here the further question whether if such consultation had taken place that would be sufficient compliance with section 59(3) of the 1952 Act.
In the circumstances, the proper course, in our opinion, is to direct that the criminal proceedings pending in the court of the sub divisional magistrate be disposed of by him or any other magistrate to whom the case may be transferred in accordance with law, after deciding the question whether there was consultation with Mining Boards constituted under section 10 of the Mines Act, 1923, before the regulations were framed and, if so, whether such consultation amounted to sufficient compliance with section 59.
If his conclusion is that there has not been compliance with the provisions of section 59 the regulations must be held to be invalid and the accused would be entitled to an acquittal; if, on the other hand, he holds that there has been sufficient compliance with the provisions of section 59 he should dispose of the case after coming to a conclusion on the evidence as regards the allegations made against the appellant in the petition of complaint.
The appeal is disposed of accordingly.
Appeal allowed.
Case remanded.
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Section 76 of the , provides that where the owner of a mine is a private company any one of the shareholders thereof may be prosecuted and punished under this Act for any offence for which the owner of the mine is punishable.
The appellant who was a shareholder and a director of a private company owning a colliery, was prosecuted for an offence under section 74 Of the Act for contravention of Regulations 107 and 127 Of the Coal Mines Regulations, 1957.
He challenged the validity of the prosecution on the grounds (1) that section 76 of the Act in pur suance of which he who was not himself the owner of the colliery but only one of the directors and shareholders had been prosecuted, was void as it violated article 14 of 'the Constitution of India, and (2) that the Coal Mines Regulations, 1957, were invalid as they had been framed in contravention of section 59 (3) of the Act, inasmuch as there was no consultation with a Mining Board before they were published as required by that sub section.
It was not disputed that when the Regulations were framed, no Mining Board as required under section 12 Of the Act had been con stituted.
and so there had been no reference to any such Board, 34 but it was alleged that there was consultation with the Mining Board constituted under section 10 of the Mines Act, 1923.
Held: (1) that the words "any one" in section 76 of the , should be interpreted as "every one" and that under that section every one of the shareholders of a private company owning the mine was liable to prosecution.
Accordingly, section 76 did not contravene article 14 Of the Con stitution.
Chief Inspector of Mines vs Lala Karam Chand Thapar, , followed.
(2) that compliance with the provisions in section 59 (3) Of the Act was mandatory.
State of U. P. vs Manbodhan Lai Srivastava, [1958] section C. R. 533, distinguished.
Quaere, whether consultation with the Mining Boards con stituted under the provisions of the Mines Act, 1923, would be sufficient compliance with section 59 (3) Of the .
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1131.txt
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Appeal No. 279 of 1964.
Appeal by special leave from the judgment and order dated December 23, 1963 of the Patna High Court in M. J. C. No. 86 of 1963.
M.C. Setalvad, R. K. Garg, D. P. Singh, section C. Agarwar and M.K. Ramamurthy, for the appellant.
C.K. Daphtary, Attorney General, and section P. Varma, for the respondent Nos. 1, 2 and 4.
S.C. Agarwal, R. K. Garg, D. P. Singh and M. K. Rama murthy, for respondent No. 5.
Sarjoo Prasad, section L. Chhibber and B. P. Jha, for respondent No. 8.
D. Goburdhun, for respondent No. 16.
section P. Varma, for intervener No. 1.
Dipak Datta Choudhri and A. K. Nag, for intervener No. 2.
April 24, 1964.
The judgment of the Court was delivered by GAJENDRAGADKAR, C. J.
The writ petition from which this appeal by special leave arises had been filed by the appellant Bisheshwar Dayal Sinha by which he challenged the validity of the order issued by the Vice Chancellor of the Bihar University directing the reconstitution of the Govern ing Body of the Rajendra College, Chapra, and of the rele vant new statutes framed by him under which the said order is purported to have been issued.
His case was that the relevant 881 new statutes are ultra vires the authority of the Vice Chan cellor and the impugned order passed by him in pursuance of the said relevant statutes is, therefore, illegal, inoperative and void.
Along with the petition filed by the appellant, four other petitions had been filed by other persons seeking to obtain similar relief.
The Patna High Court has, in substance,, rejected the appellant 's case and has accordingly dismissed the appellant 's writ petition as well as the other petitions filed by other persons.
On behalf of the appellant, Mr. Setalvad has contended that the view taken by the Patna High Court about the validity of the relevant statutes is not sustainable and that the said statutes are ultra vires with the inevitable consequence that the impugned order directing the reconstitution of the Governing Body of the Rajendra College must also be held to be invalid.
The Rajendra College is an educational institution which has been admitted by the Bihar University as a College, as defined in section 2(d) of the Bihar State Universities (Patna, University of Bihar, Bhagalpur and Ranchi) Act (Bihar Act XIV of 1960) (hereinafter called 'the Act ') read with Article I of Chapter XII of the Statutes framed under the Act.
The said college is a public institution founded by public charities and is conducted under the management of a Governing Body.
The first Governing Body of the College was formed by the citizens of Chapra who had assembled for that purpose in a meeting on the 31st July 1938.
The Governing Body thus constituted consisted of 18 members; it continued to function until the 24th July, 1940, with additions in the personnel made from time to time by co option.
Later, in 1941, the Governing Body adopted a constitution framed by the Principal of the College at its request and that constitution governed the administration of the college.
In due course, some further amendments were made in 1950.
After the passing of the University of Bihar Act, 1951 (Bihar Act XXVII of 1951) and the framing of Chapter XIII of the Statutes under the said Act, the University suggested to the Governing Body to bring its constitution in line with the provisions of Chapter XIII of said Statutes.
Accordingly, modifications were made in the constitution, and the constitution thus modified and amended from time to time was in operation at the relevant time.
The appellant had been elected Secretary to the Governing Body on the 3rd of June, 1961, and under the relevant rules of the constitution, his term of office was to be three accademic sessions, and as such, it was to last until 31st May, 1964.
Meanwhile, by the impugned order passed by the Vice Chancellor on the 13th January, 1963, the appellant has been removed from his position as Secretary and another person has been appointed in his place.
That is the reason why the 882 appellant moved the Patna High Court for appropriate writ or order quashing the impugned order and the relevant statutes on which it purports to be based.
To his writ petition, the appellant impleaded 18 persons amongst them being respondent No. 1, the University of Bihar, respondent No. 2 Mr. Srivastava, Vice Chancellor of the University of Bihar, and respondent No. 3 the Chancellor 'of the University of Bihar.
Before dealing with the contentions raised by the appellant in the present appeal, it is necessary to refer briefly to the relevant statutory provisions governing the affairs of the University of Bihar and its constituent colleges.
The first Act to which reference must be made is the University of Bihar Act (Bihar Act XXVII of 1951).
This Act was passed in August, 1951, and the provisions enacted by it were intended to furnish a comprehensive code to establish and incorporate an affiliating cum teaching University in the State of Bihar at Patna.
In 1960, Bihar Act XIV of 1960, which we are describing as the Act in the course of this judgment, came to be passed.
This Act was intended to help the establishment and incorporation of affiliating cum teaching Universities at Patna, Muzaffarpur, Bhagalpur and Ranchi in the State of Bihar.
This Act was later amended by Acts 11 of 1962, XIII of 1962, and XVII of 1962.
The first of these Amending Acts came into force on the 1st of March, 1962; the second on 21st April, 1962 and the third on the 16th October, 1962.
At this stage, we may conveniently mention the relevant provisions of the Act.
Section 2(d) defines a "college" as meaning an institution admitted to or maintained by the Uni versity, in accordance with the provisions of the Act, in which instruction is given, subject to the provisions contained in cl.
(15) of section 4, to the students of the college up to and including a standard below the post graduate standard under conditions prescribed in the Statutes.
This definition shows that the Act applies to two categories of colleges, the first category consisting of collegiate institutions admitted to the University, and the other maintained by the University.
Section 4 prescribes the purposes and powers of the University.
Section 4(10) provides that one of the purposes and powers of the University is to institute, maintain and manage colleges and hostels and to recognise colleges and hostels not maintained by the University.
This provision brings out the fact that two kinds of collegiate institutions would be functioning under the University those that are instituted by the Uni versity, and those that are admitted.
In regard to the first category of colleges, the power and purposes of the University would be to institute, maintain and manage the colleges and hostels, and in regard to the other, the power and purpose would be to recognise them, subject, of course, to the 883 conditions imposed in that behalf.
For the purpose of dealing with the main controversy between the parties in the present appeal, it is necessary to bear in mind this distinction between two categories of collegiate institutions functioning under the Bihar University.
Section 7 prescribes the Officers of the University who, are: the Chancellor, the Vice Chancellor; the Treasurer; the Registrar; the Deans of Faculties; the Finance Officer and such other persons as may be declared by the Statutes to be the officers of the University.
Section 16 defines the authorities of the University which are six; they are: the Senate; the Syndicate; the Academic Council; the Faculties; the Examination Board; and such other authorities as may be declared by the Statutes to be the authorities of the University.
Section 20 deals with powers and duties of the Senate.
Under section 20(1), the Senate shall be the supreme governing body of the University and shall have the entire management of, and superintendence over, the affairs, concerns and property of the University; shall exercise all the powers of the University, not otherwise provided for, to give effect to the provisions of the Act.
Section 20(2) prescribes in particular some of the powers and duties of the Senate; amongst them is included the power of making the Statutes.
and amending or repealing the same.
Section 21 deals with the Syndicate and its composition; and section 22 prescribes the powers and duties of the Syndicate.
Section 30 deals with statutes.
Section 30(d) provides that subject to the provisions of the Act, the Statutes may provide for the admission of educational institutions as colleges and the withdrawal of privileges from colleges so admitted; and section 30(e) provides that the statutes may provide for the institution of colleges and hostels and their maintenance and management.
It would thus be seen that proceeding on the basis of the broad distinction between collegiate institutions instituted by the University and those admitted or recognised by it, section 30 makes two separate provisions in that behalf.
In regard to the institutions admitted or recognised, the Statutes can provide for the admission or recognition of such institutions and the withdrawal of such recognition, whereas in regard to the institutions instituted by the University, the Statutes may provide for the institution of such colleges and their maintenance and management.
Section 49 deals with the problem of relations of affiliated colleges with the University, and it provides that the said relations shall be governed by the Statutes to be made in that behalf, and it prescribes in particular some of the matters which may be covered by the said Statutes.
Section 60 provides for the continuance of Statutes, Ordinances, Regulations and Rules which were in force 884 under the Bihar Acts XXV and XXVII of 1961.
Section 60 (ii) empowers the Vice Chancellor to make adaptations or modifications in the said Statutes, Ordinances, Regulations and Rules with the approval of the Chancellor in so far as they are not inconsistent with the provisions of the Act, and when such adaptations or modifications are made, they would be deemed to have been made under the appropriate provisions of the Act.
In other words, while continuing the operation of the pre existing Statutes, power has been conferred on the Vice Chancellor to make adaptations or modifications in the said Statutes, subject to the conditions which we have just indicated.
This provision came into force on the 1st March, 1962 by virtue of the amending provision prescribed by Act 11 of 1962.
There is one more provision to which reference must be made before we part with this topic.
Section 35 of Act II of 1962 provides for dissolution of the Senate, Syndicate and Academic Council functioning prior to the commencement of the said Act and constitution of new Senate, Syndicate and Academic Council in their place.
It provides that not withstanding anything contained in the Bihar Act XIV of 1960, the respective bodies established under section 3 of the said Act in regard to the Universities covered by the Act shall stand dissolved on the commencement of this Act and thereafter, as soon as may be, they shall be reconstituted, and pending their reconstitution, the Vice Chancellor shall exercise their powers and perform their duties under the said Act for a period not exceeding nine months from such commencement.
The result of this provision is to authorise the Vice Chancellor to exercise the powers and functions of the respective bodies which stood dissolved, for nine months from the date of the operation of this Amending Act, or until the said bodies were duly reconstituted.
It is by virtue of the power conferred on him by this section that the Vice Chancellor has purported to frame new Statutes some of which are challenged in the present proceedings and has issued the impugned order in pursuance of the said new Statutes.
That, in brief, is the position with regard to the statutory provisions in the light of which the dispute between the parties has to be settled in the present appeal.
The two statutes which have been challenged before us may now be set out.
This body of new Statutes came to be pro mulgated on the 18th November, 1962.
After they were thus promulgated, the Registrar of the University of Bihar wrote to the Secretaries and Principals of all Admitted Colleges, except Constituent and Government Colleges, enquiring from them what action had to be taken by the Vice Chancellor or the Syndicate in regard to the constitution of the Governing Body of the respective Colleges and the appointment of 885 Office bearers.
The new Statutes consist of 24 clauses, but for the purpose of the present appeal,, we are concerned only with two of them.
Clause 2, sub clause (4) provides: "in the case of the constitution of the Governing Bodies of admitted colleges (except colleges owned and maintained by Government) framed prior to the making of these Statutes, the Vice Chancellor shall have the power to amend or revise the constitution wherever necessary in order to bring it, as far as possible, in conformity with the provisions of these Statutes" Clause 3(l) reads thus: "The Syndicate may on its motion or at the instance of the Vice Chancellor dissolve and order constitution of Governing Body in admitted colleges or cancel its grant in aid to the college concerned for any one or more of the following reasons: (a) that the college has failed to comply with the directions issued by the Syndicate under the laws of the University within the specified time; (b) that the college has failed to observe the provisions of the laws of the University; (c) improper utilisation of the various funds of the institution; (d) that the affairs of the college have been grossly mismanaged.
Provided, however, that before ordering dissolution of the Governing Body or before passing such order against the Governing Body the Syndicate shall give a reasonable opportunity to the Governing Body to show cause against such action.
" It is clear that cl.
2(4) of the new Statutes expressly confers on the Vice Chancellor the power to amend or revise the constitution of the affiliated colleges; and cl.
3(l) empowers the Syndicate to dissolve and order constitution of their Governing Bodies either on its own motion or at the instance of the Vice Chancellor.
Clause 3(l) also empowers the Syndicate to cancel its grant in aid to the college concerned for one or more of the four reasons specified by it.
The proviso to cl. 3(l) requires that before the dissolution of the Governing Body is ordered, or any similar order is passed under cl. 3(l), reasonable opportunity has to be given to the Governing Body to show cause why such action should not be taken.
In substance, the High Court has come to the conclusion that these two Statutes and the impugned order are valid.
According to the High Court, the impugned order cannot be justified under Statute 3(l) because an opportunity had not 886 been given to the Governing Body of the Rajendra College as required by the proviso.
It has, however, held that the impugned order is valid having regard to the powers confer red on the Vice Chancellor under Statute 2(4).
It also appears that the High Court took the view that the impugned Statutes can be justified by reason of the fact that power has been conferred on the Vice Chancellor to make adaptation or modifications in the pre existing Statutes by section 60(ii).
The question which arises for our decision is whether the impugned Statute 2(4) is valid, and if yes, whether the impugned order is justified.
We may also have to decide whether the impugned Statute 3(1) is invalid either wholly or in part.
The question as to whether the power to make adaptations or modifications justifies the impugned order presents no difficulty, because we have come to the conclusion that the impugned Statute 2(4) is itself invalid, and so, the impugned order must be struck down on that ground.
If the statute on the authority of which the impugned order has been passed is itself invalid, the power to make adaptations and modifications cannot help to sustain the validity of the impugned 'order.
The power to make adaptations and modifications conferred on the Vice Chancellor by section 60(ii) of the Act must be read in the light of the substantive provisions contained in section 30(d) in regard to affiliated college, and they can not obviously justify the impugned order if the impugned Statute 2(4) itself is invalid.
This position cannot be disputed, and so, we go back to the question as to whether the impugned statute 2(4) is valid.
The decision of this question presents also no difficulty, because, on the face of it, the impugned statute is inconsistent with the relevant provisions of the Act.
It will be recalled that the Act proceeds on a broad and well recognised distinction between two categories of collegiate institutions, one instituted by the University and the other admitted to the University or affiliated to it.
Section 4(10) of the Act is based on this distinction, and section 30(d) & (e) also proceed on the same distinction.
Where the University instituted collegiate institutions, naturally the task of instituting is the task of the University, and so, the management and the maintenance of the said institutions is also the University 's responsibility.
The position is substantially different where collegiate institutions are started by other autonomous bodies and they seek admission or affiliation to the University.
In regard to this class of collegiate institutions, their institution as well as their management and maintenance is not the direct concern of the University , that is the concern of the autonomous educational bodies which have sponsored them and which have undertaken the task of instituting, managing and maintaining them.
it is, of course, true that when admitting or 887 affiliating such institutions, the University can impose reason.able and legitimate conditions subject to the provisions of the Act, and it follows that on the failure of such college either to conform to those conditions or on their committing breach of any of those conditions, it would be competent to the University under its relevant powers to disaffiliate them .and deny them the status of admitted colleges; but this power is very different from the power to constitute the Governing Bodies of such autonomous educational bodies.
The University may insist upon the observance of conditions in respect of the composition of the Governing Bodies, but it cannot direct the composition of the Governing Bodies itself; the two powers are distinct and separate.
Whereas in the case of institutions started by the University, the University has to decide who would constitute the Governing Bodies, in the case of affiliated institutions, the University can only lay down conditions and regulations which must be satisfied before the Governing Bodies are constituted; who should constitute the Governing Bodies is a matter for the autonomous educational bodies, which sponsor the collegiate institutions, to decide; how they should be formed, on what principle, and on what basis, are matters which may well form the subjectmatter of conditions imposed by the University while admitting such colleges or affiliating them.
This position, in our opinion, is plain and has to be borne in mind in considering the validity of the impugned Statute 2(4).
Now, what does the said statute purport to do? It purports to authorise the Vice Chancellor to amend or revise the constitution wherever it is necessary.
It would be noticed that this power is inconsistent with section 30(d) of the Act.
it is a power which can be exercised under section 30(e), but that would have relation only to collegiate institutions started by the University itself.
It can have no relevance to affiliated colleges.
If Statute 2(4) had merely authorised the Vice Chancellor to lay down conditions as to how the Governing Bodies of the affiliated colleges should be constituted, it would have been another matter.
The University can effectively bring about a change in the composition of the Governing Bodies of affiliated colleges if it is thought necessary and desirable to do so under its relevant powers, but that must inevitably take the form of prescribing general conditions in that behalf and leaving it to the affiliated colleges to comply with the said conditions.
Non compliance with the said conditions may entail the liability to be disaffiliated; but that is very different from giving the power to the Vice Chancellor of the University to make the necessary changes in the Governing Bodies of the affiliated colleges itself.
It is plain, as we have just seen, that this power is inconsistent with section 30(d) of the Act and as such, is invalid.
888 How this power has been worked out is evident from the impugned order itself.
This order purports to direct the reconstitution of the Governing Body of the Rajendri College with immediate effect in order to bring it in conformity with the provisions of the new Statutes.
Then, it virtually purports to nominate some members of the Governing, Body.
It provides that two staff representatives would continue on the Governing Body as at present.
Then, it adds five persons to the said Governing Body.
Then, it purports to make a change in regard to the three seats reserved for the Founders, Donors, Benefactors or Sponsors, and nominates three persons in that behalf.
It also directs that the co opted member Mr. Bishwanath Prasad Mishra will also continue till the fresh co option is held; then it nominates Mr. Ganga Prasad Sinha, Advocate, Chapra, as the Secretary of the Governing Body of the College with immediate effect.
Thus, it is plain that the power conferred on the Vice Chancellor by statute 2(4) has been exercised by him by not only directing how the Governing Body should be constituted on principle, but by nominating different persons on the Governing Body.
The basis on which a Governing Body should be constituted is very different from nominating several persons on the said Governing Body.
It is the latter course which has been adopted by the Vice Chancellor and which is inconsistent with section 30(d) of the Act.
At this stage, it is necessary to add that the course adopted by the Vice Chancellor in the present case is also inconsistent with Statute 2(4) itself.
The said Statute merely authorises the Vice Chancellor to amend or revise the constitution of the Governing Bodies of admitted colleges whenever necessary, and as we have already held, even the conferment of this power is ultra vires the Statute.
But what the Vice Chancellor has done has gone beyond even Statute 2(4); he has not only amended or revised the constitution of the Governing Body, but has also nominated certain persons on it.
Thus, this action of the Vice Chancellor suffers from the double infirmity that it is inconsistent even with Statute 2(4) and is purported to have been issued under Statute 2(4) which itself is invalid.
Unfortunately, the High Court appears to have failed to take into account the basic difference between the two categories of collegiate institutions, and the powers conferred on the University severally in respect of them.
The view taken by the High Court about the validity of Statute 2(4) completely obliterates the difference between the two kinds of collegiate institutions and treats all collegiate institutions, whether instituted by the University, or affiliated to it, as falling completely under the management of the University itself.
We accordingly hold that Statute 2(4) is invalid, and the impugned order passed under it is, therefore, invalid and inoperative.
889 Then, as to statute 3(1), the Syndicate may have the power to cancel its grant in aid to the callege concerned, but in so far as 3(l)(a) seems to contemplate that if the affiliated college refuses to submit to the order passed by the Syndicate dissolving and ordering reconstitution of its Governing Body, the penalty of the cancellation of grant in aid may follow, it must be held that that part of Statute 3(l) is invalid.
It would be open to the University to direct that the composition of the Governing Body should conform to conditions which may be changed by the University under its relevant powers and if the said conditions are not duly complied with by the affiliated college or its Governing Body, suitable and permissible action may be taken; but in so far as Statute 3 (1) proceeds on the basis that the Syndicate can itself dissolve the Governing Body and order its reconstitution, it suffers from the same infirmity as Statute 2(4).
That is why we hold that Statute 3(l) in so far as it gives power to the Syndicate to dissolve and reconstitute the Governing Body and enables it to cancel its grant in aid to an affiliated college under 3(l)(a) for the reason that the direction issued by the Syndicate in that behalf has not been complied with, is invalid.
The learned Attorney General has relied on the fact that the Vice Chancellor was compelled to pass the impugned order, because the affairs of the Rajendra College were mismanaged and a very grave situation arose as a result of which the authorities were faced with a serious law and order problem.
In that connection, he invited our attention to the statements made in the impugned order in regard to the back ground of circumstances which compelled the issue of that order.
These statements were, however, disputed by the appellant in his writ petition.
The High Court has not con sidered the question as to whether the statements made in the impugned order are proved to be true and we propose to express no opinion 'on that aspect of the matter ourselves.
We are, however, prepared to assume that the Vice Chancellor felt compelled to issue the order and that be acted bonafide in the interests of the students studying in the Rajendra College.
It is quite possible that the affairs of an affiliated college may be mismanaged and a situation may arise where either the University or the Vice Chancellor may feel justified in taking drastic action to save the situation, because, after:all, in dealing with the problem of efficient management of affiliated colleges, the consideration of paramount importance must always be the interests of the students studying in such ,colleges; and so, theoretically, there can be no objection to the University being empowered to take suitable and reasonable action to meet emergencies arising from mismanagement of affiliated colleges which expose the students to the grave 890 risk of interruption in their smooth academic work.
But the question which we have to decide in the present appeal is not whether the University or the Vice Chancellor should not have such power; the question is whether such a power can be claimed by the Statute under the provisions of the Act, and that question, in our opinion, admits of only one answer under the Act as it now stands.
The Legislature may consider whether any suitable amendment should be made in that behalf.
however, is irrelevant to the point with which we are concerned.
There is another consideration which we may incidentally mention in this connection.
The autonomous bodies which institute colleges and help the progress of higher education in this country, are generally run by disinterested persons, and it is of some importance that the autonomy of ' such bodies should not be unduly impaired.
When colleges run by such autonomous bodies seek affiliation to a University, the University undoubtedly has a right to impose reasonable conditions for affiliation and normally, the supervision exercised by the University over the affairs and administration 'of its affiliated colleges effectively serves the purpose of ' requiring the said colleges to conform to the pattern of management and education in force in the Government colleges or colleges instituted by the University.
In resolving a possible dispute between affiliated colleges and the University, attempt should be made to respect the autonomy of the colleges and reconcile the same with the supervisory powers of ' the University which are intended to be exercised in order to make functioning of the affiliated colleges efficient and progressive.
Both the University and the affiliated colleges seek to serve the cause of higher education and there should really be no serious dispute as to the principles on which their mutual relations should be regulated.
Unfortunately, in, the present case, the Vice Chancellor appears to have acted with some haste and he has exercised powers Linder Statutes, which were themselves hastily framed and which are plainly inconsistent with the provisions of the parent Act.
There is one more point to which we must refer before we part with this appeal.
The validity of the Statutes was.
challenged by the appellant on the additional ground that when they were made by the Vice Chancellor, the power con ferred on him by section 35 of Act 11 of 1962 had come to an end.
The said section empowered the Vice Chancellor to exercise, the powers 'of the appropriate Bodies of the University for a period not exceeding nine months, or until the respective Bodies were reconstituted.
The appellant 's case before the High Court was that the Senate had been reconstituted in the first week of November, 1962 and in fact.
notices had been issued to call for a meeting of the said Senate on the 891 30th November.
That being so, with the reconstitution of the Senate the statutory power of the Vice Chancellor under section 35 came to an end, and so, the Statutes which were promulgated on the 18th November, 1962 were invalid.
The High Court has rejected this contention mainly on the ground that the Senate was not duly constituted even on the 30th November, 1962 "inasmuch as the application of Mr. Baleshwar Prasad Choudhary filed, in the High Court was still pending and the question had still to be decided as to whether he was entitled to be a member of the Senate as being a donor of the Dalsingsarai College".
The High Court thought that since an order of stay had been passed by it, there could be no meeting of the Senate even on the 30th November, 1962, and so, after address of the Chancellor, the meeting bad to be adjourned.
It appears that the stay order passed by the High Court was in relation to the direction issued by the Chancellor prohibiting Baleshwar Prasad Choudhary from acting as a member of the Senate and that strictly may not have a material bearing on the question as to whether the Senate had been properly constituted before the 18th Novem ber, 1962 or not.
The appellant 's case is that since a meeting of the new Senate bad been called for the 30th November, by a notice issued in that behalf on the 8th November, it postulates that the Senate had been duly constituted before the 8th of November and for the proper reconstitution of the Senate, it was not necessary that it should actually hold its first meeting.
On the 'other hand, the learned Attorney General contends that the material adduced on the record of these proceedings is wholly insufficient to justify the finding that the Senate had been duly constituted before the 18th November, 1962.
We are satisfied that the contention raised by the Attorney General is sound .
On the available material, we see no evidence on which it could be held that a Senate had been reconstituted on any particular date, and so, we do not propose to record any conclusion on this part of the appellant 's case.
All that we would like to add is that the finding of the High Court on this point should not be taken to be binding, and if in future this question arises, it may have to be decided on the merits afresh.
The result is, the appeal is allowed, the order passed by the High Court is set aside, and the writ petition filed by the appellant is allowed.
An order will accordingly be issued restraining the respondents from giving effect to the impugned order (Annexure A), because the said order, and Statute 2(4) and a part of Statute 3(l) on which it is based are invalid and inoperative.
The appellant would be entitled to his costs from respondent No. 1 throughout.
Appeal allowed.
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The Vice Chancellor of the Bihar University by an order dated January 13, 1963 directed the reconstitution of the Governing Body of the Rajendra College, Chapra, which was a public institution founded by public charities and was affi liated to the University under section 2(d) of the Bihar State Universities (Patna, University of Bihar, Bhagalpur and Ranchi) Act, 1960, removed the appellant, who was the Secretary of the College and nominated certain persons as members of the Governing Body.
The Act of 1960 was amended by Act II of 1962 and section 35 of the Amending Act provided for the dissolution of the Senate Syndicate and Academic Council functioning prior to it and for the constitution of new bodies in their place and authorised the Vice Chancellor pending such reconstitution to exercise their powers for a period not exceeding nine months.
In exercise of the power conferred by this section the Vice Chancellor framed new statutes under which he purported to pass the impugned orders.
Clause 2(4) of the new statutes conferred on the Vice Chancellor the power to amend or revise the constitution of the affiliated colleges and cl.
3(l) empowered the syndicate either on its own motion or at the instance of the Vice Chancellor to dissolve and order constitution of Governing Bodies.
It further empowered the cancellation of grants in aid to the colleges concerned.
The proviso to cl. 3(l) required that reasonable opportunity must be given to the Governing Body before any action was taken under the clause.
The appellant moved the Patna High Court for a writ quashing the impugned order and the statutes on which it was made.
His case was that the relevant statutes were ultra vires and as such the order was unsustainable.
The High Court held that the impugned order could not be justified under cl.
3(l) as the proviso had not been complied with but that the order was valid under cl.
It further held that the impugned statutes could be justified by section 60(a)(ii) which was introduced by Act II of 1962, empowering the Vice Chancellor to make adaptations or modification in the pre existing statutes.
Held:The Bihar State University Act of 1960 made a clear ,distinction between two categories of collegiate institutions, (1) those owned and maintained by the university and (2) others admitted or affiliated to the University, as was apparent from sections 4(10) and 30(d) and (e) of the Act.
While the University had undoubtedly the power to disaffiliate an institution belonging to the second category on its failure to conform to reason.able and legitimate conditions under the Act subject to which :the affiliation was granted, it had no power to dissolve and 880 constitute the Governing Body of such an institution itself.
Clause 2(4) of the Statutes was inconsistent with section 30(d) of the Act and must be held to be invalid.
The impugned order passed under it therefore must be invalid and inoperative.
Clause 3(l) of the statute in so far as it proceeded on the basis that the syndicate could itself dissolve the Governing.
Body and order its reconstitution suffered from the same infirmity as cl.
That clause in so far at it gave the syndicatethe power to dissolve and reconstitute the Governing Body and cancel grants in aid to an affiliated college for non compliance with its direction issued in that behalf must, consequently, be held to be invalid.
The power conferred by section 60(ii) of the Act must be read in the light of the provisions of section 30(d) in regard to affiliated colleges and since statute 2(4) was itself invalid, the section could not justify the impugned order.
In resolving disputes between affiliated colleges and the university, attempt should be made to respect the autonomy of the colleges and reconcile the same with the supervisory powers of the University intended to be exercised in the interest of efficiency and progress.
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1820.txt
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Appeal No. 247 of 1953.
Appeal by special leave from the judgment and decree dated August 22, 1952 of the Bombay High Court in Appeal No. 66 of 1952 arising out of the decree dated March 7, 1952 of Bombay High Court in its Ordinary Original Civil Jurisdiction in Suit No. 1177 of 1951.
M. C. Setalvad, Attorney General for India, Purshottam Tricumdas, T. Godiwala, J. B. Dadachanji, Rameshwar Nath and section N. Andley, for the appellant.
C. K. Daphtary, Solicitor General of India and Sardar Bahadur, for the respondent.
October 19.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave against the judgment and decree of the High Court of Judicature at Bombay dated August 22,1952, reversing those of a single Judge of that Court on the Original Side, dated March 7,1952, by which he had granted a decree for dissolution of marriage between the appellant and the respondent.
840 The facts and circumstances of this case may be stated as follows: The appellant, who was the plaintiff, and the respondent were married at Patan on April 20, 1942, according to Hindu rites of the Jain Community.
The families of both the parties belong to Patan, which is a town in Gujarat, about a night 's rail journey from Bombay.
They lived in Bombay in a two room flat which was in occupation of the appellant 's family consisting of his parents and his two sisters, who occupied the larger room called the hall, and the plaintiff and the defendant who occupied the smaller room called the kitchen.
The appellant 's mother who is a patient of asthma lived mostly at Patan.
There is an issue of the marriage, a son named Kirit, born on September 10, 1945.
The defendant 's parents lived mostly at Jaigaon in the East Khandesh district in Bombay.
The parties appear to have lived happily in Bombay until a third party named Mahendra, a friend of the family came upon the scene and began to live with the family in their Bombay flat some time in 1946, after his discharge from the army.
On January 8, 1947, the appellant left for England on business.
It was the plaintiff 's case that during his absence from Bombay the defendant became intimate with the said Mahendra and when she went to Patan after the plaintiff 's departure for England she carried on "amorous correspondence" with Mahendra who continued to stay with the plaintiff 's family in Bombay.
One of the letters written by the defendant to Mahendra while staying at the plaintiff 's flat in Bombay, is exhibit E as officially translated in English, the original being in Gujerati except a few words written in faulty English.
This letter is dated April,1947, written from the plaintiff 's house at Patan, where the defendant bad been staying with her mother in law.
This letter had been annexed to the plaint with the official translation.
It was denied by the defendant in her written statement.
But at the trial her counsel admitted it to have been written by her to Mahendra.
As this letter started all the trouble between the parties to this litigation, it will have to be set out in extenso hereinafter.
Continuing 841 the plaintiff 's narrative of the events as alleged in the plaint and in his evidence, the plaintiff returned to Bombay from abroadon May 2O, 1947.
To receive him back from his foreign journey the whole family ' including the defendant was there in Bombay.
According to the plaintiff, he found that on the first night after his return his bed had been made in the hall occupied by his father and that night he slept away from his wife.
As this incident is said to have some significance in the narrative of events leading up to the separation between the husband and the wife and about the reason for which the parties differ, it will have to be examined in detail later.
Next morning, that is to say, on May 21, 1947, the plaintiff 's father handed over the letter aforesaid to the plaintiff, who recognised it as being in the familiar handwriting of his wife.
He decided to tackle his wife with reference to the letter.
He handed it to a photographer to have photo copies made of the same.
That very day in the evening he asked his wife as to why she had addressed the letter to Mahendra.
She at first denied having written any letter and asked to see the letter upon which the plaintiff informed her that it was with the photographer with a view to photo copies being made.
After receiving the letter and the photo copies from the photographer on May 23, the plaintiff showed the defendant the photo copy of the letter in controversy between them at that stage and then the defendant is alleged to have admitted having written the letter to Mahendra and to have further told the plaintiff that Mahendra was a better man than him and that Mahendra loved her and she loved him.
The next important event in the narrative is what happened on May 24, 1947.
On the morning of that day, while the plaintiff was getting ready to go to his business office his wife is alleged to have told him that she had packed her luggage and was ready to go to Jalgaon on the ostensible ground that there was a marriage in her father 's family.
The plaintiff told her that if she had made up her mind to go, he would send the car to take her to the station and offered to pay her Rs. 100 for her expenses.
But she 884 refused the offer.
She left Bombay apparently in the plaintiff 's absence for Jalgaon by the afternoon train.
when the plaintiff came back home from his office, he "discovered that she had taken away everything with her and had left nothing behind".
It may be added here that the plaintiff 's mother had left for Patan with his son some days previously.
Plaintiff 's case further is that the defendant never came back to Bombay to live with him, nor did she write any letters from Jalgaon, where she stayed most of the time.
It appears further that the plaintiff took a very hasty, 'if not also a foolish, step of having a letter addressed to the defendant by his solicitor on July 15, 1947, charging her with intimacy between herself and Mahendra and asking her to send back the little boy.
,The parties violently differ on the intent and effect of this letter which will have to be set out in extenso at the appropriate place.
No answer to this letter was received by the plaintiff.
In November, 1947, the plaintiff 's mother came from Patan to Bombay and informed the plaintiff that the defendant might be expected in Bombay a few days later.
Thereupon the plaintiff sent a telegram to his father in law at Patan.
The telegram is worded as follows: "Must not send Prabha.
Letter posted.
Wishing happy new year".
The telegram stated that a letter bad been posted.
The defendant denied that any such letter bad been received by her or by her father.
Hence the original, if any, is not on the record.
But the plaintiff produced what he alleged to be a carbon copy of that letter which purports to have been written on November 13, 1947, the date on which the telegram was despatched.
An English translation of that letter is exhibit C and is to the following effect: Bombay 13 11 47 To Rajmanya Rajeshri Seth Popatlal & others.
There is no letter from you recently.
You must have received the telegram sent by me today.
Further, this is to inform you that I have received information from my Mami (mother) that 843 Prabha is going to come to Bombay in 3 or 4 days.
I am surprised to hear this news; Ever since she has gone to Jalgaon, there has been not a single letter from her to this day.
Not only that, but, although you know everything, neither you nor any one on your behalf has come to see me in this connection.
What has made Prabha thus inclined to come all of a sudden! After her behaviour while going to Jalgaon for: the marriage, (and after), her letter to Mahendra and her words. 'He is better than you Has feeling for ' me and I love him ' and all this, I was afraid that she would not set up a house with me.
Hence when my mother gave me the news of her return, I was surprised.
I have not the slightest objection to the return of Prabha, but if she gives such shameless replies to me and shows such improper behaviour, I shall not be able to tolerate the same.
If she now really realises her mistake and if she is really repenting and wants sincerely to come, please make her write a reply to this letter.
On getting a letter from her, I shall personally come to Patan to fetch her.
Kirit is young.
For his sake also, it is necessary to persuade Prabha.
Further, I have to state that I have so far kept peace.
I have made efforts to call back Prabha.
Please understand this to her my final effort.
If even now Prabha does not give up her obstinacy, I am not responsible and (then) do not blame me.
Well, that is all for the present.
Kirit must be bale and hearty.
My new year 's greetings to you all.
Please do assign to me such work as I can manage.
Written by Bipinchandra" The plaintiff stated that be received no answer either to the telegram or to the letter.
Two days later, on, November 15, the plaintiff 's father addressed a letter to the defendant 's father, which is exhibit D.
This letter makes reference.
to the defendant 's mother having, talked to the plaintiffs mother about sending the defendant I to Bombay and to the fact that the plaintiff bad sent a telegram on November 13, and ends with the expression of opinion by the plaintiff 's father 844 that it was "absolutely necessary" that the plaintiff 's consent should be obtained before sending the defendant to Bombay.
This letter also remained unanswered.
According to the plaintiff, nothing happened until May, 1948, when he went to Patan and there met the defendant and told her "that if she repented for her relations with Mahendra in the interests of the child as well as our own interests she could come back and live with me".
To that the defendant is said to have replied that in November, 1947, as a result of pressure from her father and the community, she had been thinking of coming to live with the plaintiff) but that she had then decided not to do so.
The defendant has given quite a different version of this interview.
The second interview between the plaintiff and the defendant again took place at Patan some time later in 1948 when the plaintiff went there to see her on coming to know that she had been suffering from typhoid,.
At that time also she evinced no desire to come back to the plaintiff.
The third and the last interview between the plaintiff and the defendant took place at Jalgaon in April May, 1949.
At that interview also the defendant turned down the plaintiff 's request that at least in the interests of the child she should come back to him.
According to the plaintiff, since May 24, 1947, when the defendant left his home in Bombay of her own accord, she bad not come back to her marital home.
The suit was commenced by the plaintiff by filing the plaint dated July 4, 1951, substantially on the ground that the defendant bad been in desertion ever since May 24, 1947, without reasonable cause and without his consent and against his will for a period of over four years.
He therefore prayed for a decree for a dissolution of his marriage with the defendant and for the custody of the minor child.
The suit was contested by the defendant by a written statement filed on February 4, 1952, substantially on the ground that it was the plaintiff who by his treatment of her after his return from England had made her life unbearable and compelled her to leave her marital home against her wishes on or about May 845 24, 1.947.
She denied any intimacy between herself and Mahendra or that she was confronted by the plaintiff with a photostat copy of the letter.
, exhibit E, or that she had confessed any such intimacy to the plaintiff.
She admitted having received the Attorney 's letter, exhibit A, and also that she did not reply to that letter.
She adduced her father 's advice as the reason for not sending any answer to that letter.
She added that her paternal uncle Bhogilal (since deceased) and his son Babubhai saw the plaintiff in Bombay at the instance of the defendant and her father and that the plaintiff turned down their request for taking her back.
She also made reference to the negotiations between the defendant 's mother and the plaintiff 's mother to take the defendant back to Bombay and that the defendant could not go to Bombay as a result of the telegram of November 13, 1947, and the plaintiff 's father 's letter of November 15, 1947, aforesaid.
She also stated that the defendant and her son, Kirit, both lived with,the plaintiff 's family at Patan for over four months and off and on on several occasions.
The defendant 's definite case is that she had always been ready and willing to go back to the plaintiff and that it was the plaintiff who all along had been wailfully refusing to keep her and to cohabit with her.
On those allegations she resisted the plaintiff 's claim for a decree for a dissolution of the marriage.
On those pleadings a single issue was joined between the parties, namely, "Whether the defendant deserted the plaintiff for a continuous period of over four years prior to the filing of the suit".
At the trial held by Tendolkar, J. of the Bombay High Court on the Original Side, the plaintiff examined only himself in support of his case.
The defendant examined herself, her father, Popatlal, and her cousin, Bhogilal, in support of her case that she had been all along ready and willing to go back to her marital home and that in spite of repeated efforts on her part through her relations the plaintiff had been persistently refusing to take her back.
110 846 The learned trial Judge answered the only issue in the case in the affirmative and granted a decree for divorce in favour of the plaintiff, but made DO order as to the costs of the suit.
He held that the letter, exhibit E "reads like a love letter written by a girl to her paramour.
The reference to both of them having been anxious about something and there being now no need to be anxious any more can only be to a possible fear that she might miss her monthly periods and her having got her monthly period thereafter, because, if it were not so and the reference was to anything innocent, there was nothing that she should have repented later on in her mind as she says she did, nor should there have been occasion for saying 'after all love is such an affair '.
" With reference to that letter he further held that it was capable of the interpretation that she had misbehaved with Mahendra and that she was conscious of her guilt.
With reference to the incident of May 24, the learned Judge observed that having regard to the demeanour of the plaintiff and of the defendant in the witness box, he was inclined to prefer the husband 's testimony to that of the wife in all matters in which there was a conflict.
He held therefore that there was desertion with the necessary animus deserendi and that the defendant had failed to prove that she entertained a bonafide intention to come back to the marital home, that is to say, there was no animus revertendi.
With reference to the contention that the solicitor 's letter of July 15,1947, had terminated the desertion, if any, he held that it was not well founded inasmuch as the defendant had at no time a genuine desire to return to her husband.
He made no reference to the prayer in the plaint that the custody of the child should be given to the father, perhaps because that prayer was not pressed.
The defendant preferred an appeal under the Letters Patent which was heard by a. Division Bench consisting of Chagla C.J. and Bhagwati J.
The Appellate Bench, allowed the appeal, set aside the decision of the trial Judge and dismissed the suit with costs.
It held that the defendant was not guilty of 847 desertion, that the letter of July 15, 1947, clearly established that it was the 'plaintiff who had deserted the defendant.
Alternatively, the Appellate Court held that even assuming that the defendant was in desertion as a result of what had happened on May 24, and subsequently, the letter aforesaid bad the effect of putting an end to that desertion.
In its judgment the letter, exhibit E, did not justify the plaintiff having any reasonable suspicions about his wife 's guilt and that the oral evidence of the defendant and her relations proved the wife 's anxiety to return back to her husband and of the obduracy of the husband in refusing to take the wife back.
The plaintiff made an application to the High Court for leave to appeal to this Court.
The leave asked for was refused by another Division Bench consisting of the Chief Justice and Dixit J.
Thereafter the plaintiff moved this Court and obtained special leave to appeal from the judgment of the Appellate Bench of the High Court.
In this appeal the learned Attorney General appearing on behalf of the appellant and the learned Solicitor General appearing on behalf of the respondent have placed all relevant considerations of fact and law before us, and we are beholden to them for the great assistance they rendered to us in deciding this difficult case.
The difficulty is enhanced by the fact that the two courts below have taken diametrically opposite views of the facts of the case which depend mostly upon oral testimony of the plaintiff husband and the defendant wife and not corroborated in many respects on either side.
It is a case of the husband 's testimony alone on his side and the wife 's testimony aided by that of her father and her cousin.
As already indicated, the learned trial Judge was strongly in favour of preferring the husband 's testimony to that of the wife whenever there was any conflict.
But he made no reference to the testimony of the defendant 's father and cousin which, if believed, would give an entirely different colour to the case.
Before we deal with the points in controversy, it is convenient here to make certain general of observations 848 on the history of the law on the subject and the well established general principles on which such cases are determined.
The suit giving rise to this appeal is based on section 3(1) (d) of the Bombay Hindu Divorce Act ', XXII of 1947, (which hereinafter will be referred to as "The Act") which came into force on May 12, 1947, the date the Governor 's assent was published in the Bombay Government Gazette.
This Act, so far as the Bombay Province, as it then was, was concerned, was the first step in revolutionizing the law of matrimonial relationship, and, as the Preamble shows, was meant "to provide for a right of divorce among all communities of Hindus in certain circumstances".
Before the enactment, dissolution of a Hindu marriage particularly amongst what were called the regenerate classes was unknown to general Hindu law and was wholly inconsistent with the basic conception of a Hindu marriage as a sacrament, that is to say, a holy alliance for the performance of religious duties.
According to the Shastras, marriage amongst the Hindus was the last of the ten sacraments enjoined by the Hindu religion for purification.
Hence according to strict Hindu law as given by the Samhitas and as developed by the commentators, a Hindu marriage could not be dissolved on any ground whatsoever, even on account of degradation in the hierarchy of castes or apostacy.
But custom ', particularly amongst the tribal and what used to be called the lower castes recognised divorce on rather easy terms.
Such customs of divorce on easy terms have been in some instances held by the courts to be against public policy.
The Act in section 3 sets out the grounds of divorce.
It is noticeable that the Act does not recognise adultery simpliciter as one of the grounds of divorce, though cl.
(f) renders the fact that a husband "has any other woman as a concubine" and that a wife "is a concubine of any other man or leads the life of a prostitute" a ground of divorce.
In the present case we are immediately concerned with the provisions of section 3(1)(d), which are in these terms: 3.
(1) A husband or wife may sue for divorce on 849 any of the following grounds, namely: . . . . . . . . (d) that the defendant has deserted the plaintiff for a continuous period of four years".
"Desertion" has been defined in section 2(b) in these terms: 'Desert ' means to desert without reasonable cause and without the consent or against the will of the spouse".
It will be seen that the definition is tautological and not very helpful and leads us to the Common Law of England where in spite of repeated legislation on the subject of matrimonial law, no attempt has been made to define "desertion".
Hence a large body of case law has developed round the legal significance of "desertion".
"Marriage" under the Act means "a marriage between Hindus whether contracted before or after the coming into operation of this Act".
"Husband" means a Hindu husband and "wife" means a Hindu wife.
In England until 1858 the only remedy for desertion was a suit for restitution of conjugal rights.
But by the Matrimonial Causes Act of 1857, desertion without cause for two years and upwards was made a ground for a suit for judicial separation.
It was not till 1937 that by the Matrimonial Causes Act, 1937, desertion without cause for a period of three years immediately preceding the institution of proceedings was made a ground for divorce.
The law has now been consolidated in the Matrimonial Causes Act, 1950 (14 Geo.
VI, c. 25 ).
It would thus appear that desertion as affording a cause of action for a suit for dissolution of marriage is a recent growth even in England.
What is desertion? "Rayden on Divorce" which is a standard Work on the subject at p. 128 (6th Edn.) has summarised the case law on the subject in these terms: "Desertion is the separation of one spouse from the other, with an intention on the part of the deserting spouse of bringing cohabitation permanently to on end without reasonable cause and without the 850 consent of the other spouse; but the physical act of departure by one spouse does not necessarily make that spouse the deserting party".
The legal position has been admirably summarised in paras.
453 and 454 at pp.
241 to 243 of Halsbury 's Laws of England (3rd Edn.) Vol. 12, in the following words: "In its essence desertion means the intentional permanent forsaking and abandonment of one spouse by the other without that other 's consent, and without reasonable cause.
It is a total repudiation of the obligations of marriage.
In view of the large variety of circumstances and of modes of life involved, the Court has discouraged attempts at defining desertion, there being no general principle applicable to all cases.
Desertion is not the withdrawal from a place but from a state of things, for what the law seeks to enforce is the recognition and discharge of the common obligations of the married state; the state of things may usually be termed, for short, 'the home '.
There can be desertion without previous cohabitation by the parties, or without the marriage having been consummated.
The person who actually withdraws from cohabitation is not necessarily the deserting party.
, The fact that a husband makes an allowance to a wife whom he has abandoned is no answer to a charge of desertion.
The offence of desertion is a course of conduct which exists independently of its duration, but as a ground for divorce it must exist for a period of at least three years immediately preceding the presentation of the petition or, where the offence appears as a cross charge, of the answer.
Desertion as a ground of divorce differs from the statutory grounds of adultery and cruelty in that the offence founding the cause of action of desertion is not complete, but is inchoate, until the suit is constituted.
Desertion is a continuing offence".
Thus the quality of permanence is one of the essential elements which differentiates desertion from 851 wilful separation.
If a spouse abandon the other spouse in a state of temporary passion, for example, anger or disgust, without intending permanently to cease cohabitation, it will not amount to desertion. ' For the offence of desertion, so far as the deserting spouse is concerned, two essential conditions must be there., namely, (1) the factum of separation, and (2) the intention to bring cohabitation permanently to an end (animus deserendi ).
Similarly two elements are essential so far as the deserted spouse is con cerned: (1) the absence of consent, and (2) absence of conduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid.
The petitioner for divorce bears the burden of proving those elements in the two spouses respectively.
Here a difference between the English law and the law as enacted by the Bombay Legislature may be pointed out.
Whereas under the English law those essential conditions must continue throughout the course of the three years immediately preceding the institution of the suit for divorce; under the Act, the period is four years without specifying that it should immediately precede the commencement of proceedings for divorce.
Whether the omission of the last clause has any practical result need not detain us, as it does not call for decision in the present case.
Desertion is a matter of inference to be drawn from the facts and circumstances of each case.
The inference may be drawn from certain facts which may not in another case be capable of leading to the same inference; that is to say, the facts have to be viewed as to the purpose which is revealed by those acts or by conduct and expression of intention, both anterior and subsequent to the actual acts of separation.
If, in fact, there has been a separation, the essential question always is whether that act could be attributable to an animus deserendi.
The offence of desertion commences when the fact of separation and the animus deserendi co exist.
But it is not necessary that they should commence at the same time.
The de facto separation may have commenced without the necessary animus or it may be that the separation 852 and the animus deserendi coincide in point of time; for example, when the separating spouse abandons the marital home with the intention, express or implied, of bringing cohabitation permanently to a close.
The law in England has prescribed a three year period and the Bombay Act prescribes a period of four years as a continuous period during which the two elements must subsist.
Hence, if a deserting spouse takes advantage of the locus poenitentiae thus provided by law and decides to come back to the deserted spouse by a bonafide offer of resuming the matrimonial some with all the implications of marital life, before the statutory period is out or even after the lapse of that period, unless proceedings for divorce have been commenced,, desertion comes to an end and if the deserted spouse unreasonably refuses the offer, the latter may be in desertion and not the former.
Hence it is necessary that during all the period that there has been a desertion the deserted spouse must affirm the marriage and be ready and willing to resume married life on such conditions as may be reasonable.
It is also well settled that in proceedings for divorce ' the plaintiff must prove the offence of desertion, like any other matrimonial offence, beyond all reasonable doubt.
Hence, though corroboration is not required as an absolute rule of law, the courts insist upon corroborative evidence, unless its absence is accounted for to the satisfaction of the court.
In this connection the following observations of Lord Goddard, C.J. in the case of Lawson vs Lawson(1) may be referred to: "These cases are not cases in which corroboration is required as a matter of law.
It is required as a matter of precaution. . .
With these preliminary observations we now proceed to examine the evidence led on behalf of the parties to find out whether desertion has been proved in this case and, if so, whether there was a bona fide offer by the wife to return to her matrimonial home with a view to discharging marital duties and, if so, whether (1) , 342. 853 there was an unreasonable refusal on the part of the husband to take her back.
In this connection the plaintiff in the witness box deposed to the incident of the night of May 20, 1947.
He stated that at night he found that his bed had been made in the hall in which his father used to sleep, and on being questioned by him, the defendant told him that it was so done with a view to giving him the opportunity after a long absence in England to talk to his father.
The plaintiff expressed his wish to the defendant that they should sleep in the same room as they used to before his departure for England, to which the wife replied that as the bed had already been made, "it would look indecent if they were removed".
The plaintiff therefore slept in the hall that night.
This incident was relied upon by the plaintiff with a view to showing that the wife had already made up her mind to stop cohabitation.
This incident has not been admitted by the defendant in her cross examination.
On the other hand she would make it out that it was at the instance of the plaintiff that the bed had been made in the hall occu pied by his father and that it was the plaintiff and not she who was responsible for their sleeping apart that night.
As the learned trial Judge has preferred the plaintiff 's testimony to that of the defendant on all matters on which there was simply oath against oath, we would not go behind that finding.
This incident by itself is capable of an innocent explanation and therefore has to be viewed along with the other incidents deposed to by the plaintiff in order to prove his case of desertion by the defendant.
There was no reason why the husband should have thought of sleeping apart from the wife because there was no suggestion in the record that the husband was aware till then of the alleged relationship between the defendant and Mahendra.
But the wife may have been apprehensive that the plaintiff had known of her relations with Mahendra.
That apprehension may have induced her to keep out of the plaintiff 's way.
The most important event which led to the ulti 854 mate rupture between the parties took place on May 21, 1947, when in the morning the plaintiff 's father placed Mahendra 's letter aforesaid in the plaintiff 's hands.
The letter which has rightly been pointed out in the courts below as the root case of the trouble is in its relevant parts in these terms: "Mahendrababu, Your letter has been received.
I have read the same and have noted the contents.
In the same way, I hope, you will take the trouble of writing me a letter now and then.
I am writing, this letter with fear in my mind, because if this reaches anybody 's hands, that cannot be said to be decent.
What the mind feels has got to be constrained in the mind only.
On the pretext of lulling (my) son to sleep, I have been sitting here in this attic, writing this letter to you.
All others are chitchatting below.
I am thinking now and then that I shall write this and shall write that.
Just now my brain cannot go in any way.
I do not feel like writing on the main point.
The matters on which we were to remain anxious and you particularly were anxious, well we need not now be.
I very much repented later on in my mind.
But after all love is such an affair.
(Love begets love).
. . . . . . . "While yet busy doing services to my mother in law, the clock strikes twelve.
At this time, I think of you and you only, and your portrait shoots up before my eyes.
I am reminded of you every time.
You write of coming, but just now there is nothing like a necessity, why unnecessarily waste money? And again nobody gets salvation at my bands and really nobody will.
You know the natures of all.
Many a time I get tired and keep on being uneasy in my mind, and in the end I weep and pray God and say, 0 Lord, kindly take me away soon: I am not obsessed by any kind of anxiety and so relieve me from this mundane existence.
I do not know how many times I must be thinking of you every day. . . " This letter is not signed by the defendant and in place of the signature the word "namaste" finds 855 place.
The contents of the letter were put to the defendant in cross examination.
At that time it was no more a contested document, the defendant 's counsel having admitted it during the cross examination" of the plaintiff.
She stated that she had feelings for Mahendra as a brother and not as a lover ' When the mysterious parts of the letter beginning with the words "The matters on which" and ending with the words "such an affair" were put to her, she could not give any explanation as to what she meant.
She denied the suggestion made on behalf of the plaintiff in these words: "It is not true that the reference here is to our having had sexual intercourse and being afraid that I might remain pregnant".
The sentence "I very much repented later on in my mind" was also put to her specifically and her answer was "I do not know what I repented for.
I wrote some thing foolishly".
Pressed further about the meaning of the next sentence after that, her answer was "I cannot now understand how I came to write such a letter.
I admit that this reads like a letter written by a girl to her lover.
Besides the fact that my brain was not working properly I bad no explanation to give as to how I wrote such a letter".
She also admitted that she took good care to see that the.
other members of the family, meaning the mother in law and the sisters in law, did not see her writing that letter and that she wanted that the letter should remain a secret to them.
Being further pressed to explain the sentence "We need not be anxious now", her answer was " I did not intend to convey that I had got my monthly period about which we were anxious.
I cannot say what the normal natural meaning of this letter would be".
She bad admitted having received at least one letter from Mahendra.
Though it would appear from the trend of her cross examination that she received more letters than one, she stated that she did not preserve any of his letters.
She has further admitted in cross examination "I have not signed this letter.
It must have remained to be signed by mistake.
I admit that under the 856 letter where the signature should be I have put the word 'Namaste ' only.
It is not true that I did not sign this letter because I was afraid, that if it got into the hands of any one, it might compromise me and Mahendra.
Mahendra would have known from my handwriting that this was my letter.
I had previously written one letter to him.
That letter also I had not signed.
I had only said 'Namaste" '.
The tenor of the letter and the defendant 's explanation or want of explanation in the witness box of those portions of the letter which very much need explanation would leave no manner of doubt in any person who read that letter that there was something between her and Mahendra which she was interested to keep a secret from everybody.
Even when given the opportunity to explain, if she could, those portions of the letter, she was not able to put any innocent meaning to her words except saying in a bland way that it was a letter from a sister to a brother.
The trial court rightly discredited her testimony relating to her answers with respect to the contents of the letter.
The letter shows a correspondence between her and Mahendra which was clearly unworthy of a faithful wife and her pose of innocence by characterising it as between a sister and a brother is manifestly disingenuous.
Her explanation, if any, is wholly unacceptable.
The plaintiff naturally got suspicious of his wife and naturally taxed her with reference to the contents of the letter.
That she had a guilty mind in respect of the letter is shown by the fact that she at first denied having written any such letter to Mahendra, a denial in which she persisted even in her answer to the plaint.
The plaintiff 's evidence that he showed her a photostatic copy of that letter on May 23, 1947, and that she then admitted having written that letter and that she bad tender feelings for Mahendra can easily be believed.
The learned trial Judge was therefore justified in coming to the conclusion that the letter betrayed on the part of the writer "a consciousness of guilt".
But it is questionable how far the learned Judge was justified in observing further that ' the contents of the 857 letter "are only capable of the interpretation that she had misbehaved with Mahendra during the absence of the plaintiff".
If he meant by the word "misbehaved" that the defendant had sexual intercourse with Mahendra, he may be said to have jumped to the conclusion which did not necessarily follow as the only conclusion from them.
The very fact that a married girl was writing amorous letters to a man other than her husband was reprehensible and easily capable of furnishing good grounds to the husband for suspecting the wife 's fidelity.
So far there can be no difficulty in assuming that the husband was fully justified in losing temper with his wife and in insisting upon her repentance and assurance of good conduct in future.
But we are not prepared to say that the contents of the letter are capable of only that interpretation and no other.
On the other hand, the learned Judges of the Appeal Court were inclined to view this letter as an evidence merely of what is sometimes characterised as "platonic love" between two persons who by reasons of bond of matrimony are compelled to restrain themselves and not to go further than merely showing love and devotion for each other.
We are not prepared to take such a lenient, almost indulgent, view of the wife 's conduct as betrayed in the letter in question.
We cannot but sympathise with the husband in taking a very serious view of the lapse on the wife 's part.
The learned Judges of the Appeal Court have castigated the counsel for the plaintiff for putting those questions to the defendant in cross examination.
They observe in their judgment (speaking through the Chief Justice) that there was no justification for the counsel for the plaintiff to put to the defendant those questions in cross examination suggesting that she had intercourse with Mahendra as a result of which they were apprehending future trouble in the shape of pregnancy and illegitimate child birth.
It is true that it was not in terms the plaintiff 's case that there had been an adulterous intercourse between the defendant and Mahendra.
That need not have been so, because the Act does not recognise adultery as one of the grounds 858 for divorce.
But we do not agree with the appellate Court that those questions to the defendant in cross examination were not justified.
The plaintiff proposed to prove that the discovery of the incriminating letter containing those mysterious sentences was the occasion for the defendant to make up her mind to desert,the plaintiff.
We do not therefore agree with the observations of the appellate Court in all that they have said in respect of the letter in question.
There can be no doubt that the letter in question made the plaintiff strongly suspicious of his wife 's conduct (to put it rather mildly), and naturally he taxed his wife to know from her as to what she bad to say about her relations with Mahendra.
She is said to have confessed to him that Mahendra was a better man than the plaintiff and that he loved her and she loved him.
When matters had come to such a head, the natural reaction of the parties would be that the husband would get not only depressed, as the plaintiff admitted in the witness box, but would in the first blush think of getting rid of such an unloving, if not a faithless, wife.
The natural reaction of the defendant would be not to face the husband in that frame of mind.
She would naturally wish to be out of the sight of her husband at least for some time, to gain time for trying, if she was so minded, to reestablish herself in her husband 's estimation and affection, if not love.
The event of the afternoon of May 24, 1947, must therefore be viewed in that light.
There was going to be performed the marriage of the defendant 's cousin at her father 's place of business in Jalgaon, though it was about five to six weeks from then.
The plaintiff would make it out in his evidence that she left rather in a recalcitrant mood in the afternoon during his absence in office with all her belongings and that she had refused his offer of being sent in his car to station and Rs. 100 for ' expenses.
This conduct on the part of the wife can easily be explained as that of a person who had found that her love letter had been discovered by the husband.
She would naturally try to flee away from the husband for the time being at least because she had not the 859 moral courage to face him.
The question is whether her leaving her marital home on the afternoon of May 24, 1947, is only consistent with her having deserted, her husband, in the sense that she had deliberately ' decided permanently to forsake all relationship with her husband with the intention of not returning to consortium, without the consent of the husband and against his wishes.
That is the plaintiff 's case.
May that conduct be not consistent with the defendant 's case that she had not any such intention, i.e., being in desertion? The following observations of Pollock, M. R. in Thomas vs Thomas(1) may usefully be quoted in this connection: "Desertion is not a single act complete in itself and revocable by a single act of repentance.
The act of departure from the other spouse draws its significance from the purpose with which it is done, as revealed by conduct or other expressions of intention: see Charter vs Charter(2).
A mere temporary parting is equivocal, unless and until its purpose and object is made plain.
I agree with the observations of Day J. in Wilkinson vs Wilkinson(3) that desertion is not a specific act, but a course of conduct.
As Corell Barnes J. said in Sickert vs Sickert(4): 'The party who intends bringing the cohabitation to an end, and whose conduct in reality causes its termination, commits the act of desertion '.
That conduct is not necessarily wiped out by a letter of invitation to the wife to return".
The defendant 's further case that she bad been turned out of the house by the husband under duress cannot be accepted because it is not corroborated either by circumstances or by direct testimony.
Neither her father nor her cousin say a word about her speaking to them on her arrival at Jalgaon that she had been turned out of her husband 's home.
If her case that she bad been forcibly turned out of her marital home by the husband had been made out, certainly the husband would have been guilty of "constructive desertion", because the test is riot who (1) (3) (2) (4) , 282, 860 left the matrimonial home first.
(See Lang vs Lang(1)).
If one spouse by his words and conduct compel the other spouse to leave the marital home.
the former would be guilty of desertion, though it is the latter who has physically separated from the other and has been made to leave the marital home.
It should be noted that the wife did not cross petition for divorce or for any other relief.
Hence it is no more necessary for us to go into that question.
It is enough to point out that we are not prepared to rely upon the uncorroborated testimony 'of the defendant Chat she had been compelled to leave her marital home by the threats of the plaintiff.
The happenings of May 24, 1947, as pointed out above, are consistent with the plaintiff 's case of desertion by the wife.
But they are also consistent not with the defendant 's case as actually Pleaded in her written statement, but with the fact; and circumstances disclosed in the evidence, namely, that the defendant having been discovered in her clandestine amorous correspondence with her supposed paramour Mahendra, she could not face her husband or her husband 's people living in the same flat in Bombay and therefore shamefacedly withdrew herself and went to her parent 's place of business in Jalgaon on the pretext of the marriage of her cousin which was yet far off.
That she was not expected at Jalgaon on that day in connection with the marriage is proved by her own admission in the witness box that "when I went to Jalgaon everyone was surprised".
As pointed out above, the burden is on the plaintiff to prove desertion without cause for the statutory period of four years, that is.
to say, that the deserting spouse must be in desertion throughout the whole period.
In this connection the following observations of Lord Macmillan in his speech in the House of Lords in the case of Pratt vs Pratt(2 ) are apposite: "In my opinion what is required of a petitioner for divorce on the ground of desertion is proof that throughout the whole course of the three years the respondent has without cause been in desertion.
The (1) 417.
(2) , 420. 861, deserting spouse must be shown to have persisted in the intention to desert throughout the whole period.
In fulfilling its duty of determining whether on the evidence a case of desertion without cause has been proved the court ought not, in my opinion, to leave out of account the attitude of mind of the petitioner.
If on the facts it appears that a petitioning husband has made it plain to his deserting wife that he will not receive her back, or if he has repelled all the advances which she may have made towards a resumption of married life, he cannot complain that she has persisted without cause in her desertion".
It is true that the defendant did not plead that she had left her husband 's home in Bombay in the circumstances indicated above.
She, on the other hand, pleaded constructive desertion by the husband.
That case, as already observed, she has failed to substantiate by reliable evidence.
But the fact that the defendant has so failed does not necessarily lead to the conclusion that the plaintiff has succeeded in proving his case.
The plaintiff must satisfy the court that the defendant had been in desertion for the continuous period of four years as required by the Act.
If we come to the conclusion that the happenings of May 24, 1947, are consistent with both the conflicting theories, it is plain that the plaintiff has not succeeded in bringing the offence of desertion home to the defendant beyond all reasonable doubt.
We must therefore examine what other evidence there is in support of the plaintiff 's case and in corroboration of his evidence in court.
The next event of importance in this narrative is the plaintiff 's solicitor 's letter of July 15, 1947, addressed to the defendant, care of her father at Jalgaon.
The defendant 's cousin 's marriage was performed towards the end of June and she could have come back to her husband 's place, soon thereafter ' Her evidence is that after the marriage had been performed she was making preparations to go back to Bombay but her father detained her and asked her to await a letter from the plaintiff.
The defendant instead of getting an invitation from the plaintiff to 862 come back to the marital home received the solicitor 's letter aforesaid, which, to say the least, was not calculated to bring the parties nearer.
The letter is in these terms: "Madam, Under instructions from our client Bipin Chandra J. Shah we have to address you as under: That you were married to our client in or about April 1942 at Patan.
Since the marriage you and our client lived together mostly in Bombay and son by name Kirit was born on or about the 10th day of September 1944.
Our client.
states that he left for Europe in January last and returned by the end of May last.
After our client 's return, our client learnt that during our client 's absence from India you developed intimacy with one Mahendra and you failed to give any satisfactory reply when questioned about the same and left for your parents under the pretext of attending to the marriage ceremony of your cousin.
You have also taken the minor with you and since then you are residing with your father to evade any satisfactory explanation.
Our client states that under the events that have happened, our client has become entitled to obtain a divorce and our client does not desire to keep you any longer under his care and protection.
Our client desires the minor to be kept by him and we are instructed to request you to send back the minor to our client or if necessary our client will send his agent to bring the minor to him.
Our client further states that in any event it will be in the interest of the minor that he should stay with our client.
Our client has made this inquiry about the minor to avoid any unpleasantness when our client 's agent comes to receive the minor".
The letter is remarkable in some respects,apart from antedating the birth of the son Kirit by a year.
The letter does not in terms allege that the defendant was in desertion, apart from mentioning the fact that she had left against the plaintiff 's wishes or that she had done so with the intention of permanently abandon 863 ing her marital duties.
On the other hand, it alleges that "You are residing with your father to avoid any satisfactory explanation".
The most important part of the letter is to the effect that the plaintiff had "become entitled to obtain a divorce" and that he "does not desire to keep you any longer under his care and protection".
Thus if the solicitor 's letter is any indication of the working of the mind of the plaintiff, it makes it clear that at that time the plaintiff did not believe that the defendant had been in desertion and that the plaintiff had positively come to the determination that he was no longer prepared to affirm the marriage relationship.
As already indicated, one of the essential conditions for success in a suit for divorce grounded upon desertion is that the deserted spouse should have been willing to fulfill his or her part of the marital duties.
The statement of the law in para 457 at p. 244 of Halsbury 's Laws of England (3rd Edn.
Vol 12) may be usefully quoted: "The burden is on the petitioner to show that desertion without cause subsisted, throughout the statutory period.
The deserting spouse must be shown to have persisted in the intention to desert throughout the whole of the three year period.
It has been said that a petitioner should be able honestly to say that he or she was all along willing to fulfill the duties of the marriage, and that the desertion was against his or her will, and continued throughout the statutory period without his or her consent; but in practice it is accepted that once desertion has been started by the fault of the deserting spouse, it is no longer necessary for the deserted spouse to show that during the three years preceding the petition be or she actually wanted the other spouse to come back, for the intention to desert is presumed to continue.
That presumption may, however, be rebutted".
Applying those observations to the facts of the present case, can the plaintiff honestly say that be was all along willing to fulfill the duties of the marriage and that the defendant 's desertion, if any, continued throughout the statutory period without his consent.
The letter, exhibit A) is an emphatic No.
In the first 864 place, even the plaintiff in that letter did not allege any desertion and, secondly, he was not prepared to receive her back to the matrimonial home.
Realising his difficulty when cross examined as to the contents of that letter, he wished the court to believe that at the time the letter was written in his presence he was "in a confused state of mind" and did not remember exactly whether he noticed the sentence that he did not desire to keep his wife any longer.
Pressed fur ther in cross examination, he was very emphatic in his answer and stated: "It is not true that by the date of this letter I had made up my mind not to take her back.
It was my hope that the letter might induce her parents to find out what had happened, and they would persuade her to come back.
I am still in the confused state of mind that despite my repeated attempts my wife puts me off".
In our opinion, the contents of the letter could not thus be explained away by the plaintiff in the witness box.
On the other hand, it shows that about seven weeks after the wife 's departure for her father 's place the plaintiff had at least for the time being convinced himself that the defendant was no more a suitable person to live with.
That, as found by us, be was justified in this attitude by the reprehensible conduct of his wife during his absence is beside the point.
This letter has an importance of its own only in so far as it does not corroborate the plaintiff 's version that the defendant was in desertion and that the plaintiff was all along anxious to induce her to come back to him.
This letter is more consistent with the supposition that the husband was very angry with her on account of her conduct as betrayed by the letter, exhibit E and that the wife left her husband 's place in shame not having the courage to face him after that discovery.
But that will not render her in the eye of the law a deserter, as observed by Pollock, M. R. in Bowron vs Bowron(1) partly quoting from Lord Gorell as follows: "In most cases of desertion the guilty party (1) , 192. 865 actually leaves the other, but it is not always or necessarily the guilty party who leaves the matrimonial home.
In my opinion, the party who intends bringing the cohabitation to an end, and whose conduct in reality causes its termination, commits the act of desertion: See also Graves vs Graves(1); Pulford vs Pulford(2); Jackson vs Jackson(2); where Sir Henry Duke P. explains the same doctrine.
You must look at the conduct of the spouses and ascertain their real intention".
It is true that once it is found that one of the spouses has been in desertion, the presumption is that the desertion has continued and that it is not necessary for the deserted spouse actually to take steps to bring the deserting spouse back to the matrimonial home.
So far we do not.find any convincing evidence in proof of the alleged desertion by the wife and naturally therefore the presumption of continued desertion cannot arise.
But it is not necessary that at the time the wife left her husband 's home, she should have at the same time the animus deserendi.
Let us therefore examine the question whether the defendant in this case, even if she had no such intention at the time she left Bombay, subsequently decided to put an end to the matrimonial tie.
This is in consonance with the latest pronouncement of the Judicial Committee of the Privy Council in the case of Lang vs Lang(1) in an appeal from the decision of the High Court of Australia, to the following effect: "Both in England and in Australia, to establish desertion two things must be proved: first, certain outward and visible conduct the 'factum ' of desertion; secondly, the 'animus deserendi ' the intention underlying this conduct to bring the matrimonial union to an end.
In ordinary desertion the factum is simple: it is the act of the absconding party in leaving the matrimonial home.
The contest in such a case will be almost entirely as to the 'animus '.
Was the intention (1) 3 Sw. & Tr.
(3) (2) (4) [1955] A.G. 402, 417.
866 of the party leaving the home to break it up for good, or something short of, or different from that?" In this connection the episode of November, 1947, when the plaintiff 's mother came from Patan to Bombay is relevant.
It appears to be common ground now that the defendant had agreed to come back to Bombay along with the plaintiff 's mother or after a few days.
But on this information being given to the plaintiff he countermanded any such steps on the wife 's part by sending the telegram, exhibit B,aforesaid and the plaintiff 's father 's letter dated November 15, 1947.
'We are keeping out of consideration for the present the letter, exhibit C, dated November 13, 1947, which is not admitted to have been received either by the defendant or her father.
The telegram is in peremptory terms: "Must not send Prabha".
The letter of November 15, 1947, by the plaintiff 's father to the defendant 's father is equally peremptory.
It says "It is absolutely necessary that you should obtain the consent of Chi.
Bipinchandra before sending Chi.
Prabhavati".
The telegram and the letter which is a supplement to the telegram, as found by the courts below, completely negative the plaintiff 's statement in court that he was all along ready and willing to receive the defendant back to his home.
The letter of November 13, 1947, exhibit C, which the plaintiff claims to have written to his father in law in explanation of the telegram and is a prelude to it is altogether out of tune with the tenor of the letter and the telegram referred to above.
The receipt of this letter has been denied by the defendant and her father.
In court this letter has been described as a fake in the sense that it was an afterthought and was written with a. view to the legal position and particularly with a view to getting rid of the effect of the solicitor 's letter of July 15, which the plaintiff found it hard to explain away in the witness box.
Neither the trial court, which was entirely in favour of the plaintiff and which had accepted the letter as genuine, nor the appellate Court, which was entirely in favour of the defendant has placed implicit faith in the bona fides of this letter.
The lower appellate Court 867 is rather ironical about it, observing "This letter as it were stands in isolated glory.
There is no other letter.
There is no other conduct of the plaintiff which is consistent with this letter".
Without going into the controversy as to the genuineness or bona fldes of this letter, it can be said that the plaintiff 's attitude, as disclosed therein, was that he was prepared to take her back into the matrimonial home provided she wrote a letter to him expressing real repentance and confession of mistake.
This attitude of the plaintiff cannot be said to be unreasonable in the circumstances of the case.
He was more sinned against than sinning at the beginning of the controversy between the husband and the wife.
This brings us to a consideration of the three attempts alleged by the plaintiff to have been made by him to induce his wife to return to the matrimonial home when he made two journeys to Patan in 1948 and the third journey in April May, 1949, to Jalgaon.
These three visits are not denied by the defendant.
The only difference between the parties is as to the purpose of the visit and the substance of the talk between them.
That the plaintiff 's attachment for the defendant had not completely dried up is proved by the fact that when he came to know that she had been suffering from typhoid he went to Patan to see her.
On this occasion which was the second visit the plaintiff does not say that he proposed to her to come back and that she refused to do so.
He only says that she did not express any desire to come back.
That may be explained as being due to diffidence on her part.
But in respect of the first and the third visits the plaintiff states that on both those occasions he wanted her to come back but she refused.
On the other hand, the defendant 's version is that the purpose of his visit was only to take away the child and not to take her back to his home.
It is also the plaintiff 's complaint that the defendant never wrote any letter to him offering to come back.
The wife 's answer is that she did write a few letters before the solicitor 's letter was received by the father and that thereafter under her father 's advice she did not write 868 any more to the plaintiff.
In this connection it becomes necessary to examine the evidence of her cousin Babulal and her father Popatlal.
Her cousin, Babulal, who was a member of her father 's joint family, deposes that on receipt of the letter, exhibit A, a fortnight later he and his father, since deceased, came to Bombay and saw the plaintiff.
They expostulated with him and pleaded the defendant 's cause and asked the plaintiff to forgive and forget and to take her back.
The plaintiff 's answer was that he did not wish to keep his wife.
The defendant 's father 's evidence is to the effect that after receipt of the letter, exhibit A, he came to Bombay and saw the plaintiff 's father at his residence and protested to him that "a false notice had been given to us".
The plaintiff 's father is said to have replied that they "would settle the matters amicably" He also deposes as to his brother and his brother 's son having gone to the plaintiff.
He further states that he with his wife and the defendant went to Patan and saw the plaintiff 's mother and in consultation with her made arrangements to send her back to 'Bombay.
But before that could be done the telegram, exhibit B, and the letter, exhibit D, were received and consequently he gave up the idea of sending the defendant to Bombay without straightening matters.
Both these witnesses on behalf of the defendant further deposed to the defendant having done several times and stayed with the plaintiff 's family, particularly his mother at Patan along with the boy.
The evidence of these two witnesses on behalf of the defendant is ample corroboration of the defendant 's ,case and the evidence in court that she has all along been ready and willing to go back to the matrimonial home.
The learned trial Judge has not noticed this evidence and we have not the advantage of his comment on this corroborative evidence.
This body of evidence is in consonance with the natural course of events.
The plaintiff himself stated in the witness box that he had sent the solicitor 's ' letter by way of a shock treatment to the defendant 's family so that they might persuade his wife to come back to his matrimonial home.
The subsequent 869 telegram and letters (assuming that both the letters of the 13th and 15th November had been posted in the usual course and received by the addressees) would give a shock to the family.
Naturally thereafter the members of the family would be up and doing to see that a reconciliation is brought about between the husband and the wife.
Hence the visits of the defendant 's uncle and the father would be a natural conduct after they had been apprised of the rupture between them.
We therefore do not see any sufficient reasons for brushing aside all that oral evidence which has been believed by the Lower Appellate Court and had not in terms been disbelieved by the trial court.
This part of the case on behalf of the defendant and her evidence is corroborated by the evidence of the defendant 's relatives aforesaid.
It cannot be seriously argued that evidence should be disbelieved, because the witnesses happened to be the defendant 's relatives.
They were naturally the parties most interested in bringing about a reconciliation They were anxious not only for the welfare of the defendant but were also interested in the good name of the family and the community as is only natural in families like these which have not been so urbanised as to completely ignore the feelings of the community.
They would therefore be the persons most anxious in the interests of all the parties concerned to make efforts to bring the husband and the wife together and to put an end to a controversy which they con sidered to be derogatory to the good name and, prestige of the families concerned.
The plaintiff 's evidence, on the other hand, on this part of the case is uncorroborated.
Indeed his evidence stands uncorroborated in many parts of his case and the letters already discussed run counter to the tenor of his evidence in court.
We therefore feel inclined to accept the defendant 's case that after her leaving her husband 's home and after the performance of her cousin 's marriage she was ready and willing to go back to her husband.
It, follows from what we have said so far that the wife was not in desertion though she left her husband 's home without any fault on the part of the 870 plaintiff which could justify her action in leaving him, and that after the lapse of a few months ' stay at her father 's place she was willing to go back to her matrimonial home.
This conclusion is further supported by the fact that between 1948 and 1951 the defendant stayed with her mother in law at Patan whenever she was there, sometimes for months, at other times for weeks.
This conduct is wholly inconsistent with the plaintiff 's case that the defendant was in desertion during the four years that she was out of her matrimonial home.
It is more consistent with the defen dant 's attempts to.
get herself re established in her husband 's home after the rupture in May 1947 as aforesaid.
It is also in evidence that at the suggestion of her mother in law the defendant sent her three year old son to Bombay so that be might induce his ' ,father to send for the mother, The boy stayed in Bombay for about twenty days and then was brought.
back to Patan by his father as he (the boy) was unwilling to stay there without the mother.
, This was in August_September 1948 when the defendant deposes to having questioned her husband why she bad not been called back and the husband 's answer was evasive.
Whether or not this statement of the defendant is true, there can be no doubt that the defendant would not have allowed her little boy of about three years of age to be sent alone to Bombay except in the hope that he might be instrumental in bringing about a reconciliation between the father and the mother.
The defendant has deposed to the several efforts made by her mother in law and her father in law to intercede on her behalf with the plaintiff but without any result.
There is no explanation why the plaintiff could not examine his father and mother in corroboration of his case of continuous desertion for the statutory period by the defendant.
Their evidence would have been as valuable, if not more, as that of the defendant 's father and cousin as discussed above.
Thus it is not a case where evidence was not available in corroboration of the plaintiff 's case.
As the plaintiff 's evidence on many important aspects of the case 871 has remained uncorroborated by evidence which could be available to him, we must hold that the evidence given by the plaintiff falls short of proving his case of desertion by his wife.
Though we do not find that the essential ingredients of desertion have been proved by the plaintiff, there cannot be the least doubt that it was the defendant who had by her objectionable conduct brought about a rupture in the matrimonial home and caused the plaintiff to become so cold to her after she left him.
In view of our finding that the plaintiff has failed to prove his case of desertion by the defendant, it is not necessary to go into the question of animus revertendi on which considerable argument with reference to case law was addressed to us on both sides.
For the aforesaid reasons we agree with the Appellate Bench of the High Court in the conclusion at which they had arrived, though not exactly for the same reasons.
The appeal is accordingly dismissed.
But as the trouble started on account of the defendant 's con duct, though she is successful in this Court, we direct that each party must bear its own costs throughout.
Appeal dismissed.
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The parties were married in 1942 and there was a child of the marriage.
In 1947 the appellant left for England on business and on his return to India discovered that this wife (respondent) bad been having amorous correspondence with one M, and taxed her with having developed intimacy with him.
She was unable to give any answer and went to her father 's place on May 24, 1947, on the pretext of the marriage of her cousin which was to take place in June.
On July 15, 1947, the appellant sent a notice to the respondent through his solicitor in which after mentioning the fact that she had, left against his wishes stated that he did not desire to keep her any ' longer under his care and protection, and desired her to send the minor son to him.
On July 4, 1951, the appellant instituted the suit for divorce under section 3(1)(d) of the Bombay Hindu Divorce Act, 1947, on the ground that the respondent had been in desertion ever since May 24, 1947, without reasonable cause and without his consent and against his will for a period of over four years.
The respondent 's case that it was the appellant who by his treatment of her after his return from England had made her life unbearable and compelled her to leave her marital home against her wishes, 'was not proved but there was evidence that after the solicitor 's notice dated July 15, 1947, was received by the respondent, attempts were made by her father and his relations to bring about reconciliation between the parties but they failed owing to the attitude of the appellant.
The question was whether the respondent had been in desertion, entitling the appellant to have a decree for divorce.
Held that, on the facts, though the initial fault lay with the respondent, her leaving her marital home was not actuated by any animus to desert her husband but as the result of her sense of guilt, and as subsequently she was willing to come back but could not do, so owing to the attitude of the appellant, there was no proof that she deserted him, much less that she bad harbored that animus for the statutory period, and the appellant 's case must fail.
The essential conditions for the offence of desertion, so far as the deserting spouse is concerned, are (i) the factum of separation and (ii) the intention to bring cohabitation permanently to an end 839 (animus deserendi); and as regards the deserted spouse the elements are (i) the absence of consent and (ii) absence of conduct giving reasonable cause to the spouse leaving the matrimonial home to form the necessary intention aforesaid.
Desertion is a matter of inference to be drawn from the facts and circumstances of each case and those facts have to be viewed as to the purpose which is revealed by those facts or by conduct and expression of intention, both anterior and subsequent to the actual act of separation.
In a suit for divorce on the ground of desertion the burden is on the plaintiff to prove that the deserting spouse has been in desertion throughout the statutory period of four years.
Thomas vs Thomas ([1924] P. 194), Bowron vs Bowron ([1925] P. 187), Pratt vs Pratt ([1939] A.C. 417) and Lang vs Lang ([1965] A.C. 402), referred to.
Quaere, whether the statutory period of four years specified in section 3(1)(d) should immediately precede the institution of the suit for divorce.
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441.txt
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Appeal No. 972 of 1967.
Appeal from the judgment and order.
dated December 14, 15, 1964 of the Gujarat High Court in Special Civil Application No. 54 of 1964.
D. Narsaraju, S.K. Aiyar, S.P. Nayar and, B.D. Sharma, for the appellants.
S.T. Desai, M.C. Bhandare and K. Rajendra Chaudhuri, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate against the judgment of the Gujarat High Court dated 14th/15th December 1964 in Special Civil Application No. 54 of 1964 whereby a writ of mandamus was issued to.
quash the notices issued under sections 147, 148 and 142(1) of the Income Tax Act, 1961 against the respondent.
The respondent was assessed by the, Income Tax Officer, Ward E, Circle 11, Ahmedabad for the assessment year 1947 48 by an assessment order dated 31 1 1952.
The Income Tax Officer thereafter received 'information that a certain profit made by the assessee in the name of Natwarlal Mardial Pandit who was a benamidar of the respondent had escaped assessment by reason of the respondent not having disclosed it at the time of the original assessment.
The Income Tax Officer, therefore, after obtaining the approval of the Commissioner of Income Tax issued a notice dated 27th March, 1956 under section 34(1)(a) of the Income Tax Act, 1922 (hereinafter referred to as the old Act).
The notice could not be served personally, and, therefore, was served by affixing on a conspicuous part of the respondents.
The respondent objected to the service of the notice and did not file a return stating that there had been no valid service.
When the Income Tax Officer threatened to proceed ex parte, a return was filed under protest on 16 1 19 '57 and in that return the respondent showed the same amount of income which was determined in the original assessment.
Despite the objection.
of the respondent that there was no proper service of notice under section 34( 1 ) (a), the Income Tax Officer proceeded to assess the income of the respondent for the assessment year 1947 48 and made an order 716 dated 29th March, 1957 determining the total income of the respondent at Rs. 89,000 by including the profit alleged to have been earned by Natwarlal Manilal Pandit.
The respondent preferred an appeal to the Appellate Assistant Commissioner who allowed the appeal and set aside the order of assessment on the ground that there was no valid service of the notice.
The ' decision of the Appellate Assistant Commissioner was given on 5 1 1963 by which time the Income Tax Act, 1922 had been repealed and the Income Tax Act, 1961 (hereinafter called the New Act) had come into force with effect from 1st April, 1962.
The time for taking action for assessment or reassessment in case of escaped income exceeding Rs. 50,000 but less than Rs. ,1,00,000/ was enlarged from 8 years to 16 years under the new Act.
On 4 1 1963 the Income Tax Officer, Circle IV, Ward G, Ahmedabad issued a notice calling upon the respondent to show cause why proceedings should not be taken under section 147(a) of the new Act for bringing to tax the escaped profit of the respondent.
The respondent protested against the new notice on the ground that action under the old Act had become time barred and the new Act had no application to his case.
Subsequently, a notice under section 148 of the new Act was issued on 13 11 1963 and this notice was followed by another notice dated 9 1 1964 issued under section 142(1).
The respondent, therefore, preferred Special Civil Application No. 54 of 1964 in the Gujarat High Court praying for a writ of certiorari to quash the notices dated 13 11 1963 and 9 1 1964 by the first appellant.
The High Court took the view that on a true construction of section 297(2)(d)(ii) of the new Act the Income Tax Officer could not issue a notice under section 148 in order to reopen the assessment in a case where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force.
The High Court observed that the right of the Income Tax Officer to reopen the assessment of the resportdent in the present case was admittedly barred under section 34(1 )(a) of the old Act at the commencement of the new Act and it was, therefore, not competent to the Income Tax Officer to issue a notice under section 148 of the new Act in order to reopen the assessment of the ' respondent and to reassess the income of the respondent relying on the provisions enacted under section 297 (2)(d)(ii) of the new Act.
The High Court accordingly allowed the Special Civil Application preferred by the respondent and set aside the notices dated 13 11 1963 and 9 1 1964.
It is necessary at this stage to set out the relevant provisions of the two statutes.
Section 34 of the Income Tax Act, 1922 (No. 11 of 1922) as it stood immediately prior to its amendment by the Finance Act, 1956 is in the following terms : 717 "34.
(1) If (a) the Income Tax Officer has reason to believe that by reason 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 all material facts necessary for his assessment for that year, income, profits or gains chargeable for that year or have been underassessed, 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 computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income Tax Officer has m consequence of information in his possession reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year, or have been underassessed, 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 computed, 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 if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or reassess 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 notice were a notice issued under that sub section: Provided that : (1 ) the Income Tax Officer shall not issue a notice 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 notice.
Provided further that nothing in this section limiting the time within which any action may 'be taken, or any order, assessment or reassessment may be made shall app ly to a reassessment made under section 27 or to an assessment or reassessment made on the assessee 718 or any person in consequence of Or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A".
By the Finance Act, 1956 certain amendments were made in section 34 with effect from 1st April, 1956.
The time limit of 8 years in sub section (1 ) in respect of cases failing within clause (a) was removed and the following provisos were substituted for the existing proviso in sub section (1 ) : "Provided that the Income Tax Officer shall not issue a notice under clause (a) of sub section (1) (i) for any year prior to the year ending on the 31st day of March, 1941: (ii) for any year, if eight years have elapsed after the expiry of that year, unless the income, profits or gains chargeable to income tax which have escaped assessment or have been underassessed or assessed at too low a rate or have been made the subject of excessive relief under this Act, or the loss or depreciation allowance which has been computed in excess, amount to, or are likely to amount to, one lakh of rupees, or more in the aggregate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not being a year or years ending before the 31st day of March, 1941; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the Central Board of Revenue, and, in any other case, the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such notice; The Income Tax Act, 1961 (No. 43 of 1961) came into force from 1st April, 1962.
Sub section ( 1 ) of section 297 of the new Act repealed the old Act and by sub section (2) of that section the new Act enacted certain saving provisions consequent upon the repeal of the old Act.
The material provision is set out in clause (d): "297.
Repeals and savings : (1). . (2) notwithstanding the repeal of the Indian Income Tax Act 11 of 1922 (hereinafter referred to as the repealed Act) : 719 (d) where in respect of any assessment year after the year ending on the 31st day of March, 1940 (i) a notice under section 34 of the repealed Act ' had been issued 'before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression, in section 1.47 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly".
Sections 147 to 150 referred to in section 297(2)(d)(ii) and sections 151 to 153 were the provisions of the new Act corresponding to section 34 of the old Act.
In the new Act, section 34 of the old Act was split up into sections 147 to 153.
Section 147 empowered the Income Tax Officer to assess or reassess escaped income in the same kind of cases in which he could do so under section 34 but that right could be exercised subject to the provisions of sections 148 to 153.
Sub section (1) of section 148 provided that before making any assessment or reassessment under section 147, the Income Tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under section 139(2) and sub section (2) of that section imposed an obligation on the Income Tax Officer before issuing such notice, to record 'his reasons for doing so.
Section 149 laid down different time limits for issuing notices and in cases falling within clause ( a ) of section 14 7 corresponding to clause (a) of sub section (1 ) of section 34 the time limits.
were prescribed as follows : "149.
Time limit for notice : (a) No notice under section 148 shall be issued, (a) in cases failing under clause (a) of section 147 (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the ease falls under sub clause (ii); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable 720 to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; Section 150(1) makes an exception in cases where assessment or reassessment is sought to be made in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision and provided that in such cases there should be no time limit and notice under section 148 may be issued at any time unless of course the case fell within sub section (2) of section 150.
Section 151 made it a condition precedent to the issue of the notice under section 148 that the Income Tax Officer should obtain the previous sanction of the Central Board of Revenue or the Commissioner of Income Tax according as the notice is proposed to be issued after the expiry of 8 years from the end of the relevant assessment year or after the expiry of 4 years from the end of the relevant assessment year.
On behalf of the appellants Mr. Narasaraju stressed the argument that the High Court was in error in holding that the provisions of the new Act of 1961 were not applicable in cases where the time limit fixed in the old Act had expired before the coming into force of the new Act.
It was contended that section 297(2) (d)(ii) of the new Act was wide in its sweep and it took in all assessment years after the year ending on 31st March, 1940 irrespective of the question whether the right to reopen the assessment in respect of any such assessment years, was barred or not under the old Act at the date when the new Act came into force.
According to Mr. Narasaraju the legislative intention was that once the new Act came into force, the question whether the assessment in respect of any assessment year after the year ending on 31st March, 1940 was liable to be reopened or not should be decided with reference to the provisions of the new Act.
It was argued that the new Act authorised such assessment to be reopened whatever might be the position in regard to the right to reopen such assessment under the old Act.
In our opinion, the argument put forward by Mr. Narasaraju is not warranted.
It is admired in this case that the right of the Income Tax Officer to reopen the assessment for the year 1947 48 was barred under the old Act before the new Act came into force.
In our opinion, it not permissible to construe section 297(2)(d)(ii) of the new Act as reviving the right of the Income Tax Officer to reopen the assessment which was already barred under the old Act.
The reason is that such a construction of section 297(2)(d)(ii) would be tantamount to giving of retrospective operation to that section which is not warranted either by the express language of 721 the section or by necessary implication.
The principle is based on the well known rule of interpretation that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time.
On behalf of the appellants reference was made to the opening phrase "where in respect of any assessment year after the year ending on the 31st day of March 1940" occurring in section 297(2)(d)(ii) of the new Act, but these general words cannot take in their sweep assessment years subsequent to the year ending on 31st March, 1940 without regard to the question whether the right to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act.
We consider that the language of the new section must be read as applicable only to those cases where the right of the Income Tax Officer to reopen the assessment was not barred under the repealed section.
In our view, the new statute does not disclose in express terms or by necessary implication that there was a revival of the right of the Income Tax Officer to reopen an assessment which was already barred under the old Act.
This view is borne out by the decision of this Court in S.S. Gadgil vs Lal & Company(1).
In that case, a notice was issued against the assessee as an agent of a non resident on 27th March, 1957 and that notice related to the assessment year 1954 55.
Under clause (iii) of the proviso to section 34( 1 ) as it stood prior to its amendment by the Finance Act, 1956, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non resident after the expiry of one year from the end of the year of assessment.
The right to commence a proceeding for assessment against the assessee as agent of a non resident for the assessment year 1954 55 therefore ended on 31st March, 1956 under the new Act before its amendment in 1956.
This provision was, however, amended by the Finance Act, 1956 and under the amended provision the period of limitation was extended to two years from the end of the assessment year.
The amendment was made on 8th September, 1958 but was given effect from 1st April, 1956.
Since the time within which notice could be issued against a person deemed to be an agent of a non resident was extended to two years from the end of the assessment year, it was contended on behalf of the Income Tax Officer that the notice issued by him was within the terms of the amended provision and was; therefore, a valid notice.
Now the notice issued on 27th March, 1957 was clearly within a period of two years from the end of the assessment year 1954 55 and if the amended provision, applied, the! notice would be a valid notice.
It was, however, held by this Court that notice was (1) 722 not a valid notice inasmuch as the right of the Income Tax Officer to reopen the assessment of the assessee under the unmended provision became barred on 31st March, 1956 and the amended provision did not operate against him so as to authorise the Income Tax Officer to commence proceedings for reopening the assessment of the assessee in a case where before the amended provision came into force, the proceedings had become barred under the unamended provision.
At page 240 of the Report, Shah, J. speaking for the Court observed as follows : "As we have already pointed out, the right to commence a proceeding for assessment against the assessee an agent of a non resident party under the Income Tax Act before it was amended, ended on March 31, 1956.
It is true that under the amending Act by section 18 of the Finance Act, 1956, authority was conferred upon the Income Tax Officer to assess a person as an agent of a foreign party under section 43 within two years from the end of th e year of assessment.
But authority of the Income Tax Officer under the Act before it was amended by the Finance Act of 1956, having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending ACt.
This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act.
The legislature has given to section 18 of the Finance Act, 1956, 'only a limited retrospective operation, i.e. up to April 1, 1956 only.
That provision must be read subject to the rule that in ' the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospective than is expressly mentioned, nor to authorise the Income Tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided become barred".
In our opinion, the principle of this decision applies in the present Case and it must be held that on a proper construction of section 297(2)(d)(ii) of the new Act, the Income Tax Officer cannot issue a notice under section 148 in order to reopen the assessment of an assessee ,in a ease where the right to reopen the assessment was barred under the old Act at the.
date when the new Act came into force.
It follows therefore that the notices dated 13 11 1963 and 9 1 1964 issued by the Income Tax 723 Officer, Ahmedabad were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ.
For the reasons expressed, we hold that the judgment of the.
High Court of Gujarat dated 14th/15th December, 2964 is correct and this appeal must be dismissed with costs.
V.P.S. Appeal dismissed.
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Under section 297(2)(d)(ii) of the Income tax Act, 1961.
dealing with repeals and savings, notwithstanding the repeal of the 1922 Act, where in respect of any assessment year after the year ending on 31st day of March, 1940, any income had escaped assessment and no proceedings under section 34 of the repealed Act are pending at the commencement of the 1961 Act, a notice under section 148 of the 1961 Act may be issued for reopening the assessment.
The respondent was assessed to income tax for the assessment year 1947 48.
Thereafter the Income Tax Officer issued a notice under section 34(1)(a) of the Income tax Act, 1922, for reassessment.
There was no proper service of the notice, and despite the respondent 's objection, the Income tax Officer determined the total income of the respondent at Rs. 89,000.
The Appellate Assistant Commissioner allowed the respondent 's appeal by order dated 5th January, 1963 on the ground that there is no valid service of the notice.
On 1st April, 1962 the1922 Act was repealed and the Income tax Act.
1961 came into force, and the time for taking action for reassessment was enlarged.
from 8 years to 16 years.
By that date, the right of the Income Tax Officer to reopen the assessment under section 34(1)(a) of the 1922 Act became barred.
The Income Tax Officer however, issued a notice under section 148 of the 1961 Act for reopening the assessment.
The respondent, thereupon filed a writ petitioning the High Court for quashing the notice and the petition was allowed.
In appeal to this Court.
HELD: On a proper construction of section 297(2)(d)(ii) the Income Tax Officer cannot issue a notice under section 148 in order to reopen the assessment of an assessee in a case where the right to reopen the assessment under the 1922 Act was barred at the date when the 1961 Act came into force.
The reason is that unless the statute expressly so provides or there is a necessary implication, retrospective operation should not be given to it so as to affect, alter or destroy any right already acquired or to revive any remedy ' already lost by effluviums of time.
The 1961 Act does not disclose in express terms or by necessary implication that there was a revival of the right of the Income Tax Officer to reopen an assessment which was already barred under the 1922 Act and if the section is construed as reviving such a right it would be tantamount to giving it retrospective operation which is not warranted by its language.
The words 'where in respect of any assessment year after the year ending on 31st day of March, 1940, ' in the section, cannot take in their sweep all assessment years subsequent to the year ending on 31st March, 1940 without regard 715 to the question whether the fight to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act.
The section must he read as applicable only to those cases where the right of the Income Tax Officer to reopen the assessment was not barred under the repealed section.
[720 H; 721 A D; 722 G H] S.S. Gadgil vs Lal & Co. , followed.
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2462.txt
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Appeal No. 103 of 1950.
Appeal from a Judgment of the Bombay High Court (Chagla C.J. and Tendolkar J.) dated 25th March, 1949, in Income Tax Reference No. 31 of 1948.
M. C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the appellant.
R.J. Kolah, for the respondent.
Oct. 1.
The Judgment of the Court was delivered by KANIA C.J.
This is an appeal from a judgment of the High Court at Bombay and it arises out of the opinion ex pressed by the High Court in respect of a question submitted to it by the Income tax Tribunal.
The material facts are these.
The respondent is a textile mills company carrying on the business of manufacturing and selling textile goods.
For the assessment years 1943 44 and '1944 45, covering the accounting periods ending with the calendar years 1941, 1942 and 1943, the respondent claimed the expenditure incurred by it in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, as revenue expenditure and an allowable deduction out of its income for the said periods, under section 10(2) (xv) of the Indian Income tax Act.
Following the decision of the Bombay High Court in Commissioner of Income tax, Bombay vs The Century Spinning 13 and Weaving and Manufacturing Co. Ltd.(1), the Tribunal allowed the claim of the assessee.
At the desire of the appellant, the Tribunal submitted the following question for the opinion of the High Court : "Whether, on the facts of the case, the expenditure incurred by the assessee company in registering for the first time its trade marks which were not in use prior to the 25th February, 1937, is revenue expenditure and an allowable deduction under section 10(2) (xv) of the Indian Income tax Act ?" The High Court, following its previous decision and finding that the fact of the trade marks having come into use after the 25th of February, 1937, made no difference in the result, answered the question in the affirmative.
The Commissioner of Income tax, Bombay, has come on appeal to us.
It was argued on behalf of the appellant that the ques tion whether a certain disbursement was of a capital or revenue nature, has to be decided according to the principle laid down in British Insulated and Helsby Cables Ltd. vs Atherton(2).
In that case the company which carried on the business of manufacturers of insulated cables established a pension fund for its clerical and technical salaried staff.
The fund was constituted by a trust deed which provided that members should contribute a percentage of their salaries to the fund and that the company should contribute an amount equal to half the contributions of the members; and further that the company should contribute a sum of pound 31,784 to form the nucleus of the fund and to provide the amount necessary in order that past years of service of the then existing staff should rank for pension.
That sum was arrived at by an actuarial calculation on the basis that the sum would ultimately be exhausted when the object for which it was paid was attained.
The House of Lords held that this payment was in the nature of capital expenditure and was therefore not an admissible deduction.
Although in the opinions expressed by the different members of the House of Lords (1) (2) 14 the line of approach is not completely the same, the principle stated by Lord Cave in his speech has been test distinguish capital expenditure from revenue expenditure.
It was recognised that a sum of money expended, not of necessi ty and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carry ing on of business, may yet be expended wholly and exclu sively for the purposes of the trade.
The Lord Chancellor observed that the question appeared to be a question of fact which was proper to be decided by the Commissioners upon the evidence brought before them in each case.
The test that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing that is going to recur every year was considered an useful element in arriving at the decision but was not certainly the deci sive fact.
The Lord Chancellor observed as follows: "But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advan tage for the enduring benefit of the trade, I think that there is very good reason for treating such an expenditure as properly attributable not to revenue but to capital.
" In order to appreciate the true position here Correctly it is next necessary to notice the relevant provisions of the Indian .
It may be noted that before this Act there was no in India but it was recognised that an action lay for infringement of a trade mark independently of an action for passing off goods.
The Act opens with the preamble "whereas it is expedient to provide for the registration and more effective protection of trade marks . "Section 2(1) of the Act defines a trade mark as meaning "a mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right to use the mark, whether with or without any indication of the identity of that person.
" Section 14 permits the 15 proprietor of a trade mark to have the trade mark regis tered.
The Attorney General, on behalf of the appellant, relied on sections 20, 21, 28 and 29 in support of his contention.
He argued that before the , although the proprietor of a trade mark could maintain an action for infringement of his trade mark and the cause of action in such a case was quite different from the cause of action in an action for passing off goods, by the the right of the owner of the trade mark is in creased by section 21, and it is made assignable independ ently of the goodwill under sections 28 and 29 of the .
The question thus resolves itself into whether by reason of these two incidents the case falls within the principle laid down by Lord Chancellor Cave, as mentioned above.
In our opinion, the contention urged on behalf of the appellant must fail.
It is not contended that by the a new asset has come into existence.
It was con tended that an advantage of an enduring nature had come into existence.
It was argued that just as machinery may attain a higher value by an implementation causing greater produc tive capacity, in the present case the trade mark which existed before the acquired an advantage of an enduring nature by reason of the and the fees paid for registration thereunder were in the nature of capital expenditure.
In our opinion, this analogy is falla cious.
The machinery which acquires a greater productive capacity by reason of its improvement by the inclusion of some new invention naturally becomes a new and altered asset by that process.
So long as the machinery lasts, the im provement continues to the advantage of the owner of the machinery.
The replacement of a dilapidated roof.
by a more substantial roof stands on the same footing.
The result however of the is only two fold.
By regis tration, the owner is absolved from the obligation to prove his ownership of the trade mark.
It is treated as prima facie proved on production of the registration certificate.
It thus merely saves him the trouble of leading evidence, in the event of a suit, in a court 16 of law, to prove his title to the trade mark.
It has been said that registration is in the nature of collateral security furnishing the trader with a cheaper and more direct remedy against infringers, Cancel the registration and he has still his right enforceable at common law to restrain the piracy of his trade mark.
In our opinion, 'this is neither such an asset nor an advantage as to make payment for its registration a capital expenditure.
In this connec tion it may be useful to notice that expenditure incurred by a company in defending title to property is not considered expense of a capital nature.
In Southern (H. M. Inspector of Taxes) vs Borax Consolidated Limited(1).
it is there stated that where a sum of money is laid out for the acqui sition or the improvement of a fixed capital asset it is attributable to capital, but if no alteration is made in the fixed capital asset by the payment, then it is properly attributable to revenue, being in substance a matter of maintenance, the maintenance of the capital structure or the capital asset of the company.
In our opinion, the advantage derived by the owner of the trade mark by registration falls within this class of expenditure.
The fact that a trade mark after registration could be separately assigned, and not as a part of the goodwill of the business only, does not also make the expenditure for registration a capital expend iture.
That is only an additional and incidental facility given to the owner of the trade mark.
It adds nothing to the trade mark itself.
In the judgment of the High Court some emphasis is laid on the fact that by reason of registration the duration of the trade mark is only for seven years, and it does not thus possess that permanency which is ordinarily required of an expenditure to make it a capital expenditure and in order to prove the existence of a benefit of an enduring character.
The learned Attorney General contended that the view that as the benefit of registration lasted for seven years, i.e., for a limited period, it prevented the expenses of registra tion being treated as capital expenditure, is unsound (1) [1942] 10 I.T.R. Suppl.
17 and for that contention he relied on Henriksen (Inspector of Taxes) vs Grafton Hotel Ltd.(1).
In that case, tenants of licensing premises by agreement with the landlord paid by instalment the monopoly value fixed by the licensing jus tices when granting the licence under section 14 of the Licensing (Consolidation) Act, 1910.
These were sought to be deducted as revenue expenditure but were disallowed by the Court.
Lord Greene M.R. first considered that the pay ment fell into the same class as the payment of a premium on the grant of a lease or the expenditure on improvements to the property which justices may require to be made as a condition of granting a licence.
Having reached that conclu sion he rejected the argument that the payment not being made in one lump sum but by instalments made a difference in the character of the payment.
He observed as follows : "Whenever a licence is granted for a term, the payment is made as on a purchase of a monopoly for that term.
When a licence is granted for a subsequent term, the monopoly value must be paid in respect of that term and so on.
The payments are recurrent if the licence is renewed, they are not peri odical so as to give them the quality of payments which ought to be debited to revenue account.
The thing that is paid for is of a permanent quality although its permanence, being conditioned by the length of the term, is shortlived.
A payment of this character appears to me to fall into the same class as the payment of a premium on the grant of a lease, which is admittedly not deductible.
" The Attorney General relied on these observations to point out that the permanence of the advantage was thus not dependent on the number of years for which it was to enure for the benefit of the proprietor of the trade mark.
In our opinion, these observations have to be read in the context in which they have been made.
The learned Master of the Rolls was discuss ing only the question of payment being made by instalments as not making any difference in the nature of the (1) 3 18 expenditure.
It was first held by him that the payment in question was of a capital nature and of the same character as premium paid on the grant of a lease and was therefore necessarily of a capital nature.
Having come to that conclu sion, he only rejected the contention that because the premium was paid in more instalments than one it lost its character a capital expenditure.
In our opinion, this is an entirely different thing from stating that the fact of the advantage being for a limited time altered the character of the payment in any way.
As observed by Viscount Cave L.C. the question is always one of fact depending on the circumstances of each case individually.
In our opinion, the decision of the High Court reported in Commissioner of Income tax, Bombay vs The Century Spin ning and Weaving and Manufacturing Co. Ltd.(1) is correct and in the present case also the contention of the appellant must fail.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
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The expenditure incurred by a company carrying on the manufacture and sale of textile goods in registering for the first time its trade marks which were not in use prior to the 25th January, 12 1937, is revenue expenditure and an allowable deduction under Sec.
10 (2) (xv) of the Indian Income tax Act.
The fact that a trade mark after registration could be sepa rately assigned and not as a part of the goodwill of the business only, does not make the expenditure for registra tion capital expenditure.
It is only an additional and incidental facility given to the owner of the trade mark; it adds nothing to the trade mark itself.
Judgment of the Bombay High Court affirmed.
Commissioner of Income tax, Bombay vs The Century Spin ning and Weaving and Manufacturing Co. Ltd. ([1947] approved.
British Insulated and Helsby Cables Ltd. vs Atherton ([1926] A.C. 205), Southern vs Borax Con solidated Ltd. ([1942] 10 I.T.R. Supp. 1), Henriksen vs Grafton Hotel Ltd. ([1942] 2 K.B. 184) referred to.
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48.txt
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Civil Appeal Nos 1032 1036 of 1973.
From the Judgment and order dated 16.2.1973 of the Gauhati High Court in Civil Rule Nos. 1142 to 1146 of 1971 S.T. Desai, R.P Agarwala, Mrs Kum Kum Sen, Praveen Kumar, D.N. Mukherjee, Ranjan Mukherjee and N.R. Choudhary for the Appellants.
Dr. V. Gauri Shanker and Miss A. Subhashini for the Respondents.
The Judgment of the Court was delivered by DUIT, J.
The appellants, who are all registered firms within the meaning of section 2(39) of the Income Tax Act, 1961, hereinafter referred to as 'the Act ', have preferred these appeals against the judgments of the Gauhati High Court overruling the challenge of the appellants as to the legality of the interest charged by the Income tax officer for the delayed filing of returns and also as to the constitutional validity of sub section (4) of section 139 of the Act, as it stood before April 1, 197 l The relevant provisions of section 139, as it stood prior to April 1. 1971, are as follows: "section 139(1).
Every person, if his total income . . during the previous year exceeded the maximum amount which is not chargeable to Income tax, shall furnish a return of his income . . . . (a) in the case of every person . before the expiry of six months from the end of the previous 692 year . , or before the 30th day of June of the assessment year, whichever is later; (b) in the case of every other person, before the 30th day of June of the assessment year: Provided that, on an application made in the pre scribed manner, the Income tax officer may, in his discretion, extend the date for furnishing the return (i) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired on or before the 31st day of December of the year immediately preceding the assessment year, and in the case of any person referred to in clause (b), up to a period not extending beyond the 30th day of September of the assessment year without charging any interest; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest; and (iii)up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at nine per cent per annum shall be pay able from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return (a) in the case of a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm and (b) in any other case, on the amount of tax payable on the total income.
693 reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be.
In the case of any person, who in the Income tax officer 's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income tax officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner setting forthwith such other particulars as may be prescribed; Provided that on an application in the prescribed manner the Income tax officer may, in his discretion, extend the date for the furnishing of the return, and when the date for furnishing the return, whether fixed originally or on extension, falls beyond the 30th day of September or, as the case may be, the 31st day of December of the assessment year, the provisions of sub clause (iii) of the proviso to sub section ( 1) shall apply.
Any person who has not furnished a return within the time allowed to him under sub section (1) or sub section (2) may before the assessment is made furnish the return for any previous year at any time before the end of four assessment years from the end of the assessment year to which the return relates, and the provisions of sub clause (iii) of the proviso to sub section (1) shall apply in every such case.
" In all these cases, it is not disputed that no application for extension of time to file returns was made by the appellants for the relevant assessment years.
The returns were submitted before the assessment was made and also before the end of the four assessment years as mentioned in sub section (4) of section 139 of the Act.
The Income tax officer assessed the appellants under section 143(3) of the Act and determined the total incomes of the appellants and the amounts of tax payable by them.
In view of sub section (4) of section 139, the Income tax officer also added to the amount of tax interest calculated at the rate of six per cent per annum on the amount of tax which would have H 694 been payable if the firms had been assessed as unregistered firms.
A Being aggrieved by the charging of interest under sub section (4) read with clause (iii)(a) of the proviso to sub section ( I) of section 139 of the Act, the appellants filed writ petitions before the Gauhati High Court, challenging the charging of interest and the validity of subsection (4) read with clause (iii)(a) of the proviso to sub section ( 1) of section 139 of the Act as violative of Article 14 of the Constitution The Gauhati High Court, as stated already, overruled the challenge and dismissed the writ petitions except that some writ petitions were allowed in part only as the High Court directed the Income tax officers to take into account the advance tax paid by the assessees before calculating the interest.
Hence these appeals.
The first contention made on behalf of the appellants is that it is clear from the provisos to sub sections ( 1) and (2) of section 139 of the Act that unless an application is made for extension of the date for furnishing the return, the question of charging any interest on the amount of tax does not at all arise.
A similar contention was made before the High Court by the appellants, but the High Court overruled the same.
Much reliance has been placed on behalf of the appellants on an observation of this Court in Commissioner of Income tax, A.P. vs M. Chandra Sekhar, ; In that case, this Court has observed that it is only where the Income tax officer extends the time for furnishing the return beyond September 30, or December 31, as the case may be, the interest becomes payable The said observation has been made by this Court relating to clause (iii) of the proviso to sub section ( 1) of section 139 of the Act while considering the question whether charging of interest indicated that the Income tax officer was satisfied that there was sufficient cause for the delay in filing the return of income and whether the cancellation of the penalties levied under section 27(1)(a) of the Act was justified.
Nothing has, however, been said by this Court in respect of sub section (4) of section 139 of the Act.
Sub section (4) is a substantive provision and it does not provide for making an application to the Income tax officer for the purpose of extension of the date for the furnishing of the return.
What is provided in sub section (4) is that even though a person does not furnish the return within the time allowed to him under sub section (I) or subsection (2), yet he may furnish the same before the end of the four assessment years concerned.
695 The substantive provision of sub sections (l) and (2) of section 139 specify the time within which the return has to be filed The provisos to sub sections (1) and (2) confer power on the Income tax officer to extend the date for filing the return on an application in that regard made by the assessee.
So, it is clear that the expression 'time allowed ' in sub section (4) of section 139 is not confined only to the extension of time granted by the Income tax officer, but also to the time originally fixed for the filing of returns under sub sections ( 1) and (2) of section 139 of the Act.
There may be two types of cases for the late filing of returns, namely ( 1) the assessee after getting the date extended by the Income tax officer under sub section ( 1) or sub section (2) of section 139 of the Act, does not file the return within the extended date, but files the same before the end of four assessment years concerned and (2) the assessee without filing any application for extension of time, files the return beyond the period mentioned in sub section ( 1) or sub section (2) but before the end of four assessment years in question.
In either case, the provision of clause (iii) of the proviso to sub section (l) of section 139 will apply.
In other words, the Income tax officer will be entitled to charge interest on the amount of tax in accordance with the provision of clause (iii) of the proviso to sub section ( 1) of section 139.
Thus, where time has been extended by the Income tax officer on an application made in that regard by the assessee and the assessee does not file the return within the time allowed and where no such application has been made by the assessee, but the return is filed by him beyond the time allowed, but before the end of the four assessment years concerned, in either case, the Income tax officer will be entitled to charge interest in accordance with the provision of clause (iii) of the proviso to sub section (1) of section 139 of the Act.
There is, therefore, no substance in the contention of the appellants that as the appellants had not made any application praying for the extension of time for the filing of returns, the Income tax officer had no authority to charge interest under the provision of clause (iii) of the proviso to sub section ( I) of section 139 of the Act The next question that requires consideration relates to the validity of sub section (4) read with clause (iii)(a) of the proviso to subsection (I) of section 139.
It is submitted by the learned Counsel appearing on behalf of the appellants that as, in view of the late filing of the returns, there is postponement of the payment of tax and the Revenue suffers loss on account of delayed payment of tax, the interest when levied takes the character of penalty This contention 696 need not detain us long, for it has already been decided by this Court in Central Provinces Manganese ore Co. Ltd. vs Commissioner of Income tax, [ that interest is levied by way of compensation and not by way of penalty.
In Chandra Sekhar 's case (supra? this Court also has taken a similar view.
The High Court, however, has taken the view that the interest charged partakes also of a penal character.
In expressing that view, the High Court has placed reliance upon a decision of this Court in Jain Brothers and others vs Union of India and others, [ In that case, this Court was mainly considering a challenge to section 271(2) of the Act, which is a penal provision, on the ground of contravention of Article 14 of the Constitution.
The question whether charging of interest under the proviso to section 139(1) of the Act was in the nature of penalty or not, was not considered by this Court.
Indeed, the subject matter was different from that with which we are concerned.
In view of the decisions of this Court in Chandra Sekhar 's case (supra) and in the case of Central Provinces Manganese ore Co. Ltd. (supra), we hold that the charging of interest did not become transformed to penalty.
It is urged on behalf of the appellants that all the assessees who are charged with interest for the late filing of returns, should be classified in one and the same category inasmuch as they are similarly situated, but sub section (4) read with clause (iii) of the proviso to sub section ( I) of section 139 of the Act has without any reasonable justification placed the registered firms in a separate category inasmuch as for the late filing of returns by such firms they are saddled with interest to be calculated on the amount of tax payable by them as unregistered firms.
It is submitted that such separate classification of the registered firms for the purpose of payment of interest under section 139, does not bear any nexus to the object sought to be achieved by the section and, accordingly, the provision of sub section (4) read with clause (iii)(a) of the proviso to sub section (1) of section 139 of the Act is discriminatory and violative of the provision of Article 14 of the Constitution and, as such, is void.
In support of the contention, the appellants have placed much reliance upon a decision of the Karnataka High Court in M. Nagappa vs Income tax officer, Central Circle 1, Bangalore, [ In that case, a learned Single Judge of the Karnataka High Court has struck down as void the provision of sub section (4) read with clause (iii)(a) of the proviso to sub section ( 1) of section 139 The reason that weighed with the learned Judge is that the loss suffered by the Government which is sought to be compensated by the legislative measure 697 should be the same in all cases, irrespective of the fact that the assessee who is responsible for it is a registered firm or.
any other kind of assessee.
If that is the case, then the amount claimed by way of interest should be directly correlated to the amount of tax withheld by the assessee without reference to the kind of assessee concerned in a given case.
It is observed that the object of levy of interest being just reimbursement of what the Government would lose by delayed payment of tax resulting from the delayed filing of the return, it is clear that the levy of interest in the case of a registered firm on the tax which would have been payable if the firm had been assessed as an unregistered firm, is outside the said object.
Accordingly, it has been held that section 139(4) to the extent it required a registered firm to pay interest at the specified rate on the tax assessed as if it were an unregistered firm, whenever the registered firm did not file the return within the specified time, was violative of Article 14 of the Constitution and is, therefore, void.
That decision of the learned Single Judge has been upheld by a Division Bench of the Karnataka High Court and is since reported in [ The Karnataka High Court, before holding that provision of sub section (4) of section 139 read with clause (iii)(a) of the proviso to sub section ( 1) of section 139 of the Act as violative of Article 14 of the Constitution, has not considered the reason why, when a registered firm submits a return beyond time, it is charged with interest calculated on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm.
It is because of certain privileges which have been conferred on a registered firm.
One of the privileges is that the firm is considered as an assessable unit and is taxed at a reduced rate and the partners are assessed on their respective shares in the income of the firm.
This privilege which has been conferred on a registered firm by the Act, is not available to an unregistered firm.
The Legislature is, however, competent to withhold any of the privileges conferred on a registered firm if it violates any of the provisions of the Act.
A registered firm is required to file its return within the time as prescribed by the Act.
Clause (iii)(a) of the proviso to section 139(1) read with sub section (4) of section 139 in effect only provides for the withdrawal of the privilege of the registered firm to be assessed at a reduced rate because of its non compliance with the provisions of sub sections (1) and (2) of section 139 of the Act.
In other words, the registered firm is treated as an unregistered firm for purposes of quantification of interest.
The contention of the appellants that by treating the registered 698 firms as unregistered firms for the charging of interest, the Legislature has placed the registered firms in a separate category is not at all comprehensible.
On the other hand, by treating the registered firms as unregistered firms, the Legislature has avoided the discrimination that would have been there if the registered firms were not so treated for the purpose of charging of interest.
In other words, if the registered firms had been charged with interest on the amount of tax assessed at a reduced rate for the late filing of the returns, there would have been discrimination between registered firm and unregistered firms.
When a registered firm and an unregistered firm commit the same default in filing returns beyond the time allowed under sub sections ( 1) and (2) of section 139 of the Act, it would be unreasonable and unjust to charge two different rates of interest one at a reduced rate for the registered firm and the other at a higher rate for the unregistered firm.
So, in our opinion, section 139(4) read with clause (iii)(a) to the proviso of section 139(1) of the Act, as it stood prior to April 1, 1971, has placed the registered firms and the unregistered firms on the same footing as, for the purpose of interest, they are similarly situated.
Dr. Gouri Shankar, learned Counsel appearing for the Revenue, has pointed out to us that except the Karnataka High Court, other High Courts, namely, Madras High Court, Gujarat High Court, Madhya Pradesh High Court, Punjab & Haryana High Court and the Calcutta High Court in Mahendrakumar Ishwarlal & Co. vs Union of India, , since affirmed on an appeal reported in ; Chhotalal & Co. vs Income tax officer, ; Jiwanmal Hospital vs Income tax officer, ; Hindustan Steel Forges vs Commissioner of Income tax, [ and Mohanlal Soni vs Union of India, [ respectively have taken the view that treating of registered firms as unregistered firms for the purpose of charging of interest for the late filing of returns cannot be said to be arbitrary and violative of Article 14 of the Constitution.
The view expressed in these decisions, in our opinion, is correct.
As has been noticed already, the Karnataka High Court did not consider the question of withholding of the privileges conferred on the registered firm on their default in filing returns within the time allowed under sub sections (1) and (2) of section 139 of the Act, so that they may be treated on equal footing with unregistered firms making the same default.
In the circumstances, no discrimination has been made between a registered firm and an unregistered firm and, accordingly, the provision of sub section (4) of section 139 read with clause (iii)(a) of the proviso to sub section (1) of section 139 of the Act is not violative of Article 14 of the Constitution and is quite 699 legal and valid.
The decision of the Karnataka High Court in Nagappa 's case (supra), as affirmed on appeal by the Division Bench of that High Court, in so far as it declares the said provision as ultra vires Article 14 of the Constitution, is erroneous.
Before we part with these appeals, we think we should clarify one situation, namely, where the advance tax duly paid covers the entire amount of tax assessed, there is no question of charging the registered firm with interest even though the return is filed by it beyond the time allowed, regard being had to the fact that payment of interest is only compensatory in nature.
As the entire amount of tax is paid by way of advance tax, the question of payment of any compensation does not arise.
In C.A. No. 1035 of 1973, it appears that total tax for the assessment year 1968 69 was assessed at RS. 16,288.
The assessee paid advance tax amounting to Rs.39,018 in three instalments on 25.9.1967, 24.1.1968 and 2.3.1968.
It is apparent that the amount of advance tax paid by the assessee fully covered the amount of tax payable by it.
In spite of that, the Income tax officer charged the assessee for the said assessment year a sum of Rs. 14,233 as interest under section 139 of the Act for the delayed filing of the return.
As has been observed earlier, when the amount of tax and already been paid in the shape of advance tax, the question of payment of compensation by way of interest does not arise and the Income tax officer was not, therefore, justified in charging interest.
The assessee is, therefore, entitled to get refund of the amount paid by way of interest for the said assessment year.
The Income tax officer is directed to refund to the assessee the amount paid on account of interest.
In the result, C.A. No. 1035 of 1973 is allowed and the remaining appeals are dismissed.
There will, however, be no order as to costs in any of these appeals.
S.L. Appeal No. 1035/73 allowed and others dismissed.
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% The appellants, registered firms under the Income Tax Act, 1961, filed delayed returns.
The Income Tax officer assessed the appellants under section 143(3) of the Act and determined the total incomes of the appellants and the amounts of the tax payable by them.
The Income Tax officer also determined and added, under sub section (4) of section 139 of the Act, the amounts of interest on the amounts of tax payable by the appellants.
The appellants challenged the charging of interest in the High Court by writ petitions.
The High Court dismissed all but some writ petitions which were allowed in part to the extent that the Income tax officer was directed to take into account the advance tax paid by the assessees while calculating the interest.
The appellants have filed Civil Appeals Nos.
1032 1036 of 1973, 1927 1933 of 1978 and 1288 and 1289 of 1980 against the decision of the High Court.
Allowing Civil Appeal No. 1035 of 1973 and dismissing all the other appeals, the Court, ^ HELD: Sub section (4) of section 139 of the Income Tax Act is a substantive provision, which does not provide for the making of an application to the Income Tax officer for extention of the date for furnishing return.
The sub section provides that even though a person does not furnish the return within the time allowed under sub section (1) or (2) of section 139, yet he may furnish the same before the end of four assessment years concerned.
The substantive provisions of subsections (1) and (2) specify the time within which the return has to be filed.
The provisos to the sub sections confer power on the Income tax officer to extend the date for filing the return on an application.
The expression "time allowed" in sub section (4) is not confined only to the extension of time granted by the Income tax officer but also to the time originally fixed for 690 filing the returns under sub section(1) and (2).
[694G H;695A D] The Income Tax officer is entitled to charge interest in accordance with the provisions of clause (iii) of the proviso to sub section (1) of section 139 in a case where time has been extended by the Income Tax officer to file returns on application made by the assessee and the return is not filed within the time allowed, and in a case where no such application has been made by the assessee, and the return is filed beyond the time allowed but before the end of the four assessment years concerned.
[695D F] Secondly, as decided by this Court in Central Provinces Manganese Ore Co. Ltd. vs Commissioner of Income Tax, ; , and Commissioner of Income Tax A.P. vs Chandra Sekhar, ; , the interest is levied by way of compensation, and not by way of penalty as contended by the appellants.
[696A] The contention of the appellants that the provisions of Sub Section (4) of section 139, read with clause (iii) (a) of the proviso to Sub Section (1) of section 139 is discriminatory and violative of Article 14 of the Constitution because Sub Section (4) has placed the registered firms in a separate category inasmuch as they have to pay interest calculated on the amount of tax payable by them as unregistered firms, and a registered firm is treated as an unregistered firm, for purposes of qualification of interest, is not comprehensible, Section 139 (4) read with clause (iii)(a) of the proviso to section 139(1), as it stood prior to April 1, 1971, has placed the registered firms and the unregistered firms on the same footing and is not violative of Article 14 of the Constitution and is quite legal and valid.
[697H; 698A D] Where advance tax duly covers the entire amount of the tax assessed, there is no question of charging a registered firm with interest if the return is filed beyond the time allowed, regard being given to the fact that payment of interest is only compensatory in nature.
As the entire amount of the tax is paid by way of advance tax, the question of payment of any compensation does not arise, and accordingly, in the facts and circumstances of the case in the C.A. No. 1035 of 1973, the Income Tax of officer was not justifed in charging interest, and the assessee in that case is entitled to refund of the amount paid by way of interest.
[699B C, E] Commissioner of Income Tax, A .
P. vs M. Chandra Sekhar, ; , Central Provinces Manganese ore Co. Ltd. vs Commissioner of Income Tax, [1986] 160 I.T.R. 961; Jain Brothers 691 and others vs Union of India and others, ; M. Nagappa vs Income Tax officer, Central Circle I, Bangalore, ; Mahendra Kumar Ishwarlal and Co. v, Union of India, and ; Chhotalal & Co. vs Income Tax officer; ; Jiwanmal Hospital vs Income Tax officer, ; Hindustan Steel Forges vs Commissioner of Income Tax, and Mohanlal Soni vs Union of India, , referred to.
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il Appeal No. 2341 of 1978.
From the Judgement and Decree dated 16.11.1977 of the Andhra Pradesh High Court in Writ Appeal No. 358 of 1976.
Altaf Ahmed, Additional Solicitor General, P. Parmeshwaran and Dilip tandon for the Appellant.
128 A.S. Nambiar and B. Parthasarthy for the Respondent.
The Judgement of the Court was delivered by AHMADI, J.
This appeal, on certificate, is directed against the decision of the High Court of Andhra Pradesh which was quashed the imposition of duty and levy of penalty on the ground that the show cause notice was issued after the expiry of the period of six months from the accrual of the cause of action.
The facts leading to this appeal are as follows: The respondent M/s. Ramdev Tobacco Company, a sole proprietory concern, was at all material times a dealer in tobacco having a licenced warehouse at Guntur.
The dealer was liable to pay duty on the tobacco received at his warehouse and transported to another dealer.
On August 30, 1972 the appellant issued a notice calling upon the respondent to show cause why duty should not be demanded under Rule 160 of Central Excise Rules, 1944 (`the Rules ' hereafter) on 64,444 kgs.
of VFC Farmash Tobacco removed from his warehouse and not accounted for in the warehouse register maintained under the Rules.
The respondent was also asked to show cause why penalty should not be imposed for infraction of Rules 151 and 32(1) of the Rules for illicit removal of the aforementioned quantity of tobacco.
This show cause notice was founded on the allegation that in 1970 the respondent obtained six transport permits (T.P. 2) dated January 13, 1970, February 10, 1970, March 26, 1970, May 16, 1970, July 24, 1970 and August 5, 1970 and transported under each permit more than the quantity of tobacco allowed thereunder in contravention of the aforementioned rules.
The respondent sent a detailed reply to the said show cause notice on November 4, 1972.
After giving a personal hearing to the respondent on September 18, 1973 the appellant came to the conclusion that the respondent had evaded payment of duty on 1272 bags weighing 48,304 Kgs, of VFC Farmash tobacco and issued a demand under Rule 160 in the sum of Rs.1,66,165.76 under adjudication order No. 173/74 dated April 9, 1974.
In addition thereto the appellant imposed a penalty of Rs. 100 for contravention of Rules 151 and 32(1) of the Rules.
Thereupon the respondent filed a writ petition No.2600 of 1974 under Article 226 of the Constitution challenging the aforesaid order of the appellant.
This writ petition was heard and disposed of by a learned Single Judge of the High Court who took the view that the appellant 's action was time barred inasmuch as it was initiated after the expiry of the period of six months from the accrual of the cause of action.
According to the learned Judge under section 129 40(2) of the (`the ' hereinafter) no suit, prosecution or other legal proceeding could be instituted for anything done or ordered to be done under the law after the expiration of six months from the accrual of the cause of action.
Since a period of more than six months had indisputably expired from the dates on which the excess tobacco was transported under the six transport permits in question, the action was clearly time barred.
In this view of the matter the writ petition was allowed and the demand made under the impugned adjudication order both in respect of duty and penalty was quashed.
The present appellant questioned the correctness of this view in appeal, Writ Appeal No. 358 of 1976, but in vain.
The Division Bench found the view taken by the learned Single Judge in accord with its view in Writ Petition No. 2516 of 1974 decided on April 1, 1976.
It, therefore, dismissed the appeal but since it had granted a certificate to appeal in the case relied on, it also granted a similar certificate which has given rise to this appeal.
Sub section (2) of section 40 of the as it stood at the relevant point of time before its amendment by Amendment 22 of 1973 read as under: "No suit, prosecution or other legal proceeding shall be instituted for anything done or ordered to be done under the after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of".
Before we proceed to analyse this sub section it would be advantageous to bear in mind that sub section (1) of this section bars the institution of any suit, prosecution or other legal proceeding against the Central Government or its officer in respect of any order passed in good faith or any act in good faith done or ordered to be done under the .
The second sub section prescribes a period of limitation for suits, prosecutions and other legal proceedings instituted, lodged or taken for anything done or ordered to be done under the .
That is why in Public Prosecutor, Madras vs R.Raju & Anr., etc.; , it was urged on a conjoint reading of the two sub sections that sub section (2) applied only to Government and could not come to the rescue of a tax payer.
Rejecting this contention this Court held: "The two sub sections operate in different fields.
The first sub section contemplates bar of suits against the Central Government or against the officers by protecting them in 130 respect of orders passed in good faith or acts done in good faith.
It is manifest that the second sub section does not have any words of restriction or limitation of class of persons unlike sub section (1).
Sub section (2) does not have any words of qualification as to persons.
Therefore, sub section (2) is applicable to any individual or person.
" This the appellant 's contention that sub section (2) was confined only to the Government officers was found to be unwarranted on the plain words of the provision and was also repelled by reference to other comparable statutes which went to show that whenever the legislature intended to limit the application against the Government officers, the Legislature had chosen appropriate words of limitation to restrict the operation of the provision.
It follows, therefore, that the application of the sub section extended to any person, not being a Government Officer, against whom any suit, prosecution or other legal proceeding was commenced for anything done or ordered to be done under the .
The next contention convassed in that case by the learned counsel for the appellant was that the words "anything done or ordered to be done" employed in the sub section would not include anything done in violation of the .
This Court after referring to the definition of the word `act ' in the , which extended to illegal omissions also, and the case law on the subject observed at page 820 as under: "These decisions in the light of the definition of the word `act ' in the establish that non compliance with the provisions of the statute by omitting to do what the act enjoins will be anything done or ordered to be done under the .
The complaint against the respondents was that they wanted to evade payment of duty.
Evasion was by using and affixing cut and torn banderols.
Books of account were not correctly maintained.
There was shortage of banderols in stock.
Unbanderolled matches were found.
These are all infraction of the provisions in respect of things done or ordered to be done under the .
" It is, therefore, clear from the above observation that any omission or infraction of the statutory provision would also fall within the ambit of the provision.
Non payment of duty or dues which a dealer is under an obligation to pay under the statute was, therefore, held to fall within 131 the scope of the provision.
In that case the complaint against the respondents was that to evade the payment of duty they had used and affixed cut and torn banderols and had failed to maintain the accounts correctly resulting in shortage in stocks.
The respondents were prosecuted for contravention of the Rules punishable under sections 9(b) and 9(d) of the as also under section 420 read with section 511 and 109, I.P.C. The respondents pleaded the bar of section 40 of the as it then stood.
The High Court upheld the contention that the prosecution was barred by the rule of limitation incorporated in section 40 as the same was instituted after the expiry of six months from the date of the commission of the alleged offences.
This Court on the aforesaid line of reasoning affirmed the High Court 's decision.
But the question is whether the issuance of a show cause notice and the initiation of the consequential adjudication proceedings can be described as `other legal proceedings ' within the meaning of sub section (2) of section 40 of the ? If the said departmental action falls within the expression `other legal proceeding ' there can be no doubt that the action would be barred as the same indisputably was initiated six months after the accrual of the cause action.
So the crucial question is whether the issuance of the show cause notice dated August 30, 1972 and the passing of the impugned order in adjudication proceedings emanating therefrom constitutes `other legal proceeding ' within the meaning of section 40(2) of the to fall within the mischief of that sub section which bars such proceedings if commenced after a period of six months from the accrual of the cause of action.
The learned Additional Solictor General submitted that the expression `other legal proceeding ' must be read ejusdem generis with the proceeding expressions `suit ' and `prosecution ' and if so read it becomes crystal clear that the department 's action cannot come within the purview of `other legal proceeding '.
How valid is this contention is the question which we are called upon to answer in the present appeal.
The rule of ejusdem generis is generally invoked where the scope and ambit of the general words which follow certain specific words (which have some common characteristic and constitute a genus) is required to be determined.
By the application of this rule the scope and ambit of the general words which follow certain specific words constituting a genus is restricted to things ejusdem generis with those preceding them, unless the context otherwise requires.
General words must ordinarily bear their natural and larger meaning and need not be confined ejusdem generis to things previously enumerated unless the language of the statute spells out an intention to that effect.
Courts 132 have also limited the scope of the general words in cases where a larger meaning is likely to lead to absurd and unforeseen results.
To put it differently, the general expression has to be read to comprehend things of the same kind as those referred to by the preceding specific things constituting a genus, unless of course from the language of the statute it can be inferred that the general words were not intended to be so limited and no absurdity or unintended and unforeseen complication is likely to result if they are allowed to take their natural meaning.
The cardinal rule of interpretation is to allow the general words to take their natural wide meaning unless the language of the statute gives a different indication or such meaning is likely to lead to absurd results in which case their meaning can be restricted by the application of this rule and they may be required to fall in line with the specific things designated by the preceding words.
But unless there is genus which can be comprehended from the preceding words, there can be no question of invoking this rule.
Nor can this rule have any application where the general words precede specific words.
There can be little doubt that the words `other legal proceeding ' are wide enough to include adjudication and penalty proceedings under the .
Even the learned Additional Solicitor General did not contend to the contrary but what he said was that since this wide expression is preceded by particular words of a certain genus, namely, words indicating reference to proceedings taken in courts only, the wide words must be limited to things ejusdem generis and must take colour from the preceding words and should, therefore, receive a limited meaning to exclude proceedings of the type in question.
There can be no doubt that `suit ' or `prosecution ' are those judicial or legal proceedings which are lodged in a court of law and not before any executive authority, even if a statutory one.
The use of the expression `instituted ' in section 40(2) strengthens this belief.
Since this sub section has been construed by this Court in Raju 's case (supra) not to be confined in its application to only Government servants but to extend to others including the assessees and since the words `for anything done or ordered to be done under this ' are found to be comprehensive enough to include acts of non compliance or omissions to do what the and the Rule enjoin, the limitation prescribed by section 40(2) would undoubtedly hit the adjudication and penalty proceedings unless the expression `other legal proceeding ' is read ejusdem generis to limit its ambit to legal proceedings initiated in a court of law.
The scope of section 40(2) as it stood before its amendment pursuant to Raju 's case came up for consideration before a Division 133 Bench of the Madhya Pradesh High Court in Universal Cables Ltd. vs Union of India, [1977] ELT (J92) wherein the question raised for determination was whether penalty procedings taken under Rule 173Q for the infraction of Rule 173C with a view to evading payment of duty fell within the expression `other legal proceeding ' used in the said sub section.
The High Court conceded that the expression when read in isolation is wide enough to include any proceeding taken in accordance with law, whether so taken in a court of law or before any authority or tribunal but when read with the preceding words `suit ' or `prosecution ' it must be given a restricted meaning.
This is how the High Court expressed itself at page J 106: "Now the language of section 40 (2) is: `no suit, prosecution or other legal proceeding shall be instituted '.
`Suit ' and `prosecution ' which precede the expression `other legal proceeding ' can be taken only in a Court of Law".
After stating the expanse of the ejusdem generis rule, as explained in Amar Chandra vs Excise Collector, Tripura, AIR.
at 1868 (Sutherland, Volume 2 pages 399 400) the High Court observed that there was no indication in the said sub section or elsewhere in the that the said general words were intended to receive their wide meaning and were not to be construed in a limited sense with the aid of the ejusdem generis rule.
A departmental proceeding like penalty proceedings were, therefore, placed outside the scope of the said sub section.
This view was quoted with approval by a learned Single Judge of the Bombay High Court in C.C. Industries & Others vs H.N. Ray and Another, at 453.
These two cases, therefore, clearly support the view canvassed before us by the learned Additional Solicitor General.
We have given our careful consideration to the submission made on behalf of the appellant, reinforced by the view expressed in the aforesaid two decisions.
In considering the scope of the expression `other legal proceeding ' we have confined ourselves to the language of sub section (2) of section 40 of the before its amendment by 22 of 1973 and should not be understood to express any view on the amended provision.
On careful consideration we are in respectful agreement with the view expressed in the aforesaid decisions that the wide expression `other legal proceeding ' must be read ejusdem generis with the preceding words `suit ' and `prosecution ' as they constitute a genus.
In this view of the matter we must uphold the contention of the learned Additional Solicitor General that the penalty and adjudication 134 proceedings in question did not fall within the expression `other legal proceeding ' employed in section 40 (2) of the as it stood prior to its amendment by 22 of 1973 and therefore, the said procedings were not subject to the limitation prescribed by the said sub section.
Mr. Nambiar, the learned counsel for the respondents strongly argued that we should not entertain the submission based on the ejusdem generis rule since it was not raised before the High Court.
That indeed is true but being a pure question of law we have though it fit to entertain the same.
We therefore, do not entertain this objection.
In the result we allow this appeal and set aside the order passed by the learned Single Judge as well as the Division Bench which affirmed it and dismiss the respondent 's writ petition itself.
We also set aside the order by which the appellant was directed to pay costs.
We restore the adjudication order dated April 4, 1974 and all consequential orders, if any, passed thereunder.
Interim stay granted on August 16, 1979 is vacated and the appellant will be entitled to recover the dues from the security furnished pursuant to that order.
The appeal is allowed accordingly with no order as to costs.
R.S.S. Appeal allowed.
|
The appellant issued a notice calling upon the respondent who was a dealer in tobacco to show cause why duty should not be demanded under Rule 160 of the Central Excise Rules, 1944 on the tobacco removed from his warehouse and not accounted for, and further to show cause why penalty should not be imposed for infraction of the Rules.
The respondent sent a detailed reply, and after hearing him the appellant came to the conclusion that the respondent had evaded payment of duty.
Thereupon the appellant issued a demand notice for the duty payable and further imposed a penalty.
The respondent filed a writ petition in the High Court challenging the order of the appellant.
The learned Single Judge allowed the petition taking the view that the appellant 's action was time barred because under section 40(2) of the no suit, prosecution or other legal proceedings could be instituted for anything done or ordered to be done under the law after the expiration of six months from the accrual of the cause of action.
The Division Bench dismissed the appellant 's appeal.
Before this Court it was inter alia contended on behalf of the appellant that the expression `other legal proceeding ' is preceded by particular words of a certain genus, i.e., `suit ' and `prosecution ', indicating reference to proceedings taken in courts only, and, therefore, the wide words must be limited to things ejusdem generis and must take colour from the preceding words and receive a limited meaning to exclude proceedings of the type in question.
Allowing the appeal of the Revenue, this Court, HELD: (1) The rule of ejusdem generis is generally invoked where 127 the scope and ambit of the general words which follow certain specific words (which have some common characteristic and constitute a genus) is required to be determined.[131G] (2) The cardinal rule of interpretation is to allow the general words to take their natural wide meaning unless the language of the statute gives a different indication or such meaning is likely to lead to absurd results in which case their meaning can be restricted by the application of the rule of ejusdem generis and they may be required to fall in line with the specific things designated by the proceding words.
But unless there is a genus which can be comprehended from the preceding words, there can be question of invoking this rule.
Nor can this rule have any application where the general words precede specific words [132B C] (3) The wide expression `other legal proceeding ' must be read ejusdem generis with the preceding words `suit ' and `prosecution ' as they constitute a genus.
[133H] (4)`Suit ' or `prosecution ' are those judicial or legal proceedings which are lodged in a court of law and not before any executive authority, even if a statutory one.
[132E F] (5) The penalty and adjudication proceedings in the instant case did not fall within the expression `other legal proceeding ' employed in section 40(2) of the Act, as it stood prior to its amendment by Art.22 of the 1973, and therefore, the said proceedings were not subject to the limitation prescribed by the said sub section.
[ 133H; 134A] Public Prosecutor, Madras vs R. Raju & Anr.
; , ; Universal Cables Ltd. vs union of India, [1977] E.L.T. (J92); Amar Chandra vs Excise Collector, Tripura, ; ; C.C. Industries & Ors.
vs H.N. Ray & Anr., , referred to.
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Appeal No. 503 of 1963.
Appeal from the judgment and order dated January 31, 1962, of the Punjab High Court in I.T.R. No. 28 of 1960.
B. N. Kripal and A. N. Kripal, for the appellant.
Gopal Singh and R. N. Sachthey, for the respondent.
April 9, 1964.
The judgment of the Court was delivered by SUBBA RAO, J.
This appeal by certificate granted by the High Court of Punjab raises the question whether interest paid under section 34 of the Land Acquisition Act, 1894, herein after called the Act, is of the nature 'of a capital receipt or of a revenue receipt.
The relevant facts are not in dispute and they may be briefly stated.
The appellant, Dr. Shamlal Narula, is the Manager of a Hindu undivided family, which owned, inter alia, 40 bighas and 11 biswas of land in the town of Patiala.
The Patiala State Government initiated land acquisition proceedings for acquiring the said land under Regulation then prevailing in the Patiala State.
It is common case that the State Regulations are in pari materia with the provisions of the Act.
The State of Patiala first merged into the Union of Pepsu and later the Union of Pepsu merged into the State of Punjab.
It is also common case that there was a Land Acquisition Act in the Union of Pepsu containing provisions similar to those obtaining in the Act.
On October 6, 1953, the Act was extended to the Union of Pepsu.
On September 30, 1955, the Collector of Patiala made an award under the Act ,as a result of which the appellant received on December 1, 1955, a sum of Rs. 2,81,822/ , which included a sum of 48,660/ as interest up to the date of the award.
For the year 1956 57, the Income tax Officer included the said interest in the income of the Hindu undivided family of which the appellant is the manager, and assessed the same to income tax, after overruling the appellant 's contention that the said interest was a capital receipt and, therefore, not liable to tax.
On June 14, 1957, the Appellate Assistant Commissioner confirmed the order of the Income tax Officer.
The Appellant preferred an appeal to the Income tax Appellate Tribunal.
The said Tribunal by its order dated July 9, 1957, held that 670 the said amount representing the interest was a capital re ceipt and on that finding the said amount was excluded from the total income of the assessee.
At the instance of the Commissioner of Income tax the said Tribunal referred the following question to the High Court of Punjab under section 66 (1) of the Income tax Act, 1922: "Whether on a true interpretation of section 34 of the Land Acquisition Act and the Award given by the Collector 'of Pepsu on the 30th September, 1955, the sum of Rs. 48,660/ , was captital receipt not liable to tax under the Indian Income tax Act?" The said reference was heard by a Division Bench of the High Court and it held that the said amount was not a capital but a revenue receipt and as such liable to tax under the Indian Income tax Act.
Hence the present appeal.
Learned counsel for the appellant raised before us two contentions, namely, (i) the sum of Rs. 4.8,660/ received by the appellant under the award was compensation for deprivinl,7 him of his right to possession of his property and was therefore, a capital receipt not liable to tax; and (ii) whatever may be the character of the amount awarded under section 34 of the Act by way of interest in a case where possession of the land has been taken by the State after the award, in a case where possession of the land acquired has been taken before the award, it would be a capital receipt, for it is said that in the latter the interest necessarily takes the character of compensation for depriving the owner of the land his, right to possession.
On behalf of the Revenue the order of the High Court is sought to be sustained for the reasons stated therein.
The question raised turns upon the true meaning of the provisions of section 34 of the Act.
It reads: "When the amount of such compensation is not paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate 'of six per ~centum per ~annum from the time of so ~takin possession until it should have been so paid or deposited".
The section itself makes a distinction between the amount awarded as compensation and the interest payable on the, amount so awarded.
The interest shall be paid on the amount awarded from the time the Collector takes possession until the amount is paid or deposited.
To appreciate the scope of the section it is necessary to notice briefly the scope of an award and the manner in which possession is taken under the Act.
After the statutory notifications are issued and the 671 requisite notice is given to the persons interested in the land so acquired, the Collector, after holding the necessary enquiry, makes an award, inter alia, determining the amount of compensation payable for the land so acquired.
Section 15 in of the Act says that in determining the amount of compensation the Collector shall be guided by the provisions contained in sections 23 and 24.
Section 23 provides for the matters to be considered in determining compensation; section 24 describes the matters to be neglected in determining the compensation.
A perusal of the provisions of section 23 shows that interest is not an item included in the compensation for any of the matters mentioned therein; nor is it mentioned as a consideration for the acquisition of the land.
Under cl.
(2) of section 23, the Legislature in express terms states that in addition to the market value of the land the court shall in every case award a sum of 15 per cent.
of such market value in consideration of the compulsory nature of the acquisition.
If interest on the amount of compensation determined under section 23 is considered to be a part of the compensation or given consideration of the compulsory nature of the acquisition, the Legislature would have provided for it in section 23 itself.
But instead, payment of interest is provided for separately under section 24 in Part V of the Act under the heading "Payment".
It is so ,done, because interest pertains to the domain of payment after the compensation has been ascertained.
It is a consideration paid either for the use of the money or forbearance from demanding it after it has fallen due.
Therefore, the Act itself makes a clear distinction between the compensation payable for the land acquired and the interest payable on the compensation awarded.
Another approach to the problem leads to the same result.
Under section 16 of the Act when the Collector has made an award under section 11 he may take possession of the land which shall thereupon vest absolutely in the Government free from all encumbrances.
Under section 17 thereof: "In cases of urgency, whenever the appropriate Government so directs, the Collector, though no such award has been made, may, on the expiration of fifteen days from the publication of the notice mentioned in section 9, sub section (1), take possession of any waste land or arable land needed for public purposes or for a Company.
Such land shall thereupon vest absolutely in the Government, free from all encumbrances".
Under both the sections the land acquired vests absolutely in the Government after the Collector has taken possession in one case after the making of the award and in the other, even 672 before the making of the award.
In either case, some time may lapse between the taking of possession of the acquired land by the Collector and the payment or deposit of the com pensation to the person interested in the land acquired.
As the land acquired vests absolutely in the Government only after the Collector has taken possession of it, no interest therein will be outstanding in the claimant after the taking of such possession: he is divested of his title to the land and his right to possession thereof, and both of them vest thereafter in the Government.
Thereafter he will be entitled only to be paid compensation that has been or will be awarded to him.
He will be entitled to compensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government.
It is as it were that from that date the Government withheld the compensation amount which the claimant would be entitled to under the provisions of the Act.
Therefore, a statutory liability has been imposed upon the Collector to pay interest on the amount awarded from the time of the taking possession until the amount is paid or deposited.
This amount is not, therefore, compensation for the land acquired or for deprivin the claimant of his right to possession, but is that paid to the claimant for the use of his money by the State.
In this view there cannot be any difference in the legal position between a case where possession has been taken before and that where possession has been taken after the award, for in either case the title vests in the Government only after possession has been taken.
The Legislature expressly used the word "interest" with its well konwn connotation under section 34 of the Act.
It is, therefore, reasonable to give that expression the natural meaning it bears.
There is an illuminating exposition of the expression "interest" by the House of Lords in Westminster Batik, Ltd. vs Riches(1).
The question there was whettier where in an action for recovery of any debt or damages the court exercises its discretionary power under a statute and orders that there shall be included in the sum for which the judgment is given interest on the debt or damages, the sum of interest so included is taxable under the Income tax Acts.
If the said amount was "interest of money" within Schedule D and the General Rule 21 of the All Schedules Rules of the Income Tax Act, 1918, income tax was payable thereon.
that context it was contended that money awarded as damages for the detention of money was not interest and bad not the quality of interest.
Lord Wright observed: "The general idea is that he is entitled to compensation for the deprivation.
From that point of view (1) , 189.
673 it would seem immaterial whether the money was due to him under a contract express or implied, or a statute, or whether the money was due for any other reason in law.
In either case the money was due to him and was not paid or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation, whether the compensation was liquidated under an agreement or statute, as for instance under section 57 of the Bills of Exchange Act, 1882, or was unliquidated and claimable under the Act as in the present case.
The essential quality of the claim for compensation is the same, and the compensation is properly des cribed as interest".
This passage indicates that interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered, because he had not that use.
It is something in addition to the capital amount, though it arises 'out of it.
Under section 34 of the Act when the Legislature designedly used the word "interest" in contradistinction to the amount awarded, we do not see any reason why the expression should not be given the natural meaning it bears.
The scheme of the Act and the express provisions there,of establish that the statutory interest payable under section 34 is not compensation paid to the owner for depriving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired.
We shall now proceed to consider the case law cited at the Bar.
Where a Tribunal directed the Improvement Trust, under the provisions of section 28 of the Land Acquisition Act, to pay interest to the assessee from the date of taking possession ,of the property to the date of payment, a Division Bench of the Allahabad High Court held, in Behari Lal Bhargava vs Commissioner of Income tax, C. P. and U. P. (1), that the interest so awarded was in the nature of compensation for the loss of the assessee 's right to retain possession of the property acquired and, therefore, was no income liable to tax.
The reason for the said conclusion is stated thus: "It is not the "fruit of a tree" to borrow the simile used in Shaw Wallace 's case (2) but was compensation or damages for loss of the right to re (1) , 24.
(2) A.I.R. 1932 P.C. 138.
LP(D)lSC 22 .
674 tain possession; and it seems to us that Section 28 was designed as a convenient method of measuring such damages in terms of interest".
As we have pointed out earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter owner of the land so acquired ceases to have any title or right of possession to the land acquired.
Under the award he gets compensation for both the rights.
Therefore, the interest awarded under section 28 of the Act, just like under section 34 thereof, cannot be a compensation or damages for the loss of the right to retain possession but only compensation payable by the State for keeping back the amount payable to the owner.
Adverting to the said decision a Division Bench of the Madras High Court in Commissioner of Income tax, Madras vs CT.
N. Narayanan Chettiar(1) observed: ". . . with great respect we find ourselves unable to follow the reasoning.
Certainly we are not prepared to accept the judgment as a guide to the decision in the present case".
So was the interest granted to an assesse under section 18A of the Income tax Act on the advance payment of tax by him under the provision of that section held to be income taxable in his hand: see Commissioner of Income tax, Bihar and Orissa vs Maharajadhiraj Sir Kameshwar Singh(2).
There when the decision of the Allahabad High Court in Behari Lal Bhargava 's case(3) was relied upon, the learned Judges,.
refusing to follow it, observed thus: "It is not a matter of discussion for the Central Government but the duty to pay interest is imposed by statute.
Apart from this I think (with great respect) that the Allahabad decision is of doubtful authority.
The decision is not consistent with the principle laid down in Schulze vs Bensted(1) and Commissioners of Inland Revenue vs Barnato(5).
The Madras High Court expressly declined to follow the Allahabad case in Commissioner of Income tax vs Narayanan Chettiar(1).
" The Kerala High Court in P. V. Kurien vs Commissioner of Income tax, Kerala(6) held that interest paid on the enhanc ed amount of compensation directed to be paid by an appellate (1) , 477.
(2) , 225.
(3) (4) (5) (6) 675 court in an appeal against an award of compensation for compulsory acquisition of land under the Land Acquisition Act represented capital and was not income liable to be taxed under the Indian Income tax Act.
It was argued there, sum estimated in terms of interest.
In coming to the conclusion which they did, the learned Judges relied upon the decision of the Judicial Committee in Inglewood Pulp and Paper Co., Ltd. vs New Burnswick Electric Power Commission(1) and that of the Madras High Court in Revenue Divisional Officer, Trichinopoly vs Venkatarama Ayyar(2).
In the former, the Judicial Committee directed the purchaser who had taken delivery and possession of the property he had purchased before the sale to pay interest to the vendor on the purchase money from the date he had taken possession on the ground that "the right to receive interest takes the place of the right to retain possession and is within the rule"; and in the latter, though it arose under the Land Acquisition Act, possession was taken by the Government under circumstances falling outside the scope of sections 16 and 17 of the said Act.
In both the cases the title did not pass to the vendee in one case and to the State in the other when possession was taken by them and, therefore, it may be said that the owner was given interest in place of his right to retain possession of the property.
But in a case where title passes to the State, the statutory interest provided thereafter can only be regarded either as representing the profit which owner 'of the land might have made if he had the use of the money or the loss he suffered because he had not that use.
In no sense of the term can it be described as damages or compensation for the owner 's right to retain possession, for he has no right to retain possession after possession was taken under section 16 or section 17 of the Act.
We, therefore, hold that the statutory interest paid under section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income tax Act.
The order of the High Court is, therefore, correct.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
(1) (2) L/ P(D) ISCI 22(a) .
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The State acquired the land of the appellant.
The Collector made an award under the Land Acquisition Act as a result of which the appellant received Rs. 2,81,822/ , which included a sum of Rs. 48,660/ as interest upto the date of the award. 'The Income tax Officer included Rs. 48,660/ (the said interest) in the total income of the appellant on the ground that the said amount was not a capital receipt.
The matter went upto the Income tax Appellate Tribunal.
The Tribunal excluded the said interest from the total income of the assessee (appellant) on the ground that it was a capital receipt.
On a reference the High Court held that the said interest was not a capital but a revenue receipt and as such liable to tax under the Indian Income tax Act.
The High Court granted a certificate to the appellant to file an appeal to the Supreme Court.
Hence the appeal.
Held: (i) The scheme of the Land Acquisition Act and the express provisions thereof establish that the statutory in terest payable under section 34 is not compensation paid to the owner for depriving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired.
In other words the statutory interest paid under section 34 of the Act is interest paid for the delayed payment of the compensation amount and, therefore, is a revenue receipt liable to tax under the Income tax Act.
Behari Lal Bhargava vs Commissioner of Income tax, C.P. and U.P., (1941), 9 I.T.R. and P. V. Kurien, vs Cmmissioner of Income tax, Kerala, , overruled.
Westminister Bank Ltd. vs Riches, , Com missioner of Income tax, Madras vs CT.
N. Narayanan Chettiar, and Commissioner of Income tax Bihar and Orissa vs Maharajadhiraj Sir Kameshwar Singh, , approved.
Inglewood Pulp and Paper Co. Ltd. vs New Brunswaick Electric Power Commission, and Revenue Divisional Officer, Trichinopoly vs Venkatarama Ayyar, , distinguished.
Shaw Wallace 's case, A.I.R. 1932 P.C. 138, Schulze vs Bensted, , and Commissioner of Inland Revenue vs Barnato, , referred to.
(ii) The interest under section 34 of the Land Acquisition Act shall be paid on the amount awarded from the time the Collector take possession until the amount is paid or deposited.
It 669 makes no difference in the legal position between a case where possession has been taken before and that where possession 'has been taken after the award, for in either case the title vests" in the Government only after possession has been taken.
In no sense of the term can it (interest) be described as damages or compensation for the owner 's right to, retain Possession, for as he has no right to retain possession after possession was taken under section 16 or section 17 of the Act.
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1899.txt
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ition (Criminal) No. 941 of 1984.
(Under article 32 of the Constitution of India) S.L. Chibber for the Petitioner.
Ashwani Kumar and R.N. Poddar for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The short question which arises for decision in this petition under Article 32 of the Constitution is whether it is open to a person who is undergoing imprisonment on being convicted of an offence committed by him to claim that the period occupied by the investigation or inquiry carried on and the trial held while he was undergoing imprisonment in respect of another offence alleged to have been committed by him should be set off against the term of imprisonment imposed on him on being convicted of the latter offence, under section 428 of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'the Code ').
726 The facts relevant for the purpose of this case are these: The petitioner was convicted of an offence punishable under section 307 of the Indian Penal Code and sentenced to undergo rigorous imprisonment for seven years and to pay a fine of Rs. 100/ in a Sessions Case on February 1, 1980 by the Addl.
Sessions Judge, Karnal.
In the same case, he was also convicted of an offence punishable under section 459 of the Indian Penal Code and sentenced to undergo rigorous imprisonment for five years and to pay a fine of Rs. 100/ .
Both the sentences of imprisonment were directed to run concurrently.
The petitioner was in judicial custody with effect from January 11, 1980 in another case F.I.R. No. 315/78 under sections 457/380/411 of the Indian Penal Code before a Metropolitan Magistrate at Delhi.
That case ended in his conviction on February 16, 1981 for an offence punishable under section 457 of the Indian Penal Code and he was sentenced to undergo imprisonment for one year and to pay a fine of Rs. 200/ .
In the same case he was convicted of an offence punishable under section 380 of the Indian Penal Code and sentenced to undergo rigorous imprisonment for four months and to pay fine.
The two sentences of imprisonment imposed in this case were directed to run concurrently.
In this case it was further ordered that the petitioner was entitled to the set off as provided by section 428 of the Code.
It is not necessary to refer to the other case or cases in which he has also been convicted in order to decide the issue involved in this case.
The petitioner is undergoing rigorous imprisonment for seven years as directed by the Addl.
Sessions Judge, Karnal in the Sessions case from February 1, 1980 at the District Jail at Rohtak.
The sentences of imprisonment imposed by the Metropolitan Magistrate, Delhi will commence to run at the expiration of the imprisonment imposed by the Addl.
Sessions Judge, Karnal as prescribed by section 427 of the Code since the court has not directed that the subsequent sentence shall run concurrently with the previous sentence.
The petitioner, however, contends that since he was in judicial custody from January 11, 1980 in connection with the investigation and trial of the case which ended in his conviction by the Metropolitan Magistrate on February 16, 1981, the whole of the period between January 11, 1980 and February 16, 1981 should be set off against the sentence of imprisonment imposed by the Metropolitan Magistrate, Delhi.
This claim of the petitioner is contested by the State Government of Haryana.
It is urged on behalf of the State Government that while the petitioner is entitled 727 to set off under section 428 of the Code, the period between January 11, 1980 and February 1, 1980 on which date he was sentenced to imprisonment for seven years by the Addl.
Sessions Judge, Karnal against the sentence of imprisonment imposed by the Metropolitan Magistrate, Delhi, the period between February 1, 1980 and February 16, 1981 on which date the petitioner was convicted by the Metropolitan Magistrate, Delhi cannot be set off since during that period the petitioner was actually undergoing imprisonment imposed on him in the Sessions case.
The State Government has relied in support of its contention on the instruction issued by the High Court of Punjab and Haryana in No. 29442 Rules VI.V.38 dated November 29, 1975, the relevant part of which reads thus: "The period of detention undergone by a convict in execution of sentence of imprisonment imposed on him by a court of law while facing inquiry or trial in some other case(s) should not be set off against the term of imprisonment imposed on him on conviction in such other case(s).
" We are concerned in the present case with the correctness of the above instruction.
Section 428 of the Code reads thus: "428.
Period of detention undergone by the accused to be set off against the sentence of imprisonment.
Where an accused person has: on conviction, been sentenced to imprisonment for a term not being imprisonment in default of payment of fine, the period of detention, if any, undergone by him during the investigation, inquiry or trial of the same case and before the date of such conviction, shall be set off against the term of imprisonment imposed on him on such conviction, and the liability of such person to undergo imprisonment on such conviction shall be restricted to the remainder, if any, of the term of imprisonment imposed on him.
" There was no provision corresponding to section 428 of the Code in the Code of Criminal Procedure, 1898 which was repealed and replaced by the present Code.
It was introduced with the object of remedying the unsatisfactory state of affairs that was prevailing when the former Code was in force.
It was then found that many persons were being detained in prison at the pre conviction stage for unduly long periods, many times for periods longer than the actual sentence 728 of imprisonment that could be imposed on them on conviction.
In order to remedy the above situation, section 428 of the Code was enacted.
It provides for the setting off of the period of detention as an under trial prisoner against the sentence of imprisonment imposed on him.
Hence in order to secure the benefit of section 428 of the Code, the prisoner should show that he had been detained in prison for the purpose of investigation, inquiry or trial of the case in which he is later on convicted and sentenced.
It follows that if a person is undergoing the sentence of imprisonment imposed by a court of law on being convicted of an offence in one case during the period of investigation, inquiry or trial of some other case, he cannot claim that the period occupied by such investigation, inquiry or trial should be set off against the sentence of imprisonment to be imposed in the latter case even though he was under detention during such period.
In such a case the period of detention is really a part of the period of imprisonment which he is undergoing having been sentenced earlier for another offence.
It is not the period of detention undergone by him during the investigation, inquiry or trial of the same case in which he is later on convicted and sentenced to undergo imprisonment.
He cannot claim a double benefit under section 428 of the Code i.e. the same period being counted as part of the period of imprisonment imposed for committing the former offence and also being set off against the period of imprisonment imposed for committing the latter offence as well.
The instruction issued by the High Court in this regard is unexceptionable.
The stand of the State Government has, therefore, to be upheld.
The petitioner is not, therefore, entitled to claim that the period between February 1, 1980 on which date he was convicted in the Sessions case and February 16, 1981 on which date he was convicted by the Metropolitan Magistrate, Delhi when he was undergoing imprisonment imposed on him in the Sessions case should be set off against the term of imprisonment imposed by the Metropolitan Magistrate, Delhi.
That period should be counted as part of the imprisonment undergone by the petitioner as directed in the Sessions case.
No other contention is urged.
In the result the petition is dismissed.
S.R. Petition dismissed.
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The petitioner was convicted for an offence under Section 307 and Section 459 of the Indian Penal Code and sentenced on February 1, 1980 to a term of rigorous imprisonment.
During the pendency of the trial the petitioner was in judicial custody with effect from January 11, 1980 in another case F.I.R. 315/78 under Sections 457/380/411 of the Indian Penal Code which also ended in his conviction on February 16, 1981 and was sentenced for a term of rigorous imprisonment.
In the latter case it was ordered that the petitioner was entitled to the set off as provided by Section 428 of the Code.
The petitioner claimed that in spite of his conviction in the earlier case from February 1, 1980 he was entitled for set off from 11.1.1980 to 16.2.81.
The question in the present Writ Petition is whether such a claim is in order.
Dismissing the Writ Petition, the Court ^ HELD: 1.
The petitioner is not entitled to claim that the period between February 1, 1980 on which date he was convicted in the Sessions Case and February 16, 1981 on which date he was convicted by the Metropolitan Magistrate, Delhi in another case when he was undergoing imprisonment imposed on him in the Sessions Case should be set off against the term of imprisonment imposed by the Metropolitan Magistrate, Delhi.
That period should be counted as part of the imprisonment undergone by the petitioner as directed in the Sessions Case.
[728G H] 2: 1.
Section 428 of the Code of Criminal Procedure 1973 was introduced with the object of remedying the unsatisfactory state of affairs that was prevail 725 ing when the former Code of 1898 was in force.
It was then found that many persons were being detained in prison at the pre conviction stage for unduly long periods, many times for periods longer than the actual sentence of imprisonment that could be imposed on them on conviction.
[727F G] 2: 2.
In order to secure the benefit of Section 428 of the Code, the prisoner should show that he had been detained in prison for the purpose of investigation inquiry or trial of the case in which he is later on convicted and sentenced.
It follows that if a person is undergoing the sentence of imprisonment imposed by a court of law on being convicted of an offence in one case during the period of investigation, inquiry or trial of some other case, he cannot claim that the period occupied by such investigation, inquiry or trial should be set off against the sentence of imprisonment to be imposed in the latter case even though he had been detained during such period.
In such a case the period of detention is really a part of the period of imprisonment which he is undergoing having been sentenced earlier for another offence.
It is not the period of detention undergone by him during the investigation, inquiry or trial of the same case in which he is later on convicted and sentenced to undergo imprisonment.
He cannot claim a double benefit under Section 428 of the Code that is the same period being counted as part of the period of imprisonment imposed for committing the former offence and also being set off against the period of imprisonment imposed for committing the latter offence as well.
The instruction issued by the High Court of Punjab & Haryana No. 29442 Rules VI.
V. 38 dated 29th November, 1975 is unexceptionable.
[727G H]
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4854.txt
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Appeal No. 77 of 1957.
Appeal from the judgment and decree dated the August 6, 1954, of the Calcutta High Court in Appeal from Original Decree No. 73 of 1952.
M. C. Setalvad, Attorney General for India, W. section Barlingay and A. 0.
Ratnaparkhi, for the appellant.
A.V. Viswanatha Sastri and P. K. Chatterjee, for respondent No. 1. 1961.
March 1.
, 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 64,213 5 3 on the mortgaes in suit.
He had prayed for a preliminary mortgage decree according to 0.
XXXIV, r. 4 of the Code 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 consisted of three items all of which are situated in Calcutta.
These items are 24, Amratolla Lane, 96, Karaya Road 142 and premises 167/1 and 167/5 Dhurrumtolla Street (Chandni Bazar).
In the present appeal we are concerned with premises 167/1.
Respondent 1 's case was that he had advanced several amounts on seven different occasions to the mortgagor between August 2, 1926, and November 27, 1931.
According to the terms of the transaction no specific 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 not concerned in the present appeal.
It was further pleaded by the mortgagee that the mortgagor had acknowledged his liability of the mortgagee 's claim by letters of March 5, 1932, and February 17, 1943, which were signed by him.
It is on the strength of these acknowledgments 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 No. 2356 of 1931 by the Calcutta High Court with notice of mortgage in favour of respondent 1.
Since the said sale had been confirmed 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 not seriously disputed that the letter written by the mortgagor on February 17, 1943, amounted to an acknowledgment and it helped to bring within time respondent 1 's claim in respect of the last advance of Rs. 2,500 made on November 27, 1931.
Respondent 1 's case that the earlier letter of March ' 5, 1932, amounted to an acknowledgment was, however, seriously disputed by the appellant.
If this letter is held to amount to a 143 valid acknowledgment two items of consideration pleaded by respondent I would be within time; they are Rs. 20,000 and Rs. 35,000 advanced on the same day , September 10, 1926.
Mr. Justice Banerjee, who tried the suit on the Original Side of the Calcutta High Court, held that the letter in question did not amount to an acknowledgment, and so he found that only the last item of Rs. 2,500 was in time.
In the result he passed a decree for Rs. 5,000 only in favour of respondent 1.
Then respondent 1 took the dispute before the Court of Appeal in the Calcutta High Court.
The Court of Appeal has upheld the case made out by respondent I in regard to the acknowledgment 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. 55,000 and Rs. 2,500, 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 court with a certificate issued by the Calcutta High Court; and the only point which is raised for our decision is whether the letter in question amounts to a valid acknowledgment under section 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 section 19 which provides for the effect of acknowledgment 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 acknowledgment 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 computed from the time when the acknowledgment was so signed.
It would be noticed that some of the relevant essential requirements of a valid acknowledgment are that it must be made before the relevant period of limitation has 144 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 acknowledgment is undated oral evidence may be given about the time when it was signed but it prescribes that subject to the provisions of the , oral evidence of its contents shall not be received; in other words, though oral evidence may be given about the date oral evidence about the contents of the document is excluded.
Explanation 1 is also relevant.
It provides, inter alia, that for the purpose of section 19 an acknowledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has not yet come, 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 acknowledgment as prescribed by section 19 merely renews debt; it does not create a new right of action.
It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication.
The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words.
Words used in the acknowledge 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 not 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 not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date 145 of the statement.
In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly section excluded but surrounding circumstances can always be considered.
Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission 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 could ' 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 contained in section 19, and there is really no substantial 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 acknowledgment as in construing wills, for instance, it is not 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 context in which the words are used and would always be conditioned by the tenor of the said document, and so unless words used in a given document are identical with words used in a document judicially considered it would not ,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 acknowledgment has been answered by Fry, L., J., as early as 1884 A. D. in Green vs Humphreys (1).
This answer is often quoted with approval.
"What if; an acknowledgment", asked Fry, L.J., and he proceeded, "in my view an acknowledgment 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 not enough that he refers to a debt (1) (1884) 26 Ch.
D 474, 481 146 as being due from somebody.
In order to take the case out of the statute there must upon the fair construction 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 contained in section 19 of the Limitation Act.
Mr. Sastri has relied on the decision of the Privy Council in Beti Maharani vs Collector of Etawah (1) in which the Privy Council has recognised that it would be legitimate for the purpose of construing a document to look at the surrounding circumstances and that oral evidence about the intention of the maker of the statement cannot be admitted for the purpose of construing the said statement.
"Their Lordships", observed Lord Hobhouse, who spoke for the Board, "cannot follow the learned judges of the High Court in admitting the Collector to give oral evidence of his intentions for the purpose of construing the notice.
But they may for that purpose properly, look at the surrounding circumstances".
In Sukhamoni Chowdhrani vs Ishan Chunder Roy (2) the statements on which reliance was placed by the creditor was contained in the directions given by the debtor to apply surplus income "to the payment of the ijmali debts of us three co owners of which a list is given below".
It was held that by this statement the defendant acknowledged 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 contribution".
In other words, admission about a joint debt amounted to an acknowledgment though the liability to be sued for contribution is a matter of legal inference from the said admission and it had not been specifically included in the statement in question.
Mr. Sastri has also relied on the decision of the Full Bench of the Allahabad High Court in Munshi Lal vs Hira Lal (3) where it has been held that a document said to constitute an acknowledgment has to be construed in the context in which it is given and that (1) (1894) 22 I.A. 31, 41 (2) (1897) 25 I A 95 (3) I.L.R. [1947] All. 11. 147 where its language is not clear in itself the context must be examined to see what it is to which the words referred.
The Court, however, added that its decision She did not mean that any equivocation in an acknowledgment can be cured by ascertaining what the probable intention of the acknowledger was.
Similarly in L Swaminatha Odayar vs Subbarama Ayyar (1) the Madras High Court has held that an acknowledgment for liability under section 19 need not be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannot 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 Court in Dharma Vithal vs Govind Sadvalkar (2).
In that case certain statements made in the receipt given for the delivery of the land to the officer of the Court were relied upon as amounting to an acknowledgment.
The said receipt referred to the suit and decree and the decree to which reference was thus made had set forth in ordinary course the then plain.
tiff 's claim as resting on a mortgage.
The contention was that the reference to the decree made the decree a part of the receipt and since the decree referred to the plaintiff 's claim as resting on a mortgage the receipt itself served as an acknowledgment of a mortgage subsisting in 1827.
This plea was rejected by the High Court.
The High Court 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 consciousness of the recipient when he acknowledged 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 contract".
As we will make it clear when we deal with the document before us it would be realised (1) Mad.
(2) Bom.
99. 148 that this case cannot assist the appellant.
The receipt itself did not contain 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.
Now 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 Court naturally rejected the plea that the receipt amounted to a valid acknowledgment.
Incidentally we may add that when West, J. referred to a new contract file had perhaps in mind the definition of acknowledgment under section 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 continues to be omitted ever since.
As we have already indicated, under the present law acknowledgment merely renews the debt and does not create a fresh cause of action.
It is now necessary to consider the document on which the plea of acknowledgment is based.
This document was written on March 5, 1932.
It, however, appears that on November 26, 1931, another letter had been written by respondent 2 to respondent 1; and it would be relevant to consider this letter before construing 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 Rekistrar 's 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 common ground that respondent 1 paid to respondent 2 Rs. 2,500 on November 27, 1931 and the threatened sale was avoided.
This fact is relevant in construing the subsequent letter.
The said property was again advertised for sale on March 11, 1932, and it was about this sale that the 149 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. 2,75,000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew.
As you are interested why do not you take up the whole.
There is only about 70,000 due to the mortgagee a payment of 10,000 will stop the sale.
Yours sincerely, Sd.
J. C. Galstaun.
" Does this letter amount to an acknowledgment of respondent 1 's right as a mortgagee? That is the question which calls for our decision.
The argument in favour of respondent 1 's 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 appellant 's contention 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 not able to pay him the money then he could have given him the property or the appellant could 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 no such negotiations had taken place in 150 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 construing this letter it would be necessary to bear in mind the general tenor of the letter considered 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 November, 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 not absolutely fantastic.
Negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter nothing was heard about the said proposal.
In the context it seems to us impossible to escape the conclusion 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 nothing other than the whole of the mortgagee 's interest including the interest of the prior mortgagee.
An appeal to respondent 1 to stop the sale on payment of Rs. 10,000, as he in fact had stopped a similar sale in November, 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 considered the arguments urged before us by the learned Attorney General but we see no reason to differ from the conclusion reached by the Court of Appeal below that this letter amounts to an acknowledgment.
The tenor 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 151 whole of the mortgagee 's interest.
It is common ground that no other relationship existed between the parties at the date of this letter, and the only subsisting relationship was that of mortgagee and mortgagor.
This letter acknowledges the existence of the.
said jural relationship and amounts to a clear acknowledgment under a. 19 of the Limitation Act.
It is conceded that if this letter is held to be an acknowledgement there can be no other challenge against the decree under appeal.
In the result the appeal fails and is dismissed with costs.
Appeal dismissed.
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In a mortgage suit brought by him, the respondent 1, the mortgagee, pleaded that limitation was saved by a letter written to him by the mortgagor, the respondent 2, which amounted to acknowledgment under section 19 of the Indian Limitation Act.
There was a prior mortgage and before writing the letter in question the mortgagor had written another letter appealing to respondent 1 to save the property from being sold at the instance of the prior mortgagee.
Thereupon the respondent No. 1 paid the required amount and the threatened sale was averted.
The property was again advertised for sale and that was why the letter in question was written; it ran as follows, "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. 2,75,000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew.
As you are interested why do not you take up the whole.
There is only about 70,000 due to the mortgagee a payment of Rs. 10,000 will stop the sale".
The question was whether this letter amounted to an acknow ledgment of the respondent 1 's right as mortgagee under section 19 of the Indian Limitation Act.
The trial judge held that it did not, but the Court of appeal took the contrary view.
The auction purchaser appealed to this Court.
Held, that it was obvious that the interest mentioned in the letter in the context of the previous one was none other than that of respondent 1 as a puisne mortgagee and the appeal to take up the whole meant the entirety of the mortgagee 's interest including that of the prior mortgagee.
Since admittedly the only subsisting relation between the parties at the date of the letter was that of mortgagee and mortgagor and the letter acknowledged the existence of that jural relationship, it clearly amounted to an acknowledgment under section 19 of the Act.
Held, further, that the essential requirement for sustaining a plea of acknowledgment under section 19 of the Act is that the statement on which it is sought to be founded must relate to a 141 subsisting liability, indicate the existence of the jural relationship between the parties and must be intended, either expressly or impliedly, to admit that jural relationship.
The words used in a particular statement must be construed in the light of its own tenor and according to the context and unless the words used are identical and the interest is similar, previous decisions interpreting somewhat similar documents are not of much help.
Green vs Humphreys,, , referred to.
Beti Maharani vs Gollector of Etawah, (1894) L.R. 22 I.A. 3,, Sukkamoni Choudhrani vs Ishan Chunder Roy, (1897) L.R. 25 I.A. 95, Munshi Lal vs Hira Lal, I.L.R. 1947 All.
II and Swaminatha Odayar vs Subbarama Ayyar, Mad. 548, considered.
Dharma Vithal vs Govind Sadvalkar, Bom.
99, held inapplicable.
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vil Appeal Nos.
18083 of 1985.
From the Judgment and Order dated 12.9.1983 of the Rajasthan High Court in D.B. (Civil) Spl.
Appeal Nos.
35 of 1982, 76, 268 and 270 of 1983.
S.K. Bagga for the Appellants.
B.D. Sharma for the Respondents.
The Order of the Court was delivered by 247 VENKATARAMIAH, CJ.
In these appeals the appellants have questioned the validity of Section 15 (as amended) of the Rajasthan Imposition of Ceiling on Agricultural Holdings Act, 1973.
It is not disputed that this Act was enacted by the Rajasthan Legislature for bringing about Agrarian Re forms in the State of Rajasthan.
The validity of some of the provisions of the Act came up for consideration before this Court in Bansidhar vs State of Rajasthan, ; before a Constitution Bench of this Court and this Court made declaration that the Rajasthan Imposition of Ceiling Agricultural Holdings Act, 1973 was a legislation which was made for the purpose of bringing out Agrarian Reform.
In view of the above finding, it is clear that the provisions including section 15 (as amended) contained therein are protected by Article 31(A)(1)(a) of the Constitution notwithstanding the fact that some of these provisions contravened Articles 14 and 19.
The Grounds urged in respect of the appeal are that Section 15 (as amended) in question was violative of Article 14.
Since the provisions of the Act as already stated are protected by Article 31(A)(1)(a), the attack does not sur vive.
The High Court was therefore right in upholding the validity of Section 15 of the Act.
Therefore, there is no ground to interfere with the Judgment of the High Court.
These appeals fail and are dismissed.
Interim orders passed if any, in these cases stand vacated.
T.N.A. Appeals dis missed.
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In these appeals on the question: whether section 15 (as amended) of the Rajasthan Imposition of Ceiling on Agricul tural Holdings Act, 1973 was violative of Article 14 of the Constitution of India.
Dismissing the appeals, this Court, HELD: Rajasthan Imposition of Ceiling on Agricultural Holdings Act, 1973 was a legislation which was made for the purpose of bringing about agrarian reforms.
The provisions of the Act including section 15 (as amended) are protected by Article 31(A)(1)(a) of the Constitution.
Therefore, the attack that section 15 of the Act was violative of Article 14 of the Constitution does not survive.
The High Court was right in upholding the validity of section 15 of the Act.
[247B; C D] Bansidhar vs State of Rajasthan, ; , followed.
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6256.txt
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Civil Appeal No. 453 of 1988.
897 From the Judgment and Order dated 5.3.1984 of the Punjab and Haryana High Court in Civil Revision No. 3411 of 1983.
E.C. Agarwala for the Appellants.
G.K. Bansal for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The two short questions involved in this case are (i) whether the right of pre emption conferred on a tenant by a customary law is heritable or not and (ii) whether on the death of such a tenant, who had filed a suit for pre emption his legal representatives can continue the suit.
The property in dispute which is a double storied building situated in the town of Jagadhri, District Ambala, Haryana originally belonged to one Om Prakash.
Kishan Chand was in possession of a part of the said property as a tenant.
Om Prakash sold the entire property including the portion occupied by Kishan Chand to the respondent for a sum of Rs.23,000 under a registered sale deed dated 11.7.1980.
It is alleged that in the town of Jagadhri there was in force a customary law under which a tenant in occupation or a building had a right of pre emption.
Aggrieved by the sale of the property in his occupation as a tenant, Kishan Chand filed a suit for pre emption in the Court of the Sub Judge, II Class, Jagadhri in Civil Suit No. 131 of 1980 on 26.8.1980 stating that the value of the portion of the property occupied by him was Rs. 10.000.
The respondent denied that there was such a customary law conferring a right of pre emption on a tenant in force in the town of Jagadhri and that in the event of a decree being passed in the suit the plaintiff should be asked to pay a sum of Rs.20,000 by way of consideration.
During the pendency of the suit, Kishan Chand died on 8.8.1983.
An application was filed under Order 22, Rule 3, Civil Procedure Code by the appellants, who were the legal representatives of Kishan Chand to bring them on record in the place of the original plaintiff, Kishan Chand and to permit them to prosecute the suit further.
The respondent opposed the said application contending that the right of pre emption, even if it existed, was only a personal right of Kishan Chand and was not heritable and, therefore, the appellants were not entitled to be brought on record as the legal representatives of Kishan Chand.
It was further contended by the respondent that the suit was liable to be dismissed on the death of Kishan Chand as the right to sue did not survive.
The trial court 898 allowed the application made under Order 22, Rule 3, Civil Procedure Code holding that the right of pre emption was heritable and the right to sue survived on the death of the plaintiff in favour of his legal representatives.
Aggrieved by the order passed by the trial court, the respondent filed a revision petition under section 115, Civil Procedure Code before the High Court of Punjab & Haryana in Civil Revision No. 3411 of 1983.
Before the High Court, the respondent relied on a Full Bench decision of the High Court of Punjab & Haryana in Chandrup Singh and Another vs Data Ram and Another, [1982] Punjab Law Reporter 771 in which it had been held that a statutory right of pre emption resting only on blood relationship created by section 15(1) of the Punjab Pre emption Act, 1913 (1 of 1913) (hereinafter referred to as 'the Act ') (as it was in force in Haryana) was not a heritable right and did not devolve on the heirs on the death of the plaintiff pre emptor before the grant of the decree in the suit.
Though the learned Judge, who heard the revision petition, was of the view that the above Full Bench decision ran counter to the decision of the Supreme Court in Hazari & Ors.
vs Neki & Ors.
, ; he allowed the petition following the Full Bench decision on the ground that the said decision was bindig on him and declared that the suit instituted by Kishan Chand had abated on his death.
We have gone through the decision of this Court in Hazari 's case (supra) and also the Full Bench decision of the High Court of Punjab & Haryana in Chandrup 's case (supra).
The facts in Hazari 's case (supra) were these.
The plaintiff, who was the father 's brother of one Dhara Singh instituted three suits for pre emption of the lands sold by Dhara Singh under three sale deeds on the ground that he had a superior right of pre emption on the basis of his relationship with the vendor as against the purchasers under section 15(1)(a) of the Act.
The suits were decreed by the trial court.
The purchasers took the matter in appeal before the 1st Appellate Court and those appeals were dismissed, but in one of the appeals there was a slight modification in the amount which the plaintiff had to pay to the purchasers.
The purchasers filed three second appeals before the High Court against the judgments and the decrees of the 1st Appellate Court and the plaintiff also preferred a second appeal before the High Court in one of the cases against the increase made in the price of the land by the 1st Appellate Court.
While the second appeals were pending in the High Court, the plaintiff died.
After his death application were moved under Order 22, Rule 11 of the Civil Procedure Code to bring the legal representatives of the deceased plaintiff on record.
All the four second appeals were heard and dismissed by the High Court.
The purchasers 899 having failed in the Letters Patent Appeals filed before the Punjab & Haryana High Court against the decrees passed in the second appeals, filed three appeals before this Court by special leave.
It was contended before this Court by the purchasers that on the death of the plaintiff, the right to sue came to an end and his legal representatives were not entitled to claim any benefit under the decrees in question.
Rejecting the above contention this Court observed at page 836 of the Report thus: "In support of these appeals, learned counsel put forward the argument that the right of pre emption claimed by Neki deceased plaintiff was a personal right which died with him upon his death and the legal representatives of Neki were not entitled to be granted a decree for preemption.
The argument was that the statutory right of preemption under the Punjab Act was not a heritable right and no decree for pre emption should have been passed by the lower court in favour of the legal representatives as representing the estate of Neki.
We are unable to accept the argument put forward by the appellants.
It is not correct to say that the right of pre emption is a personal right on the part of the pre emptor to get the re transfer of the property from the vendee who has already become the owner of the same.
It is true that the right of pre emption becomes enforceable only when there is a sale but the right exists antecedently to the sale, the foundation of the right being the avoidance of the inconveniences and disturbances which would arise from the introduction of a stranger into the land.
The correct legal position is that the statutory law of pre emption imposes a limitation or disability upon the ownership of a property to the extent that it restricts the owner 's right of sale and compels him to sell the property to the person entitled to pre emption under the statute.
In other words, the statutory right of preemption though not amounting to an interest in the land is a right which attaches to the land and which can be enforced against a purchaser by the person entitled to preempt.
" In reaching the above conclusion this Court while accepting the contention that the right of pre emption under section 15(1)(a) of the Act did not create an interest in the land was, however, of the view that the right did not abate on the death of the plaintiff during course of the 900 proceedings in court.
This Court referred to the decision of the Punjab & Haryana High Court in Faqir Ali Shah vs Ram Kishan & Ors., 133 P.R. 1907 and the decision of the Allahabad High Court in Wajid Ali & Anr.
vs Shaban & Ors.
, I.L.R. 31 Allahabad 623.
In the latter decision, namely, the Wajid Ali 's case (supra) the High Court of Allahabad had held that where a right of pre emption existed by custom as recorded in the village Wajib ul arz, the right having once accrued did not of necessity lapse by the death of the pre emptor before making a claim, but descended along with the property in virtue of which it subsisted to the heir of the pre emptor.
It is significant that in that case the High Court of Allahabad had taken the view that the right of pre emption which had accrued in favour of the pre emptor would descend along with the property in virtue of which it subsisted to the heir of the pre emptor, even when the death of the pre emptor had taken place before he made a claim for pre emption.
The Full Bench of the High Court of Punjab & Haryana which heard Chandrup 's case (supra) after noticing the decision of this Court in Hazari 's case (supra) distinguished the said decision observing thus: "21.
To conclude, on the particular language of the statute, on principle, and on the weight of precedent, it is held that the purely statutory right of pre emption, resting wholly on blood relationship alone under section 15(1) of the Punjab Pre emption Act, is not a heritable right and does not devolve on the heirs on the death of the plaintiff pre emptor before the grant of the decree in the suit.
The answer to the question posed at the very outset is thus rendered in the negative.
" We find it difficult to agree with the decision of the Full Bench of the High Court of Punjab & Haryana in the above case.
While it may not be disputed that a right of pre emption does not give rise to an interest in immovable property, in the instant case the plaintiff had acquired the said right of pre emption under the customary law by virtue of the right of tenancy which he had in the portion of the property in his possession.
It cannot be disputed that the right of tenancy itself was heritable and, therefore, every right attached to the said right of tenancy or incidental to it should ordinarily be heritable.
There can be no distinction between a right of pre emption arising under the statute law or such a right arising under customary law.
The other reason given by the Full Bench in order to distinguish the decision of this Court in Hazari 's case (supra) namely that the pre emptor 901 had died at the stage of second appeal in the said case while the pre emptor had died in the case before the Full Bench at the stage of trial also does not appeal to us.
The view expressed in Muhammad Husain vs Niamet un nissa and Ors., I.L.R. 20 Allahabad 38 that under Mohammadan law applicable to the Sunni sect if a plaintiff in a suit for pre emption had not obtained his decree for pre emption in his life time the right to sue did not survive to his heirs is not relevant for purposes of this case.
It is true that the said decision was noticed by this Court in Hazari 's case (supra) but this Court did not express any opinion on the correctness of the above position.
In the case before us the right of pre emption is claimed not on the basis of Mohammadan law but under customary law by the heirs of a tenant who was in possession of the property in question and who had instituted a suit for enforcing the said right of pre emption.
It is appropriate to refer to the following passage in Faqir Ali 's case (supra) which is extracted in Hazari 's case (supra) at page 837: "While, therefore, there is good reason why voluntary transfers should not pass a right of pre emption as regards properties previously sold, those reasons do not apply to transfers by inheritance.
As regards transfers by inheritance, the general principle should apply that the right of pre emption passes with the land.
Mr. Grey laid great stress on sections 13 and 16 of the Punjab Laws Act urging that the father was the person on whom the notice had to be served, and that it was he who had the right to sue and that the right was thus a personal one that could not be inherited by the son.
The right was no doubt a personal one in the father based on his land, but I can see no reason why such right cannot be inherited by the son.
If the father had waived or otherwise disposed of his right this would no doubt be binding on the son, as the father was representing the whole estate.
Where, however, the father has done nothing of the kind, but has simply taken no steps in the matters, there seems to me no reason why the son should not step into the shoes of his father and take the same action as the father could have done.
The son inherits the other causes of action belonging to his father and why not this one? Nor do I see why the son cannot come in under section 16, simply alleging that no notice as required by section 13 was served on his father.
" 902 Hence the fact that the pre emptor had died in the present case at the trial stage cannot make any difference.
We are, therefore, of the view that the decision of the Punjab & Haryana High Court in Chandrup 's case (supra) is inconsistent with the decision of this Court in Hazari 's case (supra) and has to be overruled.
We accordingly overrule it.
We hold that the right to sue in the present case survived on the death of Kishan Chand in favour of the appellants who were his legal representatives and they were entitled to be brought on record in substitution of the original plaintiff Kishan Chand under Order 22 Rule 3 of the Civil Procedure Code.
The appeal is accordingly allowed, the order of the High Court is set aside and the order of the trial court is restored.
The trial court is directed to bring the appellants on record as the legal representatives of the deceased plaintiff and to proceed to dispose of the suit on merits.
|
% The property in dispute was sold by its original owner to the respondent.
Claiming that there was a local custom under which the tenant in occupation of a building had a right of pre emption, the tenant of a portion of the property filed a suit for pre emption and valued the portion at Rs.10,000.
The suit was opposed by the respondent contending that there was no such customary law and that in case the decree was passed, the plaintiff should be asked to pay Rs.20,000, as consideration.
During the pendency of the suit, the plaintiff tenant died and the appellants, his legal representatives filed an application under Order 22, Rule 3 of Civil Procedure Code, for being brought on record in place of the original plaintiff and for permission to prosecute the suit further.
The respondent, opposed the application contending that the right of pre emption, even if it existed, was only a personal right of the tenant and was not heritable, and consequent on his death the right to sue did not survive, and therefore the suit was liable to be dismissed.
Aggrieved by the aforesaid order, the respondent filed a revision petition before the High Court, which allowed the same following a Full Bench decision of that Court in Chandrup Singh and Anr.
vs Data Ram and Anr., [1985] Punjab Law Reporter 771, that a statutory right of pre emption resting only on blood relationship created by section 15(1) of the Punjab Pre emption Act, 1913 was not a heritable one and did not devolve on the heirs on the death of the pre emptor before the grant of 896 the decree in the suit, and declared that the suit instituted by the tenant had abated on his death.
Allowing the appeal, ^ HELD: While a right of pre emption does not give right to an interest in immovable property, the right of tenancy itself was heritable and, therefore, every right attached to the said right of tenancy or incidental to it should ordinarily be heritable.
There can be no distinction between the right of pre emption arising under the statutory law and the customary law.
[900F, H] In the instant case, the plaintiff had acquired the said right of pre emption under customary law by virtue of right of tenancy which he had in the portion of the property in his possession and had instituted a suit for enforcing that right.
The fact that the pre emptor had died at the trial stage cannot make any difference.
[900G] The right to sue therefore survived on the death of the plaintifftenant in favour of the appellants, who were his legal representatives, and they were entitled to be brought on record in substitution of the original plaintiff tenant under Order 22, Rule 3 of the Civil Procedure Code.
[902B C] The trial court was directed to bring the appellants on record as legal representatives of the deceased plaintiff and to dispose of the suit on merits.
[902C] Chandrup Singh and Another vs Data Ram and Another, [1982] Punjab Law Reporter 771, over ruled.
Hazari & Ors.
vs Neki & Ors.
, ; , followed.
Wajid Ali & Anr.
vs Shaban & Ors.
, I.L.R. 31 Allahabad 623, approved.
Muhammad Husain vs Niamet un nissa and Ors., I.L.R. 20 Allahabad 88, distinguished.
Faqir Ali Shah vs Ram Kishan & Ors., 133 P.R. 1907, referred to.
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5615.txt
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N: Criminal Appeal No. 124 of 1972 350 Appeal by Special Leave from the Judgment and order dated 24 11 1971 of the Delhi High Court in Criminal Appeal No.54 of 1971.C. P. Lal for the Appellant.
H. R. Khanna and M. N. Shroff for the Respondent.
The Judgment of the Court was delivered by DESAI, J.
The; appellant in this appeal by special leave limited to the determination of the question: whether the sanction is valid in law or not, has been convicted for offences under section 5(2) read with section S(1) (d) of the Prevention of Corruption Act, 1947 ( 'Act ' for short), and section 161 of the Indian Penal Code, and was sentenced to suffer rigorous imprisonment for 18 months on each could and a fine of Rs. 2000/ , in default to suffer further rigorous imprisonment for a period of two months, for an offence under section 5(2) of the Act.
His appeal being Criminal Appeal No. 54 of 1971 was dismissed by the High Court of Delhi and the conviction and sentence were confirmed.
As the leave is limited to the question of the validity of sanction ac corded under section 6 of the Act, it is not necessary to set out in detail the prosecution case.
Briefly stated, the prosecution case is that the appellant who was employed at the relevant time as Investigator in the office of the Chief Controller of Imports & Exports (C.C.I.E. for short), accepted from one P.T. Toprani an amount of Rs. 250/ by way.
of illegal gratification which was not his legal remuneration in presence of witnesses on 18th June 1969 at about 5.30 p.m. near Gujarati Samaj; Sabha, Delhi.
D. section P. Badri Sharma appeared as soon as the trap arranged by him materialised and recovered the amount of Rs. 2501/ from the appellant.
After completing the investigation the appellant was charge sheeted for the offences hereinabove mentioned.
Section 6 of the, Act forbids the Court from taking cognizance, inter alia, of offences punishable under section 161, IPC and under sub section
(2) of s 5 of the Act except with the previous sanction of the authority therein set out.
Necessary sanction was accorded by the Jt.
C.C.I.E.
On 26th November 1969.
The relevant portion of the sanction reads as under: "Now, therefore, I, section P. Chablani, being the authority competent to remove the said Shri L. section Srivastava, from office do hereby accord sanction under section 6(1) (c) of the prevention of Corruption Act, 1947 for the prosecution of the said Shri L. section Srivastava, for the said offences under section 161, I.P.C. and 5(2) read with 5(1)(d) of Act II of 1947 and in 351 any other offence punishable under the provisions of law, in respect of the facts aforesaid and for the taking of cognizance of the said offences by a court of competent jurisdiction".
Mr. H. R. Khanna, learned counsel who appeared for the respondent raised a preliminary objection.
It was urged that the appellant died during the pendency of this appeal and, therefore, the appeal abates and cannot be proceeded with.
Simultaneously it was urged that if the appeal were not to abate on the only ground that the appellant was also sentenced to pay a fine of Rs. 200/ and, therefore.
it may he said that right to property of the legal representatives may he adversely affected and, therefore, they would be entitled to continue the appeal, the respondent State is prepared to concede that the sentence of fine may be set aside.
Section 394 of the Criminal Procedure Code which provides for abatement of appeals reads as under: "394.
(1) Every appeal under section 377 or section 378, shall finally abate on the death of the accused.
(2) Every other appeal under this Chapter (except all appeal from a sentence of fine) shall finally abate on the death of the appellant: Provided that where the appeal is against a conviction and sentence of death or of imprisonment, and the appellant dies during the pendency of the appeal any of his near relatives may, within thirty days of the (death of the appellant, apply to the Appellate Court for leave to continue to the appeal; and if Leave is granted, the appeal shall not abate.
Explanation In this section, "near relative" means a parent, spouse, lineal descendant, brother or sister".
The appeal by the appellant is not one under section 377 or section 378 or the Cr.
P.C. and, therefore, sub section
(1) of section 394 will not be attracted The trial for an offence under section 161 IPC and section 5(2) of the Act would be governed by the provisions of Criminal Law Amendment Act, 1952.
lt envisages setting up of Court of special Judge.
Section 8(3) of the Criminal Law Amendment Act provides that the Court of Special Judge shall be deemed to be a Court of Sessions.
Section 9 confers power upon the High Court to exercise all powers of appellate Court as if the Court of Special Judge were a Court of Sessions trying cases within the local limits of the jurisdiction of the High Court.
352 The present case would, therefore, be governed by sub section (2) of s.394, Cr.
P.C. It becomes clear from the proviso to section 394(2), Cr.
P.C. that where the appeal is against the conviction and sentence of imprisonment and the appellant dies during the pendency of the appeal, any of his near relatives may, within the time prescribed therein, apply to the appellate court before which the appeal is pending for leave to continue the appeal and if the leave is granted the appeal shall not abate.
The appellant has preferred the appeal against his conviction and sentence of imprisonment as also sentence of fine.
After his death his near relations as contemplated in the Explanation to sub section
(2) of section 394, Cr.
P.C. applied by Criminal Miscellaneous Petition No. 559 of 1978 to continue the appeal and this Court granted substitution of such near relations by its order dated 28th March 1978 and thereby granted leave to continue the appeal.
Therefore, the near relations of the deceased can continue the appeal and even if the respondent State concedes that the sentence of fine be set aside yet the appeal would not abate because the appeal against conviction and sentence of imprisonment would not abate if leave is granted to the near relations of the deceased to continue the appeal.
Such Leaving having been granted, the appeal would not abate.
There is thus no merit in the preliminary objection and it must be negatived.
Section 6 of the Act which provides for necessity of previous sanction for prosecution for any of the offences under the Act reads as.
under: "6.
(1) No court shall take cognizance of an offence punishable under section 161 ( or section 164) or section 1165 of the Indian Penal Code, or under sub section (2) or Sub section (3A) of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction, (a) in the case of a person who is employed` in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the State Government, of the Central Government.
(b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the Central Government, of the State Government.
(c) in the case of any other person, of the authority competent to remove him from his office.
(2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section 353 (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed".
Mr. Lal for the appellant contended that as the appellant was an Investigator in the office of the C.C.I.E. which at best was a Department under the over all control of the Ministry of Foreign Trade and Supply.
Government of India, the sanction to prosecute him could only be given by the Government of India.
In the alternative it was contended that as the C.C.I.E. is head of the office, he alone could accord sanction for prosecution as contemplated by section 6 and, therefore.
the sanction accorded by Jt.
C.C.I.E., an officer subordinate to C.C.I.E .
was ab initio void and the Court could not have taken cognizance of the offence.
Mr. Khanna for the respondent on the other hand contended that this case would be governed by Central Civil Services (Classification, Control and Appeal Rules, 1965 ( '1965 Rules ' for short), and in view of S.R.O. 631 issued by the President in exercise of the powers D` conferred by sub rule (2) of rule 11, clause (b) of sub rule (2) of rule 14, and sub rule (2) of rule 23 of the Central Civil Services (Classification, Control and Appeal) Rules, 1957 ( '1957 Rules ' for short), which order was saved by rule 34 of the 1965 Rules and, therefore, the Jt.
C.C.I.E. was both the appointing and disciplinary authority including the authority competent to remove the appellant from service and was accordingly competent to accord sanction under section 6(1)(c) of the Act.
Rule 11(2) of 1957 Rules provides that all appointments to Central Civil Posts, classes II, III and IV, included in the General Central Service shall be made by the authorities specified in that behalf by a general or special order of the President, or, where no such order has been made, by the authorities specified in the Schedule appended to the Rules.
Similarly, rule 14(1) provides that the President may impose any of the penalties including one of removal or dismissal from service as envisaged by rule 13 on any Government servant.
Sub rule (2) of rule 14 provides that without prejudice to the provisions of sub rule (1), any of the penalties specified in rule 1 may be imposed under sub clause (b) in respect of person appointed to a Central Civil post included in the General Central Services by the authority specified in this behalf by a general or special order of the President or where no such order has been made by the appointing authority or the authority specified in the Schedule in this behalf.
The entry at p. 38 provides that the appointing and disciplinary authority in respect of posts in non Secretariat offices other than posts in respect of which specific provision has been made by a general or special order 354 of the President, the head of office would be both the appointing and the removing authority.
Now, undoubtedly in respect of the office of the C.C.I.E., the C.C.I.E. would be the head of office.
The office of the C.C.I.E. is a non Secretariat office.
May be, the administrative department in respect of this office would be the Ministry of Foreign Trade and Supply.
But C.C.I.E. is a separate office with its own establishment and undoubtedly head of office would be the C.C.I.E.
The President in exercise of the power conferred by sub rule (2) of rule 11 and clause (b) of sub Rule (2) of rule 14 of the 1957 Rules has made a special order as contemplated by rule 11(2) and rule 14(2)(b) as under: "S.R.O. 631 In exercise of the powers conferred by sub rule (2) of rule 11, clause (b) of sub rule (2) of rule 14 and sub rule (1) of rule 23 of the Central Civil Services Classification, Control and Appeal) Rules, 1957, The President hereby directs that (1) in respect of the posts in the General Central Service, Class II specified in column 1 of Part I of the Schedule to this order, the authority specified in column 2 shall be the Appointing Authority and the authority specified in column 3 shall be the Disciplinary Authority in regard to the penalties specified in column 4, (2) in respect of the posts in the General Central Service.
Class III and the General Central Service, Class II specified in column 1 of Parts II and III of the said Schedule, the authority specified in column 2 shall be the Appointing Authority ! and the authority specified in column 3 and 5 shall be the Disciplinary Authority and Appellate Authority respectively in regard to the penalties specified in column 4".
A comprehensive Schedule is annexed to this order. 'The relevant entry is as under: Description of Post Appointing Authority competent Appellate authority to impose penalties authority penalties which it may impose (with reference to item numbers in rule 13) Authority Penalties 1 2 3 4 5 Organisation of the Chief Controller of Imports and Exports All posts in Headquarters office Joint Chief Joint Chief All Chief Controller of Controller ofController of Imports & Imports & Imports & Exports Exports Exports 355 The entries in the Schedule appended to 1957 Rules will be effective and operative subject of course to any general or special order made by the President in this behalf.
It was, however, contended that by rule 34 of 1965 Rules, 1957 Rules were repealed and, therefore, the order issued by the President in exercise of the powers conferred by sub rule (2) of rule 11 and various other rules bearing on the point would stand repealed and the order of the President would not be effective unless a similar order is issued by the President under the corresponding rule 12 of 1965 Rules.
Rule 12(1) and (2) of 1965 Rules is in pari materia with rule 14 of 1957 Rules.
Rule 12 of 1965 Rules confers power on the President to impose any of the penalties specified in rule 11 on any Government servant.
Sub rule (2)(b) provides that any person appointed to a Central Civil Post included in the General Central Service by the authority specified in this behalf by a general or special order of the President or where no such order Has been issued, by the appointing authority specified in the Schedule in this behalf, may impose any of the penalties specified in rule 11 which includes the penalty or removal from service.
Therefore, the President has the power to issue any general or special order to confer power to impose penalties as specified in rule II on any authority other than the one specified in the Schedule in this behalf.
Now, if the order issued by the President, S.R.O. 631 under corresponding rule l l and the relevant rules bearing on the subject of 1957 Rules is not shown to be inconsistent with any of the Rules included in 1965 Rules.
obviously such order would be saved Tender rule 34.
No inconsistency was shown to us as contemplated by rule 34.
Therefore, indisputably the order issued by the President, S.R.O. 631 along with the Schedule would be saved.
Once S.R.O. 631 is saved, the relevant entry hereinabove quoted in respect of the organisation of C.C.I.E. would be saved.
Accordingly the entry in the order issued by the President would supplant the corresponding entry in 1965 Rules and would have to be substituted for the entries in the relevant item in the Schedule.
The necessary consequence would be that in the case of the organisation of the C.C.I.E. for all posts in Headquarters office, Jt.
C.C.I.E. would be both the appointing and the disciplinary authority having the power to remove from service such persons belonging to Class III services.
Now, the appellant was indisputably holding a post in Class III service in the Headquarters office of the organisation of C.C.I.E.
He was at the relevant time holding, the post of Investigator which was admittedly a Civil post in Class III service in the office of C.C.I.E.
Indisputably, therefore, Jt.
C.C.I.E. would be both the appointing and disciplinary authority with power to remove him from service.
Therefore, Jt.
C.C.I.E. would be competent to accord sanction as envisaged by section 6(1)(c) of the Act.
Sanction 356 in this case having been granted by the Jt.
C.C.I.E., it was valid.
There is thus no substance in the contention of Mr. Lal.
Mr. Lal in this connection drew our attention to a decision in R. J. Singh Ahluwalia vs The State of Delhi(1) The appellant in that case was at the relevant time working as Assistant in Co ordination III of D.G.T.D. at Udyog Bhavan, New Delhi.
His contention was that sanction accorded by Shri K. Rajaram, Deputy Secretary to Government of India in the Ministry of Industrial Development and Company Affairs (Department of Industrial Development) was not valid and that he could only have been prosecuted under a sanction that may be accorded by the Home Ministry.
In respect of this contention it was conceded on behalf of the State that in the absence of such sanction the prosecution must fail.
The judgment proceeds on concession and not on any analysis or examination of the relevant provisions.
Therefore it in no way helps the appellant in this case.
This being the only point that could be raised in this appeal by limited leave and such contention being without merit, the appeal fails.
and is dismissed.
As the appellant is dead there is no question of his surrendering to Bail.
S.R. Appeal dismissed.
(1) A.I.R. 1971 S.C. 1552.
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The appellant who was working as an investigator in the office of the Chief Controller of Imports and Exports was charged, found guilty and convicted and sentenced to suffer rigorous imprisonment for 18 months on each count for an offence under Sections 5(1) (d) and 5(2) of the Prevention OF Corruption Act, 1947 and section 161 I.P.C. and a fine of Rs. 200/ or in default to undergo further rigorous imprisonment under section 5(2) of the Act.
His appeal to the High Court was dismissed and the conviction and sentence were confirmed.
Special leave was granted by the Supreme Court limited to the question.
Of validity of sanction accord under section 6 of the Prevention of Corruption Act, 1947.
The appellant died during the pendency of the appeal and his near relatives were granted permission to continue the appeal.
Dismissing the appeal, the.
Court ^ HELD 1.
The preliminary objection of the State as to the abatement of the appeal because of the death of the appellant taking into account preparedness to conclude that the sentence might he set aside must be negatived.
[352D] (a) As per the proviso to section 394(2) of the Criminal Procedure Code, 1973, where the appeal is against the conviction and sentence of imprisonment and the appellant dies during the pendency of the appeal, any of his near relatives may, within the time prescribed therein, apply to the appellate Court before which the appeal is pending for leave to continue the appeal and if the leave is granted the appeal shall not abate.
[352A B] (b) The appellant, in the, instant case, has preferred the appeal against his conviction and sentence of imprisonment and also sentence of fine.
After his death his near relatives as contemplated in the Explanation to sub section (2) of section 394 Crl.
P.C., applied to continue the appeal and were granted leave to continue the appeal.
Therefore, the near relations of the deceased can continue the appeal and even if the respondent State concedes that the sentence of fine be set aside yet the appeal would not abate if leave is granted o the near relation of the deceased to continue the appeal.
[352C D] 349 2. 'The sanction accorded, for prosecution of the appellant under section 6 of the Prevention of Corruption Act, 1947 by the Joint Chief Controller of Imports and Exports is valid in law: [355H, 356A] (a) The instant case is governed by Central Civil Services (Classification, Control & Appeal) Rules, 1965 and in view of S.R.O. 631 issued by the President, in exercise of the power conferred by sub rule (2) of rule 11, clause (b) of sub rule (2) of rule 14, and sub rule (2) of rules 23 of the Central Civil Services (Classification, Control & Appeal) Rules, 1957, which order was saved by rule 34 of the 1965 Rules.
[353C D] (b) Rule 12(1) and (2) of 1965 Rules is in pari materia with rule 14 of 1957 Rules.
Rule 2 of 1965 Rules confers power on the President to impose any of the penalties specified in rule 11 on any Government servant.
Sub rule (2) (b) provides that any person appointed to a Central Civil Post included in the General Central Service by the authority specified in this behalf by a general or special order of the President or where no such order has been issued, by the appointing authority specified in the Schedule in this behalf, may impose any of the penalties specified in rule 11 which includes the penalty of removal from service.
Therefore, the President has the power to issue any general or special order to confer power to impose penalties as specified in rule 11 on any authority other than the one specified in the Schedule in this behalf.
If the order issued by the President.
S.R.O. 631 under corresponding rule 11 and the relevant rules bearing on the subject of 1957 Rules is not shown to be inconsistent with any of the Rules included in 1965 Rules, obviously such order would be saved under rule 34.
There being no inconsistency as contemplated by Rule 34, indisputably the order issued by the President S.R.O. 631 along with the schedule would be saved.
Once S.R.O. 631 is saved, the relevant entry in the schedule in respect of the origination of C.C.I.E. would be saved.
Accordingly the entry in the order issued by the President would supplant the corresponding entry in 1965 Rules and would have to be substituted for the entries in the relevant item in the Schedule.
The necessary consequence would be that in the case of the organization of The C.C.I.E. for all posts in Headquarters office, lt. C.C.I.E. would be both the appointing and the disciplinary authority having tho power to remove from service such persons belonging to Class III services.
Now, the appellant was indisputably holding a post in Class III service in the Headquarters office of the organisation of C.C.I.E.
He was at the relevant time holding the post of Investigator which is admittedly a Civil Post in Class III service in the office of C.C.I.E.
Indisputably, therefore.
C.C.I.E. would be both the appointing and disciplinary authority with power to remove him from service.
Therefore, Jt.
C.C.I.E. would be competent to accord sanction as envisaged by section 6(1)(c) of the Act.
[355B H] The fact that the administrative department in respect of the office of C.C.I.E. is the Ministry of Foreign Trade & Supply does not make any difference because C.C.I.E. is a separate office with its own establishment.[1354A] R. J. Singh Ahluwalia vs State of Delhi, A.L.R. ; distinguished.
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3921.txt
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ivil Appeal No. 3002 of 1983.
From the Judgment and Order dated 20.8.1982 of the Madras High Court in S.A. No. 83 of '1982.
G. Ramaswamy (N.P.), Mrs. Anjani and K. Ramkumar for the Appellant.
P.S. Poti and K.V. Sreekumar for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
This appeal by special leave arises out of a suit filed by the respondent in representative capacity for permanent injunction against the appellant Tamil Nadu Hous ing Board from demanding and collecting from the allottees any additional amount for settlement of lands with buildings in the colony Ashok Nagar fully described in the plaint.
In pursuance of a Housing Scheme the appellant Board proceeded to settle a large number of residential plots to different groups of applicants including one described as low income group.
A number of allottees, including the plaintiff respondent, were selected and settlement in their favour was made in 1963.A copy of the document executed separately in respect to the plots is on the record of this case as Exh.
B 3, setting out the terms and conditions of the lease.
The term as mentioned in the 15th clause, which is quoted below, has been referred to by the parties in support of their respective cases: "15.
The Lessor agrees to sell the property more particu 274 larly described in the schedule hereunder to the Lessee for such price as the Administrative Officer of the Lessor may at any time in his sole discretion fix, and at which time the Administrative Officer of the Lessor is entitled to consider details regarding development charges, cost of amenities, cost of buildings, etc., and whether the price of the land acquired under the Land Acquisition Act together with suitable modifications thereto by the local laws has become final by a conclusive adjudication thereon by the concerned Tribunals and Courts.
The final decision of the Administrative Officer of the Lessor as to the final price of the property as determined under these presents is con clusive and binding on the Lessee and the Lessee agrees to purchase the property from the Lessor at the said price on the terms and conditions hereinafter mentioned.
Excepting the fixation of price with reference to the claim or compensation adjudicated or awarded by courts finally and conclusively with regard to the lands acquired under the scheme, the Lessor shall fix the price of the property after taking into consideration the development charges, cost of amenities and buildings etc. within a period of three years from the date of allotment and which price is subject only to a revision on account of excess compensation if any awarded by courts for the lands as aforesaid." Tentative price for the property was fixed, subject to a final determination within a stipulated period under the agreement and the allottees occupied the properties on that basis.
After a lapse of more than a decade fresh demands were made in 1975 threatening dispossession in case of non payment, which led to the filing of the suit.
It is stated in the plaint that the cases of all the allottees in low income group of Ashok Nagar made under the lease deeds are identical and the plaintiff was representing them in asking for permanent injunction restraining the Board from enforc ing the belated supplementary demands.
Besides, objecting to the maintainability of the suit, the defendant Board pleaded that it was entitled in law to finally determine the correct price for the settle ment of the properties even belatedly, and the challenged demands were perfectly valid.
It was stated that the land for the scheme had been acquired under the provisions of the Land Acquisition Act, and until the final award of the 275 compensation for the acquired lands was made, the value of the lands was not capable of being ascertained.
The trial court overruled the technical pleas, but, dismissed the suit on merits.
The first appellate court confirmed the decree.
The plaintiff filed a second appeal to the Madras High Court, and the Housing Board a cross objection against the adverse findings.
The High Court while confirming the maintainability of the suit reversed the finding on merits and passed a decree.
The impugned demand included the excess compensation awarded by courts for acquisition of the land as also the development charges, cost of amenities and buildings, etc., without splitting up the two demands.
The High Court held that it was open to the Board to determine within a reasonable time what portion of the additional demand represented the excess compensation awarded for the lands and to take steps for its realisation after service of a demand notice on the allottee, but, granted a decree for injunction in regard to the entire demand at the present stage as the two amounts have not been separately mentioned.
The learned counsel for the appellant has pressed two points in support of the appeal, namely, the decision of the High Court on the merits of the dispute is erroneous and that the provisions of Order 1, Rule 8 of the Code of Civil Procedure in any event are not applicable to the case and the suit, as a representative suit, is not maintainable.
The second paragraph of clause 15 of the lease deed explicitly directs the Board to assess the final amount on account of the development charges, cost of amenities and buildings, etc.
within a period of three years from the date of the allotment, and there does not appear to be any reason for construing the provisions differently.
The High Court at considerable length considered this aspect, pointing out the unexplained long delay of about a decade after completion of the constructions, etc.
on the part of the Board.
There was no difficulty at all in making the final calculation in time, and taking steps for recovery of the same.
We entirely agree with the view of the High Court. 'The Court was also right in permitting the Board to make a fresh additional demand in regard to the enhancement in the compensation for the acquired lands and the respondents do not have any objection to that part.
On the question of maintainability of the suit in a representative capacity under Order 1, Rule 8 of the Code of Civil Procedure, it has been contended that since the injury complained of is in regard to 276 demand of money and that too by a separate demand against each ' of the allottees, giving rise to different causes of action, the Rule 1 has application.
The learned counsel proceeded to say that it is not known whether each of the allottees in Ashok Nagar had been even served with an addi tional demand before the suit was filed; and further empha sised that those who had been so served are interested in defeating only the demand individually referable to each of them.
Each one of them is not interested in what happens to the others.
It is, therefore, suggested that only such of the allottees who have already been served with additional demands are entitled to maintain an action in court, and they also should do it by filing separate suits.
We do not find any merit in the argument.
The provisions of Order 1 of Rule 8 have been included in the Code in the public interest so as to avoid multiplicity of litigation.
The condition necessary for application of the provisions is that the persons on whose behalf the suit is being brought must have the same interest.
In other words either the interest must be common or they must have a common grievances which they seek to get redressed.
In Kodia Goundar and Another vs Velandi Goundar and others, |LR 1955 Madras 339, a Full Bench of the Madras High Court observed that on the plain language of Order 1, Rule 8, the principal requirement to bring a suit within that Rule is the sameness of interest of the numerous person on whose behalf or for whose benefit the suit is instituted.
The Court, while considering whether leave under the Rule should be granted or not, should exam ine whether there is sufficient community of interest to justify the adoption of the procedure provided under the Rule.
The object for which this provision is enacted is really.
to facilitate the decision of questions, in which a large number of persons are interested, without recourse to the ordinary procedure.
The provision must, therefore, receive an interpretation which will subserve the object for its enactment.
There are no words in the Rule to limit its scope to any particular category of suits or to exclude a suit in regard to a claim for money or for injunction as the present one.
Coming to the relevant circumstances in the present case it will be seen that all the allotments in Ashok Nagar were made under the same Scheme and all the relevant facts are common.
The basis of the impugned demand of the appel lant is equally applicable to all the allottees and the plea of the plaintiff is available to all of them.
The trial court was, therefore, perfectly right in permitting the plaintiff to proceed under Order 1, Rule 8 of the Code of Civil Procedure.
Nobody in this situation can complain of any inconvenience or injustice.
On the other hand, the appellant is being saved from being 277 involved in unnecessary repeated litigation.
It is true that each of the allottees is interested individually in fighting out the demand separately made or going to be made on him and, thus, separate causes of action arise in the case, but, that does not make Order 1.
Rule 8 inapplicable.
Earlier there was some doubt about the Rule covering such a case which now stands clarified by the Explanation introduced by the Code of Civil Procedure (Amendment) Act, 1976, which reads as follows: "Explanation For the purpose of determining whether the persons who sue or are sued, or defend, have the same inter est in one suit, it is not necessary to establish that such persons have the same cause of action as the persons on whose behalf, or for whose benefit, they sue or are sued, or defend the suit, as the case may be.
" The objects and reasons for the amendment were stated below: "OBJECTS AND REASONS: Clause 55; sub clause (iv), Rule 8 of Order 1 deals with representative suits.
Under this rule, where there are numerous persons having the same interest in one suit, one or more of them may, with the permission of the Court, sue or be sued, on behalf of all of them.
The rule has created a doubt as to whether the party represent ing others should have the same cause of action as the persons represented by him.
The rule is being substituted by a new rule and an explanation is being added to clarify that such persons need not have the same cause of action.
" There is, therefore, no doubt that the persons who may be represented in a suit under Order 1, Rule 8 need not have the same cause of action.
The trial court in the present case was right in permitting the respondent to sue on behalf of all the allottees of Ashok Nagar.
We, therefore, do not find any merit in this appeal which is dismissed with costs.
Before closing, however, we would like to point out that the plaintiff has represented only those in the low income group in Ashok Nagar who will be governed by this judgment, and nothing what has been said or decided in this case is ap plicable to any other group or colony.
R.N.J. Appeal dismissed.
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In pursuance of a Housing Scheme the Tamil Nadu Housing Board, Madras had allotted residential plots over the land acquired under the Land Acquisition Act, to different groups of applicants including the low income group on terms and conditions stipulated in the lease deed Exh.
B 3 sometime in the year 1963.
After a lapse of more than a decade of the allotment, fresh demands were made from the allottees in 1975.
Objecting to the same, the respondent herein filed a suit for self and on behalf of all the allottees of low income group settled in the Colony named Ashok Nagar, pray ing for a permanent injunction restraining the Board from enforcing the demand.
The defendant Board questioned the very maintainability of the suit in a representative capacity and also pleaded that it was entitled to finally determine the correct prices for the plots after taking into account the final award of the compensation for acquired land and until then the prices were tentative.
The trial court negatived the objection to the maintainability of the suit but dismissed it on merits.
The first appellate court confirmed the decree.
On second appeal, the High Court reversed the finding on merits.
The High Court held that it was open to the Board to determine within a reasonable time what portion of the demand included the excess on account of compensation awarded by the courts for acquisition of the land and realize the same after serving fresh demand notices.
But since the impugned demand included both the excess amount of compensation as also the additional developmental charges injunction was granted in regard to the entire demand as the two amounts were not separately mentioned.
Dismissing the appeal of the Board, this Court, HELD: The provisions of Order 1 of Rule 8 have been included in the Code in the public interest so as to avoid multiplicity of litigation.
The condition necessary for application of the provisions is that the 273 persons on whose behalf the suit is being brought must have the same interest.
In other words either the interest must be common or they must have a common grievance which they seek to get redressed.
[276C D] The Court, while considering whether leave under the Rule should be granted or not, should examine whether there is sufficient community of interest to justify the adoption of the procedure provided under the Rule.
[276E] Persons who may be represented in a suit under Order I, Rule 8 need not have the same cause of action.
[277F]
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6327.txt
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Appeals Nos, 731 732 of 1964.
Appeals by special leave from the order dated January 29, 1963 of the Commissioner of Income tax, Bombay City 1, in No. 1/RP/BBY/40 and 41 of 1961.
N. A. Palkhivala, T. A. Ramachandran, section P. Mehta and O, C. Mathur, for the appellant.
Sarjoo Prasad, R. Ganapathy Iyer and R. N. Sachthey, for the respondent.
The Judgment Of SARKAR, C.J. and MUDHOLKAR, J. was delivered by SARKAR, C.J. BACHAWAT, I. delivered a dissenting opinion.
Sarkar.
The assessee was an advocate of the High Court of Bombay and was practicing his profession there till March 1, 1957 when he was elevated to the Bench of that Court.
He then ceased to carry on his profession and has not resumed it since.
As an advocate he had been assessed to income tax on his professional income, his accounting years for the assessments being the calendar years, When he was raised to the Bench, various fees for professional work done by him were outstanding.
In the years 1958 and 1959 during no part of which he had carried on any profession, he received certain moneys on account of these outstanding fees.
297 His accounts had always been kept on the cash basis.
The question is.
whether be is liable to pay income tax on those receipts.
We shall first make a few general observations.
Section 6 of the Income tax Act, 1922 specifies six sources or heads of income which are chargeable to tax.
In order to be chargeable, an income has to be brought under one of these six heads.
section 6 also provides that the chargeability to tax shall be in the manner provided in sections 7 to 12B of the Act.
Each of these sections lays down the rules for computing income for the purpose of chargeability to tax under one or other of the heads mentioned in section 6.
An income falling under any head can only be charged to tax if it is so chargeable under the corresponding computing section.
The fourth head of income in section 6 is "Profits and gains of business, profession or vocation" and the fifth head "income from other sources".
The fifth head is the residuary head embracing all sources of income other than those specifically mentioned in the section under the other heads.
Then we observe that the several heads of income mentioned in section 6 are mutually exclusive; a particular income can come only under one of them: The United Commercial Bank vs The Commissioner of Income Tax(2).
We now turn to the present case.
The receipts in the present case are the outstanding dues of professional work done.
They were clearly the fruits of the assessee 's professional activity.
They were the profits and gains of a profession.
They would fall under the fourth head, viz., "Profits and gains of business, profession or vocation".
They were not, however, chargeable to tax under that head because under the corresponding computing section, that is, section 10, an income received by an assessee who kept his accounts on the cash basis in an accounting year in which the profession had not been carried on at all is not chargeable and the income in the present case was so received.
This is reasonably clear and not in dispute: see Commissioner of Income Tax vs Express Newspapers Ltd.(1).
Can the receipts then be income falling under the residuary head of income and charged to tax as such? The Commissioner of Income tax from whose decision the present appeal has been taken by the assessee, held that it was chargeable under that head.
He came to that conclusion on what he thought were the general principles and also on the authority of a certain observation of Chagla, J. in Re. B. M. Kamdar(3).
The observation of Chagla, J. does not seem to us to be of much assistance for the decision in that case was not based on it nor is it supported by reasons.
We find ourselves unable to agree with the learned Judge.
We may add that apart from the observation in Kamdar 's case(1), there does not appear to be any direct authority supporting the view of the Commissioner.
(1) ; (2) (3) I.T.R. 10.
298 As to the general principles, we first observe that as the heads of income are mutually exclusive, if the receipts can be brought under the fourth head, they cannot be brought under the residuary head.
It is said by the Revenue that as the receipts cannot be brought to tax under the fourth head they cannot fall under that head and must therefore fall under the residuary head.
This argument assumes, in our view, without justification, that an income falling under one head has to be put under another head if it is not chargeable under the computing section corresponding to the former head.
If the contention of the revenue is right, the position would appear to be that professional income of an assessee who keeps his account on the cash basis would fall under the fourth head if it was received in a year in which the profession was being carried on, but it would take a different character and fall under the residuary head if received in a year in which the profession was not being carried on.
We are unable to agree that this is a natural reading of the provisions regarding the heads of income in the Act.
Whether an income falls under one head or another has to be decided according to the common notions of practical men for the Act does not provide any guidance in the matter.
The question under which head an income comes cannot depend on when it was received.
If it was the fruit of professional activity, it has always to be brought under the fourth head irrespective of the time when it was received.
There is neither authority nor principle for the proposition that an income arising from a particular head ceases to arise from that head because it is received at a certain time.
The time of the receipt of the income has nothing to do with the question under which particular head of income it should be assessed.
It is then said that the receipts had to be included in the total income stated in section 4 and since they do not fall under the exceptions mentioned in that section, they must be liable to tax and, therefore, they must be considered as income under the residuary head as they could not otherwise be brought to tax.
This contention seems to us to be ill founded.
While it is true that under section 4 the receipts are liable to be included in the total income and they do not come under any of the exceptions, the contention is based on the assumption that whatever is included in total income under section 4 must be liable to tax.
We find no warranty for this assumption.
Section 4 does not say that whatever is included in total income must be brought to tax.
It does not refer at ill to chargeability to tax.
Section 3 states that "Tax. shall be charged . . in accordance with, and subject to the provisions, of this Act in respect of the total income".
This section does not, in our opinion, provide that the entire total income shall be chargeable to tax.
It says that the chargeability of an income to tax has to be in accordance with, and subject to the provisions of the Act.
The income has therefore to be brought under one of the heads In section 6 and can be charged to tax only if it is so chargeable under 299 the computing section corresponding to that head.
Income which comes under the fourth head, that is, professional income, can be brought to tax only if it can be so done under the rules of computation laid down in section 10.
If it cannot be so brought to tax, it will escape taxation even if it be included in total income under section 4.
Furthermore, the expression "total income" in section 3 has to be understood as it is defined in section 2(15).
Under that definition.
total income means "total amount of income, profits and gains referred to in sub section
(1) of section 4 computed in the manner laid down in this Act", that is, computed for the purpose of chargeability under one of the sections from section 7 to section 12 B.
The receipts in the present case, as we have shown, can only be computed for chargeability to tax, if at all, under section 10 as income under the fourth head.
If they cannot be brought to tax by computation under that section, they would not be included in "total income" as that word is understood in the Act for the purpose of chargeability.
That all income included in total income is not chargeable to tax may be illustrated by referring to income from the source mentioned in the third head in section 6, namely, "Income from property".
The corresponding computing section is section 9 which says that tax shall be payable on income under this head in respect of bona fide annual value of property.
It is conceivable that income actually received from the property in a year may exceed the notional figure.
The excess would certainly be liable to be included in total income under section 4.
It however, cannot be brought to tax as income under the head "other sources", see Saliently House Estate, Ltd. vs Fry(1).
It is an income which cannot be taxed at all though it is included in total income as defined in section 4.
In Probhat Chandra Barua vs King Emperor(1) it was no doubt said that section 12 which is the computing section in respect of the residuary head of income, was clear and emphatic and expressly framed so as to make the head of "Other sources" describe a true residuary group embracing within it all sources of income, profits and gains, provided the Act applies to them, that is, provided they are liable to be included in total income under section 4 which deals with income to which the Act applies.
We are in full agreement with that observation but we do not think that it affords any support to the contention that all income liable to be included within total, income under section 4 must be brought to tax.
The observation must be read keeping in mind the undisputed principle that a source of income cannot be brought under the residuary head if it comes under any of the specific heads, for the Judicial Committee could not have overlooked that principle.
If we do that, it will be clear that all that the Judicial Committee said was that all sources of income which do not come under any of the other heads of income can be brought under the residuary head.
The words used are "embracing. all sources of income" and not all income.
It did not say that an (1) ; (2) 57 I.A. 228.
300 income liable to be included in the total income is chargeable to tax as income under the residuary head if it is not chargeable tinder a specific head under which it normally falls.
In Probhat Chandra Barva 's case(1) the Judicial Committee was not concerned with that aspect of the matter; the only question before it was, whether zamindari and certain other income fell under the third head of income from property, as the word 'property ' was understood in the Act.
Another aspect of Probhat Chandra Barua 's case(1) requires a mention.
The question that there arose, as we have just now said, was, whether the Income tax Act did not impose a tax on the income of a zamindar derived from his zamindari and certain other properties.
It was said on behalf of the assessee that the zamindari and the other income being income from property fell under the third head and could be brought to tax only under the corresponding computing section, section 9.
It was pointed out that the income could not be charged to tax under that section because it dealt only with income from house property which the income concerned was not.
It was then said that the income could not be taxed under the residuary head because it was really income from property and could be taxed only as such.
The Judicial Committee did not accept this contention.
It took the view that the word 'property ' in the third head "Income from property" had to be interpreted as restricted only to that kind of property which is described in the computing section, section 9 and as that section deals only with house property the income from zamindari and other properties did not fall under the head "Income from property".
It, therefore, found no difficulty in holding that the zamindari income was income from the residuary source.
We find no support in this case for the view that an income which is admittedly under a specific head can be brought to tax under the residuary head if it cannot be so brought under the cornputing section corresponding to that head.
That case only held that zamindari income was not income which fell under the head "Income from property" and that it could never so fall.
It provides ,no warranty for the contention that an income from one source may, in certain circumstances, be treated as income from a different source, which is the contention of the Revenue in the present case.
We think it right also to observe that if the receipts in the present case could be treated as income from the residuary source, the position would be most anomalous.
We have earlier said that if that were so, the placing of an income under this head would depend on the act of the assessee, it would depend on the time when the assessee chose to receive it.
That we conceive is not it situation which the Act contemplates.
But there is another and stronger reason to show that the Act did not contemplate it.
Suppose the assessee had kept his accounts on the mercantile basis.
(1) 57 I.A. 228. 301 He would then have been charged to tax on these receipts in the year when the income accrued which must have been a year when he was carrying on his profession as an advocate.
It could not then have been said that the receipts should be taken under the head "other sources".
If we are to accept the contention of the Revenue, we have to hold that the method of book keeping followed by an assessee would decide under which head a particular income will go.
If the Revenue is right, the income of the assessee would go under the fourth head if the method of accounting was mercantile and it would go under the fifth head if the accounting was the cash basis.
We are wholly unable to take the view that such can be the position under the Act.
The heads of income must be decided from the nature of the income by applying practical notions and not by reference to an assessee 's treatment of income: see Commissioner of Income tax vs Cocanada Radhaswami Bank Ltd.(1).
It now remains to see whether section 12 justifies a view contrary to that which we have taken.
It lays down the rules for computation of income under the head "Other sources".
It says that tax under the head "Income from other sources" shall be payable in respect of income of every kind which may be included in the total income if not included under any of the preceding heads.
It seems to us clear that the words "if not included under any of the preceding heads" which refer to the heads considered in sections 7 to 10 refer to income and not to a head of income.
section 12, therefore, deals with income which is not included under any of the preceding heads.
If the income is so included, it falls outside section 12.
Whether an income is included under any of the preceding heads would depend on what kind of income it was.
It follows that if the income Is profits and gains of profession, it cannot come under section 12.
Section 12 does not say that an income which escapes taxation under a preceding head will be computed under it for chargeability to tax.
It only says and this is most important that 'an income shall be chargeable to tax under the head "other sources" if it does not come under any other head of income mentioned in the Act.
Section 12 therefore does not assist the contention of the Revenue that professional income which cannot be brought to tax under section 10 may be so brought under section 12.
For these reasons we have come to the conclusion that the receipts were not chargeable to tax either under the head of professional income or under the residuary head, It was not said that the receipts might be brought to tax under any other head.
In our opinion, therefore, the receipts were not chargeable to tax at all.
We accordingly allow these appeals with costs.
(1) 3 S.C.R. 619.
302 Bachwat, J.
These appeals raise the question whether the professional income of an assessee whose accounts are kept on a cash basis, received by him during his life time after the discontinuance of the profession and after the close of the accounting year in which the profession is discontinued, is assessable to income tax either under section 10 or under section 12 of the Indian Income tax Act, 1922.
The assessee was practising as an advocate in the High Court of Bombay till March 1, 1957 when he was appointed a Judge of the High Court at Bombay.
His method of accounting was cash, and his accounting year was the Calendar year.
The relevant orders of the Income tax Officer suggest that his accounting year was the financial year ending on March 3 1, but it is now the common case of both the assessee and the Revenue that the accounting year was the Calendar year.
In the assessment year, 1958 59, the assessee was assessed to income tax in respect of the entire professional income received by him, during the Calendar year including the income received after March 1, 1957.
It is not disputed that the assessee was liable to pay tax in respect of the income received by him between March 1, 1957 and December 31, 1957.
During the Calendar years, 1958 and 1959, the assessee re ceived the sums of Rs. 30,570 and Rs. 15,240 respectively on account of professional fees for work done by him before March 1, 1957.
In the returns for the assessment years, 1959 60 and 196061, the assessee included the aforesaid two sums as his income from profession.
By his orders dated May 30, 1960 and October 26, 1960, the Income tax Officer subjected the aforesaid two sums to tax treating them as receipts of fees for professional services rendered in the earlier years and as part of the total income of the assessee.
On April 4, 1961, the assessee filed two revision petitions before the Commissioner of Income tax, Bombay City 1, under section 33 A contending that the aforesaid two sums were no part of his total income of the relevant accounting years and were included in his returns through an error and asking for their exclusion from his assessable income for the relevant assessment years.
By a common order dated January 29, 1963, the Commissioner of Income tax held that the two sums were assessable on general principles and also on the authority of the decision in Re. B. M. Kamdar(1), and rejected the revision petitions.
From this order, the assessee now appeals to this Court by special leave.
The first question is whether the two sums were assessable to tax under section 10 of the Indian Income tax Act, 1922.
Section 10(1) provides: "The tax shall be payable by an assessee under the head Profits and gains of business, profession or vocation ' in respect of the profits and gains of any business, profession or vocation carried on by him." (1) 303 Section 10 applies to the profits and gains of any business, profession or vocation carried on by the assessee.
Considering that the subject matter of charge is income of the previous year, the expression "carried on by him" must mean "carried on by him at any time during the previous year." To attract section 10(1), it is not essential that the assessee should have carried on the profession throughout the entire previous year or at the time when be realised the outstanding professional fees; it is sufficient that he carried on the profession at any time during the accounting year in which he realised his fees, see in re. Kamdar(1).
On the other hand, the section does not apply to the profits and gains of any profession which was not carried on by the assessee at any time during the previous year.
Our attention was drawn to several decisions of this Court dealing with section 10(2)(viii) and the second proviso to section 10(2)(vii).
In Commissioner of Income tax vs Express Newspapers Ltd(1) and Commissioner of Income tax vs Ajax Products Ltd.(1), this Court held that one of the essential conditions of the applicability of the second proviso to section 10(2)(vii) is that during the entire previous year or a part of it the business shall have been carried on by the assessee.
In the Express Newspapers Ltd. case(1), at page 259, Subba Rao, J. said: "Under section 10(1), as we have already pointed out, the necessary condition for the application of the section is that the assessee should have carried on the business for some part of the accounting year.
" These observations support the conclusion that the profits and gains of a business or profession are not chargeable under section 10(1), if the assessee did not carry on the business or profession during any part of the previous year.
In the instant case, the assessee discontinued his profession as soon as he became a Judge of the Bombay High Court.
He could not carry on the profession after he became a Judge.
It is not possible to hold that he continued to carry on the profession merely because he continued to realise his outstanding fees.
It follows that the assessee did not carry on his profession as an advocate at any time during the Calendar years, 1958 and 1959.
The receipts of the outstanding professional fees during 1958 and 1959 were not profits and gains of a profession carried on by the assessee during those years, and were not assessable to tax under section 10(1).
Section 13 provides that except where the proviso to that section is applicable, the income for the purposes of section 10 must be computed in accordance with the method of accounting regularly employed.
by the assessee.
Section 13 is mandatory.
In the instant (1) (2) , (3) ; 304 case, as the assessee employed the cash method of accounting and as the proviso to section 133 did not apply, his professional income during 1957 and the previous accounting years had to be computed on the cash basis.
The Revenue had no option in the matter.
Had the assessee adopted the mercantile method of accounting.
the entire income of the assessee arising from his profession before March 1, 1957 would have been included in his assessable income for those years, and no portion of it would have escaped assessment under section 10.
But as the assessee adopted the cash method of accounting, the outstanding fees could not be included in the assessment for those years.
The question is whether this income now escapes taxation altogether.
There is no doubt that by the method of accounting employed by the assessee, he has chosen to treat the receipts in question as income of the accounting years, 1958 and 1959.
The Revenue claims that the income was assessable to tax under section 12.
On behalf of the assessee, Mr. Palkhiwala submitted that (1) the income from the defunct source of profession, though not assessable under section 10, continued to fall under the head covered by section 10 and the residuary head under section 12 was not attracted, (2) section 12 covers residual heads and not residual receipts, and (3) that if section 12 were applied to this income, the assessee would suffer injustice because the deductions properly allowable under section 10 in respect of the income could not be allowed.
On the other ban(], Mr. Sarjoo Prasad appearing on behalf of the Revenue submitted that the receipts in question were part of the total income of the assessee for the relevant accounting years chargeable under section 3 read with sections 2(15) and 4.
and as the income was not exempt from tax and as it did not fall under section 10 or any other head, it must be assessed to tax under section 12.
In support of his contention, Mr. Sarjoo Prasad relied upon the opinion of Chagla, J. in re. Kamdar(1) at p. 58.
By section 3 read with sections 2(15) and 4, income tax is charged for every year in accordance with and subject to the provisions of the Act in respect of the total income of any previous year of the assessee computed in the manner laid down in the Act, including all income, profits and gains from whatever source derived.
which accrue or arise or are received or are deemed to accrue, arise or to be received as provided by section 4(1) and which are not exempted under section 4(3).
The crucial words in section 4 are "from whatever source derived".
The nature of the source does not affect the chargeability of the income.
Section 6 sets out the heads of income chargeable to tax.
The several heads are dealt with specifically in sections 7, 8, 9, 10 and 12.
Income is classified under different heads for the purpose of computing the net income under each head after making suitable deductions.
Income, profits and gains from what ever source derived, included in the total income fall under one (1) 305 head or the other, If any part of the total income does not fall under the specific heads under sections 7, 8, 9 and 10, it must fall under the residuary head under section 12.
Section 12(1) provides: "The tax shall be payable by an assessee under the head Income from other sources ' in respect of income, profits and gains of every kind which may be included in his total income (if not included under any of the preceding heads).
" Income, profits and gains of every kind are covered by section 12, provided two conditions are satisfied, viz., (1) they are not included under any of the preceding heads and (2) they may be included in the total income of an assessee.
Any income chargeable under a specific head can be charged only under that head and no part of that income can be charged again under section 12.
But any part of the total income of the assessee not assessable under a specific head is assessable under the residuary head covered by section 12.
Referring to similar words in section 12(1), as it stood before its amendment in 1939, Lord Russell observed in Probhat Chandra Barua vs The King Emperor(1): "These words appear to their Lordships clear and emphatic, and expressly framed so as to make the sixth head mentioned in section 6 describe a true residuary group embracing within it all the sources of income, profits and gains provided the Act applies to them i.e., provided that they accrue or arise or are received in British India or are deemed to accrue or arise or to be received in British India, as provided by section 4, sub section
(1), and are not exempted by virtue of section 4, sub section
" Referring to the words "income, profits and gains" in section 12, Lord Russell said in Gopal Saran Narain Shigh vs Income tax Commissioner(1): "The word 'income ' is not limited by the words 'profits ' and 'gains '.
Anything which can properly be described as income is taxable under the Act unless specially exempted. " And Sarkar, J. said in Sultan Brothers vs Commissioner of Incometax(1): "Section 12 is the residuary section covering income, profits and gains of every kind not assessable under any of the heads specified earlier.
" Section 6 gives the short label of each head, but the actual contents of the several heads are to be found in sections 7, 8, 9, 10 and 12.
Take the head "(iii) Income from property" in section 6.
Section 9 shows that only income from buildings or lands appurtenant thereto, of which the assessee is the owner, falls under this head.
Income from other properties, e.g., land not appurtenant to (1) [1930] L.B. 57 I.A. 228,239.
(2) [1915] L.R. 62 I.A. 207,213.
(3) , 357: 306 building is outside the purview of this head and fall s under section 12.
Again.
take the head "(iv) Profits and gains of business, profession or vocation.
" Section 10 on its proper construction applies only to the profits and gains of a business, profession or vocation carried on by the assessee during any part of the previous year.
Profits and gains of business, profession or vocation of the assessee which was not carried on by him during any part of the previous year being outside the purview of section 10 must necessarily fall under section 1 2.
Mr. Palkhiwala conceded that the receipts in question were the income of the assessee.
He also admitted that the income was not exempt from tax under sub section
(3) of section 4.
The income was received by the assessee in the taxable territories during the relevant previous years.
The receipts are, therefore, liable to be included in the total income.
We have found that this income cannot be included under section 10.
It is common case that it cannot be included under any other head.
It follows that the income must fall under the residuary head specified in section 12.
Section 12 dealing with the residuary head is framed in general terms and in computing the income under this head, requires deduction of any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of making or earning such income.
As the income in the present case falls under section 12, the allowance for the necessary expenditure must necessarily be given under this head and not under section 10.
There is no question of the assessee suffering an injustice by not being given the allowances under section 10.
He cannot be given the allowances under section 10, as the income does not fall under that section.
Counsel rightly submitted that section 12 covers residual heads and not residual receipts.
In this connection, he relied upon Salisbury House Estates Ltd. vs Fry(1).
That case decided that the various Schedules of the English Income tax Act, 1918 are mutually exclusive, Sch.
A must be applied to the class of income falling under it and no pay of this income is chargeable under Sch.
This decision received the approval of this Court in United Commercial Bank Ltd. vs The Commissioner of Income tax(2).
On the principle of this decision, if a particular income is taxable as income from property under section 9, any residual receipt from the property in excess of the annual value assessed under section 9 cannot be assessed again as residual income under section 12.
This principle has no application to the case before us.
The relevant professional income of the assessee is not taxable under section 10 or under any other specific head, and it must, therefore, be taxed tinder section 12.
This is not a case where the revenue has taxed or can tax the incomeunder section 10 and again seeks to tax the income under section 12.
Mr. Palkhiwala next referred us to several English decisions in support of his contention that the receipts of the professional (1) ; (2) ; 307 income after the discontinuance of the profession are not assess a ble to income tax.
Rowlatt, J. in Bennett vs Ogston(1) said: "When a trader or a follower of a profession or vocation dies or goes out of business because Mr. Needham is quite right in saying the same observations apply here and there remain to be collected sums owing for goods supplied during the existence of the business or for services rendered by the professional man during the course of his life or his business, there is no question of assessing those receipts to Income Tax; they are the receipts of: the business while it lasted, they are arrears of that business, they represent money which was earned during the life of the business and are taken to be covered by the assessment made during the life of the business, whether that assessment was made on the basis of bookings or on the basis of receipts." These bservations received the approval of the House of Lords in Purchase vs Stainer 's Executors(1) and Carson vs Cheyney 's Executors(1).
In ' the last two cases, the Court held that the professional earnings of a deceased individual realised by his executor were not liable to income tax either under Case II or under Cases III and VI of Schedule D of the English Income tax Act, 1918.
in Cheyney 's case(1), the professional earner had died in one of the assessment years and part of his earnings had been realised by his executor during the same assessment year.
It is remarkable, however, that in Cheyney 's case(1) at p. 265 Lord Reid said: "In my opinion, the ground of judgment in this House in Stainer 's case was that payments which are the fruit of professional activity are only taxable under Case 11 and cannot be taxed under Case III, even when it is no longer possible when they fall due to tax them under Case II, and when looked at by themselves and without regard to their source they would fall within Case Ill.
I am not sure that I fully appreciate the reasons for the decision, but I have no doubt that is what was decided, and I am bound by that decision whether I agree with it or not.
" The rule in Stainer 's case(1), rests on shaky foundations and has been subjected to criticism even in England.
The rule is subject to exceptions in England, and as pointed out by Jenkins, L. J. in Stainer 's case(1) is subject to the application of Rule 18 of the General Rules.
The Indian Income tax Act, 1922 is not pair material, the scheme is in many respects different from the scheme of the English Act, and I think that the rule in Stainer 's case(1) is not applicable to the Indian Act.
In England, the tax is on the I current year 's income, the Revenue has the option to assess the (1) ,378.
(3) (2) 308 income on the accrual basis, and even if it chooses to make an assessment on the cash basis, the entire accrued income might be considered to be covered by the assessment.
But under the Indian law, the tax is on the previous year 's income, the Revenue has no option to assess the income from a business or profession on the accrual basis if the accounts of the as are regularly kept on the, cash basis, and the assessment on the cash basis cannot cover the receipts in the subsequent years.
Moreover, it is impossible to say under the Indian law that all receipts of outstanding professional fees after the retirement of the assessee from profession escape taxation.
Beyond doubt, the receipt of the professional fees in the accounting year during which the assessee carried on the profession is assessable under section 10, though at the time of the receipt he has retired from the profession.
The decision in The Commissioner of Income tax, Bombay City 1, Bombay vs Amarchand N. Shroff(1) is entirely distinguish able.
In that case, this Court held that the income of a deceased solicitor received by his heirs subsequent to the previous year in which he died was not liable to be assessed to income tax under a. 24B as his income in the hands of his heirs, and apart from section 24B, no assesment can be made in respect of a person after his death.
In the instant case, the assessee is alive,.
and no question of assessment under section 24B arises, Neither side relied on section 25(1), and, in my opinion, rightly.
That sub section gives an option to the Revenue to make an assessment in the year of the discontinuance of the business or profession on the basis of the income of the period between the end of the previous year and the date of the discontinuance in addition to the assessment, if any, made on the basis of the income of the, previous year, The sub section does not preclude the Revenue from making an assessment on the professional income under any other section of the Act.
Our attention was drawn to section 176(4) of the Income tax Act, 1961, which provides: "Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly "in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance.
" (2) [1963] Supp.
I S.C.R. 690.
309 The note on cl. 178 of the Income tax Bill, 1961 suggests that this sub section was passed with a view to give effect to the following recommendations of the Direct Taxes Administration Enquiry Committee in paragraph 7.81 (11) of its Report: "There is no provision in the law at present to assess the income, received after the cessation of practice or retirement or death of the assessees carrying on a profession, like, Solicitors.
Advocates, Doctors, Consulting Surveyors.
Engineers etc.
The law should be amended in such a way that even on the assessee 's cessation of his vocation or retirement from the profession or death income received after such cessation, retirement or death would be taxed.
" The Report does not purport to base, its opinion on any judicial decision.
The assumption in this Report that there is no provision in the Indian Income tax Act to assess the entire income received after the retirement or death of professional men cannot be wholly correct, because, beyond doubt, the income received after the retirement in an accounting year during any part of which the assessee practiced his profession is assessable under section 10 and the income received after his death by his legal representative during the previous year in which he practised his profession is assessable in the hands of the legal representative under section 24B.
Moreover, the Report is silent on the question of the assessment of the outstanding profits of business realised by a trader after the discontinuance of his business.
In this case, we are concerned with the interpretation of the Indian Income tax Act, 1922, and the question is whether we can take into account the provision of the later Act in interpreting the earlier Act.
In Craies on Statute Law, 6th Edn, p. 146, the law is stated thus: "Except as a parliamentary exposition, subsequent Acts are not to be relied on as an aid to the construction of prior unambiguous Acts.
A later statute may not be referred to interpret the clear terms of an earlier Act which the later act does not amend, even although both Acts are to be construed as one, unless the later Act expressly interprets the earlier Act; but if the earlier Act is ambiguous, the later Act may throw light on it, as where a particular construction of the earlier Act will render the later incorporated Act in.
effectual.
" This passage is fully supported by the decision of the House of Lords in Kirkness vs John Hudson & Co.(1).
In Hariprasad Shivshankar Shukla vs A. D. Divikar(2), this Court gave effect to the (1) [1955] 2 All.
R.R. 845.
(2) [1957] S.C.R. 121,140.
310 plain meaning of an unamended Act, though on the interpretation given by it a later amendment would become largely unnecessary, and quoted with approval the following passage in the opinion of Lord Atkinson in Ormond Investment Co. Limited vs Betts(1): "An Act of Parliament does not alter the law by merely betraying an erroneous opinion of it.
" I do not find any ambiguity in the clear terms of sections 2(15), 3,4,6,10, 12 and 13 of the Indian Income tax Act, 1922 and the later Act cannot be used as an aid to their construction.
On the construction of the Indian Income tax Act, 1922, 1 hold that the profession income of an assessee whose accounts were kept on a cash basis received by him during his lifetime after the discontinuance of the profession and after the close of the accounting year in which the profession was discontinued, is assessable to income tax under section 12 of the Act.
In the result, the appeals are dismissed.
There will be no order as to costs.
ORDER In accordance with the Judgment of the majority the appeals are allowed with costs.
(1) ,164.
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The appellant an advocate who maintained his accounts on the cash system gave up practice when he was elevated to the Bench in 1957.
Certain outstanding professional dues were however received by him in the accounting years 1958 and 1959.
These receipts were shown by him as income in his return for the assessment years 1959 60 and 1960 61 and were assessed by the Income tax Officer.
The appellant then went in revision to the Commissioner of Income tax contending that the said receipts were not income and had been wrongly taxed.
The Commissioner having decided against him the appellant came to this Court under article 136 of the Constitution.
HELD: (i) The receipts in the present case were clearly the fruits of the assessee 's professional activity and fell under the fourth head of section 6 of the Indian Income tax Act 1922.
They were however not chargeable to tax under that head because under the corresponding computing section that is.
section 10.
an income received by the assessee who kept his accounts on the cash basis in an accounting year in which the profession had not been carried on at all is not chargeable.
[297 D F] Commissioner of Income Tax vs Express Newspapers Ltd., , relied on.
(ii) The income could not be taxed under section 12 either.
Section 12 deals with income which is not included under any other preceding heads covered by sections 7 to 10.
If the income is so included, it falls outside section 12.
It follows that if, as in the present case, the income is profits and gains of profession it cannot come under section 12.
[301 E] The heads of income in section 6 are mutually exclusive and it would be incorrect to say that as the receipts could not be brought to tax under the fourth head they could not fall under that head and must therefore fall under the residuary head 'other sources '.
There is no justification for the assumption that an income falling under one head has to be put under another head if it escapes taxation under the computing section corresponding to the former head.
[298 A; 300 E F] The character of the income cannot change merely because the assessee received it at a certain time or adopted a certain sYstem of accounting.
[301 B] Section 4 does not say that whatever is included in total income must be brought to tax.
The income has to be brought under one of the heads mentioned is section 6 and can be charged to tax only if it is so chargeable under the computing section corresponding to L/S5SCI 296 that head.
Income which falls under the fourth head can be brought to tax only if it can be so done under the rules of computation laid down in section 10.
[298 G 299 B] In re: B, M. Kamdar, , not approved.
The United Commercial Bank vs The Commissioner of Income Tax, ; , Salisbury House Estate Ltd., vs Fry.
15 Tax Cases 266 and Commissioner of In tax vs Cocanada Padhaswami Bank Ltd., , relied on.
Probh At Chandra Barua vs King Emperor, 57 I.A. 228, distinguished, Per Bachawat J. (dissenting) The receipts in question were chargeable under section 12.
Any income Chargeable under a specific head can be charged only under that head, and no part of that income can be charged again under section 12.
But any part of a total income of the assessee not me*sable under a specific head is assessable under the residuary head covered by section 12, [305 C] The income in question was not exempt under section 4(3).
The receipts were liable to be included in total income under section 4.
This income could not be included under section 10 owing to the method of accounting adopted by the assessee.
Nor did it fall under any other head.
It followed that the income must fall under the residuary head specified in section 12, This was not a case where the Revenue had taxed or could tax the income under s, 10 and again sought to tax the income under a. 12.
[306 C. G H]
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2120.txt
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No. 5 (N) of 1974.
(Under Article 32 of the Constitution of India).
Soli J. Sorabjee, Harish N Salve, A.K. Verma, K.J. John, Srinivasamurthy, Ms. Naina Kapur, J.B. Dadachanji and Joel Pares for the Petitioners.
Shanti Bhushan and A.V. Rangam for the Respondents.
The Judgment of the Court was delivered by VENKATACHALIAH, J.
In these writ petitions under Article 32 of the Constitution of India, three electric supply undertakings in the State of Tamil Nadu, namely, Vellore Electric Corporation Ltd., Nagapatam Electric Supply Co. Ltd., and Kumbakonam Electric Supply Corporation Ltd., challenge the constitutional validity of the Tamil Nadu Private Electricity Supply Undertakings (Acquisition) Act, 1973, ( 'Act ' for short) on the ground that the 'Act ', which envisages the acquisition of the Electric Supply Undertak ings of three petitioners, as violative of Articles 14, 19(1)(f), 19(1)(g) and 31 of the Constitution.
These writ petitions were heard along with Writ Petition (Civil) Nos. 457 and 458 of 1972, pertaining to the acquisi tion of Tinsukhia Electric Supply Co. Ltd., and Dibrugarh Electric Supply Co. Ltd., under the provisions of the Tin sukhia and Dibrugarh Electric Supply Undertakings (Acquisi tion)Act, 1973, (Assam Act 1973) and the main contentions touching the constitutionality of such State laws, providing for acquisition of private electricity undertakings inde pendently of and without recourse to the option to purchase envisaged by the terms of licences and under the provisions Sections 6, 7 and 7A of the Electricity Act 1910 are con sidered in the main judgment in the said WP 481 Nos. 457 & 458, separately rendered today.
The scheme and the broad features of The Tamil Nadu Private Electricity Supply Undertakings (Acquisition) Act, 1973, which received the assent of the President on 30th September, 1973, are that the "Act" enables and provides for the acquisition of the private undertakings engaged in the business of supplying electricity to the public other than those belonging to and are under the control of the State Electricity Board or the local authorities.
Section 2 of the Act declares that the "Act" is for giving effect to the policy of the State towards securing of the Directive Principles, specified in clauses (b) & (c) of Article 39 of the Constitution of India.
Section 3 is the interpretation clause.
Section 4 empowers the State Govern ment to declare, by order in writing, that any undertaking shall vest in Government on the date specified in such order.
The proviso to Section 4 enables the Government to modify, by advancing or postponing, the date originally fixed in such order, or the modified date; or to cancel such order.
The proviso is, however, subject to a limitation which is in terms following: "So, however, that no such order shall be modified or cancelled after the undertaking has vested in the Government but such cancel lation shall not be deemed to prevent the Government from taking any proceeding de novo in respect of such undertaking under this Act." The mode of promulgation and the incidence and consequence of an order under sub section (1) of Section 4, are envisaged in subsection (3) (4) & (5) of Sections 4 and 6 of the Act.
Sub sections (3), (4) and (5) of Section 4 provide: "(3) Every order under sub section (1) shall be (a) served on the licensee in the prescribed manner; and (b) published in such manner as the Government may deem fit.
(4) On the vesting date the under taking, to which the order under sub section (1) relates, shall, subject to the provisions of section 6, stand transferred to, and vest in, the Government.
482 (5) Every licensee who, after the vesting date, was in possession of, or deriv ing any benefit from the undertaking vested in the Government under sub section (1), shall be liable to pay to the Government, for the period, after such vesting, for which he was in such possession or deriving such benefit, an amount as compensation for the use, occupa tion or enjoyment of that undertaking as the prescribed authority may fix in the prescribed manner.
Such authority shall take into consid eration such factors as may be prescribed.
" We shall refer to Section 6 and its impact at an appropriate stage later.
Section 5 of the "Act" envisages the "amount" to be given to the licensee on whom an order has been served under Section 4 and provides for its determination on two alterna tive basis Basis (A) or Basis (B) as may be chosen by the licensee in the exercise of the option given under Section 8.
Section 7(1) contemplates and requires the appointment of an ,Accredited Agent" by the licensee within three months of service of the order under Section 4(1).
Such accredited agent is required within one month of his appointment or with such further time as may be granted by Government, signify the choice of the Basis for the determination of the "Amount".
Section 8(2) says that the choice of the Basis once intimated shall not be open to revision except with the concurrence of the Government. 'Basis (A) ' provides that the amount to be given shall be equivalent to 12 times of the average net annual profits of the undertaking during a period of any five Account years at the option of the licen see within a period of seven consecutive account years immediately preceding the vesting date. 'Basis (B) ' contem plates a different mode of determination of the amount.
It provides for payment of the aggregate value of the sums specified in clauses (i) to (ix) of sub section (2) of Section 5.
Section 10 speaks of the deduction that the Government is entitled to make for the amount.
They are specified at clauses (a) to (i) of Section 10.
Section 11 provides for the manner of payment of the "Amount".
Section 13(1) renders any dispute "in respect of any of the matters in clauses (a) to (e) of Section 13(1)" arbitrable.
The Arbitrator is required, by Section 11(2), to be a District Judge or a person who is a retired District Judge or a retired High Court Judge.
Chapter III of the Act, comprising Sections 14, 15, 16 and 17 contemplate and provide for the termination of agree ments between the licensee on the one hand and the managing agent or the managing 483 director, as the case may be, on the other; the continuation under the Government or the Electricity Board, of services of persons on the staff of the licensee taking an inventory of the assets and for information in regard to the documents maintained by the licensee and other incidental matters.
Sections 18 and 19 of Chapter IV deal with offences, penalties and procedure therefore Chapter V, comprising Sections 20, 21, 22, 23 and 24, deals with miscellaneous matters.
Two sections in Chapter V are of particular rele vance.
Section 22(i), inter alia, provides that no provi sions of Electricity Act, 1910, or the Electricity Supply Act, 1948, in so far as such provisions are inconsistent with any of the provisions of the Act, shall have any ef fect.
Section 23 refers to and deals with the action initi ated under the earlier State law viz., the Tamil Nadu Elec tric Supply Undertaking (Acquisition) Act, 1954, (Tamil Nadu Act 29 of 1954) which is repealed by the 'Act '.
Sub section (1) of Section 23 says that the said Act 29 of 1954 shall cease to apply to any undertaking as defined in Section 3(12) of the 'Act ' which has "not vested with and taken possession of by the Government under the provisions of the 1954 Act" before the commencement of the 1973 Act.
Sub section (2) and (3) of Section 23 envisage and provide for situations where some action had been initiated by the 1954 Act but such action had not culminated in the vesting of the undertaking and possession thereof being taken over by Government.
Sub section (2) and (3) of Section 23 provide: "(2) Notwithstanding anything con tained in the 1954 Act, if, in pursuance of any order under sub section (1) of section 4 of the 1954 Act in respect of any undertaking as defined in section 3 (12) of this Act, the Government have not taken possession of such undertaking before the commencement of this Act that order shall lapse and be of no effect and such undertaking shall not vest and shall be deemed never to have vested in the Govern ment under the 1954 Act and in respect of such undertaking it shall be lawful for the Govern ment to make an order under subsection (1) of section 4 of this Act and the provisions of this Act shall accordingly apply to such undertaking." "(3) Notwithstanding anything contained in the 1954 Act, where, in respect of any undertaking as defined in section 3(12) of this Act, the Government have postponed the date of vesting under the proviso to sub section (1) of 484 section 4 of the 1954 Act, that undertaking shall not vest, and shall be deemed never to have vested, in the Government under the 1954 Act, notwithstanding the expiration of a period of one year from the date originally fixed under sub section (1) of section 4 of the 1954 Act and in respect of such undertak ing it shall be lawful for the Government to make an order under sub section (1) of section 4 of this Act, and the provisions of this Act shall accordingly apply to such undertaking." The provisions of Section 23 acquire particular signifi cance in the case of the Kumbakonam Electric Supply Corpora tion Ltd. and Nagapatam Electric Supply Co. Ltd., petition ers in W.P. 14 & 15 of 1974, as, indeed, proceedings for the acquisition of the undertakings of these two companies had been initiated under the 1954 Act but full effectuation thereof had been interrupted by the interlocutory orders made by courts in proceedings in which these two companies had challenged the validity of the 1954 Act.
Section 23 of the present 'Act ' seeks legislatively to set at naught such legal consequences as might come to be considered as ensuing from the action taken under the earlier 1954 Act.
Some contentions urged in these cases centre round what the petitioners refer to as some irreversible, vested rights according to them under the earlier proceedings under the 1954 Act.
The Vellore Electric Corporation Ltd., petitioner in WP No. 5(N) of 1974, was granted on 14.5.1929 by the Govern ment of the then Presidency of Madras under the provisions of the , (1910 Act ' for short), for the supply of.
electrical energy within the municipal limits of Vellore town which was later extended to cover the adjacent area of Ranipet.
Clause 12 of the licence envisages the option to the Government to purchase the licensee 's undertaking on the expiry of 30 years from the commencement of the licence or if licence is renewed thereafter on expi ration of every subsequent period of 20 years, during the continuance of the licence.
At the relevant time when the order under Section 4(1) was made, the remaining period of the licence was upto 14.5.
The State Government in exercise of powers under Section 4(1) of the Act made an order dated 30.10.1973, served on the petitioner on 5.11.
1973 fixing 1.12.1973 (which was later postponed to 7.1.1974) as the date of vesting.
The facts in W.P. 14 of 1974 are the following: 485 The petitioner, the Kumbakonam Electric Supply Corpora tion Ltd., a public limited company, then engaged in the business of distribution and supply of electrical energy in the Taluks of Kumbakonam and Papanasam and a portion of Thanjavur Taluk, in the District of Thanjavur in the State of Tamil Nadu, was granted a licence dated 15.4.1930 under the , by the Government of the then Presidency of Madras.
The initial period of the licence was 20 years with a provision for renewal for further peri ods of 7 years each.
At the time the impugned order under Section 4(1) of the "Act" was made, in relation to the Electricity Supply Undertaking of this company, the unex pired period of the licence was up to 15.4.1978.
On 12.1.1968, the State Government in exercise of its power under Section 4(1) of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, made an order for the taking over of the undertaking.
The petitioner company filed a writ petition No. 704 of 1968 in the High Court of Madras, challenging the constitutional validity of the 1954 Act under which the order was made.
That writ petition was dis missed on 31.7.1968.
The Writ Appeal No. 338 of 1968, filed by the petitioner was also dismissed by the Division Bench.
The petitioner preferred, by special leave, an appeal to this Court in CA 119 of 197 1.
During the pendency of the proceedings before the High Court and before this Court, petitioner had had the benefit of interlocutory orders, "staying delivery of possession of the undertaking".
Howev er, the petitioner withdrew the appeal, according to it, on the suggestion of the Government With a view to facilitating negotiations for a settlement.
However, on 30.9.1973, the 'Act ' in the present proceed ings came into force.
As noticed earlier, sub section (2) and (3) of Section 23 of the 'Act ' statutorily abrogates the effect, incidents and consequences of all earlier proceed ings taken under the 1954 Act, except in cases where the vesting and the taking over of possession of the undertaking had already occurred before 30.9.1973.
The order under Sec tion 4(1) of the 1973 Act in the case of the petitioner in WP 14 of 1974 was made on 30.10.1973 declaring 1.12.1973 as the date of the vesting.
In WP No. 15 of 1974, the first petitioner, the Nagapatnam Electric Supply Co. Ltd., a public limited compa ny, was the grantee of a licence, dated 22.8.1933, under the , by the then Government, Presi dency of Madras, for the supply of electricity in the areas specified in the grant.
The initial period of the .
licence was 20 years with a provision for renewal for further peri ods of 486 7 years each.
At the time the order under Section 4(1) impugned in the writ petition was made, the unexpired period of the licence was upto 22.8.1974.
As in the case of Kumbak onam Electric Supply Corporation Ltd., so in the present case, Government in purported exercise of powers under Section 4(1) of the earlier Act, viz., the Tamil Nadu Elec tricity Supply Undertaking (Acquisition) Act, 1954, had made an order on 12.1.1968 declaring that the undertaking of the petitioner shall vest in the Government with effect from 15.7.1968.
The petitioner also challenged the constitutional validity of the 1954 Act in WP No. 703 of 1968 in the High Court of Madras.
The writ petition was dismissed in Madras High Court on 3.7.1968.
The Writ Appeal 337 of 1968 pre ferred by the company before a Division Bench of the High Court, also came .to be dismissed.
The Company preferred, by special leave, CA No. 120 of 1971 before this Court.
During the pendency of the proceedings in the High Court and in the appeal before this Court, there were interlocutory orders, staying delivery of possession of the undertaking.
The appeal before this Court was however, withdrawn by the company on 5.10. 1972.
Thereafter, 1973 Act came into force.
As stated earli er, SectiOn 23 of the 'Act ' sought to nullify the effect.
of the action taken under the 1954 Act and a fresh order dated 30.10.1973 under Section 4(1) of 1973 Act came to be promulgated declaring that the undertak ing of the .
petitioners would vest in Government with effect from 1.12.1973.
The three petitioner companies assail the constitu tional validity of the 'Act ' as also the orders made under Section 4(1) in the individual cases.
We have heard Sri Hansh Salve, learned counsel for the petitioners in the three petitions and Shri Shanti Bhushan, learned Senior Advocate for the State of Tamil Nadu and its authorities.
The challenge in the main, is to the constitu tionality of the "Act", on the basis of discrimination as between the procedures for take over contained in Section 6 and 7 of the Electricity Act, 1910, on the one hand and the less advantageous, so far as licencee is concerned, con tained in the present 'Act '.
However, some specific provi sions are also challenged as arbitrary and unreasonable.
The contentions in support of the petitions urged at the hearing of these petitions of which (b) & (c) are particular to WP Nos. 14 and 15 of 1974 may be noticed and formulated thus: 487 "(a) that the legislative declaration in Section 2 of the 'Act ' that the legislation is for giving effect to the Directive Principles of State Policy, specified in clauses (b) & (c) of Article 39 of the Constitution is invalid, it being merely a pretext to undo and take away the petitioners ' legitimate entitle ment to the payment of market value as provid ed in the terms of the licence read with Section 6 and 7 of Electricity Act, 19 10, and, accordingly, the legislation does not attract the constitutional validity from challenge under Article 31 C of the Constitu tion; (b) that, pursuant to the order made under Section 4(1) of the 1954 Act petitioners ' undertakings stood vested in Government in the year 1968 and the concomitant right to receive compensation as determinable under and in terms of the 1954 Act was came to be vested in the petitioners and got crystalized into a 'chose in action ' and that in the circum stances the impugned 'Act ' which in effect and substance acquires only these "choses in action", and not the undertakings as such which had already vested under the 1954 Act; (c) that Section 23(2) of the Impugned Act in so far it seeks to undo the legal incidents and consequences of the order made which provided a less disadvantageous standards for the determination of the amount and the im pugned orders which seeks to declare that the said undertakings vest again in Government this time pursuant to order pro mulgating under Section 4(1) of the impugned Act is violative of Article 14, 19(1)(g) and 31 (as the latter Articles then stood) being a fraud on the power to acquire; (d) that the 'Act ' is violative of Article 14 of the Constitution in as much as it seeks to confer upon the Government an alternative and discriminatory power of attaining the same end, namely, the acquisition of petitioners ' undertakings on terms more advantageous to the Government and more disadvantageous to the petitioners than those contained in the Elec tricity Act 1910; that the direct effect of the impugned Act is to extinguish the rights conferred upon the petitioners to carry on a lawful business in terms of the subsisting licences in their favour and is violative of Article 19(1)(f) (as it then stood) and 19(1)(g): 488 (e) that, at all events, Section 4(5) of the Act which renders a licencee, who after the vesting date was in possession of, or deriving any benefit from, the undertaking liable to pay to Government compensation for the use occupation enjoyment of the undertak ing is arbitrary and violative of Articles 14 and 31; (f) that clause 5(2)(i) of the Act which excludes from the compensation of the 'Amount ' works paid for by the consumers is violative of Article 19(1)(g) and Article 31; (g) that Section 10(d) providing for deduc tion from the 'Amount ' sums due to the Govern ment or the Electricity Board by the licencee account of electricity supplied by Government is arbitrary, as the provision empowers deduc tions of even sums bona fide disputed by the licencee of debts.
(h) that, while proviso to Section 6(e) enables debts, mortgages and obligations of the licencee to attach to the "amount" to be given under the Act.
Section 10 again envis ages the same 'amount ' to be deducted from the 'amount ', leading to a possible double recov ery of the same debt; (i) that Section 10(f) providing for deduc tion of loss sustained by Government by reason of any property belonging to the undertaking not having been handed over at the marketvalue of the property is unreasonable in as much as under Basis B. Such Market value is not but only the book value is the basis of determina tion of the amount; (j) that provisions of Section 8 which prescribes a period of one month during which the accredited representative has to exercise a right of auction is unreasonably short, rendering the procedure prescribed for the choice of the Basis of determination of the 'Amount unfair and arbitrary. ' 7.
Re: Contentions (a), (b), & (c): These contentions could be dealt with together.
The principal argument is that that there is no rational and direct nexus between the objects of the Act and the Direc tive Principles of (1) State Policy adumorated in clauses (b) & (c) of Article 39 in as much as the 489 impugned Act was brought forth only to avoid the conse quences of the terms of the licences and the beneficent provisions of Section 6, 7 and 7 A of the Electricity Act 1910.
If there is, thus, no protection to the law of Article 31 C, then its provisions would clearly violate Articles 14, 19 and 31.
These contentions have to be examined with reference to the provisions of the Constitution as they stood in 1973.
Article 31 C was introduced by Section 3 of the Constitution (25th Amendment) Act 1971 with effect from 20.4.1972.
Arti cle 31 C, before the expansion of its scope by the 42nd Amendment, protected a law giving effect to the Policy of the State towards implementing the principles specified in Clauses (b) & (c) of Article 39.
Article 31 itself had not then been deleted but its scope had been considerably cut down and a law providing for acquisition of property, even if it did not have the protection of Article 31 C, could not be tested with reference to the adequacy of the 'amount ' payable for the acquisition.
The 'just equivalent ' or ful lindemnification principle had been done away with and the question of the adequacy of the amount was rendered non justiciable.
It was strenuously urged on Sri Salve that the impugned Act had no rational and direct nexus with the objects of clauses (b) & (c) of Article 39 as the covert but easily discernible purpose of the Act was to deny to the petition ers ' their rights under terms of the licence and the benefit of Sections 6, 7 & 7(A) of the 1910 Act.
A somewhat similar ' contention was urged in WP Nos. 457 & 458 of 1972 where a similar legislation of the State of Assam was challenged.
The contention is noticed in our judgment in those appeals thus: " . the acquisition of the two undertak ings are challenged by the petitioner on several grounds, the principal attack, howev er, being that the legislations, brought forth, as they were, in the wake of the pri vate negotiations and the exercise of the option to purchase, are not bona fide, but constitute a mere colourable exercise of the legislative power and that, at all events the real objects of the two legislations have no direct and reasonable nexus to the objects envisage in clause (b) of Article 39 of the Constitution and that a careful and critical discernment of the context in which the legis lation was brought forth would lay bare before the judicial eye that what was sought to be acquired was not "undertakings" of the two companies but really the difference between the "market value" of the 490 undertakings which the State had agreed, under the private treaties, to pay and what, in any event, the State was obliged to pay under the provisions of Section 7A, as it then stood on the one hand and the "Book Value" of the undertaking, which the law seeks to substitute on the other.
If the protective umbrella of Article 31 C is, thus, out of the way, the 'amount ' payable under the impugned law, it is urged, would be illusory even on the judicial ly accepted tests applied to Article 31(2) as it then stood " " . .
Learned Counsel submitted that in order to decide whether a Statute is within Article 31 C or not, the Court has to examine the nature and character of the legis lation and if upon such scrutiny it appears that there is no nexus between the legislation and the principles in Article 39(b) the legis lation must be held to fall outside the pro tection of Article 31 C . " The contention was not accepted.
Repelling it, we observed in the course of the judgment in WP Nos. 457 & 458 of 1972: "The proposition of Sri Sorabjee, in princi ple, is, therefore, unexceptionable; but the question remains whether, upon the application of the appropriate tests, the impugned statute fails to measure up to the requirements of the Constitution to earn the protection under Article 31 C . . " "It is not disputed that the elec tricity generated and distributed by the undertakings of the petitioner companies constitute "material resources of the communi ty" for the purpose and within the meaning of Article 39(b)." " .
The idea of distribution of the material resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries.
That is one of the modes of "distribution".
Nationalisation is another mode . " "On an examination of the scheme of the impugned law the conclusion becomes inescapable that the legislative measure is one of na tionalisation of the undertakings and the law is eligible for and entitled to the protection of Article 31 C." 491 Referring to the contention in that case that not every provision of a law can and need to eligible for the protection of Article 31 C and that; accordingly, the provisions as to the quantification of the amount which were meant to achieve an oblique motive and inter dicting and extinguishing rights to receive market value under the 1910 Act would not attract the protection of Article 31 C, It was held: " .
We are afraid this contention pro ceeds on an impermissible dichotomy of the components integral to the idea of nationali sation.
The economic cost of social and eco nomic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core element in Nationali sation.
The need for constitutional immunities for such legislative efforts at social and economic change recognise the otherwise unaf fordable economic burden of reforms . . " "It is, therefore, not possible to divorce the economic considerations or compo nents from the scheme of the nationalisation with which the former are inextricably inte grated.
The financial cost of a scheme of nationisation lies at its very heart and cannot be isolated.
Both the provisions relat ing to the vestitute of the undertakings in the State and those pertaining to the quanti fication of the "Amount" are integral and inseparable parts of the integral scheme of nationalisation and do not admit of being considered as distinct provisions independent of each other.
These observations fully answer the contention of Sri Salve in regard to the question whether impugned Act at tracts protection of Article 31 C or not.
If Article 31 C comes in, Articles 14, 19 and 31 go out.
The second limb of the Contention (a) is that the im pugned Act seeks to take over petitioners ' undertakings which had already vested in Government under the 1954 Act.
It is, no doubt, true that appropriate orders had been made under Section 4(1) of 1954 Act.
Sri Salve contends that by the operation of law, the undertakings of the two petition ers, namely, Kumbakonam Electric Supply Corporation Ltd. and Nagapatnam Electric Supply Co. Ltd. became vested in Govern ment and that Section 23 of the present Act virtually creates an artificial divestitive event and seeks to re invest it again in Govern 492 ment by the device under the impugned Act with the sole object of cutting down the quantum of the "amount".
Sri Salve pointed out that Section 5 of the 1954 Act envisaged three alternative Bases Basis A, Basis B, and Basis C and that under Basis A the amount equal to 20 times of the average net annual profit of the undertaking during a period of five consecutive accounting years immediately preceding the vesting date was payable.
The number of years ' purchase value is, Sri Salve says, now reduced to 12 by the impugned Act.
Shri Salve submits that the amount payable under the 1973 Act is wholly illusory.
Shri Shanti Bhushan, learned Senior counsel for the State, submitted that if it is held that the legislation has the protection of Article 31 C, barring the question of legislative competence all other attacks based on Articles 14 and 19 and 31 cannot be countenanced.
Sri Shanti Bhushan submitted that all the contentions that the petitioners advance in support of their challenge to the validity of the Act rest, in the ultimate analysis, on Articles 14, 19 and 31 which is precisely what Article 31 C forbids.
So far as legislative competence is concerned, Shri Shanti Bhushan submitted that it is referable to Entry 42 of List III and with Presidential assent, the legislation prevails over any other law and, therefore, no question of lack of legislative competence can be urged.
Learned counsel submitted that the contentions urged by the petitioners, in the last analysis, would amount to this: that a legislation which offends Articles 14.
19 and 31.
would not be a valid law at all and would, therefore, not be eligible to protec tion Article of 31 C.
If a law satisfies the demand of Article 14, 19 and 31 then such a law, says learned counsel, would not need the protection of Article 31 C at all and that such an approach would render Article 31 C itself meaningless.
In regard to the Contention (d), Sri Shanti Bhushan would say that it proceeds on a factual fallacy.
There cannot, it is urged a vesting of the undertaking in the Government under the 1954 Act unless the concept of vesting has and is accompanied by, the plenitude of the legal inci dents and consequences of such vesting for purposes of the implementation of the 1954 Act.
When the delivery of posses sion of the undertaking pursuant to the alleged vesting under the 1954 Act had been interdicted by the High Court and the Supreme Court by orders of stay, at the instance of the petitioners, the exercise under the 1954 Act became infructuous and the present stance of the petitioners is merely an attempt to exploit to their own advantage a situa tion emerg 493 ing from the consequences of their own actions.
That apart, the contention (d), says counsel, is really one based on Articles 14, 19 and 31 and the protection of Article 31 C to the Act would, in any event, disallow any such attack.
On a consideration of the matter, we think that all the Contentions (a), (b), (c) and (d) are covered in one form or the other our pronouncement in WP Nos. 457 and 458 of 1972.
We are also of the opinion that Sri Salve 's contention that what was sought to be acquired was mere "choses in action" is not sound.
In any event, the decision of this Court in State of Madhya Pradesh vs Ranojirao Shinde & Anr., ; relied upon by Shri Salve to contend that choses in action could not be acquired would require to be read with later pronouncement in Madan Mohan Pathak vs Union of India & Ors., ; It is not necessary, however, to pronounce on this point as in our view what was acquired were not merely choses inaction but the undertak ings themselves.
Contentions (a), (b) and (c) accordingly fail and are held and answered and against the petitioners.
Re: Contention (d): The submission of learned counsel on the point is that the impugned Act confers upon the State Government an alter native procedure, concurrently with the one envisaged in Sec.
6 of the Electricity Act, 19 10, for attaining the same end viz., the acquisition of an Electricity Undertaking.
It is urged that Sec.
6 of the 1910 Act has been held to amount to conferment of power upon the authorities to take away the property of the licensee.
The option under Sec. 6 is really statutory and in its essential nature the power is not distinguishable from the State 's power to acquire an indi vidual 's property which really is and forms the basis of the impugned Act.
It appears to us that there are certain fallacies basic to the argument.
The special nature of the subject matter of the grant in relation to distribution in the community of such material resources be it electricity, water, gas or other essential amenities of life was recognised by this Court.
The following observations of the United States Supreme Court in New Orleans Gaslight Co. vs Louisiane Light & Heat Producing & Mfg. Co., ; were referred to: "the manufacture and distribution of gas by means of 494 pipes, mains and conduits placed under legis lative authority in the public ways of a municipality, is not an ordinary business in which everyone may engage as of common right upon terms of equality; but is a franchise relating to matters of which the public may assume control . . " and said: " . .
It thus appears that American Lawyers describe the business of supplying energy as well as the business of supplying water and gas as a franchise, and it also appears that, in granting licence or sanction to a person to engage in such busi ness, a condition is usually imposed for the compulsory acquisition of the business when the licence or sanction comes to an end".
[See The Okara.
Electric Supply Co. Ltd. vs The State of Punjab, AIR If the impugned law is within the legislative competence of the State Legislature as indeed it must be held to be the State law, with the Presidential assent, prevails and is not over borne by the Central law.
The impugned State law, by its 22nd Section, expressly excludes the operation of any provision of the Electricity Act, 1910, in so far as such provision is inconsistent with the provisions of the State Law.
The constitutional immunity afforded to the State law prevents any challenge to it on grounds based on Article 14 or 19.
We have held that the State law has such protection.
The contention (d) has thus, no foundation.
It has to fail.
Re: Contention (e): 12.
This pertains to the liability of the licensee to account to Government in respect of possession of and any benefit derived from the undertaking after the date of the vesting.
This provision is assailed as arbitrary and uncon stitutional.
There is nothing unreasonable about this provi sion which merely recognises the obligation of a licensee to account for its acts in relation to a property which has already vested in Government.
There is no substance in this contention either.
Re: Contention (f): This contention arises in the context of Sec.
5(2)(i) of the Act.
In 495 computing the amount payable under "Basis B" the aggregate value of the sums specified in several clauses of 1 Sec.
5(2) has to be taken.
5(2)(i) while requiting the book value of all "completed works in beneficial use pertaining to the undertaking and handed over to the Government" to be taken, however, excludes therefrom works paid for by the consumers.
The contention of the petitioners is that the "works paid for by the consumer" is also the property of the licensee and cannot legitimately be excluded.
A substantial ly similar contention was urged and has been considered and negatived at para 29 of our judgment in WP Nos. 457 and 458 of 1972.
The reasons stated by us in negativing the conten tion in that case fully answer the present point.
Contention (f) is also insubstantial.
Re: Contention (g): Section 10(d) envisages,deduction from the amount pay able towards and on account of arrears of electricity charges payable by the licensee to the Government or the Electricity Board.
as the case may be, for the supply of Electricity made by them to the licensee.
This is a legiti mate item of deduction.
But, the point Shri Salve sought to put across is that ,even a disputed and untenable.
claim in that behalf becomes entitled to deduction.
There is no justification for this apprehension.
Section 13(1)(e) makes such a dispute as one of the arbitrable disputes and no deduction of a disputed claim can be justified by Government if the arbitrator who is or has been a District Judge or a retired High Court Judge holds that the deduction is unjus tified.
Contention (g) has no substance either.
Re: Contention (h): The grievance sought to be made out on the matter is that while Section 6(2) of the Act has the effect of vesting all the assets specified in Sec.
6(2)(i)(b) in Government free from encumbrances and the proviso to Sec.
6(2) renders the amount payable to the licensee as substituted security for the debts, mortgages and obligations in substitution of the assets vesting in Government, however, Sec.
10(e) ren ders one species of such debt viz,.
sums due to the Govern ment or the Electricity Board, liable to be deducted from the amount.
Shri Salve contends that this would make for a double recovery of the same debt.
This, we are afraid, is a wrong way of looking at the two provisions.
If a debt is deducted from the "amount", .the debt is satisfied and is extinguished and no further debt remains outstanding to get itself attached to and became an encumbrance upon the sub stituted 496 security viz., the 'amount '.
6(2) and Sec.
10(e) must be construed harmoniously and in a reasonable manner.
There is no scope for any apprehension of a possible double recov ery of the same debt.
There is no substance in contention (h).
Re: Contention (i): The point of the matter is that sec.
10(f) entitles the deduction of the market value of any "property" or "right" which vests in Government and which is not delivered by the licensees to Government.
The grievance of the petitioner is that while recovery of "market value" is sought to be made for non delivery of the item, however, in computing the "amount" only the "book value" of such "property" or "right" is taken into account.
This, it is contended, is an instance of application of double standards and is, therefore, arbi trary.
We see no substance in this contention.
The measure of the reimbursement for an asset withheld by the licensee is the corresponding expenditure to be incurred by Govern ment for replacement which, in eminently conceivable cases, could be the market value of the asset which is so withheld by the licensee and which has to be replaced to keep the undertaking functioning.
There is no substance in this contention either.
Re: Contention (j): Shri Salve submitted that the accredited representative is, under sec.
8(1), given only a month 's time from the date of his appointment to signify the choice under section 5 as to of the basis of determination of the amount.
The time granted, it is said, is unreasonably short.
The argument clearly overlooks the clause 'or such further time as may be granted by the Government ' occurring in Section 8(1).
If the exercise of this power is arbitrary or capricious the licen see has remedies in Administrative Law.
But the provision itself cannot be held to be bad.
There is no substance in this contention either.
Certain other subsidiary contentions were urged at the hearing.
All these matters have been elaborately consid ered in our judgment in Writ Petn.
Nos. 457 and 458 of 1972 arising out of the Assam legislation.
We have not found any merit in them.
However, there is one aspect which merits considera tion.
Shri Salve submitted that the petitioners in Writ Petn.
No. 5(N) of 1974, who initially, on 16.1.1974, had opted for basis A had sought a change to basis B by their application dated 4.10.1977.
On 2.2.1978, 497 Government refused to permit the change.
Shri Salve submits that a serious and indeed, irreparable hardship has been occasioned to the petitioners by this arbitrary refusal.
In these writ petitions we have dealt with questions of consti tutionality leaving the questions of construction of the provisions to the appropriate authorities.
However, having regard to the checkered history of the proceedings, it appears to us that Shri Salve 's submission deserves to be accepted.
Accordingly, the order of the Government dated 2.2.1978 refusing a change in the basis for determination of the amount is set aside and the Government is directed to consider and dispose of the application dated 4.10.1977 afresh within two months from today.
We make it clear that the Government shall not unreasonably withhold the permis sion for the change.
In the result, subject to the direction in para 19 supra relating to W.P. No. 5(N) of 1974, we find no sub stance in these writ petitions which are dismissed.
There will be no order as to costs.
T.N.A. Petitions dismissed.
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The petitioner companies viz., Veilore Electric Corpora tion Ltd., Kumbakonam Electric Supply Corporation Ltd. and Nagapatam Electric Supply Corporation Ltd. were grantee of licences under the by the Government of the then Presidency of Madras for supply of electrical energy in their respective areas.
In exercise of its power under Section 4(1) of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, the State Government issued orders dated 12.1.1968 taking over the undertakings of the Petitioner Companies viz., Kumbakonam Electricity Supply Company and Nagapatam Electric Supply Company declaring that their undertakings shall vest in the Government with effect from the dates specified in their respective orders.
These two petitioner companies filed writ petitions in the High Court of Madras challenging the constitutional validity of the 1954 Act, which were dismissed.
The Writ Appeals filed by them were also dismissed by a Division Bench of the High Court.
Thereafter appeals were filed in this Court, which were however, later withdrawn.
Though proceedings for the acquisition of the undertak ings of these two companies had been initiated under the 1954 Act but full effectuation thereof had been interrupted by the interlocutory orders made by the courts staying delivery of possession of the undertaking.
Subsequently the Tamil Nadu Private Electricity Supply Undertakings (Acquisition) Act, 1973 came into force which, inter alia, nul 477 lifted the effect of the action taken under the the State Government issued fresh orders under Section 4(1) of 1973 Act declaring that the undertakings of these two petitioner companies shah vest in Government with effect from 1.12.1973.
A similar order was passed b.v the State Government under Section 4(1) of 1973 Act in respect of the third petitioner company viz. Vellore Electric Corporation Ltd., declaring that the undertaking of this company shall vest in the Government with effect from 7.1.1974.
By an order dated 2.2.1978 the State Government also rejected the application of the petitioner Vellore Electric Corporation seeking a change in the basis for determination of amount from basis A to basis B under the 1974 Act.
Writ Petitions were filed in this Court under Article 32 of the Constitution by the three affected companies chal lenging the constitutional validity of the Tamil Nadu Pri vate Electricity Supply Undertakings (Acquisition) Act, 1973, as well as the orders made under Section 4(1) on the ground that the 'Act ', which envisages the acquisition of the Electric Supply Undertakings of petitioners as violative of Articles 14, 19(1)(f), 19(1)(g) and 31 of the Constitu tion.
Dismissing the Writ Petitions, HELD: 1.
The electricity generated and distributed by the undertakings of the petitioner companies constitute "material resources of the community." for the purpose and within the meaning of Article 39(b).
1.1 The idea of distribution of the material resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries.
That is one of the modes of "distribution".
Nationalisation is other mode.
1.2 On an examination of the scheme of the impugned law the conclusion becomes inescapable that the legislative measure is one of nationalisation of the undertakings and the law is eligible for and entitled to the protection of Article 31 C. 1.3 The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core element in National isation.
The need for constitutional immunities for such legislative efforts at social and economic 478 change recognise the otherwise unaffordable economic burden of reforms.
It is, therefore, not possible to divorce the economic consideration or components from the scheme of the nationalisation with which the former are inextricably integrated.
The financial cost of a scheme of nationalisa tion lies at its very heart and cannot be isolated.
Both the provisions relating to the vestitute of the undertakings in the State and those pertaining to the quantification of the 'Amount ' are integral and inseparable parts of the integral scheme of nationalisation and do not admit of being consid ered as distinct provisions independent of each other.
Tinsukia Electric Supply Co. Ltd. vs
State of Assam, [1989](3) S.C.C. 709; applied. 1.4 In view Of the fact that what was acquired in the instant case were not merely "choses in action" but the undertakings themselves, it is not necessary to go into the question whether a "choses in action" can at all be ac quired.
State of Madhya Pradesh vs Ranojirao Shinde & Anr., ; and Madan Mohan Pathak vs Union of India & Ors., ; ; referred to.
The subject matter of the grant in relation to dis tribution in the community of such material resources be it electricity, water, gas or other essential amenities of life has a special nature.
New Orleans Gaslight Co. vs Louisiane Light & Heat Producing & Mfg. Co., ; ; The Okara Electricity Supply Co. Ltd. vs The State of Punjab, A.I.R. 1960 S.C. 284; referred to.
2.1 The impugned law is within the legislative compe tence of the State Legislature and such State law, with the Presidential assent, prevails and is not over borne by the Central law.
The impugned State law, by its 22nd section, expressly excludes the operation of any provisions of the Electricity Act, 1910, in so far as such provision is incon sistent with the provisions of the Stare Law.
The Constitu tional immunity afforded to the State law prevents any challenge to it on grounds based on Article 14 or 19. 3.
There is nothing unreasonable about the provision which merely recognises the obligation of a licensee to account for its acts in relation to a property which has already vested in Government.
There 479 fore Section 4 which pertains to the liability of the licen see to account to Government in respect of possession of and any benefit derived from the undertaking after the date of the vesting is not arbitrary and unconstitutional.
The deduction envisaged by Section 10(d) from the amount payable towards and on account of arrears of elec tricity charges payable by the licensee to the Government or the Electricity Board as the case may be for the supply of Electricity made by them to the licensee is a legitimate item of deduction.
It cannot be held to be arbitrary on the apprehension that even a disputed and untenable claim in that behalf becomes entitled to deduction.
Section 13(1)(e) makes such a dispute as one of the arbitrable disputes and no deduction of a disputed claim can be justified by the Government if the arbitrator who is or has been a District Judge or a retired High Court Judge holds that the deduction is unjustified.
If a debt is deducted from the "amount", the debt is satisfied and is extinguished and no further debt remains outstanding to get itself attached to and becomes an encum brance upon the substituted security viz., the 'amount '.
Section 6(2) and Section 10(e) must be construed harmonious ly and in a reasonable manner.
There is no scope for any apprehension of a possible double recovery of the same debt.
Therefore the Act cannot be challenged on the ground of possible double recovery of the same debt under Section 6(2) and Section 10(e).
The measure of the reimbursement for an asset with held by the licensee is the corresponding expenditure to be incurred by Government for replacement which, in eminently conceivable cases, could be the market value of the asset which is so withheld by the licensee and which has to be replaced to keep the undertaking functioning.
Therefore Section 10(f) cannot be held to be arbitrary on the ground that it is an instance of application of double standards because while recovery of "market value" is sought to be made for non delivery of the item whereas in computing the "amount" only the "book value" of such "property" or "right" is taken.
It cannot be said that the accredited representative is, under Section 8(1), given only a month 's time from the date of his appointment to signify the choice under Section 5 as to the basis of determination of the amount.
Section 8(1) also provides 'or such further time as may be granted by the Government '.
If the exercise of this power is arbi trary or capricious the licensee has remedies in Administra tive 480 Law.
But the provision itself cannot be held to be bad or invalid on the ground that time granted under the Section to signify choice under Section 5 is unreasonably short.
The order of the Government dated 2.2.1978 rejecting the application of the Petitioner, Vellore Electric Corpora tion and refusing a change in the basis for determination of amount from basis A to basis B is set aside and the Govern ment is directed to consider the matter afresh.
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6035.txt
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N: Criminal Appeal No. 115 of 1971.
From the judgment and order dated 16th June 1970 of the Calcutta High Court in Criminal Revision Case No. 650 of 1967 and 934 Criminal Appeals Nos.
256 and 257 of 1971 Appeals by special leave from the judgments and order dated the 27 4 67 and 28 1 71 of the Calcutta High Court in Cases Nos. 2 4/67 and 2/67 Second Criminal Sessions 1967 respectively.
D. Mookherjee and M. N. Shroff for the appellants (in all the appeals).
V. section Desai, A. G. Menseses, J. B. Dadchanji & Co. for respondents in Crl.
256 57/71.
The Judgment of the Court was delivered by BHAGWATI, J.
These three appeals arise out of the same facts and it would, therefore, be convenient to dispose of them by a common judgment.
The respondent in all the three appeals is one Haridas Mundra.
He was at all material times the managing director of section B. Industrial Development Co. (Pvt.) Ltd., who were the managing agents of a company called Richardson & Cruddas Ltd. He and his brother Tulsidas Mundra were also directors of Richardson & Cruddas Ltd. The Life Insurance Corporation of India, which was the largest shareholder, filed a petition in the High Court of Calcutta being Matter No. 357 of 1957 seeking relief against mismanagement of Richardson & Cruddas Ltd. under sections 397 and 398 of the .
The respondent and other directors were impleaded as party respondents to the petition.
The High Court, on the application of the Life Insurance Corporation, made an interim order sometime in December 1957 appointing Sir Dhirendra Mitra as Special Officer to manage the affairs of Richardson & Cruddas Ltd. There was an audit report made by M/s Gutgutia & Co., Chartered Accountants, in regard to the accounts of Richardson & Cruddas Ltd., but the Special Officer was not satisfied with this report and he, therefore, after obtaining directions from the Company Judge, appointed M/s Ferguson & Co., a reputed firm of Chartered Accountants, to examine the accounts of the Company and submit their report.
Ferguson & Co. found, as a result of their investigation, that there were two bills in the records of the Company, one for Rs. 4,12,000 dated 20th June, 1955 and the other for Rs. 6,48,900 dated 27th June, 1955 purporting to be issued by a firm called Indian Machine Tools Co. having its address at 7, Mission Row, Calcutta, showing purchase of certain machinery by Richardson & Cruddas Ltd. from Indian Machine Tools Co. and on the strength of these two bills, entries were made in the books of account of Richardson & Cruddas Ltd. on 24th June, 1955 in respect of the first bill and on 29th June, 1955 in respect of the second bill, crediting the amounts of the bills to section B. Industrial Development Co. (Pvt.) Ltd. and debiting to the machinery account.
On making inquiries, Ferguson & Co. discovered that there was no firm of Indian Machine Tools Co. in existence at 7, Mission Row, Calcutta and no machinery was in fact purchased or received by Richardson & Cruddas Ltd. as shown in the two bills supposed to have been made out by Indian Machine Tools Co. The conclusion reached by Ferguson & Co. as a result of this probe was that Richard 935 son & Cruddas Ltd. has been defrauded of an aggregate sum of Rs. 10,60,900 representing the amounts of the two bills and that amount had been siphoned off to section B. Industrial Development Co. (Pvt.) Ltd. by using these two bills, which were forged, as genuine and they made a report to this effect to the Special officer.
The Special Officer, on receipt of the report, made an application to the Company Judge for a direction that he might be authorised to lodge a complaint with the police for further investigation into these facts set out in the report.
The Company Judge gave the necessary direction and the Special officer thereupon moved the police for making further investigation in the matter.
The Special Police Establishment started the investigation and ultimately submitted a chargesheet against the respondent and Tulsidas Mundra in the Court of the Chief Presidency Magistrate.
The respondent and Tulsidas Mundra were committed by the Chief President Magistrate to stand their trial before the High Court on charges under sections 120B, 409, 471 read with section 468 and section 477A against the respondent and sections 120B and 409 of the Indian Penal Code against Tulsidas Mundra.
When the trial commenced before the High Court, the Public Prosecutor made two applications on 17th April, 1967, one for amending the charges against the respondent by dropping sections 120B and 409 adding section 418 and the other for withdrawing the prosecution against Tulsidas Mundra.
Both these applications were allowed by the High Court, with the result that the trial proceeded only against the respondent on charges under sections 418, 471 read with section 468 and section 477A. Mr. Justice Bagchi, before whom the trial proceeded, felt that he had no jurisdiction to proceed with the trial in view of section 195(1)(c) of the Code of Criminal Procedure, 1898 and he, therefore, requested the Public Prosecutor as well as the counsel for the respondent to argue the point as to the applicability of that section.
The learned Judge, after hearing the arguments advanced before him on both sides, delivered an elaborate judgment holding that by reason of section 195(1) (c) of the Code of Criminal Procedure, 1898, which applied in the present case, he had no jurisdiction to proceed further with the trial of the respondent and he accordingly discharged the respondent by an order dated 27th April 1967.
The State being aggrieved by this judgment and order passed by Mr. Justice Bagchi in the exercise of original criminal jurisdiction, preferred a revision application against the same on the appellate side of the High Court.
The respondent raised a preliminary objection against the maintainability of the revision application on the ground that it was not competent to the High Court to exercise revisional jurisdiction against an order made by a judge of the High Court in a Sessions trial.
Since this preliminary objection raised a question of some importance it was referred to a full Bench and by a judgment dated 16th June, 1970, the Full Bench upheld the preliminary objection and held that the High Court had no jurisdiction in revision of some importance, it was referred to a Full Bench and by a judge of the High Court in the exercise of its original criminal jurisdiction and accordingly rejected the revision application.
936 It appears that the State had in the meantime filed an application in the High Court for leave to appeal to this Court against the judgment and order of Mr. Justice Bagchi.
This application was rejected by the learned Judge by an order dated 28th January, 1971 on the ground that it was not a judgment or a final order or a sentence falling within article 134(1)(c) of the Constitution.
The State thereupon preferred two petitions in this Court for special leave to appeal, one against the judgment and order of Mr. Justice Bagchi discharging the respondent and the other against the judgment and order of the same learned Judge rejecting the application of the State for leave to appeal to this Court.
This Court allowed both the petitions and granted special leave and hence we have Criminal Appeal No. 256 of 1971 directed against the judgment and order of Mr. Justice Bagchi discharging the respondent and Criminal Appeal No. 257 of 1971 against the judgment and order of that learned Judge refusing leave to appeal to the State.
The State also preferred an application in the High Court for leave to appeal to this Court against the judgment and order of the Full Bench rejecting the revision application of the State and on this application, leave was granted by the High Court under article 134(1) (c) of the Constitution and that is how Criminal Appeal No. 115 of 1971 is before us.
We will first deal with Criminal Appeal No. 256 of 1971.
If that criminal appeal is allowed and it is held that section 195(1) (c) has no applicability in the present case, it would become unnecessary to consider the other two criminal appeals.
Now, section 195(1)(c) provides that no court shall take cognisance of an offence described in section 463 or punishable under sections 471, 475 and 476 of the Indian Penal Code where such offence is alleged to have been committed by a party to any proceeding in any court in respect of any document produced or given in evidence in such proceeding, except on the complaint in writing of such court or of some other court to which such court is subordinate.
Obviously, on its plain language, the inhabitation in section 195(1) (c) applies only where a person is being tried for an offence described in section 463 or punishable under sections 471, 475 or section 476.
Here, the respondent was being tried for three distinct offences under sections 418, 471 and 477A. So far as the offences under sections 418 and 477A are concerned, they were plainly not covered by section 195(1)(c) and even if section 195(1)(c) were otherwise applicable, it is difficult to see how the trial of the respondent for these two offences could be said to be vitiated on the ground that no complaint in writing was made by the Company Judge.
The High Court had, therefore clearly and indubitably jurisdiction to proceed with the trial against the respondent in respect of the offences under sections 418 and 477A.
The question of lack of jurisdiction in the High Court to proceed with the trial could arise only in regard to the offence under section 471 which is one of the offences specified in section 195(1) (c).
But in regard to this offence also, we do not see how, on the facts of the present case, the applicability of section 195 (1) (c) could be invoked on behalf of the respondent.
The offence under section 471 which was charged against the respondent was that he had used the two forged bills of Indian Machine Tools Co. as 937 genuine on 24th and 29th June, 1955 by making, on the strength of these two bills, false entries in the books of account of Richardson & Cruddas Ltd. crediting the aggregate sum of Rs. 10,60,900/ in the account of section B. Industrial Development Co. (Pvt.) Ltd. and debiting it in the machinery account.
This offence was alleged to have been committed by the respondent on 24th and 29th June, 1955 long before the proceeding in Matter No. 357 of 1957 commenced and he became a party to that proceeding and it was not committed by him in his capacity as such party, that is, after having become a party to the proceeding.
Now, at one time there was sharp cleavage of opinion amongst various High Courts in regard to the true interpretation of section 195(1) (c).
Some High Courts held that to attract the prohibition contained in section 195(1)(c), the offence should be alleged to have been committed by the party to the proceeding in his character as such party, which means, after having become a party to the proceeding, while some others took the view that it was sufficient to attract the applicability of section 195(1) (c) even if the alleged offence was committed by the party to the proceeding prior to his becoming such party, provided that the document in question was produced or given in evidence in such proceeding.
This divergence of opinion amongst different High Courts was set at rest by this Court by its decision in Patel Lal Gbhai Somabhai vs The State of Gujarat(1) where this Court accepted the former view in preference to the latter.
This Court pointed out that the words of section 195(1) (c) clearly meant that the offence should be alleged to have been committed by the party to the proceeding in his character as such party, that is, after having become a party to the proceeding.
Sections 195(1)(c), 476 and 476A read together indicated beyond doubt that the legislature could not have intended to extend the prohibition contained in section 195(1) (c) to the offences mentioned therein when committed by a party to a proceeding prior to his becoming such party.
The scope and ambit of section 195(1) (c) was thus restricted by this Court to cases where the offence was alleged to have been committed by a party to a proceeding after he became such party and not before.
This view as to the interpretation of section 195(1) (c) was reaffirmed by this Court in Raghunath vs State of U.P.(2) and Mohan Lal vs The State of Rajasthan(3).
It must inevitably follow, on this view, that since the offence charged against the respondent was one alleged to have been committed by him before he became a party to the proceeding in Matter No. 357 of 1957, section 195(1)(c) had no application.
It may also be noted that neither of the two forged bills of Indian Machine Tools Co. was produced or given in evidence in the proceeding in Matter No. 357 of 1957.
Both these forged bills formed part of the record of Richardson & Cruddas Ltd. and they were taken possession of by the Special Officer along with the other record of the Company and nobody produced them or tendered them in evidence before the Company Judge in the proceeding in Matter No. 357 of 1957.
The requirement of section 195(1) (c) that the document in question should be 938 produced or given in evidence in the proceeding was, therefore, clearly not satisfied and on this ground also, section 195(1) (c) was not attracted in the present case.
We must, therefore, hold that the High Court was entitled to proceed with the trial of the respondent in respect of the offence under section 471 without any complaint in writing from the Company Judge before whom the proceeding in Matter No. 357 of 1957 was pending.
We accordingly allow Criminal Appeal No.256 of 1971, set aside the judgment of Mr. Justice Bagchi discharging the respondent and remand the case to the City Sessions Court, to which the original criminal jurisdiction in Sessions cases has now been transferred, for disposal according to law.
Since the case is a very old one, we would direct the City Sessions Court to take it up for hearing at an early date.
In the view taken by us in Criminal Appeal No. 256 of 1971, Criminal Appeals Nos. 115 and 257 of 1971 do not survive for consideration and we accordingly dismiss them.
P.B.R. Cr. A. 256 of 1971 allowed.
115 & 257 of 1971 dismissed.
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The respondent, a director of a company was charged with offences under sections 418 and 471 read with sections 468 and 477A, I.P.C. on the ground that he defrauded the company.
At the trial, a single Judge of the High Court discharged the respondent on the view that he had no jurisdiction to proceed with the trial by reason of s.195(1)(c) of the Cr. P.C., 1898.
The full Bench of the High Court affirmed the view of the single Judge.
Allowing the appeals to this Court, ^ HELD: The High Court was entitled to proceed with the trial of the respondent in respect of offences under section 471 without any complaint in writing from the company Judge whom the proceeding was pending.
[938A] (1) Section 195(1)(c) of the Code of Criminal Procedure provides that no court shall take cognizance of an offence described in section 463 or punishable under sections 471, 475 and 476, Indian Penal Code where such offence is alleged to have been committed by a party to any proceeding in any court in respect of any document produced or given in evidence in such proceeding, except on the complaint in writing of such court or of some other court to which such court is subordinate.
The High Court had clearly and indubitably jurisdiction to proceed with the trial against the respondent in respect of offences under sections 418 and 477A. On its plain language the inhibition in section 195(1)(c) applies only where a person is being tried for an offence under section 463 or punishable under sections 471, 475 or 476.
Offences under 418 and section 477A are plainly not covered by section 195(1)(c) Cr.
P.C. [936 D G] (2) In regard to offences under section 471, I.P.C. it could not be said that the respondent could invoke the applicability of section 195(1)(c).
The offence under section 471 was committed by the respondent long before the proceeding in the Company matter commenced and he became a party to that proceeding, and it was not committed by him in his capacity as such party, i.e. after having become a party to the proceeding.
In Patel Laljibhai Somabhai vs The State of Gujarat this Court restricted the scope and ambit of section 195 (1)(c) to cases where the offence was alleged to have been committed by a party to a proceeding after he became such party and not before.
[936H, 937A D] Raghunath vs State of U.P., AIR 1973 S.C. 1100 and Mohan Lal vs The State of Rajasthan, AIR 1974 S.C. 299, referred to.
In the instant case since the offence charged against the respondent was one alleged to have been committed by him before he became a party to the proceeding in the company matter, section 195(1)(c) had no application.
Secondly, the forged bills had not been produced in evidence before the Company Judge in the proceeding before him.
The requirement of section 195(1)(c) that the document in question should be produced or given in evidence in the proceeding was, therefore, clearly not satisfied and on this ground also section 195(1)(c) was not attracted in the present case.
[937G, 938A]
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3379.txt
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ON: Criminal Appeal No. 140 of 1954.
Appeal by special leave from the judgment and order dated the 23rd July 1953 of the Punjab High Court.
in Criminal Revision No. 487 of 1953 arising out of the judgment and order dated the 17th April 1953 of the Court of Sessions Judge at Hoshiarpur in Criminal Appeal No. D/I of 1953.
N. section Bindra and P. G. Gokhale, for the appellant.
A. N. Chona and K. L. Mehta for, the respondent, 71 570 1956.
May 8.
The Judgment of the Court was delivered by SINHA J.
This is an appeal by special leave from the judgment of a single Judge of the High Court of Judicature of Punjab at Simla in Criminal Revision No. 487 of 1953 dated the 23rd July 1953 acquitting the respondent, a constable in the police force of the State of an offence under section 7 of the East Punjab Essential Services (Maintenance) Act, XIII of 1947 (which hereinafter will be referred to as "the Act"), for which he had been convicted by a Magistrate of the First Class at Dharamsala by his judgment dated the 30th March 1953 and sentenced to 15 days ' rigorous imprisonment, which.
orders of conviction and sentence had been affirmed by the Sessions Judge of Hoshiarpur, Camp Dharamsala, by his judgment and order dated the 17th April 1953.
The facts leading up to this appeal may shortly be stated.
The respondent was prosecuted on a complaint filed by the Superintendent of Police, Kangra District, in the Court of the 1laqa Magistrate, Dharamsala, District Kangra, for an offence under section 7 of the Act.
The allegations against the respondent were that he joined the Police Department as a constable in Jullundur District in 1947, that in December 1952 he was transferred from Jullundur District to Kangra District and posted to Police 'Lines, Kangra, as a constable on general duty at Seraj police station; that in January 1953 he came to Police Lines, Dharamsala for monthly training (refresher course), that on the 2nd February 1953 at the time of roll call at 7 p.m. the appellant was assigned the duty as sentry No. 1 without rifle behind the Police Lines Armoury,Dharamsala,from9p.m.toll.p.m.
The respondent, though informed of the assignment of the aforesaid duty to him, refused to obey that order or to perform any other duty in the Lines.
Thereupon his name was struck off from the Duty Roster and another foot constable was duly placed in that post of duty.
On the night between the 2nd and 3rd February 1953 at 11 30 p.m. a surprise roll call of the employees of the Police Lines was duly made by means 571 of an alarm sounded with a bugle which was blown continuously for about 15 minutes.
The respondent was found absent on such a roll call and another constable was deputed to search for the respondent but he could not be found.
He appeared the next morning at about 9 30 a.m. after remaining absent from the Police Lines without offering any explana tion for his unauthorised absence.
The gravamen of the charge as laid in the petition of complaint was that he refused to carry out the order of his superior officer who had assigned a duty to him and that he remained absent from his official duty in the Police Lines without obtaining permission and without any cogent reasons, from 11 30 p.m. on the 2nd February 1953 till 9 30 a.m. on the day following.
Thus he was said to have committed an offence under section 7 of the Act.
On those allegations the respondent was placed on his trial before the Magistrate of the First Class at Dharamsala.
After recording the. prosecution evidence the learned Magistrate framed a charge under section 7 of the Act under two heads, firstly, that he had on the 2nd February 1953 at Dharamsala as a foot constable in the police force of the Kangra District had disobeyed the lawful orders given by a superior officer who had assigned to him a duty as such foot constable of a sentry without rifle in the rear of the armoury in the Police Lines from 9 p.m. to 1 1 p.m. and, secondly, that on the same date and at the same place he had absented himself from duty as a foot constable without reasonable excuse and had thus remained absent from 11 30 p.m. on the 2nd February 1953 to 9 30 a.m. of the following day.
The respondent 's defence as disclosed in his answer to questions put by the court under section 342, Criminal Procedure Code was one of denial of the charge.
His substantive defence may be stated in his own words: "On 2nd February, 1953 at 7 p.m. my duty was allotted to me and I signed at exhibit P. D./I.
I then told Raghbir Singh P.W. that according to the Civil Surgeon, Jullundur I could only be given sitting or 572 office duty.
I showed him the copy Exhibit D. E.
I also told him that the Civil Surgeon, Dharamsala, had also examined that very day on 2nd February 1953.
Thereupon Raghbir Singh P.W. cancelled my said duty.
I was lying ill in the Police Lines Barracks and did not hear the bugle In the morning of 3rd February, 1953, I came to know that my absence had been noted.
Thereupon I presented myself for duty to the Head Constable and signed at Exhibit P.E./1.
My leg was burnt in rescue work at Gujranwalla when I was in the special Police Lines".
He also examined a number of defence witnesses including the Civil Surgeon of Jullundur who deposed to having examined the respondent on the 27th February 1953 "and found that he had got extensive burn scars on the back of the right thigh and leg crossing the knee.
Hence he could not perform any strenuous duty like standing for long hours.
In my opinion he could be given some light duty in the office.
exhibit D.W.
I/D is a true copy of my medico legal report of this case".
The learned Magistrate acquitted the accused in respect of the first part of the charge relating to his alleged disobedience of the lawful orders of his superior officer to perform sentry duty.
But he convicted him of the second part of the charge, namely, absence from duty and sentenced him to 15 days ' rigorous imprisonment.
On appeal by the accused, the learned Sessions Judge affirmed the findings of the trial Magistrate and held that the appellant before him was absent from duty without permission during the night between the 2nd and 3rd February 1953.
He accordingly dismissed the appeal.
On a revisional application made by the convicted person, the learned single Judge who heard the case, came to the conclusion that the accused had not offended against any provisions of the Act.
Accordingly he acquitted him.
The ratio of his decision may be given in his own words as follows: "This Act does not appear to me to apply to the kind of act which the constable is said to have done.
He had been called to Dharamsala on a refresher 573 course and on the night in question and in the early morning he appears to have been not present at the time when he according to the prosecution should have been present.
This, in my opinion, does not attract the attention of the Essential Services Maintenance Act.
It is possible that if he is guilty be is liable to some disciplinary punishment, but his prosecution under the East Punjab Essential Services Maintenance Act is in my opinion not justified.
I hold that he has not offended against the provisions of this Act and therefore he has not committed any offence under this Act".
Against this order of acquittal the State of Punjab obtained special leave to appear to this Court, apparently because the judgment of the learned Judge of the High Court involved very important questions as to the scope and effect of the Act and the question of law decided by the High Court was of great public importance.
This case was first placed on the 11th April this year before another Bench of this Court and learned counsel for the respondent raised a preliminary objection to the maintainability of the prosecution on the ground, it was alleged, that there was no proper complaint under section 7(3) of the Act and as this question bad not been raised in any of the courts below and as counsel for the appellant was taken by surprise, the Bench granted two weeks time to enable him to satisfy the court that there was a proper compliance with the provisions of section 7(3) of the Act.
When the matter came up before us for hearing, the learned counsel for the appellant placed before us the following notification.
by the Punjab Government authorising all police officers above the rank of Deputy Superintendent of Police and the Heads of the various Government Departments to make complaints in writing to a court in respect of alleged offences against the Act: " Dated Simla 2, the 20th January, 1948.
No. 1248 H Camp 48/2075.
In exercise of the powers conferred by sub section (3) of section 7 of the East Punjab Essential Services (Maintenance) Act 574 1947 the Governor of the East Punjab is pleased to authorise all police officers of and above the rank of Deputy Superintendent of Police and the Heads of the various Government Departments to make complaints in writing to a court against persons of their respective Departments, who are alleged to have committed offences against the Act.
Nawab Singh Home Secretary to Govt.
of East Punjab".
On a reference to the notification quoted above, it is clear that the complaint filed by the Superintendent of Police Kangra District; in the court of the Ilaqa Magistrate, Dharamsala in the district of Kangra, was filed in compliance with the provisions of sub section (3) of section 7 of the Act which is in these terms: "No court shall take cognisance of any offence under this Act except upon complaint in writing made by a person authorised in this behalf by the State Government".
But it was argued on behalf of the respondent that there was nothing to show that the complaint on the basis of which the prosecution had been initiated in this case had been authorised by the State Government.
The law does not require that the particular complaint should have been authorised by the State Government.
What is required is that the complaint should have been filed by a person authorised by the State Government to do so.
The notification has authorised a Superintendent of Police to file a complaint in respect of a contravention of the provisions of the Act by a person in his department.
It is not denied that the respondent was such a person.
Hence the preliminary objection must be overruled ' Coming to the merits of the decision, it is a little surprising that the learned Judge below should have completely ignored the opening words of section 3 of the Act which completely answer the ratio of the decision under appeal.
"This Act shall apply to all employment under the State Government. . (omitting words not material for the present case).
575 The learned Judge of the High Court has quoted the provisions of sections 5 and 6 of the Act in support of his conclusion that the Act is "intended to be applied in special cases of dislocation of essential services because of extraordinary events such as strikes of because of political agitation or similar circumstances".
The relevant portion of section 5 is in these terms: "Any person engaged in any employment or class of employment to which this Act applies who(a) disobeys any lawful order given to him in the course of such employment, or (b)without reasonable excuse abandons such employment or absents himself from work, is guilty of an offence under this Act".
The opening words of section 5 have reference to the opening words of section 3 so far as an employee under the State Government is concerned.
As the learned Judge missed these opening words as indicated above, he fell into the error of supposing that a person in the position of the respondent was not intended to be governed by the Act.
It is mainfest that the learned Judge has acquitted the appellant, not on a misreading of the provisions of the Act, but by ignoring the opening words of section 3.
It must therefore be held that the judgment of the High Court cannot be sustained.
But it still remains to consider whether the orders passed by the High Court acquitting the respondent should be interfered with.
The courts below have acquitted the respondent of the first part of the charge which could have come within clause (a) of section 5 which lays down offences under the Act.
The respondent had been convicted by the first two courts of an offence referred to in the second part of the charge, namely, of his, having absented himself from duty.
Under section 22 of the , V of 1861, every police officer is to be considered to be always on duty and may at any time be employed as a police officer, and on the findings of the courts of fact that the res pondent had absented himself from the Police Lines 576 during the night between the 2nd and 3rd February 1953 he may have made himself liable to the penalty for neglect of duty under section 29 of the , or may have made himself liable to departmental punishment for absence from the police lines without permission.
But we are not concerned here with these provisions.
The respondent bad been found guilty under clause (b) of section 5, that is to say, for the offence of absenting himself from work.
Neglect of duty as contemplated by section 29 of the is quite different from abandoning an employment or of absenting oneself from work without reasonable cause which is the particular offence contemplated by clause (b) of section 5.
As already indicated, on account of the respondent 's physical infirmity or deficiency the work assigned to him had been cancelled and he was expected to be in police lines during the material time without apparently doing any "work".
It is clear from the record that he had not been assigned any "work" within the meaning of clause (b) of section 5.
Hence his absence from Police Lines during the relevant time may have amounted to neglect of duty; but, in our opinion, is not synonymous with absence from work or abandonment of employment which has been made penal under clause (b) of section 5.
For the reasons aforesaid it must be held that the respondent bad been rightly acquitted, though for wholly wrong reasons.
The appeal must therefore stand dismissed.
Appeal dissmissed.
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Section 7(3) of the East Punjab Essential Services (Mainten ance) Act, 1947, provides that "no court shall take cognisance of any offence under this Act except upon complaint in writing made by a person authorised in this behalf by the State Government".
Held, that the law does not require that the particular com plaint should have been authorised by the State Government and it is sufficient if it has been filed by a person authorised by the State Government to do so.
Neglect of duty as contemplated by section 29 of the , is quite different from abandoning an employment or absenting oneself from work without reasonable cause within the meaning of section 5(b) of the East Punjab Essential Services (Maintenance) Act.
The respondent, a constable, on account of physical infirmity was not assigned any "work" in the Police Lines within the meaning of el.
(b) of section 5 of the East Punjab Essential Services (Maintenance) Act.
He absented himself from the Police Lines without permission.
Held, that his absence from Police Lines during the relevant time may have amounted to neglect of duty but he could not be convicted under section 5(b).
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418.txt
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s Nos. 39 & 92 of 1969.
Under Article 32 of the Constitution of India for the enforcement of Fundamental rights.
V.M. Tarkunde, G.R. Chopra and C.M. Kohli for the petitioners.
Gobind Das and section K. Nayar, for the respondents (in W.P.No. 39/69) and respondents Nos.
1 4 (in W.P. No. 92/69).
P.K. Chatterjee and G.S. Chatterjee, for respondents Nos.
5 6 (in W. P No. 92/69).
Judgment of the Court was delivered by MATHEW, J. These are petitions filed under article 32 of the Constitution praying for issue of appropriate direction or order for the enforcement of the fundamental right of the petitioners under article 31(1) of the Constitution.
The question raised in the petitions is that we propose to deal with Writ Petition No. 39 of 1969 decision there will govern and dispose of Writ No. 92 of 1969.
The petitioner is a company incorporated under the Indian Companies Act, 1913.
It has its registered office in Calcutta and a branch office at Binani House, Khundi Katra, Mirzapur, U.P.
The petitioner is an importer and a dealer in non ferrous metals like zinc, lead, copper, tin, etc.
and is on the approved list of registered suppliers to the Directorate General of Supplies and Disposals, hereinafter referred to as DGS&D.
It is also a registered dealer in the State of West Bengal under the Bengal Finance Act, 1941 and the .
The petitioner used to procure nonferrous metals from various countries and also from within the country for fulfilling its contracts with the Government of India through _the DGS&D.
The import of non ferrous metals was under Open General Licence till June 30, 1957.
Thereafter, a licensing systems was introduced by the Government of India and the established traders including M 602 Sup CI/74 622 the petitioner were asked to get their quotas fixed on the basis of their past imports.
On April 2, 1958, the Government of India promulgated the Non Ferrous Metals Control Order, 1958 under the Essential Commodities Act, 1951 by virtue of which free sale of copper was banned.
Any import of copper by the established licence holders was to be distributed under the directions of the Controller of Nonferrous Metals.
Under the Non Ferrous Metals Control Order, 1958.
and also under the Import Trade Regulations, the established importers were not free to sell the metals imported by them against their quota licences even to the DGS&D.
The petitioner, in order to effect supplies to the DGS&D had to obtain additional import licence.
Under the Import Trade Control Policy, the established importers including the petitioner obtained quota licences for import of non ferrous metals for the licensing period upto April, 1964 March, 1965, but the imports mentioned here were to be distributed only under the directions of the Controller of Non Ferrous Metals or the Import Trade Control Authority.
On September 14, 1965, the Government of India promulgated the Scarce Industrial Materials Control Order, 1965, under the Defence of India Rules.
Stocks of non ferrous metals including incoming imports were thus frozen.
The Non Ferrous Metals Control Order, 1958, was repealed.
The Scarce Industrial Materials Control Order, 1965 was also repealed on June 6, 1966.
The Government of India, in placing orders with the petitioner used to grant import licences in terms of the contract.
The petitioner had been importing and supplying non ferrous metals to respondents 1, 2 and 3 during the last 19 years.
Respondent No. 2 had agreed to pay and was paying the Central Sales Tax and/or West Bengal Sales Tax whichever was applicable to the petitioner in terms of the contract.
In 1966, this Court held in K.G. Khosla and Co. vs Deputy Commissioner of Commercial Taxes(1) hereinafter.
referred to as the Khosla Case, that the sale by Khosla & Co. to DGS&D in India of axle box bodies manufactured in Belgium by their principal occasioned the movement of goods in course of import and sales tax was not exigible on the transaction in view of section 5(2) of the .
On the basis of this judgment, respondent No. 2 issued an order.
(Annexure P 1) to all the authorities concerned including respondent No. 4, namely, the Pay and Accounts Officer, Ministry of Works, Housing and Supply directing that sales tax should not be allowed in respect of supply of stores which has been specifically imported against licences issued by the Chief Controller of Imports and Exports on the basis of Import Recommendation Certificates issued by the DGS&D or other authorities like the State Trading Corporation for supplies against contracts placed by the DGS&D.
The Pay and Accounts Officer, acting on Annexure P 1 deducted the amounts of sales tax paid by the respondents under all the old contracts from the current bills which were submitted by the petit ioner to him.
Respondent No. 4 actually deducted a sum of Rs. 60,780/ from the bills which were pending payment and also threatened to recover Rs. 2,35,130 01 being the amount paid by respondent No. 2 as sales tax in respect of (1) ; 623 contracts which had, already been executed.
The assessments on the petitioner upto the year ending October, 27, 1962, were completed prior to the date of judgment in Khosla Case and the issue of the order at Annexure P 1.
The petitioner, when it came to know of Annexure P 1 Order, approached the Sales Tax authorities in West Bengal and filed revised returns in the pending assessments and claimed refund of taxes paid on the sales, treating the sales as having been made in the course of import on the basis of the judgment in Khosla Case.
The West Bengal Sales Tax authorities took the view that there were two sales involved in the transactions in question, namely, sale to the petitioner by the foreign sellers and sale by the petitioner to the DGS&D, that there was no privity of contract between the DGS&D and the foreign sellers, that the petitioner, under the import licences granted to it, was entitled to import the goods from any person or country and that the import licences issued as against the contracts with the DGS&D imposed no obligation on the petitioner to supply the goods to the DGS&D after they had been imported.
They, therefore, held that tax was exigible on the sales by the petitioner to the DGS&D.
The questions which arise for consideration are, whether, on the basis of Annexure P 1 Order, respondent No. 4 was entitled to deduct Rs. 60 780/ from the amount due to the petitioner in respect of pending bills and whether the claim of the respondents to recover a further sum of Rs. 2,35,130.01 from the petitioner is justified.
It was contended on behalf of the petitioner that the transactions in question, namely, the sales which the petitioner made to DGS&D were not the sales which occasioned the movement of the goods in the course of import and as those sales were separate and distinct from the contracts of purchase made by the petitioners with the foreign sellers which alone occasioned the movement of goods in the course of import, tax was exigible upon the transactions of sale by the petitioner to DGS&D and, therefore, the decision in Khosla Case has no application to facts here.
Article 286(1)(b) provides: "286.
(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place (b) in the course of import of the goods into, or export of the goods out of, the territory of India".
In State of Travancore Cochin & Others vs The Bombay Co. Ltd. (1) Patanjali Sastri, C.J. said that a sale by export involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea and that such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction.
Of these two integrated activities which together (1) ; 624 constitute an expert sale, whichever first occurs can well be regarded as taking place in the course of the other.
In State of Travancore Cochin & Others vs Shanmugha Vilas Cashew Nut Factory and Others (1), it was observed by the same learned Chief Justice that the phrase 'integrated activities ' was used in the previous decision to denote that 'such a sale ' (i.e. a sale which occasions the export)"cannot be dissociated from the export without which it cannot be effectuated ', and the sale and the resultant export form parts of a single transaction" and that it is in that sense that the two activities the sale and the export were said to be integrated.
There was no definition of the expression 'in the course of import ' before the Sixth Amendment of the Constitution.
By that Amendment, Parliament was given power to formulate the principles for construing the expression.
And, in s.5(2) of the , Parliament has given a legislative meaning to the expression "5(2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
" In Ben Gorm Nilgiri Plantations Company V. Sales Tax Officer(2), the question was whether the sales of the tea chests at auctions held at Fort Cochin were exempt from levy of sales tax by virtue of article 286(1)(b).
The nature of the transaction was as follows: A manufacture obtains from the Tea Board allotment of export quota, the manufacturer then puts the tea in chests which are sold in public auctions; bids are made by agents or intermediaries of foreign buyers; agents and intermediaries then obtain licences from the Central Government for export.
This Court found nothing in the transaction from which a bond could be said to spring between the sale and the.
intended export linking them as parts of the same transaction.
The sellers had no concern with the export, the sale imposed or involved no obligation to export and there was possibility that the goods might be diverted for internal consumption.
The Court considered the sales as sales for export and not in the course of export.
The Court observed that to occasion export there must exist such a bond between the contract of sale and the actual exportation, that each link is in extricably connected with the one immediately preceding it and that without such a bond, a transaction of sale cannot be called a sale in the course of export of goods out of the 'territory of India.
The Court further said that in general where the sale is effected by the seller, and he is not connected with the export which actually takes place, it is a sale for export and where the export is the result of the sale, the export being inextricably linked up with the sale so that the bond cannot be dissociated without a breach of the obligation arising (1) ; ,63.
(2) ; 625 by statute, contract or mutual understanding between the parties arising from the nature of the transaction, the sale is in the course of export.
In the Khosla Case, the assessee entered into a contract with the DGS&D, New Delhi, for the supply of axle box bodies.
The goods were to be manufactured in Belgium according to specifications and 'the DGISD, London or his representative had to inspect the goods at the works of the manufacturers and issue an inspection certificate.
Another inspection was provided for at Madras.
The assessee was entitled to be paid 90 per cent.
after inspection and delivery of the stores to the consignee and the balance of 10 per cent.
was payable on final acceptance by the consignee.
In the case of deliveries on f.o.r.
basis the assessee was entitled to 90 per cent.
payment after ins pection on proof of despatch and balance of 10 per cent.
after receipt of stores by the consignee in good condition.
The assessee was entirely responsible for the execution of the contract and for the safe arrival of the goods at the destination.
The contract provided that notwithstanding any approval or acceptance given by an Inspector, the consignee was entitled to reject the goods, if it was found that the goods were not in conformity with the terms and conditions of the contract in all respects.
The manufacturers consigned the goods to the assessee by ship under bills of lading and the goods were cleared at the Madras Harbour by the Assessee 's Clearing Agents and despatched for delivery to the Southern Railway in Madras and Mysore.
The question was whether the sales by the assessee to the Government departments were in the course of import and export from taxation under s.5(2) of the .
Sikri, J. (as he then was), delivering the judgment of the Court said after referring to s.5(2) of the that the movement of goods to India was occasioned by the contract of sale between the appellant (Khosla & Co.) and the DGS&D, that if the movement of goods is the result of a covenant or incidental to the contract of sale, it is quite immaterial that the actual sale took place after the import was over.
In Coffee Board vs Joint Commercial Tax Officer (1), hereinafter referred to as Coffee Board Case, the Coffee Board claimed that as certain sales of coffee to registered exporters in March and April, 1963 were sales made 'in the course of export ',it could not be taxed under the Madras General Sales Tax Act, 1959.
The rules framed by the Coffee Board provided that only dealers who had registered themselves as exporters of coffee with the Coffee Board or their agents and who held permits from the Chief Coffee Marketing Officer in that behalf would be permitted to participate in the auction , and after the bidding comes to an end, the payment of price would take place in a particular way.
Condition No.26 he added "export guarantee" provided that it was an essential condition of the auction that the coffee sold thereat shall be exported to the destination stipulated in the Catalog of lots, or to any other foreign country outside.
India as may be approved by the Chief Coffee Marketing Officer, within three (1) ; 626 months from the date of Notice of Tender issued by the Agent and that it shall not under any circumstances be diverted to another destination, sold, or be disposed of, or otherwise released in India.
Condition 30 stated that if the buyer failed or neglected to export the coffee as aforesaid within the prescribed time or within the period of extension, if any granted to him, he shall be liable to pay a penalty calculated a Rs. 50 per 50 kilos which shall be deductible from out of the amount payable to him as per condition 31.
And Condition 31 provided that no default by the buyer to export the coffee aforesaid Within the prescribed time or such extension thereof as may be granted, it shall be lawful for the Chief Coffee Marketing Officer, without reference.
to the buyer, to seize the un exported coffee and take possession of the same and deal with it as if it were part and parcel of Board 's coffee held by them in their Pool stock.
The case of the petitioners before this Court was that the purchases at the export auctions were really sales by the Coffee Board in the course of export of coffee out of the territory of India since the sales themselves occasioned the export of Coffee and that the coffee so sold was not intended for use in India or for sale in the Indian markets.
The case of the Sales Tax Authorities, oil the other hand, was that these sales were not inextricably bound up with the export of coffee and that the sales must therefore be treated as sales taking place within the State of Tamil Nadu liable to sales tax under the Madras General Sales Tax Act.
This Court held that the Board was not entitled to the exemption claimed.
The Court said that the phrase 'sale in the course of export ' comprises three essentials, namely, that there must be a sale, that goods must actually be exported and that the sale must be a part and parcel of the export.
The Court further said that the sale must occasion the export and that the word 'occasion ' is used as a verb and means 'to cause ' or 'to be the immediate cause of '.
The Court was of the view that the sale which is to be regarded as exempt from tax is a sale which causes the export to take place or is the immediate cause of the export, that the introduction of an intermediary between the seller and the importing buyer breaks the link, for, then there are two sales, one to the intermediary and the other to the importer, and that the first sale is not in the course of export, for the export begins from the intermediary and ends with the importer.
According to the Court the test was that there must be a single sale which itself causes the export and that there is no room for two or more sales in the course of export, The Court, therefore, held that though the sales by the Coffee Board were sales for export, they were not sales in the course of export, that there were two independent sales involved in the export programme: the first sale by the Coffee Board to the export promoter, and the second sale by the export promoter to a foreign buyer which occasioned the movement of goods and that the latter sale alone could earn the exemption from sales tax as being a sale the in the course of export.
Khosla Case, it might be recalled that Khosla and Co. entered into.
the contract of sale with the DGS&D for the Supply of axle bodies manufactured by its Principal.
in Belgium and the goods were to be 627 inspected by the buyer in Belgium but under the contract of sale the goods were liable to be rejected after a further inspection by the buyer in India.
It was in pursuance to this contract that the goods were imported into the country and supplied to the buyer at Perambur and Mysore.
From the statement of facts of the case as given in the judgment of the High Court it is not clear that there was a sale by the manufacturers in Belgium to Khosla & Co., their agent in India.
it would seem that the only sale was the sale by Khosla & Co. as agent of the manufacturer in Belgium In the concluding portion of the judgment of this Court it was observed as follows : ".
It seems to us that it is quite clear from the contract that it was incidental to the contract that the axle box bodies would be manufactured in Belgium, inspected there and imported into India for the consignee.
Movement of goods from Belgium to India was in pursuance of the conditions of the contract between the assessee and the Director General of Supplies.
There was no possibility of these goods being diverted by the assessee for any other purpose.
Consequently we hold that the sales took place in the course of import of goods within s.5(2) of the Act, and are, therefore, exempt from taxation.
" As already stated, there was to be an inspection of the goods in Belgium by the representative of the DGS&D but there was no completed sale in Belgium as, under the contract, the DGS&D reserved a further right of inspection of the goods on their arrival in India.
Be that as it may, in the case under consideration we are concerned with the sales made by the petitioner as principal to the DGS&D. No doubt, for effecting these sales, the petitioner had to purchase goods from foreign sellers and it was these purchases from the foreign sellers which occasioned the movement of goods in the course of import.
In other words, the movement of goods was occasioned by the contracts for purchase which the petitioner entered into with the foreign sellers.
No movement of goods in the course of import took place in pursuance to the contracts of sale made by the petitioner with the DGS&D.
The petitioner 's sales to DGS&D were distinct and separate from his purchases from foreign sellers.
To put it differently, the sales by the petitioner to the DGS&D did not occasion the import.
It was purchases made by the petitioner from the foreign sellers which occasioned the import of the goods.
The purchases of the goods and import of the goods in pursuance to the contracts of purchases were, no doubt, for sale to the DGS&D.
But it would not follow that the sales or contracts of sales to DGS&D occasioned the movement of the goods Into this country.
There was no privity of contract between DGS&D and the foreign sellers.
The foreign sellers did not enter into any contract by themselves or through the agency of the petitioner to the DGS&D and the movement of goods from the foreign countries was not occasioned on account of the sales by the petitioner to DGS&D.
It was contended on behalf of the Central Government that the contracts of sale between the petitioner and the DGS&D envisaged 628 the import of goods for fulfilling the contracts and it was for that reason that there was first the recommendation for issue of import licences by DGS&D and then the actual issue of import licences and, as the contracts of sale visualised the import of goods for fulfilling them, the movement of goods in the course of import was occasioned by the contracts of sale to the DGS&D, and, therefore, the sales to the DGS&D were the sales which occasioned the movement of goods in the course of import.
There was no obligation under the contracts on the part of the DGS&D to procure import licences for the petitioner.
On the other hand, the recommendation for import licence made by DGS&D did not carry with it any imperative obligation upon the Chief Controller of Imports and Exports to issue the import licence.
Though under the contract DGS&D undertook to provide all facilities for the import of the goods for fulfilling the contracts including an Import Recommendation Certificate, there was no absolute obligation on the DGS&D to procure these facilities.
And, it was the obligation of the petitioner to obtain the import licence.
Therefore,even if the contracts envisaged the import of goods and their supply to the DGS&D from out of the goods imported, it did not follow that the movement of the goods in the course of import was occasioned by the contracts of sale by the petitioner with DGS&D.
We see no reason in principle to distinguish this case from the decision in the Coffee Board Case though that case was concerned with the question when a sale occasions the movement of goods in the course of export.
In the result, we quash Annexure P 1 order so far as the petitioners are concerned and allow the writ petitions with costs.
S.C. Petitions allowed.
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In W. P. No. 92 of 1969, the Petitioner Company prayed for issue of appropriate direction or order for the enforcement of its fundamental rights guaranteed under article 31(1) of the Constitution.
The facts are as follows: The petitioner company was a dealer in non ferrous metals and was a registered supplier to the Directorate General of Supplies and Disposals.
The company was also a registered dealer in the State of West Bengal.
The petitioner used to procure non ferrous metals from various countries and also from within the country for fulfilling its contracts with D.G.S. & D.
The import of non ferrous metals was under open General licence till June, 30, 1957.
Thereafter, a licensing system was introduced by the Government of India and the petitioner was asked to get their quotas fixed on the basis of their past imports.
On April 2, 1958, the Government of India promulgated the Non ferrous Metals Control Order, 1958 by virtue of which free sale of copper was banned.
Any import of copper by the licence holders was to be distributed under the directions of the Controller of Non ferrous metals.
Under the Non ferrous Metals Control Order, 1958, and also under the Import Trade Regulations, the established importers were not free to sell the metals imported by them against their quota licences even to D.G.S.& D. The petitioner, in order to effect supplies to D.G.S. & D. had to obtain additional import licence.
The petitioner obtained quota licences for import of non ferrous metals for the licensing periods upto April 1964, March 1965; but the imports were to be distributed only under the directions of the Controller.
On Sept. 14, 1965, the Govt.
of India promulgated the Scarce Industrial Materials Control Order 1965, under the Defence of India Rules.
Stocks of non ferrous metals including incoming imports were thus frozen.
The Non ferrous Metals Control Order 1958 and the Scarce Industrial Materials Control Order 1965 were both repealed.
The Government of India in placing orders with the petitioner used to grant import licences in terms of the contract.
The petitioner had been importing and supplying non ferrous metals to respondents 1,2 and 3 during the last 19 years.
Respondent No. 2 had agreed to pay and was paying the Central Sales Tax and/or West Bengal Sales Tax, whichever was applicable to the petitioners in terms of the contract.
In 1966, the Supreme Court held in K. G. khosla and Co. vs Deputy Commissioner of Commercial tax ; that the sale by Khosla & Co. to DGS & D in India of axle box bodies manufactured in Belgium by their principal, occasioned the movement of goods in the course of import and sales tax was not exigible on the transaction in view of Sec.
5(2) of the , and article 286 of the Constitution.
Thereafter, respondent No. 2 issued an order to respondent No. 4 that Sales Tax should not be allowed in respect of supply of stores which had been specifically 620 imported against contracts placed by D.G.S. & D. Respondent No. 4, acting in terms of the order, deducted Rs. 60,780/ being the Sales Tax already paid from the pending bills of the petitioner and also threatened to recover more than Rs. 2 lakhs being the amount paid by respondent No. 2 as Sales Tax in respect of contracts which had already been executed.
The petitioner, thereafter, approached the Sales Tax Authorities in W. Bengal and filed revised returns in the pending assessments and claimed refund of taxes paid on the sales, treating the sales as having been made in the course of import on the basis of the judgment in Khosla 's case.
The West Bengal Sales Tax Authorities took the view that there were two sales one, to the petitioner by the foreign seller and the other, by the petitioner to D.G.S. & D. and that there was no privity of contract between D.G.S. & D. and the foreign sellers, that the petitioner under the import licences granted to it, was entitled to import the goods from any person or country and that the import licences issued as against the contracts with the Directorate General of Supplies & Disposals imposed ,no obligation on the petitioner to supply the goods to the D.G.S. & D after they had been imported, they therefore, held that tax was exigible on the sales by.
the petitioner to the D.G.S. & D.
The questions which arose for consideration were: (i) whether on the basis of the order, respondent No.4 was entitled to deduct Rs. 60,780 from the amount due to the petitioner and (ii) Whether the claim of the respondent to recover a further sum of more than Rs. 2 lakhs from the petitioner was justified.
The petitioner contended that the sales which the Company made to D.G.S. & D. were not the sales which occasioned movement of any goods in the course of import as those sales were separate and distinct from the contracts of purchase made by the Company with the foreign sellers which alone occasioned the movement of goods in the course of import, tax was exigible upon the sales by the petitioner to D.G.S & D. and therefore, the decision in Khosla 's Case has no application to the facts here.
Allowing the writ petitions, HELD : (i) article 286(1) (b) provided that no law of a State shall impose a tax on the sale or purchase of goods where such sale or purchase takes place in the course of the import or export of the goods in India.
A sale by export involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea and that such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale or resultant export from parts of a single transaction of these two integrated activities which together constituted an export sale, whichever occurs first can well be regarded as taking place in the course of the other.
[623H] State of Travancore Cochin and Ors.
vs The Bombay Co. Ltd. ; 12, referred to (ii) The words, 'Integrated activities ' were used in the earlier case to denote that such a sale ' (i.e. a sale which occasions the export) ' cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction ', and in that case the sale and the export were said to be integrated.
[624B] per Patanjali Sastri C.J. in State of Travancore Cochin and Ors.
vs Shamugha Vilas Cashew Nut Factory and Ors. ; referred to .
(iii) There was no definition of the expression 'in the course of import ' before the Sixth Amendment of the Constitution.
Later Parliament gave legislative meaning to the expression in section 5(2, of the which provides that a sale or purchase of goods in the course of the import into India, shall be deemed to take place if the sale or purchase either occasions such import or is effected by a transfer of documents of title before the goods have crossed the customs frontiers of India.
[624C] 621 (iv) In the present case, the petitioner as principal made the sale to the D.G.S. & D. 'For effecting the sales, the petitioner had to purchase goods from foreign sellers and it was these purchases from the foreign sellers which occasioned the movement of goods in the course of imports.
In other words, the movement of goods was occasioned by the contracts for the purchase, which the petitioner entered into with the foreign sellers.
No movement of goods in the course of import took place in pursuance to the contracts of sales made by the petitioner with the D.G.S. & D. The petitioner 's sales to D.G.S. & D. were distinct and separate from his purchases from foreign sellers.
There was no privity of contract between the D.G.S. & D. and the foreign sellers.
The foreign sellers did not enter into a contract by themselves or through the agency of the petitioner to the D.G.S.& D. and the movement of goods through foreign countries was not occasioned on account of the sales by the petitioner to D.G.S. & D.
Even if the contracts between the petitioner and the D.G.S. & D. envisaged the import of goods, and their supply to the D.G.S. & D. from out of the goods imported, it did not follow that the movement of the goods in the course of import was occasioned by the contracts of sale by the petitioner with the D.G.S. & D.
The present case, therefore, cannot be distinguished from the decision in the Coffee Board 's case though that case was concerned with the question when a sale occasioned the movement of goods in the course of export.
The order issued by respondent No. 2, was, therefore, quashed.
, [627E 628E]
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3192.txt
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o. 3 of 1992.
IN Civil Appeal No. 732 of 1973.
From the Judgment and Order dated 29.9.79 of the Delhi High Court in Civil Writ 734 of 1971.
Satish Chandra, Pramod B. Agarwala and Mohinder Rupral for the Appellants.
V.R. Reddy Additional Solicitor General, P. Chidambaram, Syed Akhtar, C.L. Sahu, R.C. Bhalla, P. Parmeshwaran, C.V.S. Rao, K. Swamy and E.C. Agarwala for the Respondents.
J. Shri Chiranjilal Shrilal Goenka was involved in several suits and one of which is the pending appeal at his behest.
He died on November 25, 1985 leaving behind last Will dated October 29.,1982 said to have been executed in which he appointed his younger daughter Mrs. Sushila N. Rungta as sole executrix of his Will.
Radhey Shyam claims to be the adopted son of Shri C.S. Goenka.
Radhey Shyam is the natural son of Shri Mangal Chand Kedia and Mrs. Sita another daughter of Sri C.S. Goenka.
The applicant executrix; Radhey Shyam and his wife filed substitution applications under order 22 Rule 3 CPC setting up rival claims.
When the dispute arose as to who would represent the estate of Shri C.S. Goenka, by order dated October 7, 1991 this Court brought all the three on record as legal representatives.
By further order dated November 1, 1991 this Court passed the following order .lm15 " By consent of parties Justice V.S. Deshpande, retired Chief Justice of the Bombay High Court is appointed as arbitrator to settle the dispute as to who would be the 459 legal heirs to the estate of the late Chiranjilal Shrilal Goenka.
" The rest of the order is not necessary for the purpose of this case, hence omitted.
Pursuant thereto Shri Justice V.S. Deshpande entered upon the arbitration.
Preceding the order counsel for Sri Radhey Shyam had enclosed a letter giving details of all the pending suits and item No. 19, Suit No. 65 of 1985, titled S.N. Rungta vs R. C Goenka, was one such case.
The schedule of the suits was annexed to the order of appointment of the arbitrator.
On filing the respective pleadings, the arbitrator framed diverse issues.
Issues No. 1 and 2 relate to two Wills and are as under: "1. Does Claimant No.1 prove execution of the Will dated 29th (28th) October, 1982 and prove the same to be the last and genuine Will of late Shri G.S. Goenka.
If not does she prove the execution of the Will dated 4.7.1978and prove the same to be the last and genuine Will of the late Shri G.S. Goenka".
Simultaneously proceedings in the probate suit is being pursued in Bombay High Court where in the learned Judge, on application, expressed doubt, whether arbitrator has jurisdiction to decide probate suit.
Similarly, on application made before the arbitrator seeking clarification, he too had stated that when the appointment of him as arbitrator was made and all the pending proceedings were referred to in the schedule, it would be assumed that this Court applied its mind and referred to him the probate suit as well but he cannot give any clarification in that behalf.
It would be expedient to the applicant to seek clarification from this Court.
Thus the prayers in the application are : "A. That this Hon 'ble Court may be pleased to allow the applicant to proceed with the Probate Suit No. 65 of 1987 pending before the Hon 'ble High Court of Bombay in accordance with law; and B. to pass such order and other orders as this Hon 'ble Court may deem fit and proper in the circumstances".
Shri Satish Chandra, learned Senior counsel for the applicant contended, placing reliance on Gopi Rai vs B.N. Rai, AIR 1930 Allahabad 840 460 Chellan Bhai vs Nandu Bhai, ILR 21 Bombay, 337 and Manmohini Guha vs Banga Chandra Das, ILR that probate court has exclusive jurisdiction to grant probate of the Will to the applicant for due implementation of the directions contained in the Will as the executrix.
That issue cannot be referred to arbitration and the arbitrator thereby is devoid of jurisdiction to decide issuses Nos.1 and 2.
He also further contended that the applicant had not consented to refer the probate suit for arbitration.
Shri P. Chidambaram, learned Senior counsel for the respondents contended that preceding the order of this Court dated November 1, 1991, the counsel for the respondents addressed a letter to the counsel for the petitioner including the probate suit for reference to arbitration.
This was to obviate the litigation pending in all the courts as to who are the leg heirs of Shri C.S. Goenka.
Thereafter this Court appointed Shri Justice S.V. Deshpande.
The contention, therefore, of the applicant that she did not consent to refer the probate suit for arbitration is an after thought and cannot be accepted.
He further contended that this Court, with a view to put an end to the litigation in all the suits pending 'in different courts, appointed the arbitrator to decide all the disputes in pending suits go that it would bind them.
The arbitrator had accordingly framed Issues Nos. 1 and 2, referred to herein before which pertinently relate to the Wills 'in ' the probate suit alongwith other suits.
Therefore, the arbitrator alone has got jurisdiction.
The award of the arbitrator would be subject to approval or disapproval by this Hon 'ble Court and on putting its seal it would bind all the parties and the courts including the probate court.
Therefore, it is expedient that instead of parallel proceedings before the probate court and the arbitrator to be permitted to continue, it is desirable that the arbitrator should decide issues Nos.1 and 2 with other issues and determine as to who would be the legal heirs and his decision would be binding in the probate suit.
If any clarification is necessary it may be indicated accordingly.
Having given our anxious consideration we will proceed further in deciding the scope and effect of the order passed by this Court.
As seen the order of reference to the arbitrator relates "to settle dispute as to who would be the legal heirs to the estate of Shri C.S. Goenka".
Section 2(11) of CPC Act 5 of 1908 defines legal representatives means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representatives character the person on whom the estate 461 devolves on the death of the party so suing or sued.
Order 22 rule 3 says that if one or two or more plaintiffs die and the right to sue does not survive to the surviving plaintiff or plaintiff, , alone, or a sole plaintiff or sole surviving plaintiffs dies and the right to sue survives, the Court on an application made in this behalf, shall cause the legal representatives of the deceased plaintiff to be made a party and shall proceed with the suit.
Mutatis Mutandis by operation of Order 22 Rule 11 this rule applies to the appellants at the appeal stage.
Similarly, Order 22 Rule 4 applies in the case of death of one of several defendants or of sole defendant and in case of a dispute under Rule 5 such a question shall be determined by the court.
Inheritance is in some sort a legal and fictitious continuation of the personality of the dead man, for the presentation is in some sort identified by the law with him who he represents.
The rights which the dead man can no longer own or exercise in propria persona and the obligations which he can no longer in propria person a fulfil, he owns, exercise and fulfils in the persons of a living substitute.
To this extent, and in this fiction, it may be said that legal personality of a man survives his natural personality until his, obligation being duty performed, and his property duly disposed of, his representation among the living is no longer called for.
In Black 's Law Dictionary the meaning of the world 'Legal Representative ' is : The term is its broadest sense means one who stands in place of, and represents the interests of another.
A person who overseas the legal affairs of another.
Examples include the executors or administrator of an estate and a court appointed guardian of a minor or incompetent person.
Term "Legal representative" which is almost always held to be synonymous with term "personal representative", means in accident cases, member of family entitled to benefits under Wrongful death statute.
Unsatisfied claim and judgment fund.
In The Andhra Bank Ltd. vs R. Srinivasan and Ors., 1963 (1) and.
W.R.(S.C.) 14 this Court considered the question whether the legatee under the Will is the legal representative within the meaning of Section 2(11) of the Code.
It was held that it is well known that the expression "Legal Representative" had not been defined in the Code of 1882 and that led to a difference of judicial opinion as to its denotation.
Considering the case law developed in that behalf it was held that respondents 2 to 12, the legatees under the Will of the estate are legal 462 representatives of the deceased Raja Bahadur and so it follows that the estate of the deceased was sufficiently represented by them when the judgment were pronounced.
In The Official Liquidator vs Parthasarathi Sinha and Ors., ; this Court considered whether the legal representative would be bound by the liability for misfeasance proceeding against the deceased.
While considering that question under section 50 CPC this Court held that the legal representative, of course, would not be liable for any sum beyond the value of the estate of the deceased in his hands.
Mulla on CPC 14th Ed., Vol.
I at P.27 stated that a person on whom the estate of the deceased devolves would be his legal representative even if he is not in actual possession of the estate.
It includes heirs and also persons who without title either as executors, administrators were in possession of the estate of the deceased.
It is, therefore, clear that the term legal representative is wide and inclusive of not only the heirs but also intermeddlers of the estate of the deceased as well as a person who in law represents the estate of the deceased.
It is not necessarily confined 'to heirs alone.
The executor, administrators, assigns or persons acquired interest by devolution under Order 22 Rule 10 or legatee under a Will, are legal representatives.
Section 3(f) of the defines "heirs" means any person, male or female who is entitled to succeed to the property of an intestate under this Act.
Section 8 thereof provides that the property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter 'Chapter 11 ' (Inestate succession) firstly upon the heirs, being the relatives specified in Class 1 of the Schedule. .
Schedule provides Class 1 heirs are Son, daughter, widow, mother. .
Thus under the personal law of , if a Hindu dies intestate, the heirs either male or female specified in Schedule 1 Class 1, are heirs and succeed to the estate as per law.
In ' their absence, the next class or classes are entitled to succeed to the property of an intestate under the Act.
In Sudama Devi and Ors.
vs Jogendra Choudhary and Ors., AIR.
1987 Patna 239, (Full Bench) considered the question whether father of the minor in possession of his property and who himself was a party to the suit alongwith the minor is legal representative.
The minor died.
The father was held per majority to be legal representatives under section 2(11) of the Code as an intermeddler.
It must therefore be held that not only that Class I heirs under Section 8 read with Schedule of the but also 463 the executor of the Will of the deceased Goenka are legal representatives within the meaning of Section 2(11) of the Code.
Section 213 of the (Act 39) of 1925 for short 'the Succession Act ' provides right to the executor to obtain probate of the Will thus "(1) No right as executor. can be established in an), Court of Justice, unless court of competent jurisdiction in (India) has granted probate of the will under which the right is claimed with a copy of the Will annexed.
By operation of sub section 2(i) only in the case of wills made by any Hindu . where such wills are of the classes specified in Cls.
(a) and (b) of Sec.
Section 57 provides that the provisions of part which are set out in Schedule 111, shall, subject to the restrictions and modifications specified therein apply (a) to all wills made by any Hlndu, on or after the first day of September, 1870, within the local limits of the ordinary original civil jurisdiction of the High Court of Judicature at Madras and Bombay. (c) to all wills and codicils made by any Hindu on or after the first day of January, 1927, to which those provisions are not applied by Cls.
(a) and (b).
In other places the Dist.
Court or Court to whom the power is delegated alone are entitled to grant probate.
Section 276 provides the procedure to obtain probate, namely (1) application for probate . with the Will annexed, shall be made by a distinctly written in English. the will as the case may be, the particulars are the details mentioned in ' Cls.(a) to ' (e) and further details provided in sub sections (2) and (3), the mention of the details whereof are not material for the purpose of this case.
The petition shall be verified in the manner prescribed under section 280 and also further to be verified by at least one of the witnesses to the will in the manner and to the affect specified therein.
The Caveator is entitled to object to its grant by operation of Section 284 When it is contested Section 295 directs that probate proceedings shall take, as nearly as may be, the form of a regular suit, according to the provisions of C.P.C. and the petitioner for probate . shall be the plaintiff and the person who had appeared to oppose the 464 grant shall be the defendant.
Section 217 expressly provides that save as otherwise provided by this Act or by any other law for the time being in force, all grants or probate . with the will annexed . shall be made or carried out, as the case may be, in accordance with the provisions of Part IX.
Section 222 declares that (1) Probate shall be granted only to an executor appointed by the will.
(2) The appointment may be expressed or by necessary implication Section 223 prohibits grant of probates to the persons specified therein.
Section 224 gives power to appoint several executors.
Section 227 declares the effect of probate thus: Probate of a will when granted establishes the will from the.
death of the testator, and renders valid all intermediate acts of the executor as such.
Section 248 envisages grant of probate for special purposes, namely, if an executor is appointed for any limited purpose specified in the will, the probate shall be limited to that purpose, and if he should appoint an attorney. . with the will annexed, shall be limited accordingly.
Section 273 declares conclusiveness of probate thus : Probate shall have the effect over all the property and estate moveable or immovable, of the deceased, throughout the State in which the same is or are granted, and shall be conclusive as to the representative title against the debtors of the deceased and all persons holding property which belongs to him, and shall afford full indemnity to all debtors, paying their debts and all persons delivering up such property to the person to whom such probate have been granted.
The further details are not necessary for the purpose of this case.
Under section 294 it shall be the duty of the court to preserve original Wills.
Section 299 gives right of appeals against an order or the decree of the court of probate.
By operation of Section 211(1) the executor of a deceased person is his legal representative for all purposes, and all the property of the deceased person vests in him as such.
In Inswardeo Narain Singh vs Smt.
Kanta Devi & Ors., AIR 1954 SC 280 this court held that the court of probate is only concerned with the question as to whether the document put forward as the last will and testament of a deceased person was duly executed and attested in accordance with law and whether at the time of such execution the testator had sound disposing mind.
The question whether a particular bequest is good or bad is not within the purview of the Probate Court.
Therefore the only issue in a probate proceeding relates to the genuineness and due execution of the Will and the court itself is under duty to determine it and preserve 465 the preserve the original Will in its custody.
The Succession Act is a self contained code in so far as the question of making an application for probate, grant or refusal of probate or an appeal carried against the decision of the probate court.
This is clearly manifested in the fasecule of the provision of Act.
The probate proceedings shall be conducted by the probate court in the manner prescribed in the Act and in no other ways.
The grant of probate with a copy of the Will annexed establishes con clusively as to the appointment of the executor and the valid execution of the will.
Thus it does no more than establish the factum of the will and the legal character of the executor.
Probate court does not decide any question, of title or of the existance of the property itself.
The grant of a Probate by Court of competent jurisdiction is in the nature of a proceeding in rem.
So long as the order remains in force it is conclusive as to the due execution and validity of the will unless it is duly revoked as per law.
It binds not only upon all the parties made before the court but also upon all other persons in all proceedings arising out of the Will or claims under or connected therewith.
The decision of the Probate Court, therefore, is the judgment in rem.
The probate granted by the competent court is conclusive of the validity of the Will until it is revoked and no evidence can be admitted to impeach it except in a proceeding taken for revoking the probate.
In Sheoparsan Singh vs Ramnandan Prasad Singh, Cal., 694 PC the judicial committee was to consider, whether the Will which had been affirmed by a Court of competent jurisdiction, would not be impugned in a court exercising original jurisdiction (Civil Court) in suit to declare the grant of probate illegal etc.
The privy council held that the Civil Court has no jurisdiction to impugne the grant of probate by the court of competent jurisdiction.
In that case the subordinate court of Muzafarbad was held to be had no jurisdiction to question the validity of the probate granted by the Calcutta High Court.
In Narbheram Jivram vs Jevallabh Harjivan, AIR 1933 Bombay, 469 probate was granted by the High Court exercising probate jurisdiction.
A civil suit on the Original Side was filed seeking apart from questioning the probate, also other reliefs.
The High Court held that when a probate was granted.
, it operates upon the whole estate and establishes the Will from the death of the testator.
Probate is conclusive evidence not only of the factum, but also of the validity of the Will and after the probate has been granted, in is incumbent on a person who wants to have the Will declared null and void, to have the probate revoked before proceeding further.
That could 466 be done only before the Probate Court and not on the original side of the High Court.
When a request was made to transfer the suit to the Probate Court, the learned Judge declined to grant the relief and stayed the proceeding on the original side.
Thus it is conclusive that the court of probate alone had jurisdiction and is competent to grant probate to the will annexed to the petition in the manner prescribed under the Succession Act.
That court alone is competent to deal with the probate proceedings and to grant or refuse probate of the annexed will.
It should keep the original will in its custody.
The probate thus granted is conclusive unless it is revoked.
It is a judgment in rem.
We agree with Mr. Chidambaram that the applicant had consented to refer the dispute for arbitration of dispute in the pending probate proceedings, but consent cannot confer jurisdiction nor an estoppel against statute.
The other legatees in the will were not parties to it.
In A.R. Antulay VI R.S. Naik; , when a Constitution Bench directed the High Court Judge to try the offences under the Prevention of Corruption Act with which the petitioner therein was charged and the trial was being proceeded with, he 'questioned by way of writ petition the jurisdiction of this Court to give such a direction.
A Bench of seven judges per majority construed meaning of the word 'jurisdiction ', Mukerjee, J. as he then was, speaking per himself.
Oza and Natarajan, JJ. held that the power to create or enlarge jurisdiction is legislative in character.
So also the power to confer a right of appeal or to take away a right of appeal.
The Parliament alone can do it, by law and not Court, whether interior or both combine, can enlarge the jurisdiction of a Court and divest a person of his rights of appeal or revision.
Ranganath Misra, J. as he then was, held that jurisdiction comes solely from the law of the land and cannot be exercised otherwise.
In this country, jurisdiction can be exercised only when provided for either in the Constitution or in the laws made by the Legislature.
Jurisdiction is thus the authority or power of the Court to deal with a matter and make an order carrying binding force in the facts.
Oza, J. supplementing the question held that the jurisdiction to try a case could only be conferred by law enacted by the legislature.
The Supreme Court could not confer jurisdiction if it does not exist in law.
Ray, J. held that the Court cannot confer a jurisdiction on itself which is not provided in the law.
In the dissenting opinion Venkatachaliah, J., as he then was to lay down that the expression jurisdiction or prior determination is a "verbal coat of many colours".
In the case of a Tribunal an error of law might 467 become not merely an error in jurisdiction but might partake of the character of an error of jurisdiction.
But, otherwise, jurisdiction is a 'legal shelter ' and a power to bind despite a possible error in the decision.
The existence of jurisdiction does not depend on the correctness of its exercise.
The authority to decide embodies a privilege to bind despite error, a privilege which is inherent in and indispensable to every judicial function.
The characteristic attribute of a judicial act is that it binds whether it be right or it be wrong.
Thus this Court laid down as an authoritative proposition of law that the jurisdiction could be conferred by statute and this Court cannot confer jurisdiction or an authority on a tribunal.
In that case this Court held that Constitution Bench has no power to give direction contrary to Criminal Law Amendment Act, 1952.
The direction per majority was held to be void.
It is settled law that a decree passed by a court without jurisdiction on the subject matter or on the grounds on which the decree made which goes to the root to its jurisdiction of lacks inherent jurisdiction is a corum non judice.
A decree passed by such a court in a nullity and is nonest.
Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings.
The defect of jurisdiction strikes at the very authority of the court to pass decree which cannot be cured by consent or waiver of the party.
In Bahadur Singh & Anr.
vs Muni Subrat Dass & Anr., an eviction petition was filed under the Rent Control Act on the ground of nuisance.
The dispute was referred to the arbitration.
An award was made directing the tenant to run the workshop upto a specified time and thereafter to remove the machinery and to deliver vacant possession to the landlord.
The award was signed by the arbitrators, the tenant and the landlord.
It was filed in the court.
A judgment and decree were passed in terms of the award.
On expiry of the time and when the tenant did not remove the machinery nor delivered vacant possession, execution was levied under Delhi and Ajmer Rent Control Act.
It was held that a decree passed in contravention of Delhi and Ajmer Rent Control Act was void and the landlord could not execute the decree.
The same view was reiterated in Smt.
Kaushalya Devi and Ors.
vs KL.
Bansal, AIR 1970 SC 838.
In Ferozi Lal Jain vs Man Mal & Anr., AIR 1979 SC 794 a compromise dehore grounds for eviction was arrived at between the parties under section 13 of the Delhi and Ajmer Rent Control Act.
A decree in terms thereof was passed.
The possession was not delivered and execution was 468 laid.
It was held that the decree was nullity and, therefore, the tenant could not be evicted.
In Sushil Kumar Mehta vs Gobind Ram Bohra (dead) through his Lrs.
JT 1989 (SUPPI.) SC.329 the Civil Court decreed eviction but the building was governed by Haryana Urban (Control of Rent & Eviction) Act 11 of 1973.
It was held that the decree was without jurisdiction and its nullity can be raised in execution.
In Union of India vs M/s. Ajit Mehta and Associates.
Pune and Ors.
, AIR 1990 Bombay 45 a Division Bench to which Sawant, J. as he then was, a member was to consider whether the validity of the award could be questioned on jurisdictional issue under section 30 of the Arbitration Act.
The Division Bench held that Clause 70 of the, Contract provided that the Chief Engineer shall appoint an engineer officer to be sole arbitrator and unless both.
parties agree in writing such a reference shall not take place until after completion of the works or termination or determination of the Contract.
Pursuant to this contract under section 8 of the Act, an Arbitrator was appointed and award was made, Its validity was questioned under section 30 thereof.
The Division Bench considering the scope of Sections 8 and 20(4) of the Act and on review of the case law held that Section 8 cannot be invoked for appointment of an Arbitrator unilaterally but be available only.
under section 20(4) of the Act.
Therefore, the very appointment of the Arbitrator without consent of both parties was held void being without jurisdiction.
The Arbitrator so appointed inherently lacked jurisdiction and hence the award made by such Arbitrator is nonest.
In Chellan Bhai 's case Sir C. Farran, Kt.
, C.J. of Bombay High Court held that the Probate Court alone is to determine whether probate of an alleged will shall issue to the executor named in it and that the executor has no power to refer the question of execution of Will to arbitration.
It was also held that the executor having propounded a Will, and applied for probate, a caveat was filed denying the execution of the alleged Will, and the matter was duly registered as a suit, the executor and the caveatrix subsequently cannot refer the dispute to arbitration, signing a submission paper, but such an award made pursuant thereto was held to be without jurisdiction.
In Gopi Rai 's case, Sulaiman, J. as he then was, speaking for the Division Bench held that the Civil Court has no jurisdiction to allow the dispute relating to the genuineness of a Will in a probate proceedings pending before him to be referred to the arbitration of an arbitrator.
He has got to be specified that the Will is a genuine document before the order of granting probate is passed.
He cannot delegate those functions to a 465 private individual and decide the point through him.
Similar was the view laid in Manmohini Guha 's case, Sarda Kanta Das vs Gobinda Das 6 Indian.
Cases 912 and Khelawati vs Chet.
Ram Khub Rain, AIR 1952 Punjab 67.
When the plea of estoppel was raised, Sulaiman.
J. in Gopi Rai 's case held that "We cannot hold that there is any estoppel against Gopi Rai on this question of jurisdiction.
That is a matter which we can take into account only when ordering costs. ', ' The decision in Nalla Ramudamma vs Nalla Kasi Naidu, AIR 1945 Madras 269 relied on by Shri Chidambaram does not help his clients.
Therein the question was the matrimonial dispute.
The Arbitrator had decided at the request of the parties and a decree was passed.
It was held that the dispute would come under section 21 of the Arbitration Act.
The question of jurisdiction was not raised therein.
Equal ly the decision in Mt. Mahasunader Kuer and Anr.
vs Ram Ratan Prasad Sahi.
is also of little assistance.
The question of adoption, it was held, cannot be decided in the probate proceedings.
On a conspectus of the above legal scenario we conclude that the Probate Court has been conferred with exclusive jurisdiction to grant probate of the Will of the deceased annexed to the petition (suit); on grant or refusal thereof, it has to preserve the original Will produced before it.
The grant of probate is final subject to appeal, if any, or revocation if made in terms of the provisions of the Succession Act.
It is a judgment in rely and conclusive and binds not only the parties but also the entire world The award deprives the parties of statutory right of appeal provided under section 299.
Thus the necessary conclusion is that the Probate Court alone has exclusive jurisdiction and the Civil Court on original side or the Arbitrator does not get jurisdiction even if consented to by the parties, to adjudicate upon the proof or validity of the Will propounded by the executrix, the applicant.
It is already seen that the executrix was nominated expressly in the will is a legal representative entitled to represent the Estate` of the deceased but the heirs cannot get any probate before the Probate Court.
They are entitled only to resist the claim of the executrix of the execution and genuineness of the Will.
The grant of probate gives the executrix the right to represent the estate of the deceased, the subject matter in other proceedings.
We make it clear that our exposition of law is only for the purpose of finding the jurisdiction of the arbitrator and not an expression of opinion on merits in the probate suit.
From this perspective we are constrained to conclude that the Ar.
470 bitrator cannot proceed with the probate suit to decide the dispute in issues Nos.1 and 2 framed by him.
Under these circumstances the only course open in the case is that the High Court is requested to proceed with the probate suit No.65/85 pending on the probate jurisdiction of the High Court of Bombay and decide the same as expeditiously as possible.
The learned Judge is requested to fix the date and proceed day to day at his convenience till it is concluded and decide the matter according to law preferably within six months.
Till then the Arbitrator is requested not to decide issue Nos.1 and 2.
He may be at liberty to proceed with the other issues.
He is requested to await the decision of the Probate Court; depending upon the result thereon, he would conclude his findings on Issues Nos.1 and 2 and then make the award and take the proceedings according to law.
The application is accordingly ordered but without cost.
N.V.K Application disposed of.
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The appellant Shri Chiranjilal Shri Lal Goenka was involved in several suits, one of which was the present appeal.
He died on November 25, 1985 leaving behind his last Will dated October 29, 1982 in which he appointed his younger daughter Mrs. Sushila N. Rungta as the sole executrix Radhey Shyam, the natural son of Shri Mangal Chand Kedia and Mrs. Sita daughter of Shri C.S. Goenka; claimed to be the adopted son of Shri C.S. Goenka.
The applicant, executrix; Radhey Shyam and his wife filed substitution applications under Order 22 Rule 3 CPC setting up rival claims.
When the dispute arose as to who should represent the estate of Shri C.S. Goenka by order dated October 7, 1991 this Court brought all the three on record as legal representatives; and by a further order dated November 1, 1991 by consent of parties appointed a retired Chief Justice of the Bombay High Court as an Arbitrator to settle the dispute as who would be the legal heirs to the estate of late Chiranjilal Shri Lal Goenka.
The arbitrator entered upon the reference and on the riling of pleadings by the parties framed diverse issues.
Issues No. 1 and 2 related to the two Wills and were : (1) Does the claimant No. 1 prove.
execution of the Will dated 29th Oct. 1982 and prove the same to be the last and genuine Will of Shri G.S. Goenka.
(2) If not does she prove the execution of the Will dated 4.7.78 and prove the same 455 to be the last and genuine Will of the late Shri G.S. Goenka.
Simultaneous proceedings in the probate suit were being pursued in Bombay High Court, and a Single Judge expressed doubt whether the arbitrator had jurisdiction to decide the probate suit.
Similarly, on an application made before the arbitrator seeking clarification, he too stated that with his appointment as arbitrator all the pending suits in the schedule should be assumed to have been referred for arbitration and that includes the probate suit as well, but that he cannot give any clarification in that behalf.
An Interlocutory Application was, therefore, moved in this Court for clarification, and it was contended on behalf of the applicant that the probate court had exclusive jurisdiction to grant probate of the Will to the applicant for due implementation of the directions contained in the Will as the executrix, and that this issue cannot be referred to arbitration and the arbitrator thereby is devoid of jurisdiction to decide Issue Nos. 1 and 2 that had been framed by him, and that the applicant had not consented to refer the probate suit for arbitration.
The application was contested on behalf of the respondents by contending that proceeding the order of the Court dated November 1, 1991 the counsel for the respondents addressed a letter to the counsel for the petitioner including the probate suit for reference to arbitration, and this was to obviate the litigation pending in all the courts as to who were the legal heirs of Shri C.S.Goenka, and thereafter this court appointed the arbitrator, ' that with a view to put an end to the litigation in all the suits pending in different courts, this Court appointed the arbitrator to decide all the disputes in pending suits.
It is, therefore, desirable that the arbitrator should decide Issue Nos. 1 and 2 that have been framed.
Disposing of the Application, this Court, HELD : 1. Section 2(11) of Code of Civil Procedure 1908 defines "legal representatives" to mean a person who in law represents the estate of a deceased person; and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued.
Order 22 rule 3 says that if one or two or more plaintiffs dies and the right to sue survives, the Court on an application made in this behalf, shall cause the legal representatives of the deceased plaintiff 456 to be made a party and shall proceed with the suit.
Mutatis Mutandis by operation of Order 22 Rule 11 this rule applies to the appellants at the appeal stage.
Similarly, Order 22 Rule 4 applies in the case of death of one of several defendants or of sole defendant and in case of a dispute under Rule 5 such a question shall be determined by the Court.
[460H, 461A B] 2.
Inheritance is In some sort a legal and fictitious continuation of the personality of the dead man, for the prepresentation is in some sort identified by the law with him who he represents.
The rights which the dead man can no longer own or exercise in propria persona and the obligations which he can no longer in propria persona fulfil, he owns exercises, and fulfils in the person of a living substitute.
To this extent, and in this fiction, it may be said that legal personality of a man survives his natural personality, until his obligations being duty performed, and his property duly disposed of, his representation among the living is no longer called for.
1461D] 3.
The grant of Probate by a Court of competent jurisdiction is in the nature of a proceeding in rem.
So long as the order remains in force it is conclusive as to the due execution and validity of the will unless it is duly revoked as per law.
It binds not only upon all the parties made before the Court but also upon all other persons in all proceedings arising out of the Will or claims under or connected therewith.
The decision of the Probate.
Court, therefore, is the judgment in rem.
The probate granted by the competent court is conclusive of the validity of the Will until it is revoked and no evidence can be admitted to impeach it except in a proceeding taken for revoking the probate.
[465D] Slieoparsan Singh vs Ramnandan Prasad Singh, Cal.
694 PC and Narbharam Jivram vs Jayvallabh Harjiwan, AIR 1933 Bom.
469, approved.
[465E F] 4.
It is settled law that a decree passed by a court without jurisdiction on the subject matter or on the grounds on which the decree made which goes to the root of its jurisdiction or lacks inherent jurisdiction is a corum non judice.
A decree passed by such a court is a nullity and is nonest.
Its invalidity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage or execution or in collateral proceedings.
The defect of jurisdiction strikes at the very authority of the court to pass decree which cannot be cured by consent or 457 waiver of the party.
[467D] A.R. Antulay vs R.S. Naik, ; ; Bahadur Singh & Anr.
vs Muni Subrat Dass & Anr ; Smt.
Kaushalya Devi and Ors.
vs KL.
Bansal, AIR 1970 SC 838; Ferozi Lal Jain vs Man Mal & Anr, AIR 1979 SC 794 and Sushil Kumar Mehta vs Gobind Rain Bohra (dead) through his Lrs, JT 1989 (suppl.) SC 329.
In the instant case, the applicant had consented to refer for arbitration the dispute in the pending probate proceedings, but consent cannot confer jurisdiction nor an estoppel against statute.
The other legatees in the Will were not parties to it.
The Probate Court has been conferred with exclusive jurisdiction to grant probate of the Will of the deceased annexed to the petition (suit); on grant or refusal thereof, it has to preserve the original will produced before it.
The grant of probate is final subject to appeal, if any, or revocation if made in terms of the provision of the Succession Act It is a judgment in rem and conclusive and binds not only the parties but also the entire world.
The award deprives the parties of statutory right of appeal provided under section 299.
Thus the necessary conclusion is that the Probate Court alone has exclusive jurisdiction and the Civil Court on original side or the Arbitrator does not get jurisdiction, even if consented to by the parties, to adjudicate upon the proof or validity of the Will propounded by the executrix, the appellant [468D F] 6.
The executrix was nominated expressly in the Will as a legal representative entitled to represent the Estate of the deceased but the heirs cannot get any probate before the Probate Court.
They are entitled only to resist the Claim of the executrix of the execution and genuiness of the Will.
The grant of probate gives the executrix the right to represent the estate of the deceased, the subject matter in other proceedings.
This exposition or the law is only for the purpose of finding the jurisdiction of the arbitrator and not an expression of opinion on the merits in the probate suit.
[468G] 7.
The Arbitrator cannot therefore proceed with the probate suit to decide the dispute in Issue Nos. 1 and 2 framed by him.
The High Court is to proceed with the Probate suit, the Judge to fix the date and proceed day to day till it is concluded and decide the matter within six months.
Till 458 then the Arbitrator is not to decide Issue Nos. 1 and 2, but at liberty to proceed with the other issues, to await the decision of the probate Court and depending upon the result thereon, conclude the findings on issue Nos.1 and 2 and then make the award and take the proceedings according to law.
[469H, 470A B]
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7038.txt
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minal Appeal No. 101 of 1958.
Appeal by special leave from the judgment and order dated the 12th September, 1956 of the Calcutta High Court in Criminal Appeal No. 19 of 1956, arising 127 out of the judgment and order dated the 8th December, 1955 of the Sessions Judge, Birbhum in Sessions Trial No. 1 of November 1955.
H. J. Umrigar and D. N. Mukherjee, for the appellant.
K. B. Bagchi, P. K. Ghosh for P. K. Bose, for the respondent.
May 8.
The Judgment of the Court was delivered by IMAM J.
The appellant was sentenced to imprisonment for life under section 302 by the Sessions Judge of Birbhum who agreed with the majority verdict of the jury that he was guilty.
He appealed against his conviction to the Calcutta High Court.
That Court being of the opinion that there was no misdirection in the Sessions Judge 's charge to the jury dismissed the appeal.
Two persons Jagdish Gorain and Sudhir Gorain were also tried along with the appellant but were acquitted by the jury whose verdict the Sessions Judge accepted.
The appellant appealed to the High Court for a certificate to appeal to this Court which was refused.
The present appeal is by special leave.
According to the prosecution Sibapada Hati was married to a girl by the name of Lila.
About a month previous to the date of occurrence the appellant had made a proposal to her that she should live with him which was rejected.
The appellant thought that the removal of Sibapada Hati would clear the way and improve his chance of gaining Lila 's favour.
Accordingly he murdered Sibapada Hati on the May 26, 1955.
In that murder he was assisted by Jagdish Gorain, Sudhir Gorain and the approver Sastipada Ghose.
The conviction of the appellant depended on the evidence of the approver and the circumstantial evidence which corroborated him in connecting or tending or connect the appellant with the murder of the deceased Sibapada Hati.
Unless there was a misdirection or non direction amounting to a misdirection in the charge to the jury which, in fact, had occasioned a failure of justice the jury 's verdict must prevail and 128 it cannot be interfered with.
The High Court was of the opinion that there was no misdirection in the Sessions Judge 's charge to the jury and we are in agreement with the High Court.
We have examined the charge to the jury.
The Sessions Judge in dealing with the evidence of the approver charged the jury as follows: " Before doing so, some established legal principles as regards the approver 's evidence and the confessions on which the prosecution has relied in the present case are required to be explained to you.
The approver is a competent witness against an accused person and although his evidence is strictly admissible and a conviction is not illegal, merely because it is based on approver 's evidence, it is a settled rule of practice not to convict a person on such evidence except under very rare and exceptional circumstances, and usually substantial corroboration is required.
I, therefore, warn you, gentlemen, that it is highly dangerous to convict on approver 's evidence alone.
There can, no doubt be a legal conviction upon the uncorroborated evidence of an accomplice and, as already stated, the uncorroborated testimony of an accomplice is strictly admissible and a conviction based on it alone is not illegal, yet you should remember, gentlemen, that experience teaches us that an accomplice being always an infamous person, he having thrown to the wolves his associates and friends in order to save his own skin and, though criminal, has purchased his liberty by betrayal, his evidence must be received with very great caution and it is highly dangerous to act upon his evidence unless it is materially corroborated.
I must also tell you that this rule as to corroboration has become a settled rule of practice of so universal an application that it has now almost the force and reverence of law.
Corroboration must be as to the crime and the identity of each one of the accused and the corroboration required must be independent evidence, that is reliable evidence of another kind.
129 Evidence in corroboration must be independent testimony, which affects the accused by connecting or tending to connect the accused with the crime.
In other words.
it must be evidence which implicates him, that is, which conforms in some material particulars not only the evidence that the crime has been committed but also that the prisoner (accused) committed it.
Corroborative evidence, you should bear in mind, is evidence which shows or tends to show that the story of the accomplice that the accused committed the crime is true.
The corroboration need not be direct evidence that the accused committed the crime.
It would be sufficient if it is merely circumstantial evidence of his connection with the crime.
The corroboration in material particulars must be such as to connect or identify each of the accused with the offence.
In the present case, a previous statement of an approver, viz., the confession has been made exhibit before you, but that previous statement, you are further to bear in mind, cannot corroborate his latter statement, viz., the statements that have been made by him before you in this Court.
In dealing with the question what amount of corroboration is required you, gentlemen, must exercise careful discrimination and look at all the surrounding circumstances in order to arrive at a conclusion whether the facts deposed to by the approver Sastipada are borne out by those circum stances. " Mr. Umrigar on behalf of the appellant urged that the aforesaid direction given by Sessions Judge to the jury was not sufficient.
The jury should have been told (1) in accordance with the decision of this Court in the case of Sarwan Singh vs The State of Punjab (1) that the approver 's evidence has to satisfy a double test.
It must show that he is a reliable witness and that his evidence receives sufficient corroboration, (2) that the evidence of an approver must be confirmed not only as to the circumstances of the crime but also as to the identity of the prisoner.
The corroboration (1) ; 17 130 ought to consist in circumstances that affects the identity of the party accused.
Reliance was placed on the case of The King vs Baskerville (1), (3) that the circumstantial evidence corroborating the approver was not sufficient to connect the appellant with the murder of the deceased and (4) that on similar corroboration of the approver 's testimony the accused Jagdish Gorain had been acquitted.
There was no real distinction between the case of Jagdish Gorain and the appellant.
It is true that in Sarwan Singh 's case this Court had held, " The appreciation of an approver 's evidence has to satisfy a double test.
It must show that he is a reliable witness and that his evidence receives sufficient corroboration and that is a test which is common to all witnesses.
If this test is satisfied the second test which still remains to be applied is that the approver 's evidence must receive sufficient corroboration.
This test is special to the cases of weak or tainted evidence like that of the approver.
" These observations were made in the special circumstances of the case which this Court was deciding when dealing with the case of Sarwan Singh.
This Court went on to observe, " The argument that the character of the approver 's evidence has not been considered by the High Court cannot be characterised as merely academic or theoretical in the present case because, as we shall presently point out, the evidence of the approver is so thoroughly discrepant that it would be difficult to resist the conclusion that the approver in the present case is a wholly unreliable witness.
Indeed it may be legitimate to point out that the learned Judges of the High Court have themselves criticised the evidence of the approver in dealing with the prosecution case against Gurdial Singh and have ultimately found that the account given by the approver is unreliable and, though there was circumstantial evidence which raised an amount of suspicion against Gurdial Singh, that would not be enough to sustain his conviction.
It seems to us that if it was found that the approver 's account against one of the accused persons was wholly discrepant, this (1) (1916) 2 K.B.D. 658, 131 finding itself should inevitably have led the court to scrutinise his evidence in respect of the other accused persons with greater caution.
" It is clear therefore that in the special circumstances of the case of Sarwan Singh the approver had been found to be a wholly unreliable witness.
It is important to observe that this Court stated that the approver 's evidence must show that he is a reliable witness and that is the test which is common to all witnesses.
Nothing has been shown to us in this case, as was shown in Sarwan Singh 's case that apart from the approver 's testimony in the present case being regarded as tainted evidence his evidence as it stood was in any way unreliable.
Indeed, the Sessions Judge went to the length of telling the jury that although an approver 's evidence is strictly admissible and a conviction is not illegal merely because it is based on an approver 's evidence, it was a settled rule of practice not to convict a person on such evidence except under very rare and exceptional circumstances and usually substantial cor roboration was required.
The jury could not have been more clearly warned about the danger of acting on an approver 's evidence.
In other words, the jury were told not to convict the appellant on the approver 's evidence unless his evidence had been substantially corroborated.
Apart from the question of corroboration of the approver 's evidence nothing was suggested to us or to the High Court in what respect the approver 's evidence was unreliable after testing his evidence in the same way as one would test the evidence of any witness for the prosecution in a criminal case.
In our opinion, the decision in Sarwan Singh 's case can be distinguished in the present case.
Obviously, it was never suggested that the approver 's evidence in this case was entirely unreliable, if his evidence was tested in the same way as the evidence of any prosecution witness in a criminal trial.
We cannot accept the submission made on behalf of the appellant that the charge to the jury is vitiated because of the decision of this Court in Sarwan Singh 's case.
132 As to the second submission made by Mr. Umrigar it is to be remembered that in Baskerville 's case the Court of Criminal Appeal in England after discussing various authorities on the subject came to the following conclusion : " We hold that evidence in corroboration must be independent testimony which affects the accused by connecting or tending to connect him with the crime.
In other words, it must be evidence which implicates him, that is, which confirms in some material particular not only the evidence that the crime has been committed, but also that the prisoner committed it.
The test applicable to determine the nature and extent of the corroboration is thus the same whether the case falls within the rule of practice at common law or within that class of offenses for which corroboration is required by statute.
The language of the statute, implicates the accused, " compendiously incorporates the test applicable at common law in the rule of practice.
The nature of the corroboration will necessarily vary according to the particular circumstances of the offence charged.
It would be in high degree dangerous to attempt to formulate the kind of evidence which would be regarded as corroboration, except to say that corroborative evidence is evidence which shows or tends to show that the story of the accomplice that the accused committed the crime is true, not merely that the crime has been committed, but that it was committed by the accused.
" The corroboration need not be direct evidence that the accused committed the crime; it is sufficient if it is merely circumstantial evidence of his connection with the crime.
In the present case the jury had been clearly directed by the Sessions Judge that corroborative evidence must be evidence which implicates the accused, i.e., which confirms in some material particulars not only the evidence that the crime had been committed but also that the appellant had committed it.
The Sessions Judge told the jury that " Corroborative 133 evidence, you should bear in mind, is evidence which shows or tends to show that the story of the accomplice that the accused committed the crime is true.
The corroboration need not be direct evidence that the accused committed the crime.
It is sufficient if it is merely circumstantial evidence of his connection with the crime.
The corroboration in material particulars must be such as to connect or identify each of the accused with the offence.
" It seems to us that the Sessions Judge directed the jury in accordance with the principle laid down in Baskerville 's case and no serious objection can be taken to the manner in which the Sessions Judge directed the jury in this respect.
The moment there is corroborative evidence which connects or tends to connect an accused with the crime such corroborative evidence relates to the identity of the accused in connection with that crime.
It is the approver 's evidence which is the direct evidence of the crime.
There should be corroboration in material particulars not only concerning the crime but corroboration of the approver 's story by evidence which connects or tends to connect an accused with the crime.
It is this corroborative evidence which determines the mind of the Court or a jury that the approver 's evidence that the accused committed the crime is true.
As to the 3rd Submission made on behalf of the appellant the following circumstances were established by the evidence which were accepted by the jury: 1.
There was a motive for the appellant to commit the, crime, that is to say, his immoral proposal to Lila, wife of the deceased.
On the 25th of May, 1955, the appellant came to Lila 's house and had a talk with the deceased.
On the 26th of May, 1955, in the morning the appellant also came to the house and talked with the deceased.
Later on that very day a little after sunset the appellant came to the house and asked the deceased to go for a walk with him.
The deceased did so. 4.
Thereafter the appellant was seen going with Jagdish Gorain and the deceased by Brojeswari and 134 Lila towards the north of the village after 5 p.m. while they were bathing in Talbona tank.
According to the approver at the time that the, deceased was stabbed by the appellant he had sustained an injury on the dorsum of his left palm.
The medical evidence established that the appellant had an almost healed up ulcer I inch in length on the left side of the palm at its posterior surface one inch below the wrist joint and another healed up ulcer 1/3 inch in length on the left thumb at the posterior surface and that these injuries could be caused by a sharp cutting weapon like a knife.
As it had become night and the deceased had not returned, Lila 's mother Brojeswari and.
her uncle Radharaman Sadhu searched for him.
They went to the club house where the appellant and his two co accused Jagdish Gorain and Sudhir Gorain and the approver used to associate with each other.
When enquiries were made from the appellant by Brojeswari he first replied that the deceased had not gone with him and that he did not know anything about his whereabouts.
When he was remainded that it was he who had taken the deceased for a walk which he was denying, the appellant replied that the deceased went with him upto the canal towards north of the village, but as he felt a headache he came away and it was not possible for the appellant to give any news about the deceased 's whereabouts.
The above mentioned circumstances either individually or collectively may fall short of proving that the appellant committed the murder of the deceased.
Indeed, the High Court was of the opinion that these circumstances independent of the direct evidence of the approver would not be sufficient to induce any reasonable person to come to the conclusion that the appellant had committed the crime.
As already stated, however, the approver 's evidence is the direct evidence which establishes that the appellant had murdered the deceased.
The jury had to decide for themselves whether the above mentioned circumstances were sufficient corroborative evidence to satisfy 135 them that the approver 's evidence that the appellant murdered the deceased was true.
It is, however, urged by Mr. Umrigar that the circumstances mentioned were not circumstances corroborating the evidence of the approver in material particulars which would connect or tend to connect the appellant with the crime.
In our opinion, at least in one circumstance the corroboration is in a very material particular connecting or tending to connect the appellant with the crime.
The approver 's evidence that while the appellant was murdering the deceased he had received an injury on the dorsum of his left palm is corroborated by the medical evidence.
It was, however, pointed out that the medical evidence does not show that the injury was on the dorsum of the left palm.
In our opinion, there is no substance in this submission because the first injury is described as one on the left side of the palm at its posterior surface 1 inch below the wrist joint, that is to say, the dorsum of the left palm.
The second injury is clearly on the left thumb at its posterior surface which is also consistent with the evidence of the approver that the dorsum of the left palm was injured.
The jury were entitled to accept this evidence as sufficient corroboration in a material particular connecting the appellant or tending to connect him with the crime.
In addition, the circumstance that it was the appellant who had called for the deceased a little after sunset and had taken him away and thereafter was seen going along towards the north of the village with the deceased and that thereafter the deceased was not seen alive was one upon which the jury could rely in coming to the conclusion that it connected or tended to connect the appellant with the crime.
The appellant 's pretended ignorance of the whereabouts of the deceased that very night and his ultimate admission that he had taken the deceased towards the north of the village was also a circumstance upon which the jury could rely as inconsistent with his innocence.
In our. opinion, all the circumstances referred to above were sufficient corroboration of the approver 's evidence connecting or tending to connect the appellant with 136 the crime and accordingly the, approver 's evidence that the appellant did commit the crime was true.
As to the 4th submission that although there was similar corroboration of the approver 's evidence against Jagdish Gorain but he had been acquitted by the jury although no real distinction between his case and the case of the appellant arose is unsound as, in our opinion, the two cases are not comparable.
In the first place, there was no motive for Jagdish Gorain to commit the murder.
In the second place, the injury which Jagdish received was while he caught the knife in the hand of the appellant saying " what have you done?" The approver 's evidence therefore rather tended to show that he tried to prevent the appellant from further stabbing the deceased.
These circumstances may have induced the jury to make a distinction between the case of Jagdish Gorain and the appellant.
It was for the jury to say whether they regarded the circumstantial evidence as sufficient to connect or tending to connect Jagdish with the crime.
It would seem that on the approver 's evidence the jury may well have regarded the circumstances as insufficient corroboration to connect or tending to connect Jagdish Gorain with the crime.
In our opinion, it cannot be said with any good reason that there was any defect in the charge to the jury delivered by the Sessions Judge which would justify us in saying that the verdict of the jury was vitiated.
The appeal is accordingly dismissed.
Appeal dismissed.
|
The appellant was tried on a charge of murder by the Sessions judge with the aid of a jury.
The evidence against him consisted of the testimony of an approver and the proof of corroborative circumstances tending to connect him with the crime.
The jury found the appellant guilty and the Sessions judge accepting the verdict sentenced him to imprisonment for life.
An appeal to the High Court was dismissed as that Court found no misdirections in the charge to the jury.
The appellant contended that there was misdirection in the charge to the jury in that the jury was not told, as laid down in Sarwan Singh vs The State of Punjab, ; , that the approver 's evidence had to satisfy a double test i.e., he must be a reliable witness and his evidence must receive sufficient corroboration and in that the corroborating evidence was not sufficient to connect the appellant with the crime.
Held, that there were no misdirections in the charge.
The observations in Sarwan Singh 's case that it must be shown that the approver was a reliable witness were made in the special circumstances of that case where the approver had definitely been found to be so thoroughly discrepant as to be wholly unreliable.
In the present case there was nothing to show that the evidence of the approver was in any way unreliable.
Saywan Singh vs The State of Punjab, ; , dis tinguished.
The Sessions judge had correctly directed the jury that the corroboration of the evidence of the approver in material particulars must relate not only to the commission of the crime, but also to the evidence connecting or tending to connect the accused with the crime.
The circumstances proved in the case corroborated the approver 's evidence connecting the appellant with the crime.
Once there was evidence of such circumstances it was for the jury to decide whether they were sufficient corroboration of the approver 's evidence that the appellant murdered the deceased.
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750.txt
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Appeals Nos.
664 to 669 of 1967.
Appeals from the judgment and order dated March 22, 1962, July 23, 1962, July 24, 1962, July 12, 1963 and August 14, 1963 in Writ Petitions Nos.
1077 of 1959, 19 and 739 of 1960, 157 of 1961, 970 of 1962 and 594 of 1963.
Jagadish Swarup, Solicitor General, section K. Aiyar and R. N. Sachthey, for the appellants (in all the appeals).
section V. Gupte, A. K. Varma, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the respondent.
(in C. A. Nos. 664 and 668 of 1967).
O. P. Rana, for the intervener for the State of U.P. M. R. K. Pillai, for the intervener for the State of Kerala.
B. Sen, Santosh Chatterjee and G. section Chatterjee for Sukumar Bose, for the State of West Bengal.
section Govind Swaminathan, Advocate General, Tamil Nadu, A. V. Rangam and M. Subramaniam, for the State of Tamil Nadu.
Lal Narayan Sinha, Advocate General, Bihar, D. P. Singh nad V. J. Francis, for the intervener for the State of Bihar.
K. A. Chitaley, Advocate General, State of Madhya Pradesh, M.N. Shroff and I. N. Shroff, for the intervener for the State of Madhya Pradesh.
E. section Venkataramiah, Advocate General, Mysore and section P. Nayar, for the intervener for the State of Mysore.
J. C. Medhi, Advocate General, Assam and Naunit Lal, for the intervener for the State of Assam.
The Judgment of the Court was delivered by Hidayatullah, C.J.
These six appeals by certificate under article 132(1) of the Constitution are filed against the decision of the High Court of Mysore, declaring that Parliament had no power to legislate with respect to taxes on gift of lands and buildings.
The High Court passed a detailed judgment on two of the petitions by which the competence of Parliament was challenged and followed its own decision in the other four cases.
It is not necessary to give the facts of the six petitions in the High Court.
As illustrative of the facts involved we may mention on W.P. No. 1077 of 1959.
In that case a certain D. H. Nazareth, owner of a coffee plantation, 197 made a gift by registered deed, January 22, 1958, of a coffee plantation and other properties in favour of his four sons.
The market value of the property was Rs. 3,74,080 and the coffee plantation accounted for Rs. 3,24,700.
Gift tax of Rs. 35,612/ was demanded.
If the coffee _plantation was left out of consideration the tax was liable to be reduced by Rs. 3,4,036.
The authority to charge gift tax on the gift of the coffee plantation was challenged and the right of Parliament to impose a gift tax on lands and buildings questioned.
In some of the other cases agricultural or paddy lands or buildings were the subjects of gifts and they were similarly taxed and the tax questioned.
The High Court held that, entry 49 of the State List read with entry 18 of the same list reserved the power to tax lands and buildings to the Legislature of the States and Parliament could not, therefore, use the residuary power conferred by entry 97 of the Union list.
This decision is challenged before us.
The Gift Tax Act was passed in 1958 and subjected gifts made in the year ending March 31, 1958 to tax.
The Act contained the usual exempted limits and other exemptions.
We need not concern ourselves with them here.
We are only concerned with the validity of parliamentary legislation imposing gift tax at all.
To consider the objection to the Gift Tax Act which was sus tained by the High Court a few general principles may be borne in mind.
Under article 245 Parliament makes laws for the whole or any part of the territory of India and the Legislatures of the States for the whole or part of their respective States.
The subject matter of laws are set out in three lists in the Seventh Schedule.
List I (usually referred to as the Union List) enumerates topics of legislation in respect to which Parliament has exclusive power to make laws and List II (usually referred to as the State List) enumerates topics of legislation in respect to which the State Legislatures have exclusive power to make laws.
List III (usually referred to as the Concurrent List) contains topics in respect to which both Parliament and Legislature of a State have power to make laws.
Inconsistency between laws made by Parliament and those made by the Legislatures of the State, both acting under the Concurrent List, is resolved by making Parliamentary law to prevail over the law made by the State Legislature.
So long as the Parliamentary law continues, the State law remains inoperative but becomes operative once the Parliamentary law, throwing it into shadow, is removed.
Then there is the declaration in article 248 of the residuary powers of legislation.
Parliament has exclusive power to make any law in respect to any matter not enumerated in the Concurrent List or State List and this power includes the power of mak ing any law imposing a tax not mentioned in either of those lists.
198 For this purpose, and to avoid any doubts, an entry has also been included in the Union List to the following effect: "97.
Any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists".
It will, therefore, be seen that the sovereignty of Parliament and the Legislatures is a sovereignty of enumerated entries, but within the ambit of an entry, the exercise of power is as plenary as any legislature can possess, subject, of course, to the limitations arising from the Fundamental Rights.
The entries themselves do not follow any logical classification or dichotomy.
As was said in State of Rajasthan vs section Chawla and another(1) the entries in the list must be regarded as enumeratio simplex of broad categories.
Since they are likely to overlap occasionally, it is usual to examine the pith and substance of legislation with a view to determining to which entry they can be substantially related, a slight connection with another entry in another list notwithstanding.
Therefore, to find out whether a piece of legislation falls within any entry its true nature and character must be in respect to that particular entry.
The entries must of course receive a large and liberal interpretation because the few words of the entry are intended to confer vast and plenary _powers.
If, however, no entry in any of the three lists covers it, then it must be regarded as a matter not enumerated in any of the three lists.
Then it belongs exclusively to Parliament under entry 97 of the Union List as a topic of legislation.
The Gift Tax Act was enacted by Parliament and it is admit ted that no entry in the Union List or the Concurrent List mentions such a tax.
Therefore, Parliament purported to use its powers derived from entry 97 of the Union List read with article 248 of the Constitution.
This power admittedly could not be invoked if the subject of taxes on gifts could be said to be comprehended in any entry in the State List.
The High Court has accepted the contention of the tax payers that it is so comprehended in entries 18 and 49 of the State List.
Those entries read 18.
Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonization." "49.
Taxes on lands and buildings.
" The argument is that by entry 18, 'land ' of all description is made subject to legislation in the States and by entry 49 taxes of (1) [1959] Supp. 1 S.C.R. 904.
199 whatever description on lands in that large sense and buildings generally fall also in the jurisdiction of the State.
Reference is made to entries 45, 46, 47 and 48 of the State List in which certain taxes are to be imposed on land and agricultural land or income from agriculture exclusively by the States in contrast with entries 82, 86, 87 and 88 where the taxes are imposed on properties other than agricultural land or income from agriculture.
It is submitted, therefore, that the general scheme of division of taxing and other entries by which land particularly agricultural land and income therefrom is reserved for the States shows that taxes on lands and buildings read liberally must also cover taxes in respect of gifts of land particularly agricultural land and buildings.
If the entry so read can be reasonably said to include the tax, then there can be no question of recourse to the residuary powers of Parliament.
The matter is not res integra and however attractive the argument, it cannot be accepted.
Many High Courts in India have considered this matter before the Supreme Court decided it.
The Mysore view was not followed in section Dhandapani vs Addl.
Gift Tax Officer, Cuddalore(1) (Madras High Court); Shyam Sunder vs Gift Tax Officer(2) (disapproved on another point in the Supreme Court).
A contrary view was earlier also expressed in Jupadi Sesharatnam vs Gift Tax Officer, Palacole(3) (Andhra Pradesh High Court) and Joseph vs Gift Tax Officer (4) (Kerala High Court).
In fact the judgment under appeal stands alone.
The subject of entry 49 of the State List in relation to imposition of Wealth Tax came up for consideration in Sudhir Chandra Nawn vs Wealth Tax Officer, Calcutta & ors.(5) and the view of the High Court on the construction of this entry was affirmed.
Although the judgment ' under appeal was not referred to expressly the result is that it must be taken to be impliedly overruled.
In view of the decision of this Court it is not necessary to deal with the matter except briefly.
The Constitution divides the topics of legislation into three broad categories : (a) entries enabling laws to be made, (b) entries enabling taxes to be imposed, and (c) entries enabling fees and stamp duties to be collected.
It is not intended that every entry gives a right to levy a tax.
The taxes are separately mentioned and in fact contain the whole of the power of taxation.
Unless a tax is specifically mentioned it cannot be imposed except by Parliament in the exercise of its residuary powers already mentioned.
Therefore, entry 18 of the State List does not confer additional power (1) (3) (5) (2) A.I.R. 1967 All. 19.
(4) 200 of taxation.
At the most fees can be levied in respect of the items mentioned in that entry, vide entry 66 of the same list.
Nor ,is it possible to read a clear cut division of agricultural land in favour of the States although the intention is to put land in most of its aspects in the State List But however wide that entry, it cannot still authorise a tax not expressly mentioned.
Therefore, either the pith and substance of the Gift Tax Act falls within entry 49 of State List or it does not.
If it does, then Parliament will have no power to levy the tax even under the residuary powers.
If it does not, then Parliament must undoubtedly possess that power under article 248 and entry 97 of the Union List.
The pith and 'substance of Gift Tax Act is to place the tax on the gift of property which may include land and buildings.
It is not a tax imposed directly upon lands and buildings but is a tax upon the value of the total gifts made, in a year which is above the exempted limit.
There is no tax upon lands or buildings as units of taxation.
Indeed the lands and buildings are valued to find out the total amount of the gift and what is taxed is the gift.
The value of the lands and buildings is only the measure of the value of the gift.
A gift tax is thus not a tax on lands and buildings as such (which is a tax resting upon general ownership of lands and buildings) but is a levy upon a particular use, which is transmission of title by gift.
The two are not the same thing and the incidence of the tax is not the same.
Since entry 49 of the State List contemplates a tax directly levied by reason of the general ownership of lands and buildings, it cannot include the gift tax as levied by Parliament.
There being no other entry which covers a gift tax, the residuary powers of Parliament could be exercised to enact a law.
The appeals must, therefore, be allowed but there shall be no order about costs throughout.
The appeal 666/67 however abates as the sole respondent died.
V.P.S. Appeals allowed.
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Gift tax was levied under the Gift Tax Act, 1958, on gifts, of coffee plantations, paddy and other agricultural lands and buildings, made by the respondents.
The Gift Tax Act was enacted by Parliament but there is no entry in the Union or Concurrent Lists mentioning such a tax.
The High Court held that Parliament was not competent to enact a law impos ing a gift tax on lands and buildings, because, entries 18 and 49 of the State List reserved the power to State Legislatures.
On appeal to this Court.
HELD : The Constitution divides the topics of legislation into three broad categories : (a) entRies enabling laws to be made, (b) entries enabling taxes to be imposed, and (c) entries enabling fees and stamp duties to be collected.
The taxes are separately mentioned and contain the whole of the power of taxation, except entry 97 of the Union List under which, Parliament ha, , exclusive power to make a law in respect of any matter not enumerated in the Concurrent or State Lists and the power includes the power of making a law imposing a tax not mentioned in either of the Lists.
[199 G H] Entry 18 of the State List dealing with 'land ', though very wide, does not therefore confer any power of taxation and cannot authorise a tax not expressly mentioned.[199 H] Entry 49 of the State List contemplates a tax directly levied bY reason of the general ownership of lands and buildings.
But the pith and substance of the Gift Tax Act,is to place the tax on the gift of property which may include land, and buildings.
It is not a tax imposed directly upon lands and buildings but is a tax upon the value of the total gifts made in a year which is above the exempted limit.
The lands and buildings are valued only as a measure of the value of the gift and what is taxed is the gift.
A gift tax is thus not a tax on lands and buildings as such but is a levy upon a particular use, namely, the transmission of title by gift.
[200 A E] There being no other entry in the State List which might cover a gift tax, the residuary powers of Parliament under article 248, and entry 97 of the Union List, could be exercised by Parliament to enact the law.
[200 E F] Sudhir Chandra Nawn vs Wealth Tax Officer, Calcutta & Ors. followed.
section Dhandapani vs Addl.
Gift Tax Officer, Cuddalore, , Shyam Sunder vs Gift Tax Officer, A.I.R. 1967 All. 19, Jupadi Sesharatnam vs Gift Tax officer, Palacole, and Joseph vs Gift Tax, Officer, , approved.
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vil Appeal No. 528 (NT) of 1989.
From the Judgment and Order dated 7.8.1987 of the Set tlement Commission (IT & WT), New Delhi in Settlement Appln.
No. 22/1/3/ 77 IT.
Harish N. Salve and Miss Bina Gupta for the Appellant.
Dr. V. Gauri Shankar and Miss A. Subhashini for the Respond ents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This is an appeal against the judgment and order of the Settle 338 ment Commission dated 7th August, 1987.
The fact that an appeal under Article 136 of the Constitution lies against the Order of the Settlement Commission is now beyond pale of any controversy in view of the decision of this Court in Commissioner of Income Tax (Central), Calcutta vs B.N. Bhattachargee and another, [1979] Vol.
118 Income Tax Re ports 461.
The appellant had applied to the Settlement Commission for settlement of his assessment for the assess ment years 1948 49 to 1975 76 under the Income tax Act, 196 1 (hereinafter referred to as 'the Act ').
That application had to be proceeded in accordance with section 245C of the Act which is as follows: "245C. (1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner and containing such particulars as may be prescribed to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided.
" Sub sections (2) and (3) of section 245C of the Act are not relevant for our present purpose.
The application made by the appellant was a composite one for settlement of his assessments for the assessment years 1948 49 to 197576.
The purpose for the introduction of the Settlement Commission has been explained by this Court in the aforesaid decision.
This Court observed that these are contained in Chapter XIX A of the Income tax Act, 1961.
The said Chapter was enacted by the Taxation Laws (Amend ment) Act, 1975 whose beneficiaries were ordinarily those whose tax liability was astronomical and criminal culpabili ty perilous.
As has been observed that this Chapter was introduced with the debatable policy, fraught with dubious potentialities in the context of Third World conditions of political peculium and bureaucratic abetment, that composi tion and collection of public revenue from tycoons is better than prosecution of their tax related crime and litigation for total revenue recovery.
The Wanchoo Committee appointed by the Government of India had recommended this step.
It appears that on 12th August, 1977 the Commissioner of Income tax objected to the proposal of the appellant under section 245D(1) of the Act.
The Commissioner objected to the settlement for the years 1948 49 to 1959 60, but agreed to the settlement for later years.
The Commissioner, it ap pears, accordingly made an order on 24th August, 1977 re jecting the application for settlement for the years 339 1948 49 to 1959 60.
The appellant on 20th September, 1977 applied to the Commission to recall its earlier order dated 24th August, 1977 since the same had been made without furnishing any opportunity of hearing to the appellant.
Section 245D(1) provides as follows: "245D. PROCEDURE ON RECEIPT OF AN APPLI CATION UNDER SECTION 245C (1) On receipt of an application under Section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Set tlement Commission may, by order, allow the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this sub section unless an opportunity has been given to the applicant of being heard.
Provided further that an application shall not be proceeded under this sub section if the Commissioner objects to the application on being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impassable under the Indian Income tax Act, 1922 (XI of 1922), or under this Act, has been established or is likely to be established by any Income tax authority, in relation to the case.
" About hearing the applicant prior to the rejection of the application this Court in the aforesaid decision at page 472 of the report held that an applicant before the Settle ment Commission was entitled to a hearing before his appli cation for composition was rejected.
This Court observed that section 245D(1) does not negate natural justice and in the absence of an express exclusion of the rule of audi alteram partem, it is fair, and indeed fundamental, that no man be prejudiced by action without opportunity to show to the contrary.
Natural justice must be followed.
This also is the natural corollary of the decisions of this Court in M.S. Gill vs Chief Election Commissioner, 405 and Maneka Gandhi vs Union of India, [1978] 1 SCC 248.
The Finance Act, 1979, however, was amended with effect from ist April, 1979 and sub section (1A) was inserted to section 245D which empowered the Settlement Commission to overrule the objection of the Commissioner.
Sub section (1A) of section 245D reads as follows: "Notwithstanding anything contained in sub section (1), an application shall not be proceeded with under that subsection if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impassable under this Act, has been estab lished or is likely to be established by any Income tax Authority in relation to the case: Provided that where the Settlement Commission is not satisfied with the correct ness of the objection raised by the Commis sioner the Settlement Commission may, after giving the Commissioner an opportunity of being heard, by order, allow the application to be proceeded with under sub section (1) and send a copy of its order to the Commissioner." Though the Commission is empowered not to accept the objec tion of the Commissioner yet the Commissioner 's objection is of "lethal potency" as described by Krishna Iyer, J. in the aforesaid decision.
From the facts of this case, however, it has to be noted that the appellant applied to the Settlement Commission to permit him to contest the objections of the Commissioner on the proviso now inserted as mentioned above.
It has to be borne in mind that this was done after the proceedings had proceeded to a certain extent.
As mentioned hereinbefore, the appellant had applied to the Settlement Commission as aforesaid on 22nd January, 1977.
On 12th August, 1977 the Commissioner had tendered the objections as mentioned hereinbefore.
On 24th August, 1977, the Settlement Commissioner made an order rejecting the application for settlement for the assessment years 194849 to 1959 60.
This had been done without hearing the appellant.
On , 20th September, 1977 the appellant applied to the Commission to recall its order dated 24th August, 1977 since it had been passed without giving an opportunity of hearing to the appellant.
That application 341 was pending.
In the meantime, as mentioned hereinbefore, on Ist April, 1979, the Finance Act, 1979 inserted sub section (1A) to section 245(D) which empowered the Settlement Com mission to overrule the objections of the Commissioner.
On 29th May, 1979 the appellant applied to the settlement Commission to permit him to contest the objections of the Commissioner under the said proviso now inserted.
The matter was taken up after a long gap in June 1987 and it was heard on 18th June, 1987 and Ist July, 1987.
The appellant con tended that the order of 24th August, 1977 should be re called and the objections of the Commissioner be dealt with in accordance with the amended provisions of section 245D(1A) and it also contended that if the Commissioner 's objections were not to be interfered with then the entire application should be dismissed.
On 7th August, 1987, which is the date of impugned order in this appeal, the Settlement Commission accepted the first part of the contentions and held that the applicant was entitled to a reheating since its order of 24th August, 1977 had been made in violation of the principles of natural justice and also express provision of section 245D(1) proviso, but rejected the second part of the submission that the application for settlement made by the petitioner would have to be disposed of in accordance with law which prevailed on 24th August, 1977.
The Commis sion, however, held that since the Commissioner had objected only to some of the years under settlement, the entire application would have to be rejected.
It is this order which is under challenge before us.
We are definitely of the opinion that on the relevant date when the order was passed, that is to say, 24th August, 1977 the order was a nullity because it was in violation of principles of natural justice.
See in this connection, the principles enunciated by this Court in State of Orissa vs Dr. (Miss) Binapani Dei and Ors., ; as also the observations in Administrative Law by H.W.R. Wade, 5th Edition, pages 3 10 311 that the act in violation of the principles of natural justice or a quasi judicial act in violation of the principles of natural justice is void or of no value.
In Ridge vs Baldwin, ; and Anisminic Ltd. vs Foreign Compensation Commission, ; the House of Lords in English has made it clear that breach of natural justice nullifies the order made in breach.
If that is so then the order made in violation of the princi ples of natural justice was of no value.
If that is so then the application made for the settlement under section 245C was still pending before the Commission when the amendment made by Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objec 342 tions of the Commissioner.
Dr. V. Gauri Shanker, appearing for the Revenue, did not seriously contest that position.
He accepted the position that the law as it is, after the amendment authorises the Commission to consider and overrule the Commissioner 's objection.
He also very fairly, in our opinion, and rightly accepted the position that the appel lant was entitled to be heard on the Commissioner 's objec tions.
It appears to us, therefore, if that is the position then, in our opinion, the appellant was entitled to be heard on the objections of the Commissioner.
As mentioned herein before, the only short ground which was sought to be con vassed before us was whether after the amended Act the order had been rightly set aside and whether the appellant had a fight to be heard on the objections of the Commissioner.
Mr. Harish Salve, counsel for the appellant contends that it had a right to be heard.
On the other hand, Dr. V. Gauri Shan kar, learned counsel for the respondents submitted that the order proceeded on the assumption that the objections had been heard.
He did not, in fairness to him it must be con ceded, contest that in a matter of this nature the appellant had a fight to be heard.
Reading the order, it appears to us, that though the appellant had made submissions on the Commissioner 's objections.
but there was no clear opportuni ty given to the appellant to make submissions on the Commis sioner 's objections in the sense to demonstrate that the Commissioner was not justified in making the objections and secondly, the Commission should not accept or accede to the objections in the facts and circumstances of he present case.
We are of the opinion that in view of the facts and circumstances of the case and in the context in which these objections had been made, it is necessary as a concomitant of the fulfilment of natural justice that the appellant should be heard on the objections made by the Commissioner.
It is true that for the relevant orders for the years for which the Commissioner had objected the concealment had been upheld in the appeal before the appropriate authorities.
But it may be that in spite of this concealment it may be possi ble for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread over period settlement of the entire period should be allowed and not bifurcated in the manner sought to be suggested for the Commissioner 's objections.
This objection the appellant should have opportunity to make.
In exercise of our power of judicial review of the decision of the Settlement Commission we are concerned with the legality of procedure followed and not with validity of the order.
See the observations of Lord Hailsham in Chief Constable of the North Wales Police vs Evans; , Judicial Review is concerned not with the decision but with the decision making process.
343 We therefore allow the appeal.
We set aside the order of 7th August, 1987 and remand the matter back to the Settle ment Commission to hear and dispose of the settlement peti tion made by the appellant dated 22nd January, 1977 taking into consideration objections made by the Commissioner and the objections made by the appellant to the Commissioner 's objections and after giving the appellant an opportunity of showing reasons and causes why the Commissioner 's objections should not be accepted by the Commission.
After considering the said objections of the Commissioner as well as the objections to the Commissioner 's objections made by the appellant, the Settlement Commission would be free to pass such orders as it considers fit and proper in accordance with the law.
Since the matter is pending for a long time, we do hope that the Settlement Commission will dispose of the matter as expeditiously as possible.
It is not necessary for us in this appeal to express any opinion on the correct ness or otherwise of the Commissioner 's objections or on the validity of the appellant 's objections to the Commissioner 's objections.
The appeal is disposed of accordingly.
There will be no order as to costs.
P.S.S. Appeal disposed of.
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Sub section (1) of section 245C of the Income Tax Act, 1961 entitles an assessee, at any stage of the case, to make an application to the Settlement Commission to have his case settled.
Sub section (1) of section 245D requires the Set tlement Commission, as and when such an application is made to call for a report from the Commissioner of Income Tax.
The first proviso thereto interdicts rejection of the appli cation under that sub section unless an opportunity has been given to the applicant of being heard.
The second proviso thereto provides that no application shall be proceeded with under that sub section if the Commissioner objects to the same on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax has been established or is likely to be established.
Sub section (IA) inserted in section 245D by the Finance Act, 1979 empowered the Settlement Commission to overrule the objections of the Commissioner.
The appellant made a composite application under section 245C of the Act for settlement of his assessments for the assessment years 1948 49 to 1975 76.
The Commissioner ob jected to the proposals under sec 336 tion 245D(1) for settlement for the years 1948 49 to 1959 60, but agreed to the settlement for the later years.
The Commission accordingly made an order an 24th August, 1977 rejecting the application for settlement for the years 1948 49 to 1959 60.
The appellant thereupon applied to the Commission to recall its order since the same had been made without furnishing him any opportunity of hearing.
That application was pending.
When sub section (IA) was inserted to section 245D, the appellant applied to the Commission to permit him to contest the objections of the Commissioner contending that these should be dealt with in accordance with the amended provisions of section 245D(IA).
On 7th August, 1987 the Settlement Commission accepted the first part of the contentions holding that the applicant was entitled to a re hearing since its order of 24th August, 1977 had been made in violation of the principles of natural justice and also express provision of section 245D(1) provi so, but rejected the second part of the submission on the view that the application for settlement would have to be disposed of in accordance with law which prevailed on 24th August, 1977.
It further held that since the Commissioner had objected only to some of the years under settlement the entire application would have to be rejected.
Allowing the appeal by Special Leave, HELD: 1.
It is necessary as a concomitant of the fulfil ment of natural justice that an applicant before the Settle ment Commission should be heard before his application under Section 245C of the Act is rejected.
The order made by the Commission on 24th August, 1977 in the instant case in violation of the principles of natural justice was, there fore, of no value.
If that is so, then the application made for settlement was still pending before the Commission when the amendment made by the Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objections of the Commissioner.
[342E; 341E, G H] Income Tax (Central), Calcutta vs B.N. Bhattachargee & Anr., [1979] Vol. ; M.S. Gill.
vs Chief Election Commissioner, ; ; Maneka Gandhi vs Union of India, [1978] 1 SCC 248; State of Orissa vs Dr. (Miss) Binapani Dei & Ors., ; ; Ridge vs Baldwin, ; ; Anisminic Ltd. vs Foreign Compensation Commission, ; and Administrative Law, by H.W.R. Wade,5th Edn.
310 311 referred to.
2.1 The appellant had a right to be heard on the objections of the 337 Commissioner.
But no clear opportunity was given to him to make submissions in the sense to demonstrate that the Com missioner was not justified in making the objections and that the Commission should not accept or accede to the objections.
He should, therefore, be heard on the said objections.
[342D E].
2.2 Though for the relevant orders for the years for which the Commissioner had objected the concealment had been upheld in the appeal before the appropriate authorities, but in spite of this it may be possible for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread over period settlement of the entire period should be allowed and not bifurcated in the manner sought to be suggested for the Commissioner 's objections.
This objection the appellant should have opportunity to make.
[342F G] 3.
In exercise of its power of judicial review of the decision of the Settlement Commission under Article 136 of the Constitution the Court is concerned with the legality of procedure followed and not with the validity of the order.
[342G] Chief Constable of the North Wales Police vs Evans, ; referred to.
The order dated 7th August, 1987 is set aside and the matter is remanded hack to the Settlement Commission to hear and dispose of the settlement petition in accordance with law.
[343A]
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Civil Appeal No. 2905 of 1981.
From the Judgment and Order dated the 19th June, 1981 of the Bombay High Court in Appeal No. 44 of 1981 in Suit No 540 of 1970.
F.S. Nariman, V. Tulzapurkar, R. Nariman, Srikant Singh and Rajan Karanjawala for the Appellants.
L.N. Sinha, Attorney General and P. P. Singh for the Respondent.
The Judgment of the Court was delivered by AMARENDRA NATH SEN, J.
The maintainability of an appeal filed by the defendant in the suit against a money decree payable in instalment after the defendant had filed an appeal only against the part concerning the direction with regard to the instalments and had withdrawn the same, is the question for consideration in this appeal by certificate granted by the High Court under Article 133 (1) of the Constitution.
The facts material for the purpose of the decision involved in this appeal are brief and may be stated.
The State Trading Corporation, the respondent in this appeal, as plaintiff, filed a suit against the appellant who was the defendant in the suit on the Original Side of the Bombay High Court for the enforcement of the plaintiff 's claim for a large amount which inclusive of interest worked out to over Rs.40,00,000.00.
For the purpose of deciding this appeal, it does not become necessary to refer to the nature of the claim and the averments made by the plaintiff in the plaint for claiming a decree for the said amount against the defendant appellant.
The defendant appellant had contested the claim.
The defendant appellant in the written statement had denied the claim of the plaintiff respondent, pleaded legal as well as equitable set off and had made a counter claim.
In due course the suit came up for hearing before Bharucha, J.
It appears that on the conclusion of the hearing, the defendant appellant prayed that the defendant appellant might be allowed to pay the decretal amount in the event of a decree being passed against the defendant appellant, in instalment in the 31 manner prayed for in an affidavit containing such prayer, filed on behalf of the defendant.
The learned single Judge for reasons recorded in his judgment passed a decree in favour of the plaintiff respondent for a sum of Rs. 40,00,000.00 with costs quantified at Rs. 42,750.00, two counsel being certified.
The learned Judge dismissed the counter claim of the defendant appellant without any order as to costs.
The learned Judge in the concluding portion of the judgment observed as follows: "Mr. Thakkar relied upon affidavits filed on behalf of the 1st and 2nd defendants and sought for the payment of the decretal amount a moratorium of 5 years, and after the expiration of these 5 years, instalments of Rs. 4,00,000 per annum.
He then left it to the Court to fix such instalments as it deemed proper.
Mr. Doctor opposed the grant of any instalment.
Neither the facts of the suit nor the averments, such as they are, made in the affidavits would justify the giving of an extended period for the payment of the decretal amount.
In the circumstances I order that the decretal amount be paid by monthly instalments of Rs. 3,50,000 each, the first of such instalment to be paid up on or before 7th March, 1981 and subsequent instalment on or before the 7th day of each succeeding month.
The plaintiffs shall be at liberty to execute the decree for the amount then due in the event of the plaintiff committing any one default in payment of the said instalments.
" Delivery of the judgment commenced on the 12th December, 1980 and was concluded on the 16th December, 1980.
On the day of the conclusion of the judgment i.e. 16th December, 1980, three precipes were addressed by the Advocates for the defendant appellant to the Prothonotary and Senior Master of the Bombay High Court, (1) for certified copy of the decree when drawn up, (2) certified copy of the judgment and (3) for certified copy of the minutes of the order.
On the 16th of January, 1981, the Advocates for the Defendant Appellant addressed a letter to the Prothonotary and Senior Master, High Court Bombay to the following effect: "Be pleased to take on file the accompanying Memo of appeal along with compilation in duplicate.
We also 32 send herewith Vakalatnama duly signed by our clients the appellants abovenamed.
Kindly take the same on file.
We have to put on record that the appeal is under Order 20, rule 11 of the Civil Procedure Code and Court fee of Rs. 5 is payable.
We have to further state that the appeal is in time as certified copy of the order and judgment as well as the decree was applied for on 16th December, 1980 but the same has not been received by us.
Appeal is therefore in time.
Kindly see that the said appeal is circulated before the Chief Justice and Hon 'ble Mr. Justice Rege and that the same appeal is called on Wednesday the 21st day of January, 1981".
The memorandum of appeal which was numbered as appeal No. 36 of 1981 and was filed on 20.1.81 by the defendant appellant states: "Being aggrieved by the judgment and order dated 16th December by the Hon 'ble Mr. Justice Bharucha directing payment of the Decretal amount by monthly instalments of Rs. 3,50,000 each, the appellants beg to appeal therefrom on the following amongst other grounds".
In this memorandum of appeal directed against the order of instalments, the defendant appellant had taken 21 grounds and each of the ground related to the order with regard to the payment of decretal amount by monthly instalment of Rs. 3,50,000.
This appeal No. 36 of 1981 came up for admission before a division Bench of the High Court consisting of the learned Chief Justice and Rege, J. on 21.1.81 and when the matter was called on for admission, the counsel for the appellant asked for leave to withdraw the appeal and the appeal was allowed to be withdrawn.
The minutes of the Court record "Appeal allowed to be withdrawn".
On 29.1.82 i.e. just after a week of the withdrawal of the appeal No. 36/1981, the defendant appellant filed an appeal against the judgment delivered on 16th December, 1980 by Bharucha, J. and this appeal was numbered as appeal No. 44 of 1981.
The memorandum of appeal in this appeal states: "Being aggrieved by the judgment dated 33 16.12.1980, passed by the Hon 'ble Mr. Justice Bharucha, the appellant begs to appeal therefrom on the following amongst other grounds.
" In this memorandum of appeal, the appellant has taken as many as 73 grounds out of which grounds nos.
1 to 53 relate to Judgment and decree on the merits and grounds 54 to 73 relate to the provision as to instalments.
This appeal i.e. appeal No. 44 of 1981 came up for admission on 3.2.1981 before the same Bench consisting of the learned Chief Justice and Rege, J., when the plaintiff respondents appeared through their counsel and opposed the admission on the ground that the appeal was not maintainable.
The appeal was, however, admitted and the minutes of the Court after noting the appearances record Admitted.
After filing the appeal, the defendant appellant, made an application for stay of the execution of the decree by way of notice of motion which was rejected by the division Bench.
Against the said order of refusal to stay execution, a special leave petition was filed in this Court.
For the propose of the present appeal, it does not become necessary to refer to this special leave petition and the proceedings arising therefrom.
The appeal came up for hearing before a Division Bench on the 24th of March, 1981 and the hearing continued till 27th March, 1981 and on that date hearing of the appeal was adjourned to 8th April, 1981 as per following order: "Having heard Mr. Nariman on the merits of the appeal for almost four days though we had not heard the respondents, we, prima facie, were of the opinion that there was force and substance in several of the contentions raised and the arguments advanced on behalf of the appellants and as the second instalment under the said decree was payable by April 8, 1981, we suspended the operation of the decree appealed against pending the hearing and final disposal of the said appeal.
" Hearing of the appeal commenced again on the adjourned date i.e. 8th April, 1981 in terms of the earlier order and continued for some days.
It appears that after the appeal had been heard on merits for some days, it was stated on behalf of the plaintiff respondent before the Division Bench that the plaintiff respondent would be raising a preliminary objection as to the maintainability of the appeal.
It was stated on behalf of the plaintiff respondent that since the defendant appellant had earlier filed an appeal, being 34 appeal No. 36 of 1981 against the provision regarding instalments which had been withdrawn on 21.1.1981 by the defendant appellant, plaintiff respondent would be contending that the present appeal No. 44 of 1981 was not maintainable.
It appears that since the objection was taken at a late stage after the learned counsel for the defendant appellant had addressed the Court on merits for a number of days: the Court permitted the counsel for the defendant appellant to complete the arguments and the Court thereafter proceeded to hear the respondent on the question of maintainability.
On 19.6.1981, the Division Bench dismissed the appeal up holding the preliminary objection to the maintainability of the appeal on the ground that the defendant appellant had, by filing appeal No. 36 of 1981 against the provision relating to instalments which the defendant appellant had withdrawn, abandoned its right to challenge the decree on merits.
The Division Bench, however, while dismissing the appeal substituted for the decree of the Trial Court a decree for the sum of Rs. 40,18,737.38 with interest on the principal amount of Rs. 18,18,451.39 @ 6 percent per annum from the date of the judgment till the payment or realisation and maintained the order for costs as passed by the Trial Court.
Aggrieved by the judgment and decree of the dismissal of the appeal filed by the defendant appellant in the High Court on the ground that the appeal was not maintainable, this appeal has been filed by the defendant appellant with certificate granted by the High Court.
Mr. Nariman, learned counsel appearing on behalf of the defendant appellant, has submitted that the High Court has erred in holding that the instant appeal No. 44 of 1981 is not maintainable, as the defendant appellant by filing the earlier appeal No. 36 of 1981 against the provision relating to instalments had abandoned its right to challenge the decree on merits.
The principal contention of Mr. Nariman is that the filing of the earlier appeal No. 36 of 1981 or the withdrawal of the same by the defendant appellant does not affect the right of the defendant appellant to prefer the present appeal against the decree on merits and does not preclude the defendant appellant from filing the present appeal and proceeding with the hearing thereof Mr. Nariman has argued that the earlier appeal No. 36 of 1981 was filed against the order of the High Court passed under Order 20, rule 11 of the Code of Civil Procedure with regard to the instalments only and the said appeal was not an appeal against 35 the decree.
In support of his submission Mr. Nariman has referred to the precipe filed on behalf of the defendant appellant, the letter addressed by the Advocates for the defendant appellant on the 16th January, 1981 to the Prothonotary and Senior Master, High Court and also to the memorandum of appeal filed in appeal No. 36 of 1981 and the stamps paid on the said memorandum of appeal.
Mr. Nariman has submitted that the earlier appeal No. 36 of 1981 which was an appeal against an order was incompetent as no appeal lay from the said order.
It is the submission of Mr. Nariman that the right to prefer an appeal is a creature of Statute and unless the right to prefer an appeal is conferred by law a litigant cannot prefer any appeal.
Mr. Nariman submits that an order regarding instalment is not appealable under the Code and such an order cannot also be considered to be a 'judgment ' within the meaning of cl. 15 of the Letters Patent.
Mr. Nariman, therefore, contends that the earlier appeal No. 36 of 1981 was an incompetent appeal and was, therefore, no appeal in the eye of law and for all legal purposes was non est.
It is the contention of Mr. Nariman that as the earlier appeal No. 36 of 1981 was incompetent and non est in the eye of law, the filing of the appeal and its withdrawal do not have any legal consequence and cannot, in any way, prejudice the right of the defendant appellant to prefer a proper appeal against the decree.
Mr. Nariman has next contended that notwithstanding the amendment introduced in order 20, rule 11 of the Code providing that the order of instalment of payment of the decretal amount has to be incorporated in the decree, the said appeal No. 36 of the 1981 still must be held to be incompetent, Mr. Nariman argues that the Rules of Original Side of the High Court make provisions with regard to drawing up of the decree and there is a time lag between judgment and the drawing up of the decree.
Mr. Nariman points out that as the rules of the Original Side of the High Court permit filing of an appeal without a certified copy of the decree or order, appeal No. 36 of 1981 had been filed soon after the judgment had been pronounced and long before the decree had been drawn up, and the said order had been filed without the certified copy of the order or the decree in terms of the provisions of rules of the Original Side of the High Court.
It is the argument of Mr. Nariman that as the appeal No. 36 of 1981 had been filed long before the decree incorporating the order had been drawn up, appeal No. 36 of 1981 which had been filed only against the order regarding instalments must be 36 considered to be an appeal against the order and not against the decree.
Mr. Nariman has further argued that even if it can be said that Appeal No. 36 of 1981 has to be considered to be an appeal against the decree in view of the amended provisions of Order 20, rule 11 of the Code, it cannot be disputed that the said appeal had been filed without a certified copy of the decree and the said appeal had been withdrawn before any certified copy of the decree had been filed in the said appeal, and the said appeal must therefore be held to be no appeal in the eye of law.
Mr. Nariman submits that the later appeal No. 44 of 1981 against the decree had been filed in terms of the provisions contained in the Original Side rules of the Bombay High Court had the certified copy of the judgment and decree had been filed in Appeal No. 44 of 1981.
It is Mr. Nariman 's argument that appeal No. 44 of 1981 becomes a proper and competent appeal, as the earlier appeal No. 36 of 1981 could not be considered to be a valid appeal in the eye of law at the time of the withdrawal of the same in the absence of the certified copy being filed.
Mr. Nariman argues that though by virtue of the provisions of the Bombay High Court Original Side Rules an appeal can initially be filed without the certified copy, the certified copy the filing of which is a mandatory requirement of law has to be filed within the period of limitation before the hearing of the appeal to render the appeal valid and competent.
Mr. Nariman in this connection has referred to the decisions of this Court in Jagat Dhish Bhargava vs Jawaharlal Bhargava & Ors.(1) and Shakuntal Devi Jain vs Kuntal Kumari & Ors.(2) Mr. Nariman has further argued that there is no provision in the Code or any other law which prevents an appellant from preferring more than one appeal.
Relying on the decision of this Court in Jagat Dhish Bhargava (supra) Mr. Nariman has submitted that where the decree consists of distinct and severable parts enforceable against the same or several defendants, separate appeals against such distinct and severable directions or orders or provisions in a decree may be filed.
It is Mr. Nariman 's argument that in the instant case, even if the order for instalment be considered to be a part of the decree, the decree shall consist of two distinct and severable parts, (1) on the merits of the claim and (2) on the question of payment in instalment.
Mr. Nariman has next contended that the provisions of Order 2, rule 2 of the Civil Procedure Code do not in any way affect the maintainability and the merits of the 37 present appeal No. 44 of 1981.
He has submitted that the said provisions have no application to an appeal and in any event, the cause of action and the subject matter of the present appeal are entirely different from the cause of action and the subject of the earlier appeal.
Mr. Nariman argues that though this Court in the case of Bijoyananda Patnaik vs section Sahu(1) has held that the provisions of Order 23, rule 1 of the Code of Civil Procedure will be applicable to the withdrawal of an appeal, the provisions will also not preclude the appellant from filing the present Appeal No. 44 of 1981.
It is his submission that in considering the provisions of order 23, rule 1, the relevant fact to be borne in mind is the subject matter of the appeal and if the subject matter of the appeal be different, as in the present case it is, the earlier appeal No. 36 of 1981 being confined to the subject matter of instalment and the subsequent appeal No. 44 of 1981 being against the decree on the merits of the claim, the withdrawal of the earlier appeal cannot, in any way, be a bar to the maintainability of the subsequent appeal.
Mr. Nariman has in this connection referred to the decision of this Court in Vallabhdas vs Dr. Madan Lal & Ors.(2) in which this Court equated the meaning of the words "subject matter" in order 23 rule 1 with the meaning of the words "cause of action" in Order 23 rule 2.
Relying on this decision, Mr. Nariman has argued that the "subject matter" of the appeal within the meaning of Order 23, rule 1, must be considered in the light of the meaning of the words "cause of action" in Order 2, rule 2; and it is his argument that as the "cause of action" in respect of the claim for instalment is entirely different from the "cause of action" in respect of decree which embraces within its fold the `subject matter" of the respective claims of the parties in the suit, the withdrawal of the earlier appeal No. 36 of 1981 against the instalments cannot in any way affect the maintainability of the appeal No. 44 of 1981 against the decree on the merits of the claim.
Mr. Nariman does not dispute that though the right of an appeal is a statutory right enjoyed by a party, the party in an appropriate case may lose his right of appeal.
But he submits that a very strong case must be made out to establish that a party has forfeited his right to prefer an appeal.
According to Mr. Nariman, the right 38 of appeal may be lost because of any provision of law and also in appropriate cases, the parties may lose his right of appeal because of his conduct.
Mr. Nariman contends that in the instant case, the present appeal is within time; and the provisions of the Code earlier referred to or the provisions of any other law do not have the effect of extinguishing the right of the appellant to prefer an appeal against the decree.
Mr. Nariman submits that the facts and circumstances of this case cannot justifiably lead to the conclusion that the appellant by his conduct has disentitled himself to file the present appeal against the decree.
He argues that the conduct that can be attributed to the appellant is that he prayed for instalments, filed an appeal against the order regarding instalments and he has withdrawn the same.
He reiterates that if the earlier appeal against the order regarding the instalments is held to be incompetent, the conduct of the appellant in withdrawing the incompetent appeal is indeed of no consequence.
Mr. Nariman argues that the prayer for instalments is made only on the basis that if the case of the appellant is not accepted and a decree is passed against him, the appellant may be granted instalments to pay the decretal amount and such a prayer when it is not known whether a decree will at all be passed against the appellant and if so, for what amount, can never be considered to amount to such conduct as to disentitle or preclude him from filing an appeal against the decree.
Mr. Nariman argues that it cannot be said that in the instant case the defendant appellant has elected to exercise one of two alternatives remedies and by virtue of such election he has deprived himself from exercising the other right, as the defendant appellant has both the remedies open to him and no question of election on his part arises.
Mr. Nariman submits that in the facts and circumstances of this case it cannot legitimately be held that the appellant waived his statutory right to file an appeal against the decree and otherwise became estopped from exercising his right.
In this connection Mr. Nariman has referred to Halsbury 's Laws of England, 4th Edn., vol 16, paras 1471,1472,1473 and 1474 at pages 992 to 996 which read as follows: "1471.
Waiver.
Waiver is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted, and is either express or implied from conduct.
It may sometimes resemble a form of election, and sometimes be based on ordinary principles of estoppel, although, unlike estoppel, 39 waiver must always be an intentional act with knowledge.
A person who is entitled to rely on a stipulation, existing for his benefit alone, in a contract or of a statutory provision, may waive it, and allow the contract of transaction to proceed as though the stipulation or provision did not exist.
Waiver of this kind depends upon consent, and the fact that the other party has acted on it is sufficient consideration.
Where the waiver is not express it may be implied from conduct which is inconsistent with the continuance of the right, without need for writing or for consideration moving from, or detriment to, the party, who benefits by the waiver; but mere acts of indulgence will not amount to waiver; nor can a party benefit from the waiver unless he has altered his position in reliance on it.
The waiver may be terminated by reasonable but not necessarily formal notice unless the party who benefits by the waiver cannot resume his position, or termination would cause injustice to him.
It seems that, in general, where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, so as to alter his position, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he has himself so introduced, even though it is not supported in point of law by any consideration.
Where the right is a right of action or an interest in property, an express waiver depends upon the same consideration as a release.
If it is a mere statement of an intention not to insist upon the right it is not effectual unless made with consideration, but where there is consideration the statement amounts to a promise and operates as a release.
Even where there is no express waiver the person entitled to the right may so conduct himself that it become inequitable to enforce it (this is sometimes called an implied waiver), but in such cases the right is lost on the ground either of estoppel or of 40 acquiescence, whether by itself or accompanied by delay.
Where it is claimed that the decision of a tribunal is a nullity, a party 's right of action in the High Court is not waived by appeal to a higher tribunal whose decision is expressed by Parliament to be final.
Knowledge of rights essential.
For a release or waiver to be effectual it is essential that the person granting it should be fully informed as to his rights.
Similarly, a confirmation of an invalid transaction, is inoperative unless the person confirming knows of its invalidity.
Estoppel and acquiescene.
The term 'acquiescence ' is used where a person refrains from seeking redress when there is brought to his notice a violation of his rights of which he did not know at the time, and in that sense acquiescence is an element in laches.
Subject to this, a a person whose rights have been infringed without any knowledge or assent on his part has vested in him a right or action which, as a general rule, cannot be delivered without accord and satisfaction or release under seal.
The term, is however, properly used where a person having a right, and seeing another person about to commit it in the course of committing an act infringing upon the right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, a person so standing by cannot afterwards be heard to complain of the act.
In that sense the doctrine of acquiescence may be defined as quiscence under such circumstance that assent my be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct, the principle of estoppel by representation applying both at law and in equity, although its application to acquiescene is equitable.
The estoppel rests upon the circumstance that the person standing by in effect makes a misrepresentation as to a fact, namely, his own title; a mere statement that he intends to do something, for 41 example, to abandon his right, is not enough.
Further more, equitable estoppel is not applied in favour of a volunteer The doctrine of acquiescene operating as an estoppel was founded on fraud, and for the reason is no less applicable when the person standing by is a minor.
As the estoppel is raised immediately by the conduct giving raise to it lapse of time is of no importance, and for the reason the effect of acquiscence is expressly preserved by statute.
Elements in the estoppel: When A stands by while his right is being infringed by B the following circumstances must as a general rule be present in order that the estoppel may be raised against A: (1) B must be mistaken as to his own legal rights: if he is aware that he is infringing the rights of another, he takes the risk of those rights being asserted; (2) B must expend money, or do some act, on the faith of his mistaken belief: otherwise, he does not suffer by A 's subsequent assertion of his rights; (3) acquiescence is founded on conduct with a knowledge of one 's legal rights, and hence A must know of his own rights; (4) A must know of B 's mistaken belief; with that knowledge it is inequitable for him to keep alliance and allow B to proceed on his mistake; (5) A must encourage B in his expenditure of money or other act, either directly or by abstaining from asserting his legal right.
On the other hand there is no hard and fast rule that ignorance of a legal right is a bar to acquiescence in a breach of trust, but the whole of the circumstances must be looked at to see whether it is just that a complaining beneficiary should proceed against a trustee." Mr. Nariman has argued that in the instant case the plaintiff respondent has claimed against the defendant appellant a very large sum of money and the claim has been very seriously centested by the defendant appellant who has not merely disputed the claim of the plaintiff respondent but has in fact made a counter claim in the suit against the plaintiff respondent.
He points out that immediately after the pronouncement of the judgment, three separate precipies or requisitions have been put in on behalf of the defendant appellant.
In view of the urgency of the situation, an appeal had immediately 42 been filed against the order of instalment for immediate relief and thereafter an appeal against the decree had been filed after the earlier appeal against the instalments had been withdrawn.
He has submitted that under these facts and circumstances it can never be said that the appellant had accepted the decree and had abandoned its right to prefer an appeal against the same.
Mr. Nariman further submits that a litigant usually proceeds on the advice of his lawyer and the mistaken advice of a lawyer cannot be the foundation of the plea of estoppel and in support of his submission he relies on the decision of the Judicial Committee in the case of John Agabog Vertannes & Ors.
vs James Golder Robinson & Another.(1) He has further argued that in the instant case no possible prejudice has been done to the respondent by the filing or withdrawal of the earlier appeal and the respondent could never, in any way, be under an impression that by the institution of appeal No. 36 of 1981, the appellant had unequivocally given up his right to appeal from the decree on merits.
Mr. Nariman has commented that the Division Bench had admitted this appeal despite the objection of the plaintiff respondent and it is his comment that after having admitted the appeal the Division Bench had in fact heard the appeal for a number of days.
He submits that the Division Bench should not have, therefore, entertained the plea of maintainability and the Division Bench should not have dismissed the appeal on the ground that the appeal is not maintainable and it is his submission that the said view of the Division Bench is any event erroneous and unsustainable in law.
The learned Attorney General, appearing on behalf of the plaintiff respondent, has submitted that the Division Bench in the instant case has correctly come to the conclusion that the appeal preferred by the defendant appellant against the decree is not maintainable in view of the filing of the earlier appeal by the defendant appellant against the provision regarding instalments and the withdrawal of the same.
The learned Attorney General has argued that the provision in the judgment regarding instalments on the basis of the affidavit filed on behalf of the defendant appellant forms part of the decree and cannot be considered to be an order.
The learned Attorney General has in this connection referred to the amended provisions contained in Order 20, rule 11 of the Code of Civil Procedure.
Relying on these provisions, the learned Attorney General contends that the order regarding instalments which is required to 43 be incorporated in the decree, necessarily forms a part of the decree itself.
It is his contention that the mere fact that it may take a little time to draw up the decree, incorporating the provisions regarding instalments does not make the provisions any the less a part of the decree.
He argues that it was open to the appellant to prefer an appeal against the decree and it was also open to him to appeal against any part thereof.
It is his argument that the appellant preferred to file an appeal only against the part of the decree regarding instalments without filing any appeal against the decree as a whole.
He contends that the filing of a restricted appeal against the directions for instalments bars any subsequent appeal against the amount decreed on merits.
In support of this contention the learned Attorney General has referred to the provisions contained in Order 2, rule 2 and to order 23, rule 1 of the Code of Civil Procedure.
Order 2, rule 2 of the Code of Civil Procedure provides : "(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action, but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.
(2) where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.
(3) A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs: but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.
Explanation : For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.
" Order 23, rule 1 of the Code of Civil Procedure reads : (1) At any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abandon a part of his claim : 44 Provided that where the plaintiff is a minor or other person to whom the provisions contained in Rules 1 to 14 of Order XXXII extend, neither the suit nor any part of the claim shall be abandoned without the leave of the Court.
The Attorney General argues that an appeal is a continuation of the suit and the principles underlying Order 2, rule 2, therefore, apply to an appeal.
It is his argument that the right of appeal which is no doubt a statutory right will also necessarily be governed by the provisions of Order 2, rule 2 and as the appeal is filed not against the entire subject matter of appeal arising out of the cause of action in the appeal, the right to file another appeal against the decree is clearly lost.
He has further submitted that the defendant appellant having chosen to file an appeal only against a part of the decree confined to the payment of the decretal amount in instalments and not against the decree on its merits and having withdrawn the said appeal unconditionally has clearly forfeited his right to prefer the instant appeal.
The learned Attorney General has next contended that in the instant case apart from the aspect that the right of appeal has been extinguished by virtue of the statutory provisions earlier referred to, the defendant appellant must be held to have clearly abandoned or waived his right of preferring an appeal against the decree by filing an appeal only against the part of the decree directing the payment of the decretal amount in instalments.
It is the argument of the Learned Attorney General that defendent appellant had the right to prefer an appeal against the whole of the decree, if he had felt aggrieved by the same.
He submits that if the defendant appellant does not have any grievance against the decree on merits but is only aggrieved against the par of the decree providing for instalments, the defendant appellant would not certainly exercise his right of appeal against the decree on merits against which he had no grievance, and the defendant appellant has filed an appeal only against the part against which he had a grievance.
He submits that the defendant appellant having done so, must be held to have waived his right to file an appeal against the decree on merits.
The learned Attorney General has argued that in any event the defendant appellant is estopped from exercising his right of appeal in view of the fact that the defendant appellant has asked for 45 and obtained a decree payable in instalments and the defendant appellant has taken advantage of the said instalment decree to the prejudice of the plaintiff respondent.
It is his argument that it is not open to the defendant appellant to question the validity of the decree after he has obtained benefit under the same.
The Learned Attorney General contends that although a right to prefer an appeal is a right conferred by the Statute on a party aggrieved, the aggrieved party may be estopped and or precluded from asserting or exercising the right of appeal under given circumstances.
He submits that is well settled that if any party takes advantage of an order or decree or derives benefit under the same, he disentitles himself by his conduct to question the validity of the order or the decree.
The learned Attorney General sums up submitting that in the instant case, the defendant appellant is clearly estopped from filing appeal No. 44 of 1981 against the decree and the said appeal filed by the appellant is not maintainable because of the following circumstances : 1.
The defendant appellant has asked for the payment of the decretal amount in instalments; 2.
The defendant appellant had filed appeal No. 36/1981 against the decree only with regard to the instalments allowed and the defendant appellant had not filed any appeal against the decree as a whole questioning the correctness of the decree; 3.
The defendant appellant had subsequently withdrawn the appeal No. 36/1981 filed against the decree without obtaining any leave of the court to file any fresh or subsequent appeal; and 4.
The defendant appellant having asked for payment of the decretal amount in instalments and having obtained such a decree has enjoyed the benefit of such a decree to the prejudice of the plaintiff respondent who was prevented from executing the decree for recovering the entire decretal amount immediately in view of the provisions regarding payment in instalments and had suffered prejudice; and the defendant appellant having obtained a benefit or advantage under the decree to the prejudice of the 46 plaintiff respondent cannot now turn round to question the correctness of the decree passed.
The right to prefer an appeal is a right created by Statute.
No party can file an appeal against any judgment, decree or order as a matter of course in the absence of a suitable provisions of some law conferring on the party concerned the right to file an appeal against any judgment, decree or order.
The right of appeal so conferred on any party may be lost to the party in appropriate cases by the provisions of some law and also by the conduct of the party.
The law of limitation may deprive a party of the right he may enjoy to prefer an appeal by virtue of any statutory provisions.
Also, in appropriate cases a party may be held to have become disentitled from enforcing the right of appeal which he may otherwise have.
In the present case there cannot be any manner of doubt that the defendant appellant did have a right of appeal against the decree by virtue of the provisions of the Code of Civil Procedure.
section 96 of the Code, read with O. 41 of the Code makes it abundantly clear that an appeal with lie from an original decree.
It is also not in dispute that the appeal has been filed within the period of limitation.
The law of limitation, therefore, does not defeat the right of the appellant to file appeal.
The provisions of Order 20, rule 11, in our opinion, do not deprive the appellant in the instant case of his right to prefer an appeal against the decree.
Order 20, rule 11, of the Code provides as follows : "(1) Where and in so far as a decree is for the payment of money, the Court may for any sufficient reason at the time of passing the decree order that payment of the amount decree shall be postponed or shall be made by instalments, with or without interest, not withstanding anything contained in the contract under which the money is payable.
(2) After the passing of any such decree the Court may, on the application of the judgment debtor, and with consent of the decree holder, order that payment of the decreed shall be postponed or shall be made by instalments on such terms as to the payment of inte 47 rest, the attachment of the property of the judgment debtor, or the taking of the security from him, or otherwise as it thinks fit.
" By the C.P.C. Amendment Act, 1976, O. 20, R, 11 (1) was amended and the amended rule reads : "(1) Where and in so far as a decree is for the payment of money, the Court may for any sufficient reason (incorporate in the decree, after hearing such of the parties who had appeared personally or by pleader at the last hearing, before judgment, an order that) payment of the amount decreed shall be postponed or shall be made by instalments, with or without interest, notwithstanding anything contained in the contract under which the money is payable.
" Order 20, rule 20, rule 11 makes provision for postponement of payment of a money decree and of its payment in instalments and lays down the procedure for directing payment of a money decree in instalments.
The amendment introduced in O. 20, rule 11, (1) by the Amending Act, 1976 requires that any provision directing that payment of the amount decreed shall be postponed or shall be made by instalments may be incorporated in the decree.
In view of the provisions requiring the order of postponement of payment of money decree or payment thereof in instalments to be incorporated in the decree, the question for consideration is whether the earlier appeal filed against the provision in relation to instalments, is an appeal against the decree or against an order, and the further question is whether the said appeal was competent or not.
If the earlier appeal is considered to be an appeal against an order, the earlier appeal will clearly be incompetent.
An appeal against any provision granting instalments or refusing to grant instalments will not be competent if the direction granting or refusing to grant instalment is considered to be an order.
Such an order is not appealable under the Code.
Such an order will also not be a 'judgment ' within the meaning of cl. 15 of the Letters Patent and will not be appealable as such.
There is, indeed, no provision in any law to make such an order appealable.
If, however, the direction with regard to instalments is considered to be a part of the decree, an appeal will undoubtedly lie as an appeal from a decree.
In the instant case, the facts and circumstances go to indicate that the defendant appellant 48 had, in fact, filed an appeal against the direction regarding instalment treating the same to be an order.
The precipe filed, the letter addressed by the Advocates for the defendant appellant dated 16th January, 1981 to the Prothonotary and Senior Master High Court of Bombay, the memorandum of appeal filed and the stamp furnished on the memorandum, all go to indicate that the appeal filed was an appeal against an order.
If Mr. Nariman 's contention that the earlier appeal No. 36 of 1981 was an appeal against an order is accepted, the said appeal must be held to be incompetent.
There appears to be force in the contention of Mr. Nariman that the earlier appeal No. 36 of 1981 was an appeal against an order notwithstanding the provisions contained in Order 20, rule 11 of the Code.
The rules of the Original Side of the Bombay High Court make necessary provisions as to the drawing up of a decree.
An order under Order 20, rule 11 of the Code can only be incorporated in the decree when the decree is drawn up.
The rules of the Original Side of the Bombay High Court make necessary provisions as to the drawing up of a decree.
In view of the procedure laid down in the rules for the drawing up of a decree, there is bound to be a time lag between the judgment and the drawing up of a decree in which the order regarding instalment is to be incorporated.
Mr. Nariman rightly points out that the earlier appeal No. 36 of 1981 had been filed long before the decree in which the order regarding instalments under Order 20, rule 11 of the Code had to be incorporated, had been drawn up and had come into existence with the orders incorporated therein.
There appears to be force in the contention of Mr. Nariman that so long as the decree incorporating the order regarding the instalments in terms of the provisions contained in the amended provisions of Order 20, rule 11 of the Code is not drawn up, the direction or order regarding instalments retains the character of an order in law.
Order 20, rule 11 of the Code clearly postulates that the direction regarding postponement of payment of money decree or payment thereof in instalments is an independent order which is to be incorporated in the decree.
Appeal No. 36 of 1981 had been filed soon after the pronouncement of the judgment, before the decree incorporating the order regarding the instalments had been drawn up.
The direction regarding payment of the decretal amount is an order which is required to be incorporated in the decree and it can only be incorporated in the decree, when the decree is drawn up.
It retains the character of an order till it is so incorporated in the decree.
As at the time of filing the earlier appeal No. 36 of 1981 the order regarding instalments had not been incorporated in the decree, the order retained 49 its character of an order.
The earlier appeal No. 36 of 1981 at the time when it was filed, should therefore be regarded as an appeal against an order.
The precipe filed for the drawing up of the order, the letter to the Prothonotary and Senior Master of the High Court by the Advocates for the defendant appellant, the memorandum appeal filed and the amount of stamp furnished on the memorandum are facts which go to indicate that the earlier appeal had been filed against an order regarding instalments treating the same to be an order.
Even if we accept the contention of the learned Attorney General that the earlier appeal No. 36 of 1981 must in law be held to be an appeal against a decree, as the order regarding instalments has to form in law a part of the decree by virtue of the provisions contained in amended rule 11 of order 20 of the Code, the appeal will still be incompetent, because the defendant appellant had furnished the amount of stamp necessary for preferring an appeal against an order and the requisite stamp in respect of an appeal against a decree had not been affixed.
If the earlier appeal No. 36 of 1981 were to be considered to be an appeal against the decree, the appeal would not be competent for want of payment of requisite Court fee payable in respect of an appeal against the decree.
Though by virtue of the provisions contained in the Original Side Rules of the High Court an appeal may be filed without the certified copy of the decree or order a provision made to enable the party to seek immediate interim relief from the Appellate Court, the further requirement to file a certified copy of the decree in the case of an appeal from a decree within the period of limitation to make the appeal valid and competent has still to be satisfied: Unless a certified copy of the decree is filed, the appeal does not become competent and the appeal is liable to be dismissed as incompetent and invalid for not filing the certified copy of the decree within the period of limitation.
So long as the certified copy of the decree is not filed there is no valid appeal in the eye of law.
In the case of Jagat Dhish Bhargava vs Jawaharlal Bhargava (supra) this Court held at page 922: "The position of law under O. 41, r. 1 is absolutely clear.
Under the said rule every appeal has to be preferred in the form of a memorandum signed by the appellant or his pleader and presented to the Court or to such officer as it appoints in that behalf, and has to be accompanied by a copy of the decree appealed from, and of the judgment on which it is founded.
Rule 1 empowers the 50 appellate Court to dispense with the filing of the judgment but there is no jurisdiction in the appellate Court to dispense with the filing of the decree.
Where the decree consists of different distinct and severable directions enforceable against the same or several defendants the Court may permit the filing of such portions of the decree as are the subject matter of the appeal but that is a problem with which we are not concerned in the present case.
In law the appeal is not so much against the judgment as against the decree; that is why Article 156 of the Limitation Act prescribes a period of 90 days for such appeals and provides that the period commences to run from the date of the decree under appeal.
Therefore there is no doubt that the requirements that the decree should be filed along with the memorandum of appeal is mandatory, and in the absence of the decree the filing of the appeal would be incomplete, defective and incompetent." Also in the case of Shankuntala Devi vs Kuntal Kumari (supra), this Court held at pp.
1008 to 1010: "Order 41, rule 1 of the Code provides that every appeal shall be preferred in the form of a memorandum signed by the appellant or his pleader 'and the memorandum shall be accompanied by a copy of the decree appealed from and (unless the appellate court dispenses therewith) of the judgment on which it is founded '.
Under 0.41, r. 1 the appellate Court can dispense with the filing of the copy of the judgment but it has no power to dispense with the filing of the copy of the decree.
A decree and a judgment are public documents and under section 77 of the Evidence Act only a certified copy may be produced in proof of their contents.
The memorandum of appeal is not validly presented, unless it is accompanied by certified copies of the decree and the judgment.
The contention of Mr. Misra is that a decree is the formal expression of the adjudication and that where, as in this case, no formal decree is drawn up, the determination under sec.
47 is a judgment and the Court having admitted the appeal must be presumed to have 51 dispensed with the filing of the copy of the judgment.
In this connection he drew our attention to sec.
2(2), 33 and 0.20 rules 1, 4, 6.
We are unable to accept these contentions.
We are not satisfied that the High Court dispensed with the filing of the copy of the order under Sec.
Admittedly, the High Court did not pass any express order to that effect.
It may be that in a proper case such an order may be implied from the fact that the High Court admitted the appeal after its attention was drawn to the defect [see G.I.P. Railway Co. vs Radhakissan(1)].
But in the present case the High Court was not aware of the defect and did not intend to dispense with the filing of the copy.
Moreover an order under Sec.
47 is a decree, and the High Court had no power to dispense with the filing of a copy of the decree.
Ordinarily a decree means the formal expression of the adjudication in a suit.
The decree follows the judgment and must be drawn up separately.
But under sec.
2(2), the term 'decree ' is deemed to include the determination of any question within sec.
This inclusive definition of decree applies to 0.41, r. 1.
In some courts, the decision under sec.
47 is required to be formally drawn up as a decree in that case the memorandum of appeal must be accompanied by a copy of the decree as well as the judgment.
But in some other Courts no separate decree is drawn up embodying the adjudication under sec.
In such a case, the decision under sec.
47 is the decree and also the judgment, and the filing of a certified copy of the decision is sufficient compliance with 0.41, r. 1.
As the decision is the decree the appeal is incompetent unless the memorandum of appeal is accompanied by a certified copy of the decision.
Our attention was drawn to the decision in Bodh Narain Mahto vs Mahabir Prasad & Ors.(2) where Agarwala, J. seems to have held that where no formal decree was prepared in the case of a decision under sec.47 the appellant was not required to file a copy of the order with the memorandum of appeal.
We are unable 52 to agree with this ruling.
The correct practice was laid down in Kamla Devi vs Tarapada Mukherjee(1) where Mookerjee, J. observed: 'Now it frequently happens that in cases of execution proceedings, though there is a judgment, an order, that is, the formal expression of the decision is not drawn up.
In such cases the concluding portion of the judgment which embodies the order may be treated as the order against which the appeal is preferred.
In such a case it would be sufficient for the appellant to attach to his memorandum of appeal a copy of the judgment alone, and time should run from the date of the judgment.
Where, however, as in the case before us, there is a judgment stating the grounds of the decision and a separate order is also drawn up embodying the formal expression of the decision, copies of both the documents must be attached to the memorandum, and the appellant is entitled to a deduction of the time taken up in obtaining copies thereof.
We hold that the memorandum of appeal from the order dated January 20, 1967 should have been accompanied by a certified copy of the order and in the absence of the requisite copy of the appeal was defective and incompetent." Though by virtue of the provisions of the Original Side Rules of the Bombay High Court the earlier appeal could be permitted to be filed without a certified copy of the decree or order, the appeal would not be valid and competent unless the further requirement of filing the certified copy had been complied with.
At the time when the earlier appeal No. 36 of 1981 had been withdrawn, the certified copy of the decree had not been filed.
The said appeal without the certified copy of the decree remained an incompetent appeal.
The withdrawal of an incompetent appeal which will indeed be no appeal in the eye of law cannot in any way prejudice the right of any appellant to file a proper appeal, if the right of appeal is not otherwise lost by lapse of time or for any other valid reason.
We are, therefore, of the opinion that the provisions contained in order 20, 53 rule 11 of the Code do not in the facts and circumstances of the present case deprive the appellant of his right to file an appeal against the decree.
The provisions of O. 2, rule 2 of the Code of Civil Procedure do not stand in the way of the appellant in the matter of filing the subsequent Appeal No. 44 of 1981.
Order 2, rule 2 deals with suits and provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of a cause of action, but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any court.
Order 2, rule 2(2) further provides that where the plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.
The requirement of Order 2, rule 2(3) is that a person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.
The explanation provides that for the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.
It is clear from the provisions of Order 2, rule 2 that this rule is applicable only to suits and cannot in terms apply to appeals.
Even if an appeal be considered to be a continuation of a suit for certain purposes, the provision of Order 2, rule 2 cannot in terms be made applicable to an appeal in view of the scheme of the said rule and the language used therein.
Order 2, rule 2, contemplates that at the initial stage of the institution of the suit, the whole of the claim which the plaintiff is entitled to make in respect of the cause of action, has to be made and further deals with the consequences of non compliance with the requirements of the said rule.
It is indeed doubtful whether the principles underlying this rule can be said to be applicable to an appeal.
Even if the principles underlying Order 2, rule 2 can be considered to apply to an appeal, the maintainability of the instant case cannot be held to be affected in any way as the cause of action in respect of the present appeal is entirely different from the cause of action on the basis of which the earlier appeal had been filed.
Order 23, rule 1 of the Code of Civil Procedure does not also stand in the way of the maintainability of the instant appeal.
The 54 withdrawal of the earlier appeal which was not competent and was no appeal in the eye of the law and which was only concerned with regard to the provision of instalment cannot in any way effect the validity of the present appeal.
Apart from the incompetency of the earlier appeal No. 36 of 1981, the subject matter of the said appeal was entirely different from the subject matter of the present appeal.
It may further be noted that the provisions of the Code of Civil Procedure contained in Order 20, rule 11 order 2, rule 2 and Order 23 rule 1 do not in terms deal with any question in relation to the right of appeal or the extinguishment thereof.
The aforesaid provisions do not by themselves confer any right of appeal on a party or deprive any party of the right of appeal which a party may enjoy.
These are not the statutory provisions which either confer a right of appeal on a party or deprive a party of any such right.
We have earlier considered the effect of there provisions and we are of the opinion that these provisions do not in the facts and circumstances of this case have the effect of depriving the defendant appellant of his right to file the present appeal.
The only other question that requires to be considered is whether the defendant appellant in the facts and circumstances of this case has become disentitled to file the instant appeal after the filing of the earlier appeal and the withdrawal of the same.
It is beyond question that the right of appeal which is, no doubt, a creature of statute, may be lost to a party in a proper case and an appellant may be debarred from exercising the right of the appeal Whether any party has lost his valuable right of preferring an appeal conferred on him by law must necessarily depend upon the facts and circumstances of a particular case.
The facts and circumstances which have been relied upon in support of the submission that the defendant appellant in the instant case has become disentitled to file the present appeal No. 44 of 1981 are: (1) the defendant appellant filed an affidavit asking for postponement of payment of the decretal amount in instalments; (2) the dafendant appellant filed an appeal only against the direction regarding instalments before the filing of the present appeal against the decree on merits; (3) the defendant appellant had withdrawn the earlier appeal without obtaining leave of Court to file any fresh appeal; (4) the defendant appellant had obtained benefit of the instalment decree passed by the trial Court.
We may not that the 55 ground which weighed with the learned judges of the Division Bench of the Bombay High Court was the filing of an appeal against only the provision regarding instalments and not against the decree on merits.
We shall now proceed to consider whether the facts and circumstances of this case justifiably lead to the conclusion that the defendant appellant has become disentitled to file the present appeal.
It is not in dispute that the defendant appellant had filed an affidavit asking for postponement of payment of any money decree that may be passed and also for payment of the amount in instalments.
The filing of an affidavit on the conclusion of hearing and before pronouncement of judgment cannot in the facts and circumstances of this, case be considered to amount to such conduct on the part of the defendant appellant as to disentitle him to file an appeal against any decree that may ultimately be passed against him.
In view of the provisions contained in Order 20, rule 11 (1) of the Code, the prayer for instalment has necessarily to be made before the pronouncement of the judgment and the passing of a decree, as the Court after the passing of the decree can grant instalments only with the consent of the decree holder in terms of the provisions contained in Order 20, rule 11 (2) of the Code.
Till the very last stage of the hearing of the suit the defendant appellant had seriously contested the claim of the plaintiff respondent and had in fact pressed for a counter claim against the plaintiff respondent.
Before the delivery of judgment the defendant appellant could not possibly have known with any amount of certainty whether an decree against the defendant appellant would be passed in the suit, and if so, for what amount.
Under such circumstances it cannot be said that any party who in view of the provisions contained in Order 20, rule 11 (1) makes a prayer for postponement of payment of the decretal amount and asks for payment of the same in instalments makes any representation that he will accept any decree that may be passed against him and will not prefer any appeal against the same.
A mere prayer for postponement of payment of the decretal amount or for payment thereof in instalments on the basis of the provisions contained in Order 20, rule 11 (1) of the Code at a time when the decision in the suit is yet to be announced can never be considered to amount to such conduct of the party as to deprive him of his right to prefer an appeal against any decree, if ultimately passed, and to disentitle him from filing an appeal against the decree.
It is no doubt true that 56 after the judgment had been pronounced and the decree had been passed it was open so the defendant appellant to file an appeal against the decree.
It may be noted that immediately after the pronouncement of judgment and the passing of the decree three separate precipes or requisitions had been filed on behalf of the defendant appellant to the Prothonotary and Senior Master of the Bombay High Court and there was a specific requisition for a certified copy of the decree when drawn up, apart from requisitions for a certified copy of the judgment and also for certified copy of the minutes of the order.
The immediate filing of the requisition for the certified copy of the decree and also of the judgment clearly manifests the intention of the defendant appellant to prefer an appeal against the decree.
It is common knowledge that in matters of litigation the litigant who is not expected to be familiar with the formalities of law and rules of procedure is generally guided by the advice of his lawyers.
The statement of the lawyers recorded by the Division Bench in its judgment clearly goes to indicate that the lawyer had advised filing of the earlier appeal under a mistaken belief.
The act done by the defendant appellant on the mistaken advice of a lawyer cannot furnish a proper ground for depriving the defendant appellant of his valuable statutory right of preferring an appeal against the decree.
We have already held that the earlier appeal No. 36 of 1981 against the provision regarding instalments was incompetent and the filing of an incompetent appeal or the withdrawal of the same does not entail any legal consequences, prejudicing the right of the defendant appellant to file a proper appeal against the decree.
The question which still remains to be considered is whether the act of filing an appeal against the order regarding instalments and not filing an appeal against the decree, when it was open to the defendant appellant to do so, can be regarded to constitute such conduct on the part of the defendant appellant as to disentitle him to maintain the present appeal.
The filing of an incompetent appeal on the mistaken advice of a lawyer cannot, in our opinion, reflect any such conduct on the part of the defendant appellant.
An appeal which is not competent is necessarily bound to fail, and in such a case the proper course for an appellant would be to file a valid and competent appeal.
The filing of an incompetent appeal and withdrawal of the same do not prejudice the right to file a proper appeal and cannot be held to constitute such conduct on the part of an appellant as to deprive him of his right to file a valid appeal.
The filing of the earlier appeal No. 36 of 1981 cannot in 57 the facts and circumstances of this case be said to manifest any intention on the part of the defendant appellant that he would not prefer an appeal against the decree and the same does not amount to any representation that the otherwise accepts the decree.
In judging the conduct of the defendant appellant to decide whether the defendant appellant had abandoned, relinquished or waived his right of appeal against the decree, all the relevant facts and circumstances which have a bearing on the question have to be considered.
The facts and circumstances of this case clearly go to indicate that the defendant appellant had felt aggrieved by the decree and had not manifested any intention to accept the same and not to prefer an appeal against the decree.
As we have earlier seen, the defendant appellant had not only denied and disputed the case of the plaintiff respondent but had also made a counter claim in the suit against the plaintiff respondent.
The defendant appellant had throughout contested the suit and the claim of the plaintiff respondent with all seriousness.
Immediately on the pronouncement of judgment the defendant appellant clearly manifested its intention of preferring an appeal against the decree by causing the necessary requisition for the certified copy of the decree and judgment to be filed.
The stakes involved in the suit of the defendant appellant were very high and the judgment and the decree in the suit had gone against the defendant appellant.
In this background the filing of the earlier appeal on the mistaken advice of the lawyer cannot in our opinion, legitimately lead to the conclusion that the defendant appellant had abandoned or relinquished his right to prefer the present appeal and that the defendant appellant had become disentitled to file the same.
The further fact that the earlier appeal No. 36 of 1981 was withdrawn the very next day after the same had been filed at the stage of admission and the present appeal came to be filed just a week after the withdrawal of the earlier appeal clearly establishes that the defendant appellant had never intended to relinquish or abandon its right to file an appeal against the decree.
The earlier appeal No. 36 of 1981 which was filed on 20.1.1981 and was withdrawn on 21.1.1981 at the time of admission, could not possibly have caused any prejudice to the plaintiff respondent.
The promptitude with which the present appeal was filed just after a week on 29.1.1981 indicates that the defendant appellant had never intended to give up their right of appeal against the decree and they have acted with all promptness and earnestness on being properly advised as to the legal position and as to their legal rights.
The filing of the earlier appeal No. 36 of 1981 in the facts and circumstances of this case 58 does not amount to any representation or promise on the part of the defendant appellant to accept the decree on merits and not to prefer an appeal from the same.
There is also no question of election on the part of the defendant appellant in preferring an appeal against the order regarding the instalment and not against the decree on merits.
It is not a case where a party is called upon to elect one of two alternative remedies, when by a election of one of two alternative remedies he loses his right to pursue the other.
In the instant case, the defendant appellant has a statutory right to prefer an appeal against the decree and any question of election on his part does not aries.
The withdrawal of the earlier appeal No. 36 of 1981 without obtaining the leave of Court does not in the facts and circumstances of this case, affect in any way the maintainability of the present appeal.
We have already held that the earlier appeal No. 36 of 1981 was an incompetent appeal and the withdrawal of the incompetent appeal in the instant case did not have prejudice, in any way, the right of the defendant appellant to file a proper appeal against the decree.
The withdrawal of the earlier appeal at the stage of admission on the very next day after the same had been filed and the filing of the present appeal just after a week thereafter, on the other hand, have a bearing on the conduct of the defendant appellant and they manifestly make it clear that the defendant appellant had always intended to file an appeal against the decree and it never intended to give up his right of appeal against the decree.
In the instant case we are not satisfied that the defendant appellant had obtained any advantage under the decree to preclude him from filing an appeal against the same.
Even before any instalment had fallen due under the decree, the defendant appellant had filed the earlier appeal No. 36 of 1981 against the provisions regarding instalments.
It is to be noted that instead of taking or getting any advantage under the decree in the matter of granting instalments, the defendant appellant had challenged the same long before the question of deriving any benefit thereunder had come.
As we have earlier noticed, the defendant appellant had withdrawn the earlier appeal the very next day and had filed the present appeal within eight days thereafter.
In an appropriate case any party which derives any advantage under a decree or order may, depending on the facts and circumstances of the case, disentitle himself to challenge the same and will be estopped from filing an appeal against the same, 59 It is also to be borne in mind that no execution of decree passed in a suit on the original side is normally permitted unless a certified copy of the decree is on the record in the execution proceeding.
A certified copy of the decree is not available so long as the decree is not drawn up and filed.
The present appeal had been filed long before the decree had been drawn up and, therefore, there could be no question of execution of any decree at the time when the present appeal was filed.
The question of the defendant appellant having obtained an advantage under the decree does not therefore, really arise.
In the case of Bhau Ram vs Baijnath,(1) this Court observed at p. 362: "It seems to us, however, that in the absence of some statutory provision or of a well recognised principle of equity, no one can be deprived of his legal rights including a statutory right of appeal.
" We have earlier held that no statutory provision deprives the defendant appellant of his right to file the present appeal.
We have carefully considered the facts and circumstances of this case and the facts of this case also do not attract any well recognised principle of equity to deprive the appellant of his very valuable statutory right of appeal.
The various passages from Halsbury relied on by Mr. Nariman which we have earlier quoted lend support to the view that the defendant appellant in the instant case by reason of its conduct or otherwise is not estopped or has not become disentitled to file the appeal.
In the result the appeal has to be allowed.
We, therefore, set aside the judgment and decree of the Division Bench of the Bombay High Court dismissing the appeal of the defendant appellant on the ground of maintainability.
We remand the appeal to the High Court for decision on merits.
In the facts and circumstances of this case, we make no order as to costs.
H.S.K. Appeal allowed.
|
The respondent, as plaintiff, filed a suit against the appellant, as defendant, in the Original side of the Bombay High Court for the enforcement of its claim for a large amount of over Rs. 40 lakhs.
The appellant not only contested the claim but also made a counter claim.
The appellant made a request that in the event of a decree being passed against them, they may be allowed to pay the decretal amount in instalments.
A single Judge dismissed the counter claim and passed a decree in favour of respondent and allowed the decretal amount to be paid in instalments.
Delivery of Judgment which commenced on 12th December 1980 was concluded on 16th December 1980, upon which the advocates for the appellant addressed a letter to the Prothonotary and Senior Master, High Court, requesting that the accompanying memorandum of appeal be taken on file.
This appeal which was numbered 36 of 1981 26 was filed on 20th January, 1981.
The appeal was directed against the order in respect of instalments.
On 21st January 1981, when the matter was called for admission before a Division Bench the appellant asked for leave to withdraw the appeal and the appeal was allowed to be withdrawn.
A week after the withdrawal of appeal No. 36 the appellant filed an appeal against the judgment taking grounds relating to the merits of the case and also the direction as to instalments.
This appeal was numbered 44 of 1981.
After this appeal was heard on merits for a few days, the respondent raised a preliminary objection that because the appellant had earlier filed appeal No. 36 against the provision regarding instalments and which had been withdrawn, the present appeal No. 44 was not maintainable.
The Division Bench upheld the preliminary objection and dismissed appeal No. 44 on the ground that the appellant had by filing appeal No. 36 against the provision relating to instalments abandoned its right to challenge the decree on merits.
The appellant contended in this Court that the filing of earlier appeal No. 36 or the withdrawal thereof does not affect the right of appellant to prefer appeal No. 44 against the decree on merits.
Appeal No. 36 was filed against the order of the High Court passed under Order 20, r. 11 of the Code of Civil Procedure in regard to instalments only and not against the decree.
Appeal No. 36 had been filed soon after the judgment had been pronounced and long before the decree incorporating the order regarding instalments had been drawn up.
Appeal No. 36 must be considered to be an appeal against the order and not against the decree.
The right to prefer an appeal is a creature of statute.
The order regarding instalments is not appealable under C.P.C. and such an order cannot also be considered to be a 'Judgment ' within the meaning of clause 15 of the Letters Patent.
Appeal No. 36 which was against the order regarding instalments was incompetent and was therefore no appeal in the eye of law and for all legal purposes was non est.
Even if appeal No. 36 has to be considered an appeal against the decree in view of amended provision of Order 20, r. 11 of C.P.C., the said appeal still must be held to be incompetent and no appeal in the eye of law as the appeal was filed without a certified copy of the decree and was even withdrawn before a certified copy of the decree could be filed.
Appeal No. 44 filed against the decree in terms of the provisions contained in the Original Side Rules of Bombay High Court becomes a proper and competent appeal as the earlier appeal No. 36 was not a valid appeal in the eye of law.
The provisions of Order 2, r. 2 and Order 23, r. 1 of C.P.C. do not in any way affect the maintainability and the merits of appeal No. 44 as the cause of action and the subject matter of appeal No. 44 are entirely different from the cause of action and the subject matter of appeal No. 36.
The appellant did not waive his statutory right to file the appeal.
The appellant by his conduct has also not disentitled himself to file Appeal No. 44.
Appeal No. 36 was filed on the advice of lawyer under mistaken belief; mistaken advice of a lawyer cannot be the foundation of a plea of estoppel.
No prejudice has been caused to the respondent by filing and withdrawal of appeal No. 36 by the appellant.
The respondent contended that in view of the amended provisions of Order 20, r. 11, the order regarding instalments which is required to be incorporated in the decree necessarily forms a part of the decree.
In view of the 27 provisions contained in Order 2, r. 2 and Order 23, r. 1 of C.P.C. it was open to the appellant to prefer an appeal against the decree or to appeal against any part thereof.
The appellant preferred to file appeal No. 36 only against the part of the decree relating to instalments and not against the decree as a whole.
The filing of appeal restricted to the directions as to the instalments bars a subsequent appeal against the decree on merits.
The appellant having obtained a benefit or advantage under the decree to the prejudice of respondent cannot now question the correctness of the decree passed.
Allowing the appeal, ^ HELD: The provisions of Order 20, r. 11, Order 41, r. 1 Order 5, r. 2 and Order 23, r. 1 of the Code of Civil Procedure do not deprive the appellant of his right to file appeal No. 44.
[54 D] The right to prefer an appeal is a right created by statute.
A right of appeal may be lost to a party in appropriate cases by the provisions of law and also by the conduct of the party.
The law of limitation may deprive the party of the right he may enjoy to prefer an appeal.
Also in appropriate cases a party may be held to have become disentitled from enforcing the right to appeal which he may otherwise have.
[46 A C] In the instant case the defendant appellant did have a right of appeal against the decree by virtue of the provisions of section 96 read with Order 41 of Civil Procedure.
The appeal has been filed within the period of limitation, The law of limitation, therefore, does not defeat the right of the appellant to file an appeal.
[46 C D] Order 20, r. 11 makes provisions for postponement of payment of money decree and of its payment in instalments and lays down the procedure for directing payment of a money decree in instalments.
The amendment introduced in 1976 to Order 20, r. 11 requires that any provision directing the payment of the amount decreed shall be postponed or shall be made by instalments may be incorporated in the decree.
The direction regarding payment of the decretal amount is an independent order which is required to be incorporated in the decree and it can only be incorporated in the decree when the decree is drawn up.
It retains the character of an order till it is so incorporated in the decree.
The rules of the Original Side of the Bombay High Court make necessary provisions as to the drawing up of a decree.
In view of procedure laid down in the rules for the drawing up of a decree, there is bound to be a time lag between the judgment and the drawing up of a decree, in which the order regarding instalment is to be incorporated.
Appeal against any provision granting instalments or refusing to grant instalments will not be competent if the direction granting or refusing to grant instalments is considered to be an order.
Such an order is not appealable under the Code.
Such an order will also not be a 'judgment ' within the meaning of clause 15 of the Letters Patent and will not be appealable as such if however, the direction with regard to instalments is considered to be a part of the decree, an appeal will undoubtedly lie as an appeal from a decree.
[47 D E, 41 G H, 41 C D, 47 F H] 28 The provisions of Order 20, r. 11 do not deprive the appellant in the instant case of his right to prefer an appeal against the decree.
The earlier appeal No. 36 of 1981 had been filed long before the decree in which the order regarding instalments under Order 20, r.11 of the Code was to be incorporated had been drawn up.
As at the time of filing the earlier appeal No. 36 the order regarding instalments had not been incorporated in the decree, the order retained its character of an order.
The earlier appeal No. 36 at the time when it was filed, should therefore be regarded as an appeal against an order.
The precipe filed for the drawing up of the order, the letter to the Prothonotary and Senior Master of the High Court by the Advocates for the appellant, the memorandum of appeal filed and the amount of stamp furnished on the memorandum are facts which go to indicate that the earlier appeal had been filed against the order regarding instalments treating the same to be an order.
The appeal No. 36 must therefore be held to be incompetent.
If the earlier appeal No. 36 were to be considered to be an appeal against the decree, the appeal would still be incompetent, because the appellant had furnished the amount of stamp necessary for preferring an appeal against the order and the requisite stamp in respect of an appeal against a decree had not been affixed.
[46 E, 48 D E, 48 H, 49 A B, 48 B, 43 D C] Under Order.
41, r.1, every appeal has to be preferred in the from of a memorandum signed by the appellant or his pleader and presented to the court or to such officer as it appoints in that behalf, and has to be accompanied by a copy of the decree appealed from, and of the judgment on which it is founded.
Rule 1 empowers the appellate court to dispense with the filing of the judgment but there is no jurisdiction in the appellate court to dispense with the filing of the decree.
The requirement that the decree should be filed alongwith the memorandum of appeal is mandatory and in the absence of the decree the filing of the appeal would be incomplete, defective and incompetent.
So long as the certified copy of the decree is not filed there is no valid appeal in the eye of law.
Though by virtue of the provisions of the Original Side Rules of the Bombay High Court the earlier appeal could be permitted to be filed without a certified copy of the decree or order, the appeal would not be valid and competent unless the further requirement of filing the certified copy had been complied with.
[49 G H, 50 A, 53 C, F] In the instant case, at the time when the earlier appeal No. 36 had been withdrawn, the certified copy of the decree had not been filed.
The said appeal without the certified copy of the decree remained an incompetent appeal.
The withdrawal of an incompetent appeal which would indeed be no appeal in the eye of law cannot in any way prejudice the right of any appellant to file a proper appeal, if the right of appeal is not otherwise lost by lapse of time or for any other valid reason.
[52 F G] Order 2, r.2, contemplates that at the time of the institution of the suit, the whole of the claim which the plaintiff is entitled to make in respect of the cause of action, has to be made and also deals with the consequences of non compliance with the requirements of the said rule.
It is doubtful whether the principles underlying this rule can be said to be applicable to an appeal.
This rule is applicable only to suits and cannot in terms apply to appeals.
Even if 29 an appeal be considered to be a continuation of a suit for certain purposes, the provision of this rule cannot in terms be made applicable to an appeal in view of the scheme of the said rule and the language used therein.
[53 F G, 53 E F] In the instant case the provisions of Order 2, r.2 of the Code do not stand in the way of the appellant in the matter of filing the subsequent appeal No. 44.
Even if the principles underlying Order 2, r.2 are considered as applicable to an appeal the maintainability of the appeal No. 44 cannot be held to be affected in any way as the cause of action in respect of the present appeal is entirely different from the cause of action on which the earlier appeal was filed.
[23 A B, G] Order 23, r.1 of the Code does not also stand in the way of the maintainability of the instant appeal No. 44.
Apart from the incompetency of the earlier appeal No. 36, the subject matter of the said appeal was entirely different from the subject matter of the present appeal.
[53 H, A B] The provisions of the Code of Civil Procedure contained in Order 20, r.11, Order 2.
r. 2 and Order 23,r.
1 do not in terms deal with any question in relation to the right of appeal or the extinguishment thereof.
These provisions do not by themselves confer any right of appeal on a party or deprive any party of the right of appeal which a party may enjoy.
These are not the statutory provisions which either confer a right of appeal on a party or deprive a party of any such right.
[54 B C] A mere prayer for postponement of payment of decretal amount or for payment thereof in instalments on the basis of the provisions contained in Order 20, r.11 (1) of the Code at a time when the decision in the suit is yet to be announced can never be considered to amount to such conduct of the party as to deprive him his right to prefer an appeal against any decree, if ultimately passed, and to disentitle him from filing an appeal against the decree.
[55 G H] In the matters of litigation the litigant who is not expected to be familiar with the formalities of law and rules of procedure is generally guided by the advice of his lawyers.
The statement of the lawyers recorded by the Division Bench in its judgment clearly goes to indicate that the lawyer had advised filing of the earlier appeal under mistaken belief.
The act done by the defendant appellant on the mistaken advice of a lawyer cannot furnish a proper ground for depriving the defendant appellant of his valuable statutory right of preferring an appeal against the decree.
The filing of an incompetent appeal on the mistaken advice of a lawyer cannot, in our opinion, reflect any such conduct on the part of the defendant appellant as to disentitle him to maintain the present appeal.
[56 C, D; F, G] The present appeal No. 44 had been filed long before the decree had been drawn up, and, there can be no question of execution of any decree at the time when that appeal was filed.
The question of the defendant appellant having obtained an advantage under the decree does not therefore really arise.
[59 A B] 30
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4618.txt
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Criminal Appeal No. 385 of 1991.
From the Judgment and Order dated 18.4.1988 of the Andhra Pradesh High Court in Crl.
Revision Petition No. 41 of 1987.
M.C. Bhandare and Ms. C.K. Sucharita for the Appellants.
C.N. Sreekumar and G. Prabhakar (for the State) for the Respondents.
The Judgment of the Court was delivered by SAWANT, J.
Leave is granted.
Appeal is taken oj board for final hearing by consent of parties.
The 1st appellant and the 1st respondent were married ar Tirupati on February 27, 1975.
They separated in July 1978.
The 1st appellant filed a petition for dissolution of marriage in the Circuit of St. Louis Country Missouri, USA.
The 1st respondent sent her reply from here under protest.
The Circuit Court passed a decree for dissolution of marriage on February 19, 1980 in the absence of the 1st respondent.
826 2.
The 1st appellant had earlier filed a petition for dissolution of marriage in the Sub Court of Tirupati being O.P. No. 87/86.
In that petition, the 1st appellant filed an application for dismissing the same as not pressed in view of the decree passed by the Missouri Court.
On August 14, 1991 the learned sub Judge of Tirupati dismissed the petition.
On November 2, 1981, the 1st appellant married the 2nd appellant in Yadgirigutta, 1st respondent filed a criminal complaint against the appellants for the offence of bigamy.
It is not necessary to refer to the details of the proceedings in the said complaint.
Suffice it to say that in that complaint, the appellants filed an application for their discharge in view of the decree for dissolution of marriage passed by Missouri Court.
By this judgment of October 21, 1986, the learned Magistrate discharged the appellants holding that the complainant, i.e., the 1st respondent had failed to make out a prima facie case against the appellants.
Against the said decision, the 1st respondent preferred a Criminal Revision Petition to the High Court and the High Court by the impugned decision of April 18, 1987 set aside the order of the magistrate holding that a photostat copy of the judgment of the Missouri Court was not admissible in evidence to prove the dissolution of marriage.
The Court further held that since the learned Magistrate acted on the photostat copy, he was in error in discharging the accused and directed the Magistrate to dispose of the petition filed by the accused, i.e., appellants herein for their discharge, afresh in accordance with law.
It is aggrieved by this decision that the present appeal is filed.
It is necessary to note certain facts relating to the decree of dissolution of marriage passed by the Circuit Court of St. Louis Country Missouri, USA.
In the first instance, the Court assumed jurisdiction over the matter on the ground that the 1st appellant had been a resident of the State of Missouri for 90 days next preceding the commencement of the action and that petition in that Court.
Secondly, the decree has been passed on the only ground that there remains no reasonable likelihood that the marriage between the parties can be preserved, and that the marriage is, therefore, irretrievably broken ' '.
Thirdly, the 1st respondent had not submitted to the jurisdiction of the Court.
From the record, it appears that to the petition she had filed two replies of the same date.
Both are identical in nature except that one of the replies begins with an additional averment as follows: ``without prejudice to the contention that this respondent is not submitting to the jurisdiction of this hon 'ble court, this respondent sub 827 mits as follows ' '.
She had also stated in the replies, among other things, that (i) the petition was not maintainable, (ii) she was not aware if the first appellant had been living in the State of Missouri for more than 90 days and that he was entitled to file the petition before the Court, (iii) the parties were Hindus and governed by Hindu Law, (iv) she was an Indian citizen and was not governed by laws in force in the State of Missouri and , therefore, the Court had no jurisdiction to entertain the petition, (v) the dissolution of the marriage between the parties was governed by the and that it could not be dissolved in any other way except as provided under the said Act, (vi) the Court had no jurisdiction to enforce the foreign laws and none of the grounds pleaded in the petition was sufficient to grant any divorce under the .
Fourthly, it is not disputed that the 1st respondent was neither present nor represented in the Court passed the decree in her absence.
In fact, the Court has in terms observed that it had no jurisdiction ``in personam ' ' over the respondent or minor child which was born out of the wed lock and both of them had domiciled in India.
Fifthly, in the petition which was filed by the 1st appellant in that Court on October 6, 1980, besides alleging that he had been a resident of the State of Missouri for 90 days or more immediately preceding the filing of the petition and he was then residing at 23rd Timber View Road, Kukwapood, in the Country of St. Louis, Missouri, he had also alleged that the 1st respondent had deserted him for one year or more next preceding the filing of the petition by refusal to continue to live with the appellant in the United States and particularly in the State of Missouri.
On the other hand, the averments made by him in his petition filed in the court of the Subordinate Judge, Tirupati in 1978 shows that he was a resident of Apartment No. 414, 6440, South Claiborn Avenue, New Orleans, Louisiana, United States and that he was a citizen of India.
He had given for the service of all notices and processes in the petition, the address of his counsel Shri PR Ramachandra Rao, Advocate, 16 11 1/3, Malakpet, Hyderabad 500 036.
Even according to his averments in the said petition, the 1st respondent had resided with him at Kuppanapudi for about 4 to 5 months after th marriage.
Thereafter she had gone to her parental house at Relangi, Tanuka Taluk, West Godawari District.
He was, thereafter, sponsored by his friend Prasad for a placement in the medical service in the United States and had first obtained employment in Chicago and thereafter in Oak Forest and Greenville Springs and ultimately in the Charity Hospital in Louisiana at New Orleans where he continued to be emp 828 loyed.
Again according to the averments in the said petition, when the 1st respondent joined him in the United States, both of them had stayed together as husband and wife at New Orleans.
The 1st respondent left his residence in New Orleans and went first to Jackson, Texas and, thereafter, to Chicago to stay at the residence of his friend, Prasad.
Thereafter she left Chicago for India.
Thus it is obvious from these averments in the petition that both the 1st respondent and the 1st petitioner had last resided together at New Orleans, Louisiana and never within the jurisdiction of the Circuit Court of St. Louis Country in the State of Missouri.
The averments to that effect in the petition filed before the St. Louis Court are obviously incorrect.
Under the provisions of the (hereinafter referred to as the ``Act ' ') only the District Court within the local limits of whose original civil jurisdiction (i) the marriage was solemnized, or (ii) the respondent, at the time of the presentation of the petition resides, or (iii) the parties to the marriage last resided together, or (iv) the petitioner is residing at the time of the presentation of the petition, in a case where the respondent is, at the time, residing outside the territories to which the Act extends, or has not been heard of as being alive for a period of seven years of more by those persons who would naturally have heard of him if he were alive, has jurisdiction to entertain the petition.
The Circuit Court of St. Louis Country, Missouri had, therefore, no jurisdiction to entertain the petition according to the Act under which admittedly the parties were married.
Secondly, irretrievable breakdown of marriage is not one of the grounds recognised by the Act for dissolution of marriage.
Hence, the decree of divorce passed by the foreign court was on a ground unavailable under the Act.
Under Section 13 of the Code of Civil Procedure 1908 (hereinafter referred to as the ``Code ' '), a foreign judgment is not conclusive as to any matter thereby directly adjudicated upon between the parties if (a) it has not been pronounced by a Court of competent jurisdiction; (b) it has not been given on the merits of the case; (c) it is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable; (d) the proceedings are opposed to natural justice, (e) it is obtained by fraud, (f) it sustains a claim founded on a breach of any law in force in India.
As pointed out above, the present decree dissolving the marriage passed by the foreign court is without jurisdiction according to the Act as neither the marriage was celebrated nor the parties last 829 resided together nor the respondent resided within the jurisdiction of that Court.
The decree is also passed on a ground which is not available under the Act which is applicable to the marriage.
What is further, the decree has been obtained by the 1st appellant by stating that he was the resident of the Missouri State when the record shows that he was only a bird of passage there and was ordinarily a resident of the State of Louisiana.
He had, if at all, only technically satisfied the requirement of residence of ninety days with the only purpose of obtaining the divorce.
He was neither domiciled in that State nor had he an intention to make it his home.
He had also no substantial connection with the forum.
The 1st appellant has further brought no rules on record under which the St. Louis Court could assume jurisdiction over the matter.
On the contrary, as pointed out earlier, he has in his petition made a false averment that the 1st respondent had refused to continue to stay with him in the State of Missouri where she had never been.
In the absence of the rules of jurisdiction of that court, we are not aware whether the residence of the 1st respondent within the State of Missouri was necessary to confer jurisdiction on that court, and if not, of the reasons for making the said averment.
Relying on a decision of this Court in Smt.
Satya vs Teja Singh, it is possible for us to dispose of this case on a narrow ground, viz., that the appellant played a fraud on the foreign court residence does not mean a temporary residence for the purpose of obtaining a divorce but habitual residence or residence which is intended to be permanent for future as well.
We remain from adopting that course in the present case because there is nothing on record to assure us that the Court of St. Louis does not assume jurisdiction only on the basis of a mere temporary residence of the appellant for 90 days even is such residence is for the purpose of obtaining divorce.
We would, therefore, presume that the foreign court by its own rules of jurisdiction had rightly entertained the dispute and granted a valid decree of divorce according to its law.
The larger question that we would like to address ourselves to is whether even in such cases, the Courts in this country should recognise the foreign divorce decrees.
The rules of Private International Law in this country are not codified and are scattered in different enactments such as the Civil Procedure Code, the Contract Act, the Indian Succession Act, the Indian Divorce Act, the Special Marriage Act etc.
In addition, some rules have also been evolved by judicial decisions.
In matters of status or legal capacity of natural persons, matrimonial disputes, custody of 830 children, adoption, testamentary and intestate succession etc.
the problem in this country is complicated by the fact that there exist different personal laws and no uniform rule can be laid down for all citizens.
The distinction between matters which concern personal and family affairs and those which concern commercial relationships, civil wrongs etc.
is well recognised in other countries and legal systems.
The law in the former area tends to be primarily determined and influenced by social, moral and religious considerations, and public policy plays a special and important role in shaping it.
Hence, in almost all the countries the jurisdicational procedural and substantive rules which are applied to disputes arising in this area are significantly different from those applied to claims in other areas.
That is as it ought to be.
For, no country can afford to sacrifice its internal unity, stability and tranquility for the sake of uniformity of rules and comity of nations which considerations are important and appropriate to facilitate international trade, commerce, industry, communication, transport, exchange of services, technology, manpower etc.
This glaring fact of national life has been recognised both by the Hague Convention of 1968 on the Recognition of Divorce and Legal Seperations as well as by the Judgments Convention of the European Community of the same year.
Article 10 of the Hague Convention expressly provides that the contracting States may refuse to recognise a divorce or legal separation if such recognition is manifestly incompatible with their public policy.
The Judgments Convention of the European Community expressly excludes from its scope (a) status or legal capacity of natural persons, (b) rights in property arising out of a matrimonial relationship, (c) wills and succession, (d) social security and (e) bankruptcy.
A separate convention was contemplated for the last of the subjects.
We are in the present case concerned only with the matrimonial law and what we state here will apply strictly to matters arising out of and ancillary to matrimonial disputes.
The Courts in this country have so far tried to follow in these matters the English rules of Private International Law whether common law rules or statutory rules.
The dependence on English Law even in matters which are purely personal, has however time and again been regretted.
But nothing much has been done to remedy the situation.
The labours of the Law Commission poured in its 65th Report on this very subject have not fructified since April 1976, when the Report was submitted.
Even the British were circumspect and hesitant to apply their rules of law in such matters during their governance of this country and had left the family law to be governed by the customary rules of the diffe 831 rent communities.
It is only where was a void that they had stepped in by enactments such as the Special Marriage Act, Indian Divorce Act, Indian Succession Act etc.
In spite, however, of more than 43 years of independence we find that the legislature has not thought it fit to enact rules of Private International Law in this area and in the absence of such initiative from the legislature the courts in this country their inspiration, as stated earlier, from the English rules.
Even in doing so they have not been uniform in practice with the result that we have some conflicting decisions in the area.
We cannot also lose sight of the fact that today more than ever in the past, the need for definitive rules for recognition of foreign judgments in personal and family matters, and particularly in matrimonial disputes has surged to the surface.
Many a man and woman of this land with different personal laws have migrated and are migrating to different countries either to make their permanent abode there or for temporary residence.
Likewise there is also immigration of the nationals of other countries.
The advancement in communication and transportation has also made it easier for individuals to hop from one country to another.
It is also not unusual to come across cases where citizens of this country have been contracting marriages either in this country or abroad with nationals of the other countries or among themselves, or having married here, either both or one of them migrate to other countries.
There are also cases where parties having married here have been either domiciled or residing separately in different foreign countries.
This migration, temporary or permanent, has also been giving rise to various kinds of matrimonial disputes destroying in its turn the family and its peace.
A large number of foreign decrees in matrimonial matters is becoming the order of the recognition of the foreign judgments in these matters.
The minimum rules of guidance for securing the certainty need not await legislative initiative.
This Court can accomplish the modest job within the framework of the present statutory provisions if they are rationally interpreted and extended to achieve the purpose.
It is with this intention that we are undertaking this venture.
We aware that unaided and left solely to our resources the rules of guidance which we propose to lay down in this area may prove inadequate or miss some aspects which may not be present to us at this juncture.
But a begining has to be made as best as one can, the lacunae and the errors being left to be filled in and corrected by future judgments.
832 12.
We believe that the relevant provisions of Section 13 of the Code are capable of being interpreted to secure the required certainty in the sphere of this branch of law in conformity with public policy, justice, equity and good conscience, and the rules so evolved will protect th sanctity of the institution of marriage and the unity of family which are the corner stones of our societal life.
Clause (a) of Section 13 states that a foreign judgment shall not be recognised if it has not been pronounced by a court of competent jurisdiction.
We are of the view that this clause should be interpreted to mean that only that court will be a court of competent jurisdiction which the Act or the law under which the parties are married recognises as a court of competent jurisdiction to entertain the matrimonial dispute.
Any other court should be held to be a court without jurisdiction unless both parties voluntarily and unconditionally subject themselves to the jurisdiction of that court.
The expression ``competent court ' ' in Section 41 of the has also to be construed likewise.
Clause (b) of Section 13 states that if a foreign has not been given on the merits of the case, the courts in this country will not recognise such judgment.
This clause should be interpreted to mean (a) that the decision of the foreign court should be on a ground available under the law under which the parties are married, and (b) that the decision should be a result of the contest between the parties.
The latter requirement is fulfilled only when the respondent is duly served and voluntarily and unconditionally submits himself/herself to the jurisdiction of the court and contests the claim, or agrees to the passing of the decree with or without appearance.
A mere filing of the reply to the claim under protest and without submitting to the jurisdiction of the court, or an appearance in the Court either in person or through a representative for objecting to the jurisdiction of the Court, should not be considered as a decision on the merits of the case.
In this respect the general rules of the acquiescence to the jurisdiction of the Court which may be valid in other matters and areas should be ignored and deemed inappropriate.
The second part of clause (c) of Section 13 states that where the judgment is founded on a refusal to recognise the law of this country in cases in which such law is applicable, the judgment will not be recognised by the courts in this country.
The marriages which take place in this country can only be under either the customary or the statutory law in force in this country.
Hence, the only law that can be applicable 833 to the matrimonial disputes is the one under which the parties are married, and no other law.
When, therefore, a foreign judgment is founded on a jurisdiction or on ground not recognised by such law, it is a judgment which is in defiance of the Law.
Hence, it is not conclusive of the matters adjudicated therein and therefore, unenforceable in this country.
For the same reason, such a judgment will also be unenforceable under clause (f) of Section 13, since such a judgment would obviously be in breach of the matrimonial law in force in this country.
Clause (d) of Section 13 which makes a foreign judgment unenforceable on th ground that the proceedings in which it is obtained are opposed to natural justice, states no more than an elementary principle on which any civilised system of justice rests.
However, in matters concerning the family law such as the matrimonial disputes, this principle has to b extended to mean something more than mere compliance with the technical rules of procedure.
If the rule of audi alteram partem has any meaning with reference to the proceedings in a foreign court, for the purposes of the rule it should not be deemed sufficient that the respondent has been duly served with the process of the court.
It is necessary to ascertain whether the respondent was in a position to present or represent himself/herself and contest effectively the said proceedings.
This requirement should apply equally to the appellate proceedings if and when they are file by either party.
If the foreign court has not ascertained and ensured such effective contest by requiring the petitioner to make all necessary provisions for the respondent to defend including the costs of travel, residence and litigation where necessary, it should be held that the proceedings are in breach of the principles of natural justice.
It is for this reason that we find that the rules of Private International Law of some countries insist, even in commercial matters, that the action should be filed in the forum where the defendant is either domiciled or is habitually resident.
It is only in special cases which is called special jurisdiction where the claim has some real link with other forum that a judgment of such forum is recognised.
This jurisdiction principle is also recognised by the Judgments Convention of this European Community .
If, therefore, the courts in this country also insist as a matter of rule that foreign matrimonial judgment will be recognised only it it is of the forum where the respondent is domiciled or habitually and permanently resides, the provisions of clause (d) may be held to have been satisfied.
The provision of clause (e) of Section 13 which requires that the 834 courts in this country will not recognise a foreign judgment if it has been obtained by fraud, is self evident.
However, in view of the decision of this Court in Smt.
Satya vs Teja Singh, (supra) it must be understood that the fraud need not be only in relation to the merits of the mater but may also be in relation to jurisdictional facts.
From the aforesaid discussion the following rule can be deduced for recognising foreign matrimonial judgment in this country.
The jurisdiction assumed by the foreign court as well as the grounds on which the relief is granted must be in accordance with the matrimonial law under which the parties are married.
The exceptions to this rule may be as follows: (i) where the matrimonial action is filed in the forum where the respondent is domiciled or habitually and permanently resides and the relief is granted on a ground available in the matrimonial law under which the parties are married; (ii) where the respondent voluntarily and effectively submits to the jurisdiction of the forum as discussed above and contests the claim which is based on a ground available under the matrimonial law under which the parties are married; (iii) where the respondent consents to the grant of the relief although the jurisdiction of the forum is not in accordance with the provisions of the matrimonial law of the parties.
The aforesaid rule with its stated exceptions has the merit of being just and equitable.
It does no injustice to any of the parties.
The parties do and ought to know their rights and obligations when they marry under a particular law.
They cannot be heard to make a grievance about it later or allowed to bypass it by subterfuges as in the present case.
The rule also has an advantage of rescuing the institution of marriage from the uncertain maze of the rules of the Private International Law of the different countries with regard to jurisdiction and merits based variously on domicile, nationality, residence permanent or temporary or ad hoc forum, proper law etc.
and ensuring certainty in the most vital field of national life and conformity with public policy.
The rule further takes account of the needs of modern life and makes due allowance to accommodate them.
Above all, it gives protection to women, the most vulnerable section of our society, whatever the strata to which they may belong.
In particular it frees them from the bondage of the tyrannical and servile rule that wife 's domicile follows that of her husband and that it is the husband 's domicilliary law which determines the jurisdiction and judges the merits of the case.
Since with regard to the jurisdiction of the forum as well as the ground on which it is passed the foreign decree in the present case 835 is not in accordance with the Act under which the parties were married, and the respondent had not submitted to the jurisdiction of the court or consented to its passing, it cannot be recognised by the courts in this country and is, therefore, unenforceable.
The High Court, as stated earlier, set aside the order of the learned Magistrate only on the ground that the photostat copy of the decree was not admissible in evidence.
The High Court is not correct in its reasoning.
Under Section 74(1)(iii) of the (Hereinater referred to as the "Act") documents forming the acts or records of the acts of public judicial officers of a foreign country are public documents.
Under Section 76 read with Section 77 of the Act, certified copies of such documents may be produced in proof of their contents.
However, under Section 86 of the Act there is presumption with regard to the genuineness and accuracy of such certified copy only if it is also certified by the representative of our Central Government in or for that country that the manner in which it has been certified is commonly in use in that country for such certification.
Section 63(1) and (2) read with Section 65(e) and (f) of the Act permits certified copies and copies made from the original by mechanical process to be tendered as secondary evidence.
A photostat copy is prepared by a mechanical process which in itself ensures the accuracy of the original.
The present photostat copies of the judicial record of the Court of St. Louis is certified for the Circuit Clerk by the Deputy Clerk who is a public officer having the custody of the document within the meaning of Section 76 of the Act and also in the manner required by the provisions of the said section.
Hence the Photostat copy per se is not inadmissible in evidence.
It is inadmissible because it has not further been certified by the representative of our Central Government in the United States as required by Section 86 of the Act.
The expression "certified copy" of a foreign judgment in Section 14 of the Code has to be read consistent with the requirement of Section 86 of the Act.
While, therefore, holding that the document is not admissible in evidence for want of the certificate under Section 86 of the Act and not because it is a photostat copy of the original as held by the High Court, we uphold the order of the High Court also on a more substantial and larger ground as stated in paragraph 14 above.
Accordingly, we dismiss the appeal and direct the learned Magistrate to proceed with the matter pending before him according to law as expenditiously as possible, preferably within four months from now as the prosecution is already a decade old.
T.N.A. Appeal dismissed.
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The first appellant and the first respondent were married at Tirupati on 27.2.1975 according to Hindu Law.
They separated in July 1978.
The appellant husband filed a petition for dissolution of the marriage in the Sub Court of Tirupati stating that he was a resident of South Claiborn Avenue, New Orleans, Louisiana, and that he was a citizen of India and that he and his wife last resided together at New Orleans, Louisiana.
Subsequently he filed another petition for dissolution of marriage in the Circuit Court St. Louis Country, Missouri, USA alleging that he has been a resident of the State of Missouri for 90 days or more immediately preceding th filing of the petition by refusing to continue to live with the appellant in the US and particularly in the State of Missouri.
But from the averments made by him in the petition before the Sub Judge, Tirupati it was obvious that he and his wife had last resided together at New Orleans, Louisiana and never within the jurisdiction of th Circuit Court of St. Louis Country in the State of Missouri.
The respondent wife filed her reply raising her objections to the maintainability of the petition.
She also clearly stated that her reply was without prejudice to her contention that she was not submitting to the jurisdiction of the foreign court.
The Circuit Court Missouri assumed jurisdiction on the ground that the 1st Appellant had been a resident of the State of Missouri for 90 days next preceding the commencement of the action in the Court.
In the absence of the respondent wife the Circuit Court, Missouri passed a decree for dissolution of marriage on the only ground that the marriage has irretrievably down.
Subsequent to the passing of the decree by the Circuit Court, Missouri, the appellant filed an application for dismissal of his earlier petition before the Sub Court of Tirupati and the same was dismissed.
823 On 2nd November 1981 the last appellant married appellant No. 2.
Thereafter, the 1st respondent filed a criminal complaint against the appellants for the offence of bigamy.
The appellants filed an application for their discharge in view of the decree for dissolution of marriage passed by the Circuit Court, Missouri.
The Magistrate discharged the appellants by holding that the complainant wife had failed to make out a prima facie case against the appellants.
The respondent preferred a Criminal Revision Petition before the High Court which set aside the order of the Magistrate by holding (i) that a photostat copy of the judgment of Missouri Court was not admissible in evidence; (ii) since the Learned Magistrate acted on the photostat copy of the judgment, he was in error in discharging the accused.
Accordingly the High Court directed the Magistrate to dispose of the petition filed by the appellants for their discharge afresh in accordance with law.
Aggrieved by the decision of the High Court the appellants filed appeal in this Court.
Dismissing the appeal, this Court, HELD: 1.
The decree dissolving the marriage passed by the foreign court is without jurisdiction according to the as neither the marriage was celebrated nor the parties last resided together nor the respondent resided within the jurisdiction of that Court.
Further, irretrievable breakdown of marriage is not one of the grounds recognised by the Act of dissolution of marriage.
Hence, the decree of the divorce passed by the foreign court was on a ground unavailable under the Act which is applicable to the marriage.
Since with regard to the jurisdiction of the forum as well as the ground on which it is passed the foreign decree in the present case is not in accordance with the Act under which the parties were married, and the respondent had not submitted to the jurisdiction of the court or consented to its passing, it cannot be recognised by the courts in this country and is therefore, unenforceable.
[828H, 829A, 828E, 834H, 835A] 2.
Residence does not mean a temporary residence for the purpose of obtaining a divorce but habitual residence or residence which is intended to be permanent for future as well.
[829E] Smt.
Satya vs Teja Singh, , referred to.
The rules of Private International Law in this country are not codified and are scattered in different enactments such as the Civil Procedure Code, the Contract ACt, the Indian Succession Act, the Indian Divorce Act, the Special Marriage Act etc.
In addition, some 824 rules have also been evolved by judicial decisions.
In matters of status or legal capacity of natural persons, matrimonial disputes, custody of children, adoption, testamentary and intestate succession etc.
the problem in this country is complicated by the fact that there exist different personal laws and no uniform rule can be laid down for all citizens.
Today more than ever in the past, the need for definitive rules for recognition of foreign judgments in personal and family matters, and particularly in matrimonial disputes has surged to the surface.
A large number of foreign decrees in matrimonial matters is becoming the order of the day.
A time has, therefore, come to ensure certainty in the recognition of the foreign judgments in these matters.
The minimum rules of guidance for securing the certainty need not await legislative initiative.
This Court can accomplish the modest job within the frame work of the present statutory provisions if they are rationally interpreted and extended to achieve the purpose.
Though the proposed rules of guidance in this area may prove inadequate or miss some aspects which may not be present to us at this juncture, yet a begining has to be made as best as one can, the lacunae and the errors being left to be filled in and corrected by future judgments.
[829H, 830A, 831C, F H] 4.
The relevant provisions of Section 13 of the CPC are capable of being interpreted to secure the required certainty in the sphere of this branch of law in conformity with public policy, justice, equity and good conscience, and the rules so evolved will protect the sanctity of the institution of marriage and the unity of family which are the corner stones of our social life.
[832A] 4.1 On an analysis and interpretation of Section 13 of CPC the following rule can be deduced for recognising a foreign matrimonial judgment in this country.
The jurisdiction assumed by the foreign court as well as the grounds on which the relief is granted must be in accordance with the matrimonial law under which the parties are married.
The exceptions to this rule may be as follows; (i) where the matrimonial action is filed in the forum where the respondent is domiciled or habitually and permanently resides and the relief is granted on a ground available in the matrimonial law under which the parties are married; (ii) where the respondent voluntarily and effectively submits to the jurisdiction of the forum and contests the claim which is based on a ground available under the matrimonial law under which the parties are married; (iii) where the respondent consents to the grant of the relief although the jurisdiction of the forum is not in accordance with the provisions of the matrimonial law of the parties.
[834B D] 825 5.
The High Court erred in setting aside the order of the learned Magistrate only on the ground that the photostat copy of the decree was not admissible in evidence.
In the instant case photostat copies of the judicial record of the Court of St. Louis is certified for th Circuit Clerk by the Deputy clerk who is a public officer having the custody of the document within the meaning of Section 76 of the also in the manner required by the provisions of the said section.
Hence the photostat copy per se is not inadmissible in evidence.
It is inadmissible because it has not further been certified by the representative of our Central Government in the United States as required by Section 86 of the Act.
Therefore the document is not admissible in evidence for want of the certificate under Section 86 of the Act and not because it is a photostat copy of the original as held by the High Court.
[835B, E, F G] 6.
The Magistrate is directed to proceed with th matter pending before him according to law as expeditiously as possible, preferably within four months.
[835G]
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6751.txt
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Appeal No. 135 of 1961.
Appeal by special leave from the judgment and order dated January 3, 1961, of the Rajasthan High Court, Jodhpur, in Civil Writ Petition No. 1 of 1961.
M. K. Nambiar, R. K. Garg, D. P. Singh, M. K. Ramamurthi and section C. Agarwala, for the appellant petitioner.
H. N. Sanyal, Additional Solicitor General of India, C. C. Kasliwal, Advocate General of Rajasthan, Khan Singh and D. Gupta, for the respondents.
April 14.
The Judgment of the Court was delivered by WANCHOO, J.
These two connected matters arise out of an order approving a scheme framed under Chap.
IV A of the , No. IV of 1939, (hereinafter referred to as the Act) and will be disposed of together.
The brief facts necessary for present purposes are these.
The appellant was plying a bus between Jaipur and Ajmer on a permit granted to him for three years by resolution of the Regional Transport Authority, Jaipur, dated December 16/17, 1958.
In August, 1960, the State Government promulgated rules under section 68 1 of the Act, called the Rajasthan State Road Transport Services (Development) Rules, 1960 (hereinafter called the Rules).
The Rules were framed for carrying out the purposes of Chap.
IV A of the Act and provided inter alia for framing of schemes, hearing of objections, determination and payment of 980 compensation, and other incidental matters.
A draft scheme was published on September 7, 1960, for taking over the Jaipur Ajmer route.
The appellant made objections to the draft scheme within the time allowed by the notification thereof.
The State Government appointed the Legal Remembrancer to hear and decide the objections under r. 7 of the Rules.
It appears that in the meantime an application was made under article 226 by some bus operators before the Rajasthan High Court challenging the constitutionality of section 68 D of the Act and the legality of the Rules framed by the State Government.
This application was dismissed and the High Court inter alia decided while considering r. 7(6) that it was not open to the officer hearing the objections to cancel the draft scheme and seems to have held that there was no such power even under section 68 D(2) of the Act.
This decision was given on November 9, 1960.
The draft scheme came up for consideration before the officer appointed to hear objections on November 21,, 1960.
An application was made before him that the appellant should be permitted to give evidence on points of fact which were narrated in the application in order that the officer may be in a position to decide the objections justly.
This application was rejected by the officer on the ground that there was no provision in the Rules for recording of evidence of witnesses.
The matter then came up for consideration on November 23, 1960.
On that date another application was made in which it was said that the appellant wanted to lead evidence to show that the draft scheme must be rejected in its entirety, and it was contended that the view taken by the Rajasthan High Court to the effect that it was not open to the officer to cancel a draft scheme was incorrect.
This application was also rejected by the officer with the observation that he was bound hand and foot by the decision of the Rajasthan High Court and if there was anything wrong in the interpretation given by the High Court the remedy lay elsewhere.
Thereafter the officer gave a hearing to the appellant in the sense that he heard arguments on behalf of the appellant and approved the draft scheme 981 by his order dated December 7, 1960.
The approved scheme was then published on December 12,1960.
On January 9, 1961, the Regional Transport Authority informed the appellant that his permit was cancelled, as from January 26, 1961, or such later date from which the buses of Rajasthan State Roadways begin to operate on the above mentioned route.
In the meantime, the appellant unsuccessfully moved the Rajasthan High Court, and his prayer for leave to appeal to this Court was also rejected.
The appellant then applied for special leave to appeal to this Court which was granted; and that is how the matter has come up before us.
Two main points have been urged before us on behalf of the appellant, namely, (i) the officer was wrong in the view he took that it was not open to him to reject the draft scheme in its entirety, and (ii) the officer was wrong in holding that he could not take evidence, whether oral or documentary, and all that he had to do under section 68 D of the Act was to hear arguments on either side.
It is contended that in view of these two wrong decisions of the officer his approach to what he had to do in dealing with objections under section 68 D was quite incorrect.
, with the result that there was no effective hearing of the objections and any approval given to the scheme in these circumstances is liable to be set aside and the appellant is entitled "to be heard" in the real sense in which those words were used in section 68 D (2).
Section 68 D (2) with which we are concerned is in these words: "The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State transport undertaking to be heard in the matter, if they so desire, approve or modify the scheme.
" The view taken by the Rajasthan High Court in its decision of November 9, 1960, seen is to be that this section does not justify what it called the cancellation of the scheme.
We are of the opinion that this view is 982 not correct.
What section 68 D(2) provides is that after hearing the parties, the State Government may approve or modify the draft scheme.
This in our opinion clearly implies that the authority which has to approve or modify the scheme has the power also, if it so thinks fit, not to approve the scheme at all.
What is before the.
State Government under section 68 D (2) is a draft scheme.
That sub section provides that the State Government may approve or modify the scheme; that does not mean that the State Government is bound to approve the scheme with or without modifications.
An authority to which power has been given to approve or modify some proposal has certainly in our opinion the power to say that it will not approve the proposal at all, for the words "may approve" on a reasonable interpretation include "may not approve".
If a person may approve he is not bound to approve.
Up to the stage when the hearing takes place under sub s.(2) the draft scheme is merely a proposal before the State Government and it will only become effective if it approves of it with or without modifications.
But this power clearly implies the power to say that it does not approve the draft scheme at all; and if it says that, the draft scheme will stand rejected and the State Transport Undertaking may have to submit another scheme for approval.
When section 68 E speaks of cancellation it refers to a scheme already approved under section 68 D(3), and in that con.
text the word "cancellation" is properly used.
But the fact that section 68 E provides for the cancellation of a scheme which has already been approved, does not mean that it is not open to the State Government under section 68 D(2) to say, after hearing the objections, that it does not approve the scheme at all which is put up before it as a draft for approval.
We are therefore of the opinion that under section 68 D(2) it is open to the State Government to say after hearing objections that it does not approve of the draft scheme at all, in which case the draft scheme will stand rejected and the State Transport Undertaking may have to frame a fresh scheme in accordance with the procedure provided in Chap.
The officer therefore was wrong 983 in holding that he had no power to reject the scheme in the sense that he could withhold approval of it altogether, though we may add that he came to that conclusion because of the earlier decision of the Rajasthan High Court.
As for r. 7(6) of the Rules it is in similar terms as section 68 D(2) and must therefore mean what we have said above with respect to section 68 D(2).
If, however, by the use of the word "shall" in r. 7(6) in place of the word "may" which appears in section 68 D(2) the intention is to curtail the power of the officer hearing the objections, the rule would be bad as going beyond what is provided in section 68 D(2).
But we do not think that the use of the word "shall" in r. 7(6) makes any difference, for the word "shall" had to be used there according to the rules of English Grammar and has no greater force than the word "may used in section 68 D(2) The learned Additional Solicitor General who appeared for the State of Rajasthan did not contest that what we have said above was the true position in section 68 D(2) and r. 7(6).
(ii) The next question is the scope of the hearing under section 68 D(2).
The officer has held that the scope of the hearing is confined only to hearing of arguments and no more, and that is why he rejected the prayer of the appellant for leading evidence, whether oral or documentary.
Now it has been held by this Court in Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation (1) that a State Government acts as a quasi judicial tribunal when giving a hearing under section 68 D.
The purpose of the hearing is that the State Government has to satisfy itself that the opinion of the State Transport Undertaking formed under section 68 C, namely that the scheme is for the purpose of providing an efficient, adequate, economical and properly coordinated road transport service, is correct.
The objections are all made to show that the scheme does not provide for an efficient, adequate, economical and properly coordinated road transport (1) [1959] Supp. 1 S.C.R. 319 984 service.
In order therefore to arrive at the conclusion that the draft scheme provides for a transport service of this nature, the State Government as a quasi judicial authority may require materials to come to that conclusion.
A hearing before a quasi judicial authority does not merely mean an argument; it may in proper cases include the taking of evidence, both oral and documentary.
It seems to us that in the circumstances of the provision contained in section 68 D(2) and the purpose of the hearing thereunder, taking of evidence, whether oral or documentary, that maybe desired to be produced by either party, may be necessary before the State Government can arrive at a just conclusion with respect to the objections to the draft scheme.
We cannot therefore agree with the officer that there is no warrant for taking any evidence at all at a hearing under section 68 D(2).
It seems to us, considering the nature of the objections and the purpose for which the hearing is given, that production of evidence, either oral or documentary, is comprehended within the hearing contemplated in section 68 D(2).
The officer therefore was wrong in loading that it was not open to the parties to produce evidence before him and they were confined only to submit their arguments on the basis of the draft scheme on the one hand and their written objections on the other.
We may however point out that the production of evidence (documentary or oral) does not mean that the parties can produce any amount of evidence they like and prolong the proceedings inordinately and the State Government when giving the hearing would be powerless to check this.
We need only point out that though evidence may have to be taken under section 68 D(2) it does not follow that the evidence would be necessary in every case.
It will therefore be for the State Government, or as in this case the officer concerned, to decide in case any party desires to lead evidence whether firstly the evidence is necessary and relevant to the inquiry before it.
If it considers that evidence is necessary, it will give a reasonable opportunity to the party desiring to produce evidence to give evidence relevant to the enquiry and within reason and it 985 would have all the powers of controlling the giving and the recording of evidence that any court has.
Subject therefore to this over riding power of the State Government or the officer giving the hearing, the parties are entitled to give evidence either documentary or oral during a hearing under section 68 D(2).
In view of what we have said above the approach of the officer in this case was wrong on both the points.
He was wrong in his view that it was not open to him to reject the scheme in toto and withhold approval altogether.
He was also wrong in the view that it was not open to him to take evidence, whether oral or documentary, though of course, as we have said above the control on this evidence must be in him.
The result of this wrong approach to our mind has certainly been that the appellant did not get a hearing to which he was entitled under section 68.D(2).
In the circumstances we must hold that the approval of the scheme was without a proper hearing under section 68 D(2), which, even though arguments were heard in full in this case, vitiates the approval given to the scheme by the officer concerned.
We therefore allow the appeal and set aside the order of the officer concerned approving the scheme and direct that the draft scheme be reconsidered by the said officer or such other officer as the State Government may appoint hereafter after giving a hearing in the light of the observations we have made above.
The appellant will get his costs from the State of Rajasthan.
In the circumstances no order is necessary in the writ petition, which is hereby dismissed.
We pass no order as to costs in the writ petition.
Petition dismissed.
|
By section 68 D(2) of the , "The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in the matter, it they so desire, approve or modify the scheme".
The appellant 's objections to the draft scheme in question were heard by the Legal Remembrance, appointed by the State Government to hear such objections, under r. 7(6) of the Rajasthan State Transport Services (Development) Rules, 1960, framed under section 68 1 of the Act.
The appellant applied to the said Officer for permission to give evidence in order that he could show that the entire scheme ought to be rejected.
His applications were rejected by the Officer holding that the Rules did not provide for recording of evidence and that according to a decision of the Rajasthan High Court, dated November 9, 1960, section 68 D(2) of the Act did not empower him to cancel the draft scheme in its entirety.
He, therefore, heard the arguments addressed on behalf of the appellant and approved the scheme.
After moving unsuccessfully the Rajasthan High Court, the appellant appealed to this Court by special leave, Held, that the Officer was in error on both the points.
Section 68 D(2) of the Act clearly implies that the authority which has to approve or modify the scheme, has also the power, if it thinks proper, to disapprove the scheme altogether.
The words " may approve" in the section, properly construed, must also include "may not approve".
The use of the word "shall" in r. 7(6) of the Rules instead of the word "may", which is otherwise similar in its terms to section 68 D(2) of the Act,.can make no difference.
In hearing objections under section 68 D(2) of the Act, the State Government or its Officers act as a quasi judicial tribunal and regard being to the nature of the objections and the purpose of the hearing thereunder, there can be no doubt that production of evidence, both oral and documentary, is clearly contemplated by the section.
979 Gullapalli Nageswara Rao vs Andhra Pradesh State Road Transport Corporation, [1959] Supp. 1 S.C.R. 319, referred to.
Bat that does not mean that the parties can produce any amount of evidence merely to prolong the proceeding.
It is for the State Government or the Officer to decide whether the evidence sought to be adduced is necessary and relevant to the enquiry and, if so, they will have all the powers that a court has of controlling the giving and recording of such evidence.
Where a draft scheme is disapproved under section 68 D(2) and thus stands rejected, any fresh scheme that may have to be framed, must be framed according to the procedure prescribed by Ch.
IVA of the Act.
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1233.txt
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ition No. 106 of 1980 Under Article 32 of the Constitution of India.
with 509 Civil Appeal No. 2735 of 1986 Arising out of Special Leave Petition (Civil) No. 2775 of 1980.
P.S. Potti, K.R. Chaudhary, Miss Malini Poduval and Miss R. George for the Petitioners.
M.K. Ramamurthy, T.V.S.N. Chari and Miss. V. Grover for the Respondents in W .
No . 106 of 1980.
K. Ram Kumar for the Appellant in C.A. No. 2735 of 1986.
A. Subba Rao for the Respondents in C.A. No. 2735 of 1986.
The Judgment of the Court was delivered by DUTT, J.
The Writ Petition No. 106 of 1980 under Article 32 of the Constitution of India preferred by the petitioners, Smt.
M. Nirmala & 309 others, and the appeal by special leave filed by the State of Andhra Pradesh have been heard together as they involve the common question as to the seniority of certain employees of the Government of Andhra Pradesh in Group II and Group IV services.
Group II services relate to the posts of Junior Assistants in the Secretariat and Group IV services relate to the posts of Lower Division Clerks, Lower Division Assistants, Lower Division Typists and Steno Typists.
The petitioners are working in Group IV services in various Departments of the Government of Andhra Pradesh.
On August 18, 1970 by G.O. Ms. No. 682, the Government of Andhra Pradesh put a ban on direct recruitment of all categories of State and subordinate services, pending the recommendations of the Backward Classes Commission.
In spite of the said order baning direct recruitments, the Government had to appoint employees in all Departments in view of exigencies of circumstances and in the public interest.
Such appointments were made under the General Rule 10(a)(i)(1) on a purely temporary basis.
Most of the petitioners were appointed after April, 1974 as temporary employees under General Rule 10(a)(i)(1).
Indeed, General Rule 10(a)(iii) provides that a person appointed under clause (i) shall, whether or not he possesses the qualifications prescribed for the service, class or category to which he is appointed, be replaced as soon as possible by a member of the service or an approved candidate qualified to hold the post under the rules.
In view of clause (iii) of 510 General Rule 10(a), the appointments of the petitioners were to be replaced as soon as possible by qualified and approved candidates.
In 1973, the ban on recruitment through Public Service Commission was partially lifted.
By G.O. Ms. No. 725 dated December 28, 1973, the Government of Andhra Pradesh directed the Public Service Commission to conduct a special qualifying test for recruitment in Group IV services with a view to regularising the temporary appointments made during the ban period.
One of the conditions of eligibility for appearing at the said qualifying test was, as fixed by the Public Service Commission, two years of service as on 1.1.1973.
As the petitioners were appointed after April, 1974, the question of their appearing at the said qualifying test did not arise.
It appears that those who appeared at the said test were all absorbed in the regular service.
On the representation of the temporary employees who were not absorbed, the Public Service Commission conducted another special qualifying test as directed by the Government by G.O. Ms. No. 787 dated November 9, 1976.
The petitioners could not avail themselves of the said test as they had not put in two years of service as on 1.1.1976 as fixed by the Public Service Commission.
The temporary employees including the petitioners who were appointed on or after January 2, 1974, became eligible only in 1976 in which year a test for recruitment through Public Service Commission was conducted to facilitate all temporary employees including the petitioners to compete for regular appointments.
About 82,000 candidates appeared in the test for Group IV services.
The petitioners, however, did not appear at the said qualifying test even though they were eligible for the same.
At the same time, the petitioners and others, who did not appear at the qualifying test in 1976, began to put pressure on the Government for their absorption.
The Government was also prevented from replacing the temporary employees including the petitioners by the candidates who were successful in the said qualifying test.
The successful candidates were appointed to additional posts in Group II and Group IV services sometime in 1977 or 1978.
The temporary employees made a representation to the Government that their appointments should be regularised without requiring them to appear at the special qualifying test.
The Government seems to have yielded to the pressure brought to bear upon it by these temporary employees, as a result of which the appointments of successful candidates in the said test could not be regularised.
By Memo No. 1806/ Ser B/78 2 dated 25.1.1979 the Government proposed to fix the inter se 511 seniority between the Public Service Commission candidates, that is, those who passed in the qualifying test held in 1976 and the temporary employees who did not appear at the qualifying test.
Being aggrieved by the said Memo, certain Public Service Commission candidates belonging to Group II services filed a representation petition being R.P.No. 145/79 before the Andhra Pradesh Administrative Tribunal.
i; Subsequently, another representation petition being R.P. No. 447 of 1979 was filed by certain other Public Service Commission candidates belonging to Group IV services including the respondents Nos. 18 to 108 in the Writ Petition.
While the said representation petitions were pending before the Andhra Pradesh Administrative Tribunal, the Government of Andhra Pradesh issued G.O.Ms.
No. 646 dated September 14, 1979 whereby the temporary employees including the petitioners were exempted from appearing at any examination and the posts held by them were withdrawn from the purview of the Public Service Commission.
By another order, being G.O.Ms.
No. 647 dated September 14, 1979, the Government directed regularisation of the temporary employees including the petitioners without subjecting them to any test, written or oral.
One of the conditions of such regularisation, as contained in clause (b) of the G.O.Ms.
No. 647, is that "in the case of temporary Junior Assistants, Typists and Steno Typists in the Secretariat and L.D.Cs, Typists and Steno Typists in the offices of the Heads of Departments, their services should be regularised from the date subsequent to the date of last regular appointment in that category or from the date of temporary appointment whichever is later and subject to the decision of the Andhra Pradesh Administrative Tribunal before which representation petitions in this regard are pending.
" At this stage, it may be stated that R.P. No. 145 of 1979 and R.P. No. 447 of 1979 were both decided by the Tribunal in favour of the Public Service Commission candidates, holding that their appointments were regular and their seniority should be computed from the respective dates of regular appointments under the General Rule 33(a) which, inter alia, provides that the seniority of a person in a service, class, category or grade shall be determined by the date of his first appointment to such service, class, category or grade.
The State of Andhra Pradesh being aggrieved by the said order of the Tribunal passed in R.P. No. 145 of 1979, has preferred the instant appeal by special leave.
It is not in dispute that the Public Service Commission candidates including the respondents Nos. 18 to 108, who belong to Group IV services, were appointed sometime in 1977 or 1978 pursuant to their 512 being successful in the special qualifying test held by the Public Service Commission in 1976.
In view of General Rule 33(a), the seniority of the respondents should be computed from the respective dates of their appointments as held by the Administrative Tribunal.
The petitioners, however, claim that their seniority should be computed from the respective dates of their appointments after April, 1974 so that they maybe placed before the respondents Nos. 18 to 108 in the seniority list.
In our view, the claim of the petitioners is untenable.
The petitioners were not appointed on a regular basis, but by way of stop gap arrangements to be replaced by the appointment of qualified candidates.
The petitioners failed to avail themselves of the opportunity of qualifying themselves for regular appointments by appearing at the special qualifying test held in 1976, although they were eligible for the test.
The Government order being G.O.Ms.
No. 647 dated September 14, 1979 on which much reliance has been placed by Mr. Patti, learned counsel appearing on behalf of the petitioners, does not support their claim of seniority from the respective dates of their appointments after April, 1974.
Under the said G.O.Ms. No.647, the services of the employees belonging to Group IV services would be regularised from the date of last regular appointment in that category or from the date of temporary appointments whichever is later and subject to the decision of the Andhra Pradesh Administrative Tribunal.
The Andhra Pradesh Administrative Tribunal, as stated already, held that the appointments of the Public Service Commission candidates were regular appointments.
The appointments of the Public Service Commission candidates are, therefore, the last regular appointments as contemplated by G.O.Ms. No. 647.
In view of the said decision of the Andhra Pradesh Administrative Tribunal and the directions contained in G.O.Ms. No.647, the services of the petitioners will be regularised subsequent to the respective dates of appointments of the respondents Nos.
18 to 108 or the other employees in Group IV services, who were appointed pursuant to their being successful in the special qualifying test held by the Public Service Compression in 1976.
The petitioners have not challenged the said G.O.Ms.
No. 647; on the contrary, as stated already, they have placed reliance upon the same and have also prayed for the implementation of the same.
The petitioners, therefore, cannot assail the. findings of the Andhra Pradesh Administrative Tribunal and claim that their seniority should be computed from the respective dates of their appointments after April, 1974.
WE have also considered the findings of the Administrative Tri 513 bunal and we are of the view that the findings arrived at by it are quite legal and justified, and no exception can be taken to the same.
For the reasons aforesaid, both the Writ Petition and the appeal are dismissed.
However, in view of the peculiar facts and circumstances of the case, there will be no order as to costs.
S.R. Petition and appeal dismissed.
|
The petitioners in Writ Petition 106 of 1980 are working in Group IV Services in various departments of the Government of Andhra Pradesh.
Most of them were appointed after 1974, under the General Rule 10(a)(i)(l) on a purely temporary basis due to the existence of a ban on direct recruitment.
After the lifting of the ban partially special qualifying tests were held for regularising their services in 1974 and 1976.
As they did not put in two years of qualifying service as on 1.1.73 and 1.1.76 respectively, they could not take the said examinations.
In 1976 there was another test conducted by the Public Service Commission wherein about 82000 candidates appeared.
The petitioners did not appear in the said test.
Among the several candidates who were appointed sometimes hl 1977 and 1978 were Respondents 18 to 108.
The petitioners were, however, granted complete exemption from appearing at any examination by GOMS 646 dated 14.7.1979 and the posts held by them were withdrawn from the purview of the Public Service Commission.
Earlier to the said Notification Government issued a memo No. 1806/ Ser B/78 2 Gad dated 25.1.79 proposing to fix inter se seniority between the Public Service Commission candidates who qualified in 1976 and the temporary employees including the petitioners who did not appear at the qualifying test.
Being aggrieved, the Service Commission candidates including respondents 18 to 108 in the Writ Petition, filed R.P. No. 447/79 before the State Administrative Tribunal whose decision went in favour of the Service Commission candidates.
Hence the Civil Appeal No. 2735/86 by the State of Andhra Pradesh.
In both the 508 Writ Petitions and the appeal the question related to the computation of seniority of the Service Commission candidates and the temporary employees whose services were regularised by GOMS 647 dated 14.9.79 after exempting them from passing the qualifying examination etc.
by GOMS 646 dated 14.9.1979.
Dismissing the petition and the appeal, the Court, ^ HELD: l.
The petitioners cannot claim that their seniority should be computed from the respective dates of their appointments after April 1974.
The petitioners were not appointed on a regular basis, but by way of stop gap arrangements to be replaced by the appointment of qualified candidates.
The petitioners failed to avail themselves of the opportunity of qualifying themselves for regular appointments by appearing at the special qualifying test held in 1976, although they.
were eligible for the test.
The Government order being GOMS No. 647 dated September 14, 1979 does not support their claim of seniority from the respective dates of their appointments after April 1974.
Under the said GOMS No. 647, the services of the employees belonging to Group IV services would be regularised from the date of last regular appointment in that category or from the date of temporary appointment, whichever is later and subject to the decision of the Andhra Pradesh Administrative Tribunal.
The Andhra Pradesh Administrative Tribunal held that the appointments of the Public Service Commission candidates were regular appointments.
The appointments of the Public Service Commission candidates are, therefore, the last regular appointments as contemplated by GOMS No. 647.
In view of the said decision of the Andhra Pradesh administrative Tribunal and the directions contained in GOMS No. 647, the services of the petitioners will be regularised subsequent to the respective dates of appointments of the respondents Nos.
18 to 108 or the other employees in Group IV services, who were appointed pursuant to their being successful in the special qualifying test held by the Public Service Commission in 1976.
The petitioners have not challenged the said GOMS No. 647; on the contrary, they have placed reliance upon the same and have also prayed for the implementation of the same.
[512B G]
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5106.txt
|
os. 246 of 1956 and 2 of 1959 (Under Article 32 of the Constitution of India for enforcement of Fundamental Rights) with C. As.
126 to 128 of 1958.
August 16, 17.
N. C. Chatterjee, with N. C. Chakravarti, Dipti Bose and section C. Mazumdar for the petitioners in Petition No. 246 of 1956 and with P. Chaudhuri, D. N. Mukherji and B. N. Ghose, for the appellants in C. As.
126 128 of Taxation (on goods carried by road and inland waterways) Act, contravenes article 301 of the Constitution.
Article 301 means freedom from all restrictions including tax laws.
Articles 245 and 246 are subject to article 301.
It is wrong to say that taxation is outside the scope of article 301.
Article 304(a) itself contemplates 'the imposition of tax.
Article 304(b) may also refer to tax in certain circumstances, in cases other than those covered by article 304(a).
In enacting article 301 the Constituent Assembly rejected section 297 of the Government of India Act, 1935, and deliberately adopted the Australian section 92.
Movement is an essential ingredient of trade and commerce and there must be no fetter on it; any taxation would be a fetter.
Taxation is not outside the ambit of article Bom.
680, 683.
What is commerce is brought out in the following decisions : ; , 68; ; , 578 ; ; ; 1936 A.C. 573, 627 A.I.R. 1954 Raj. 217.
B. Sen and section N. Mukherjee, for the petitioners in Petn.
No. 2/59.
Article 301 sets out the general freedom and article 302 the restrictions that can be placed on this freedom.
Non discrimination is one of the aspects of the freedom in article 301.
Article 306 as it stood before its deletion, spoke of taxation or duty on import or export of goods between States.
It postulated 'taxes ' in article 301 ; but for the non obstante clause it would have been affected by article 301.
The Supreme Court has discussed the scope of article 301 in ; , 1079, 1081, 1088.
The decision Of Chagla, C. J., in I.L.R. regarding scope of article 301 was not reversed by the Supreme Court.
B. K. P. Sinha and A. G. Ratnaparkhi.
With regard to the scope of article 301 reference is invited to the decision in A.I.R. 1954 Hyd. 207, A.I.R. 1958 M.P. 33, A.I.R. 1956 M.B. Mad. 933; , , 56 and regarding the meaning of export to the decision in I.L.R. 1955 Tr.
Co. 123.
M. C. Setalvad, Attorney General of India, with section M. Lahiri, Advocate General of Assam and Naunit 812 Lal, for the respondents in Petition No. 246 of 1956 and Civil Appeals Nos.
126 128 of 1958 and Petition No. 2 of 1959, and with T. M. Sen, for the Intervener, Attorney General of India.
Power to tax is an incident of sovereignty.
The Power is divided between the Union and the States.
Part XII of the Constitution deals with taxation several aspects of it.
All restrictions on the powers to tax are contained in Part XII which is self contained.
Part XII1 deals with something else.
article 301 deals with freedom of inter State as well as intra state trade and is different from section 92 of the Australian Constitution.
In Article 301 freedom of trade only means freedom from trade barriers it does not mean freedom from taxation.
Taxation simpliciter was not within the terms of article 301.
Taxation is not a restriction within the meaning of Part XIII.
Article 302 uses the words " in the public interest ".
If the restrictions contemplated therein included tax, then every tax will have to be justified to be in the public interest.
Restrictions do not include taxing measures, otherwise there will be a power of judicial review in respect of all such taxing measures.
Cooley 's Consti tutional Limitations, 8th Edition, Vol.
II, p. 986 988.
Taxation is a peculiarly legislative activity.
It is likely that if the Constitution makers wanted to put a bar on the taxation power, it would have been placed 'in Part XII and not left to be inferred from article 301 ; ; , 136 137: The word " restriction " is very inapt to describe taxation.
Apart from Part III all restrictions must be found in Part XIII so far as taxation is concerned.
Article 301 does not start with the words " notwithstanding anything in this Constitution " because it is concerned only with a small sphere of freedom of trade and commerce and not with taxation.
Restriction in these Articles means restriction on movement.
The result of holding otherwise would be that even for intrastate taxes the States will have to go to the President and the legislation will be subject to judicial review.
If Part III as well as article 301 apply to taxing measures, the question will arise which test would 813 the Court apply " reasonable in the interest of the general public " as envisaged by Part III or " in the interest of the public " envisaged by article 302.
This indicates that neither Part III nor article 301 applies to taxing measures.
Article 303 deals with preference and discrimination between one State and another.
It is restricted to legislation with respect to the entries regarding trade and commerce within the State, like entry 26, list II and the entries 33 and 42 of list 111.
Nothing in article 303 indicates that the freedom there includes freedom from taxation.
Article 304(a) deals with discrimination and not with taxation simpliciter.
It lays no restriction on the State taxing goods in its own territory: Article 304(a) cannot be interpreted as throwing any light on the scope of article 301.
Section 297 of the Government of India Act, 1935, was the predecessor of article 304.
Article 304(a) assumes that there is an existing tax on goods which is not levied under 304(a).
There is an intermediate position also.
Article 301 should be restricted to legislation which is directly with respect to trade and commerce and not to legislation, which is in pith and substance not with respect to trade but only incidentally or indirectly affects trade and commerce.
The Assam Act passed under entry 56 is not a legislation with respect to trade and commerce.
Mahabir Prasad, Advocate General for the State of Bihar, B. K. Saran and K. L. Mehta for the Intervener, State of Bihar.
Article 301 merely concerns itself with the restrictions on the free flow of trade and commerce.
It deals with policy of protection.
Article 302 also contemplates movement and passage of goods.
Restriction does not as a rule imply taxation.
If taxation is imposed with a view to restrict goods passing from one State to another, it will become a restriction under article 301.
Article 304(a) permits tax on entry of goods equal to the tax on such goods which are in the State.
Octroi may be hit by article 301 if it is not saved by other provisions.
It 104 814 is a restriction within article 301 when it obstructs the movement of trade.
section M. Sikri, Advocate General for the State of Punjab, N. section Bindra and T. M. Sen for the Intervener, the State of Punjab.
It is impossible to determine whether a particular tax places reasonable restrictions and whether it is in the public interest.
Article 301 is concerned with the right of passage generally with respect to trade and commerce and article 19(1)(g) with the right of an individual: 1955 P.L.R. Raj. 794; A.I.R. 1960 Andhra 234.
Article 302 assumes legislation of Parliament under the entries relating to trade and commerce.
R. Ganapathi Iyer and T. M. Sen, for Intervener No. 3, the State of Madras adopted the submissions made by the Attorney General.
G. C. Kasliwal, Advocate General for the State of Rajasthan and T. M. Sen for the Intervener, the State of Rajasthan adopted the submissions made by the Attorney General.
G. C. Mathur and C. P. Lal, for the Intervener No. 6, the State of Uttar Pradesh, adopted the submissions made by the Attorney General.
N. C. Chatterjee in reply.
Article 301 is an over.
riding provision over all other provisions.
It is much wider than section 297 of the Government of India Act.
It applies to all pecuniary burdens and commands that trade shall be free from all pecuniary burdens: 22 C.L.R. 566; 1936 A.C. 573, 629 630. 1960.
September 26.
The Judgment of Sinha, C. J., was delivered by Sinha, C. J.
The judgment of Gajendragadkar, Wanchoo and Das Gupta, JJ., was delivered by Gajendragadkar, J. and Shah, J., delivered his own judgment.
SINHA C. J.
These appeals on certificates granted under article 132 of the Constitution by the High Court of Judicature in Assam and Writ Petitions under article 32 of the Constitution impugn the constitutionality of the Assam Taxation (on Goods Carried by Roads or Inland Waterways) Act, (Assam Act XIII 815 of 1954), which hereinafter will be referred to as the Act.
The appellants moved the High Court under article 226 of the Constitution challenging the validity of the Act.
The High Court by its judgment and order dated June 6, 1955, dismissed the writ petitions.
Thereupon, the appellants obtained the certificates that the cases involved substantial questions of law as to the interpretation of the Constitution.
The petitions under article 32 of the Constitution were moved in this Court for the same purpose of challenging the vires of the Act.
The appellants and the petitioners will , in the course of this judgment, be referred to, for the sake of convenience, as the appellants.
The State of Assam, the Commissioner of Taxes, appointed under section 6 of the Act, and the Superintendent of Taxes are the respondents to the appeals and the writ petitions.
It appears that the appellants are growers of tea in West Bengal or in Assam and carry their tea to the market in Calcutta from where the tea is sold for consumption in the country or is exported for sale out of the country.
The sale of tea inside Assam bears a very small proportion to the tea produced and manufactured by the appellants.
Thus the bulk of tea produced and manufactured is carried out of Assam, either for internal consumption in India or for export abroad.
Besides the tea carried by rail, a large quantity of tea is carried by road or by inland waterways from Assam to Bengal and in some of these cases, from one part of West Bengal to another part of the same State through inland waterways, only a few miles of which pass through the territory of the State of Assam.
The Assam Legislature passed the Act which received the assent of the Governor of Assam on April 9, 1954, and came into force on and from June 1, 1954.
The purpose of the Act is to levy taxes on certain goods carried by road or inland waterways in the State of Assam.
On June 30, 1954, the second respondent, the Commissioner of Taxes, Assam, in exercise of the powers conferred upon him by subs.
(3) of section 7 of the Act,, published a notification in the Assam Government Gazette bearing date June 21, 816 1954, by which he notified for general information that the return under the aforesaid Act and the rules made thereunder for the period commencing June 1, 1954 to September 30, 1954, should be furnished by October 30, 1954.
The said notification also demanded the furnishing of quarterly returns before January 30, 1955 and April 36, 1955, for the quarters ending December 31, 1954 and March 31, 1955, respectively.
The appellants in some of the cases, in pursuance of demand notices, submitted returns to the third respondent, the Superintendent of Taxes, in the prescribed form in respect of tea despatched and carried up to September 30, 1954, under protest.
They also paid the tax demanded under protest.
The appellants moved the High Court of Judicature in Assam under article 226 of the Constitution challenging the validity of the said Act and praying for the issue of a writ of mandamus directing the respondents to forbear from giving effect to the provisions of the Act and the notification issued under the Act and/or a writ of prohibition or any other appropriate writ restraining them from taking steps under the provisions of the Act.
The appellants challenged the validity of the Act mainly on the grounds that (1) the Act, rules and the notifications under the Act were ultra vires the Constitution, because the Act was repugnant to the provisions of article 301 of the Constitution as the tax on carriage of tea through the State of Assam had the effect of interfering with the freedom of trade, commerce and intercourse; (2) that tea being a controlled industry under the provisions of the Tea Act XXIX of 1953, the Union Government alone had the power to regulate the manufacture, production, distribution or transport of tea and the jurisdiction of the Assam Legislature was thus completely ousted; (3) that the tax under the Act was nothing but a duty of excise, in substance, though not in form, and was thus an encroachment on the Central legislative field within the meaning of entry 84 of the Union List.
The impugned Act was also challenged on the ground that it was discriminatory and thus void under article 14 of 817 the Constitution.
The competence of the Assam Legislature to legislate on the subject was also questioned.
The respondents opposed those petitions under article 226 of the Constitution in the High Court.
It was denied by the State that the Act or the rules made thereunder or the notifications issued thereunder were ultra vires the Constitution or that the Act contravened the provisions of article 301 of the Constitution or that it was an encroachment on the sphere of the Union Legislature or was in any way in conflict with the provisions of the Tea Act XXIX of 1953.
The case of the respondents was that the Act was in pith and substance, a legislation to levy tax on certain classes and types of goods carried by road or inland waterways, strictly within entry No. 56 of the State List.
It was also asserted that the Act was within the legislative competence of the Assam Legislature and was not within the terms of the prohibition contained in article 301 of the Constitution.
These petitions were heard by a Special Bench of the Assam High Court, which, by its judgment and order dated June 6, 1955, dismissed them holding that the Act was not unconstitutional.
Two separate, but concurring judgments, were delivered by Sarjoo Prasad, C. J. and Ram Labbaya, J. The learned Chief Justice, in the course of his judgment, held that the Act contemplated imposition of a tax on transport or carriage of goods within the Meaning of entry 56 of List II and did not amount to interference with the freedom of trade and commerce within the meaning of article 301 of the Constitution ; that the pith and substance of the impugned Act was that it was a taxing legislation which was not directly concerned with trade and commerce, though it might indirectly entrench on the field of trade and commerce and that article 301 was not directly concerned with taxing laws.
He also held that the impost levied by the Act was not in the nature of an excise duty and that there was no substance in the contention that it encroached upon entry 84 of the Union List 1.
It was also held that the impugned Act did not, in any way, come in conflict with the control of the tea industry 818 introduced by the Central Legislation, namely, the Tea Act XXIX of 1953.
Ram Labhaya, J., examined the provisions of the impugned Act in great detail and came to the conclusion that the element of carriage was expressly made a condition of liability to tax under the impugned Act and it was, therefore, distinguishable from a duty of excise and came directly under entry 56 of List 11.
On the crucial question arising in this case, his conclusion was that taxation per se has not the effect of abridging or curtailing the freedom contemplated by article 301 ; that articles 302 and 304 restrict the powers of Parliament and the State Legislatures in the matter of legislation under entries 42 of List 1, 26 of List 11 and 33 of List III and that restrictions properly so called on the movement of goods and traffic must find their justification from the provisions of Part XIII of the Constitution ; that the impugned Act made provision for taxation which did not directly impinge upon the freedom of trade, commerce and intercourse within the meaning of article 301.
His view also was that in some cases taxation may have the effect of placing restrictions on movement of goods and traffic, and if it has that effect, it comes within the mischief of article 301.
In the result, his conclusion was that the impugned Act in its pith and substance fell within the ambit of entry 56 of List 11.
He also examined the terms of the Union legislation, Tea Act No. XXIX of 1953, and came to the conclusion that the impugned Act did not trespass upon the field of the controlled industry of tea.
His conclusion with reference to the argument of discrimination based on article 14 was that there was no proof forthcoming of any real discrimination between persons and things.
With these conclusions Deka, J., the third Judge, entirely agreed.
From the judgment of the High Court the appellants have come up in appeal on certificates granted by the High Court.
The two petitions under article 32 of the Constitution were filed on behalf of two other producers of tea.
They raise the same questions as arise for determination in the three appeals from the decision of the Assam High Court.
They have all been 819 heard together And will be dealt with by a common judgment.
Mr. Chatterjee, on behalf of the appellants, contended that the impugned Act imposed fetters on the free flow of trade and commerce in respect of tea and jute, the two commodities dealt with by the Act and, A therefore,, contravened the provisions of article 301 of the Constitution; that the legislation was beyond the legislative competence of the Assam Legislature and was not authorised by entry 56 in List II ; that the tea industry was a controlled industry as declared by Parliament and directly came under entry 52 of List 1 ; that it was a colourable piece of legislation which, in its true effect, was a levy of a duty of excise which could only be done by the Union Legislature, and finally, that it contravened article 14 of the Constitution.
The learned Attorney General on behalf of the State of Assam as also of the Union contended, on the other hand, that taxation simpliciter was not within the terms of article 301.
Taxation as such is not a restriction within the meaning of Part XIII.
It is an attribute of sovereignty, which is not justiciable.
The power to tax is a peculiar legislative function with which the courts are not directly concerned and that, therefore, the freedom contemplated by article 301 does not mean freedom from taxation and that taxation is not included within the connotation of the term.
" Restriction " in the context of Part XIII meant legislation which had the effect of impeding the free flow of goods and traffic by erection of tariff walls, for example, a tariff wall, if erected by a Legislature, may be justiciable, but not legislation simply imposing a tax for purposes of revenue.
He further contended that Part XII of the Constitution is a self contained part dealing with finance etc., even as Part XIII is a selfcontained part dealing with trade, commerce and intercourse within the territory of India.
He emphasis ed that the American and Australian decisions are no guide to the decision of the points in controversy in the present case, as the framework of their respective constitutions was entirely different from the Indian 820 Constitution.
Particularly, the Australian Constitution did not contain anything corresponding to Parts III and XII of our Constitution.
According to his contention " freedom " in Part XIII meant freedom from discriminatory taxation and freedom from trade barriers.
The Advocate General of the several States who appeared in this case supported the viewpoint stressed by the learned Attorney General.
The most important question that falls to be determined in this batch of cases is whether the impugned Act infringes the provisions of Part XIII of the Constitution, with particular reference 'to article 301.
Part XIII is headed "Trade Commerce and Intercourse within the Territory of India".
Article 301, which is the opening Article in this Part is in very general terms, which are as under: " Subject to the other provisions of this part, trade, commerce and intercourse throughout the territory of India shall be free ".
It is clear that this Part is not subject to the other provisions of the Constitution and the generality of the words used in article 301 is cut down only by the provisions of the other Articles of this Part ending with article 307.
It has not been and it could not be contended that the generality of the expressions used in article 301 admit of any Exceptions or explanations not occurring in this Part itself, nor has it been contended that trade, commerce and intercourse are subject to any other fetters.
All parties are agreed that trade, commerce and intercourse throughout the territory of India have been emphatically declared by the Constitution to be free, but there is a wide divergence of views on the answer to the question " free from what ?" It has been contended on behalf of the appellants that the answer to this question must be that trade, commerce and intercourse throughout India, shall be free from everything including taxation.
On the other hand, the contention on behalf of the Union Government and the State Government is that the freedom envisaged by article 301 does not include immunity from taxation and that freedom means that there shall be no trade barriers or tariff 821 walls shutting out commodities, traffic and intercourse between individuals, and no shutting in.
In order fully to appreciate the implications of the provisions of Part XIII of the Constitution, it is necessary to bear in mind the history and background of those provisions.
The Constitution Act of 1935 (Government of India Act, 26 ( 'Teo. 5, Ch. 2) which envisaged a federal constitution for the whole of India, including what was then Indian India in contradistinction to British India, which could not be fully implemented and which also introduced full provincial autonomy enacted section 297 prohibiting certain restrictions on internal trade in these terms: " 297. (1) No Provincial Legislature or Government shall (a) by virtue of the entry in the Provincial Legislative List relating to trade and commerce within the Province, or the entry in that list relating to the production, supply, and distribution of commodities, have power to pass any law or take any executive action prohibiting or restricting the entry into, or export from the Province of goods of any class or description ; or (b) by virtue of anything in this Act have power to impose any tax, cess, toll or due which, as between goods manufactured or produced in the Province and similar goods not so 'manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the Province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality.
(2) Any law passed in contravention of this section shall, to the extent of the contravention, be invalid.
" It will be noticed that the prohibition contained in the section quoted above applied only to Provincial Governments and Provincial Legislatures with reference to entries in the Provincial Legislative List relating to trade and commerce within the Province and to production, supply and distribution of commodities.
That section dealt with prohibitions or 105 822 restrictions in respect of import into or export from a Province, of goods generally.
It also dealt with the power to impose taxes etc.
and prohibited discrimination against goods manufactured or produced outside a Province or goods produced in different localities.
Part XIII of the Constitution has introduced all those prohibitions, not only in respect of State Legislatures, but of Parliament also.
In other words, Part XIII enlarges the scope of the inhibitions and lays down the limits within which the Union Parliament or a State Legislature may legislate with reference to trade, commerce and intercourse inter State, intrastate and throughout the territory of India.
In this connection it has got to be remembered that before the commencement of the Constitution about two thirds of India was directly under British rule and was called ' British India ' and the remaining about one third was being directly ruled by the Princes and was known as Native States.
There were a large number of them with varying degrees of sovereignty vested in them.
Those rulers had, broadly speaking, the trappings of a Sovereign State with power to impose taxes and to regulate the flow of trade, commerce and intercourse.
It is a notorious fact that many of them had erected trade barriers seriously impeding the free flow of trade, commerce and intercourse, not only shutting out but also shutting in commodities meant for mass consumption.
Between the years 1947 and 1950 almost all the Indian States entered into engagements with the Government of India and ultimately merged their individualities into India as one political unit, with the result that what was called British India, broadly speaking, became, under the Constitution, Part A States, and subject to certain exceptions not relevant to our purpose, the Native States became Part B States.
We also know that before the Consti tution introduced the categories of Part A States, Part B States and Part C States (excluding Part D relating to other territories), Part B States themselves, before their being constituted into so many units, contained many small States, which formed themselves into 823 Unions of a number of States, and had such trade barriers and custom posts, even inter se.
But even after the merger, the Constitution had to take notice of the existence of trade barriers and therefore had to make transitional provisions with the ultimate objective of abolishing them all.
Most of those Native States, big or small, had their own taxes, cesses, tolls and other imposts and duties meant not only for raising revenue, but also as trade barriers and tariff walls.
It was in the background of these facts and circumstances that the Constitution by article 301 provided for the abolition of all those trade barriers and tariff walls.
When for the first time in the history of India the entire territory within the geographical boundaries of India, minus what became Pakistan, was knit into one political unit, it was necessary to abolish all those trade barriers and custom posts in the interest of national solidarity, economic and cultural unity as also of freedom of trade, commerce and intercourse.
It is in the background of these facts and circumstances that we have to determine the ambit of the freedom contemplated by article 301.
That Article envisages freedom of trade and commerce with reference to different parts of India as also freedom of movement of individuals in relation to their trade and other activities.
Hence, article 301 has reference not only to trade and commerce, as ordinarily understood in common parlance, but also in relation to individuals who have to move with their goods and commodities throughout the length and breadth of the country.
Movement of traffic in goods and commodities as also of persons can be by railway or airways, by road or by inland waterways etc., etc.
Carriage of goods and passengers by railway, by sea or by air or by national waterways is covered by entry 30 of List 1 and taxes on railway fares and freights and terminal taxes on goods or passengers carried by railway, sea or air come under the purview of entry 89 in the same List.
On the other hand, taxes on goods and passengers carried by road or inland waterways come under entry 56 of List II (State List).
It will thus be seen that the Constitution makers contemplated taxes 824 on goods and passengers to be imposed by the Parliament on journeys covered by railway or by sea or by air; and by State Legislatures on journeys by road or inland waterways.
The power to tax is inherent in sovereignty.
The sovereign State, in some cases the Union, in other cases the State, has the inherent power to impose taxes in order to raise revenue for purposes of State.
Such a sovereign power ordinarily is not justiciable, simply because the State in its legislative department has to determine the policy and incidence of taxation.
It is the St ate which determines, through the Legislature, what taxes to impose, on whom and to what extent.
The judicial department of the State is not expected to deal with such matters, because it is not for the courts to determine the policy and incidence of taxation.
This power of the State to raise finances for Government purposes has been dealt with by Part XII of the Constitution, which contains the total prohibition of levy or collection of tax, except by authority of law (article 265).
This Part also deals with the distribution of revenue between the Union and the States.
It does not clearly demarcate the taxing authority as between the Union and the States and therefore had to indicate in great detail what taxes shall be levied for the benefit of the Union or for the benefit of the States and what taxes may be levied and collected by the Union for the benefit of the States and the principle according to which those revenues have to be distributed amongst the constituent States of the Union.
In short, Part XII is a self contained series of provisions relating to the finances of the Union and of the States and their interrelation and adjustments (ignoring the provisions in Chapter 2 of that Part relating to borrowing and Chapter 3 relating to property contracts etc.).
Like Part XIII, Part XII also is not expressed to be subject to the other provisions of the Constitution.
Hence, both Parts XII and XIII are meant to be self contained in their respective fields.
It cannot, therefore, be said that the one is subject.
to the other.
But it has been argued on behalf of the appellants that the pro. visions of article 304 indicate that taxation is within 825 the purview of the overriding provisions, as they have been characterised, of article 301.
But a close examination of the provisions of article 304 would show that it is divided into two parts, viz., (1) dealing with imposition of discriminatory taxes by a State Legislature; and (2) relating to imposition of reasonable restrictions, thus showing that imposition of taxes, discriminatory or otherwise, is a class apart from imposition of reasonable restrictions on freedom of trade, commerce and intercourse.
The second part of article 304 dealing with imposition of reasonable restrictions on freedom of trade, commerce and intercourse by a State Legislature is on a line with the imposition by Parliament of such restrictions between one State and another or within any part of the territory of India in public interest, contained in article 302.
The provisions of article 303 further make it clear that the giving Of preference to one State over another or discrimination between one State and another are clearly within the purview of Part XIII, that is to say, they are calculated to impede the freedom of trade, commerce and intercourse.
There is a prohibition against Parliament as also against the Legislature of a State making any law giving preference to one State over another or making or authorising the making of any discrimination between one State and another.
But the most significant words in connection with giving preference or making discrimination as envisaged in article 303 are with reference to " any entry relating to trade and commerce in any of the Lists in the Seventh Schedule", that is to say, entry 42 in List 1, entry 26 in List II and entry 33 in List III of the Seventh Schedule.
Hence, any legislation under those entries which has the effect of directly interfering with trade, commerce and intercourse being free throughout the territory of India has to be struck down as infringing the provisions of article 301.
But in this matter also the Constitution makers had before them situations of emergency, say for example, created by drought or overflooding resulting in scarcity of commodities like foodgrains etc.
In such a situation, Parliament has been armed with the power to grant preference to one State over 826 another or to make a discrimination as between two and more States if the Law dealing with such a situation declares that it is necessary to do so in order to deal with an emergency like the one referred to above.
In this connection it may not be emphasised that article 303 has not been very accurately worded inasmuch as the non obstante clause, with which the Article opens, has reference only to article 302, which empowers Parliament to impose by law restrictions on the freedom of trade, commerce or intercourse, inter State or intraState, in public interest.
But the non obstante clause is immediately followed by reference not only to Parliament but also to the Legislature of a State which are armed with the power of giving preference or making discrimination as aforesaid in respect of the entries relating to trade and commerce in any of the lists in the Seventh Schedule.
Here, no reference is made to intercourse.
But as the present controversy is not concerned with the freedom of intercourse, as distinguished from the freedom of trade and commerce, no more need be said about that omission.
Learned counsel for the appellants vehemently argued that the freedom contemplated by article 301 Must be construed in its most comprehensive sense of freedom from all kinds of impediments, restraints and trade barriers, including freedom from all taxation.
In my opinion, there is no warrant for such an extreme position.
It has to be remembered that trade, commerce and intercourse include individual freedom of movement of every citizen of India from State to State, which is also guaranteed by article 19(1)(d) of the Constitution.
The three terms used in article 301 include not only free buying and selling, but also the freedom of bargain and contract and transmission of informa tion relating to such bargains and contracts as also transport of goods and commodities for the purposes of production, distribution and consumption in all their aspects, that is to say, transportation by land, air or water.
They must also include commerce not only in goods and commodities, but also transportation of men and animals by all means of transportation.
Commerce would thus include dealings over the telegraph, 827 telephone or wireless and every kind of contract relating to sale, purchase, exchange etc.
of goods and commodities.
Viewed in this all comprehensive sense taxation on trade, commerce and intercourse would have many ramifications and would cover almost the entire field of public taxation, both in the Union and in the State Lists.
It is almost impossible to think that the makers of the Constitution intended to make trade, commerce and intercourse free from taxation in that comprehensive sense.
If that were so, all laws of taxation relating to sale and purchase of goods on carriage of goods and commodities, men and animals, from one place to another, both inter State and intraState, would come within the purview of article 301 and the proviso to article 304 (b) would make it necessary that all Bills or Amendments of pre existing laws shall have to go through the gamut prescribed by that proviso.
That will be putting too great an impedi ment to the power of taxation vested in the States and reduce the States ' limited sovereignty under the Constitution to a mere fiction.
That extreme position has, therefore, to be rejected as unsound.
In this connection, it is also pertinent to bear in mind that all taxation is not necessarily an impediment or a restraint in the matter of trade, commerce and intercourse.
Instead of being such impediments or restraints, they may, on the other hand, provide the wherewithal; to improve different kinds of means of transport, for example, in cane growing areas, unless there are good roads, facility for transport of sugarcane from sugarcane fields to sugar mills may be wholly lacking or insufficient.
In order to make new roads as also to improve old ones, cess on the grower of cane or others interested in the transport of this commodity has to be imposed, and has been known in some parts of India to have been imposed at a certain rate per maund or ton of sugarcane transported to sugar factories.
Such an imposition is a tax on transport of sugarcane from one place to another, either intrastate or inter State.
It is the tax thus realised that makes it feasible for opening new means of 828 communication or for improving old ones.
It cannot, therefore, be said that taxation in every case must mean an impediment or restraint against free flow of trade and commerce.
Similarly, for the facility of passengers and goods by motor transport or by railway, a surcharge on usual fares or freights is levied, or may be levied in future.
But for such a surcharge, improvement in the means of communication may not be available at all.
Hence, in my opinion, it is not correct to characterise a tax on movement of goods or passengers as necessarily connoting an impediment, or a restraint, in the matter of trade and commerce.
That is another good reason in support of the conclusion that taxation is not ordinarily included within the terms of article 301 of the Constitution.
In my opinion, another very cogent reason for holding that taxation simpliciter is not within the terms of article 301 of the Constitution is that the very connotation of taxation is the power of the State to raise money for public purposes by compelling the payment by persons, both natural and juristic, of monies earned or possessed by them, by virtue of the facilities and protection afforded by the State.
Stich burdens or imposts, either direct or indirect, are in the ultimate analysis meant as a contribution by the citizens or persons residing in the State or dealing with the citizens of the State, for the support of the Govern ment, with particular reference to their respective abilities to make such contributions.
Thus public purpose is implicit in every taxation, as such.
There.
fore, when Part XIII of the Constitution speaks of imposition of reasonable restrictions in public interest, it could not have intended to include taxation within the generic term " reasonable restrictions ".
This Court has laid it down in the case of Ramjilal vs Income Tax Officer, Mohindargarh (1) that imposition and collection of taxes by authority of law envisaged by article 265 is outside the scope of the expression " deprivation of property " in article 31(1) of the Constitution.
Reasonable restrictions as used in Part III or Part XIII of the Constitution would in most cases be less (1) ; ,136.
829 than total deprivation of property rights.
Hence, Part XII dealing with finance etc.
as already indicated, has been treated as a Part dealing with the sovereign power of the State to impose taxes, which must always mean imposing burdens on citizens and others, in public interest.
If a law is passed by, the Legislature imposing a tax which in its true nature and effect is meant to impose an impediment to the free flow of trade, commerce and intercourse, for example, by imposing a high tariff wall, or by preventing imports into or exports out of a State, such a law is outside the significance of taxation, as such, but assumes the character of a trade barrier which it was the intention of the Constitution makers to abolish by Part XIII.
The objections against the contention that taxation was included within the prohibition contained in Part XIII may thus be summarised: (1) Taxation, as such, always implies that it is in public interest.
Hence, it would be outside particular restrictions, which may be characterised by the courts as reasonable and in public interest.
(2) The power is vested in a sovereign State to carry on Government.
Our Constitution has laid the foundations of a welfare State, which means very much expanding the scope of the activities of Government and administration, thus making it necessary for the State to impose taxes on a much larger scale and in much wider fields.
The legislative entries in the three Lists referred to above empowering the Union Government and the State Governments to impose certain taxations with refe rence to movement of goods and passengers would be rendered ineffective, if not otiose, if it were held that taxation simpliciter is within the terms of article 301.
(3) If the argument on behalf of the appellants were accepted, many taxes, for example, sales tax by the Union and by the States, would have to go through the gamut prescribed in articles 303 and 304, thus very much detracting from the limited sovereignty of the States, as envisaged by the Constitution.
(4) Laws relating to taxation, which is essentially a legislative function of the State, will become justiciable and every 106 830 time a taxation law is challenged as unconstitutional, the State will have to satisfy the courts a course which will seriously affect the division of powers on which modern constitutions, including ours, are based.
(5) Taxation on movement of goods and passengers is not necessarily an impediment.
That conclusion leads to a discussion of the other extreme position that taxation is wholly out of the purview of article 301.
That extreme position is equally untenable in view of the fact that article 304 contains, and article 306, before it was repealed in 1956, contained, reference to taxation for certain purposes mentioned in those Articles.
But article 306, which now stands repealed, contained references to tax or duty on the import of goods into one State from another or on the exports of goods from one State to another.
Such imposts were really in the nature of impediments to the free flow of goods and commodities on account of customs barriers, which it was the intention of article 301 to abolish.
Similarly, article 304 while recognising the power of a State Legislature to tax goods imported inter State, insists that a similar tax is imposed on goods manufactured or produced within the State.
The Article thus brings out the clear distinction between taxation as such for the purpose of revenue and taxation for purposes of making discrimination or giving preference, both of which are treated by the Constitution as impediments to free trade and commerce.
In other words, so long as the impost was not in the nature of an impediment to the free flow of goods and commodities between one State and another, including in this expression Union territories also, its legality was not subject to an attack based on the provisions of Part XIII.
But that does not mean that State Legislatures derive their power of taxation by virtue of what is contained in article 304.
Article 304 only left intact such power of taxation, but contained the inhibition that such taxes shall not be permitted to have the effect of impeding the free flow of goods and commodities.
Article 301, with which Part XIII commences, contains the crucial words " shall be free " and provides 831 the key to the solution of the problems posed by the whole Part.
The freedom declared by this Article is not an absolute freedom from all legislation.
As already indicated, the several entries in the three Lists would suggest that both Parliament and State Legislatures have been given the power to legislate in respect of trade, commerce and intercourse, but it is equally clear that legislation should not have the effect of putting impediments in the way of free flow of trade and commerce.
In my opinion, it is equally clear that the freedom envisaged by the Article is not an absolute freedom from the incidence of taxation in respect of trade, commerce and intercourse, as shown by entries 89 and 92 A in List 1, entries 52, 54 and 56 to 60 in List II and entry 35 in List 111.
All these entries in terms speak of taxation in relation to different aspects of trade, commerce and intercourse.
The Union and State Legislature, therefore, have the power to legislate by way of taxation in respect of trade, commerce and intercourse, so as not to erect trade barriers, tariff walls or imposts, which have a deleterious effect on the free flow of trade, commerce and intercourse.
That freedom has further been circumscribed by the power vested in Parliament or in the Legislature of a State to impose restrictions in the public interest.
Parliament has further been authorised to legislate in the way of giving preference or making discrimination in certain strictly limited circumstances indicated in el.
(2) of article 303.
Thus, on a fair construction of the provisions of Part XIII, the following propositions emerge: (1) trade, commerce, and intercourse throughout the territory of India are not absolutely free, but are subject to certain powers of legislation by Parliament or the Legislature of a State; (2) the freedom declared by article 301 does not mean freedom from taxation simpliciter, but does mean freedom from taxation which has the effect of directly impeding the free flow of trade, commerce and intercourse; (3) the freedom envisaged in article 301 is subject to non discriminatory restrictions imposed by Parliament in public interest (article 302); (4) even discriminatory or preferential legisla 832 tion may be made by Parliament for the purpose of dealing with an emergency like a scarcity of goods in any part of India (article 303(2)); (5) reasonable restrictions may be imposed by the Legislature of a State in the public interest (article 304(b)); (6) non discriminatory taxes may be imposed by the Legislature of a State on goods imported from another State or other States, if similar taxes are imposed on goods produced or manufactured in that State (article 304(a)); and lastly (7) restrictions imposed by existing laws have been continued, except in so far as the President may by order otherwise direct (article 305).
After having discussed the arguments for and against the proposition that article 301 includes within its large sweep taxation simpliciter, I now proceed to discuss the terms of the impugned Act in order to find out whether in the light of the discussion above, any of its provisions are liable to be struck down as unconstitutional, because they infringe article 301, as contended on behalf of the appellants.
The Act, as the preamble shows, is intended to " impose a tax on certain goods carried by road or inland waterways Dealer " has been defined in section 2(4) as under: "Dealer ' means a person who owns jute in bales before it is carried by motor vehicle, cart, trolley, boat, animal and human agency or any other means except railways or airways and includes his agent.
" Producer has been defined by cl. '(12) of section 2 as follows: " 'Producer ' means a producer of tea and includes the person in charge of the garden where tea is produced ".
Section 3, which is the charging section, provides that manufactured tea in chests carried by motor vehicle, etc., except railways and airways, shall be liable to a tax at a certain rate per pound of such tea and that this tax shall be realised from the producer.
It also provides that jute carried in bales by motor vehicle, etc., except railways and airways, shall be liable to a tax at a certain rate per maund on such jute, which shall be realised from the dealer.
It is not necessary 833 to set out the rate of taxes aforesaid, because 'no argument was advanced to the effect that they were oppressive or excessive.
The tax on manufactured tea in chests is to be paid by the producer, which term includes the person in charge of the garden where tea is produced.
This provision has occasioned the argument that it is an excise duty in the garb of a tax and will be dealt with later in the course of this judgment.
The tax on jute carried in bales is made realisable from the dealer which means a person who owns the jute in bales.
Section 6 lays down the taxing authorities.
Section 7 requires every producer and dealer to furnish returns of such tea or such jute as have been made liable to tax under section 3, as aforesaid.
Section 8 makes provision for licensing of balers, which means persons who own or possess a pressing machine for the compression of jute into bales.
Section 9 lays down the procedure of assessment and section 10 the procedure for cancellation of assessment in certain cir cumstances.
Section 11 lays down the procedure for assessment in such cases as have escaped assessment or there has been an evasion of the tax.
It is not necessary to refer to the other provisions of the Act, because they are not relevant to the arguments advanced at the Bar.
It will be seen from the bare summary of the relevant provisions of the statute that it is a taxing statute simpliciter without the least suggestion even of any attempt at discrimination against dealers and producers outside the State of Assam or of preference in favour of those inside the State.
On the face of it, therefore, the Act does not suffer from any of the vices against which Part XIII of the Constitution was intended.
It has not been suggested that the Act imposes a heavy burden on the dealer or the producer as the case may be.
On the terms of the Statute, it cannot be said that it is intended to put obstacles or impediments in the way of free flow of traffic in respect of jute and tea.
On the face of it, it would not be in the interest of the State of Assam to put any such impediments, because Assam is a large producer of those commodities and the market for those commodities is mainly in Calcutta.
834 In those I circumstances, it is difficult, if not impossible, to come to the conclusion that the Act comes within the purview of article 301 of the Constitution.
If that is so, no further consideration arising out of the other provisions of Part XIII of the Constitution calls for any decision.
Having thus disposed of the main ground of attack against the constitutionality of the Act based on article 301 of the Constitution, it is necessary to advert to the other contentions raised on behalf of the appellants.
It has been contended that the Act is beyond the legislative competence of the Assam Legislature.
We have, therefore, to address ourselves to the question whether or not it is covered by any of the entries in List 11 of the Seventh Schedule.
Entry 56, in its very terms, " Taxes on goods and passengers carried by rail or in inland waterways ", completely covers the impugned Act.
There is no occasion in this case to take recourse to the doctrine of pith and substance, inasmuch as the Act is a simple piece of taxing statute meant to tax transport of goods, in this case jute and tea, by road or on inland waterways.
In my opinion, it is a very simple case of taxation completely covered by entry 56, but the argument against the competence of the Assam Legislature has been sought to be supported by the subsidiary contention that though in form it is a tax on the transport of goods within the terms of entry 56, in substance it is an imposition of excise duty within the meaning of entry 84 in List 1 of the Seventh Schedule, but, in my opinion, there is no substance in this contention for the simple reason that so long as jute or tea is not sought to be transported from one place to another, within the State or outside the State, no tax is sought to be levied by the Act.
It is only when those goods are put on a motor truck or a boat or a steamer or other modes of transport contemplated by the Act, that the occa sion for the payment of tax arises.
A similar argument was advanced in the case of The Tata Iron & Steel Co. Ltd. vs The State of Bihar (2), and Das, C. J., delivering the majority judgment of the Court, disposed of the argument that the tax in that case was not (2) ; 835 on sale of goods, but was, in substance, a duty of excise, in these terms: " This argument, however, overlooks the fact that under el.
(ii) the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods, but because he sold the goods.
In other words the tax was laid on the producer or manufacturer only qua seller and not qua manufacturer or producer as pointed out in Boddu Paidanna 's case In the words of their Lordships of the Judicial Committee in Governor General vs Province of Madras, 72 I.A. 91 at p. 103, ' a duty of excise is primarily a duty levied on a manufacturer or producer in respect of the commodity manufactured or produced.
It is a tax on goods not on sales or the proceeds of sale of goods '.
If the goods produced or manufactured in Bihar were destroyed by fire before sale the manufacturer or producer would not have been liable to pay any tax under section 4(1) read with section 2(g), second proviso.
As Gwyer, C. J., said in Boddu Paidanna 's case, supra, at p. 102, the manufacturer or producer would be liable, if at all, to a sales tax because he sells and not because he manufactures or produces; and he would be free from liability if he chose to give away everything which came from his factory '.
" (See p. 1369 of the Report).
The observations quoted above completely cover the present controversy.
The Legislature has chosen the dealer or the producer as the convenient agency for collection of the tax imposed by section 3, but the occasion for the imposition of the tax is not the production or the dealing, but the transport of those goods.
It must, therefore, be held that the Act does what it sets out to do, namely to impose a tax on goods carried by road or on inland waterways.
Another line of argument directed to the same end, namely, of attacking the competence of the Assam Legislature was that it impinged on the provisions of the Tea Act, XXIX of 1953.
It was argued that the tea industry was a controlled one within the competence the Union Legislature.
The Tea Act declared that it was expedient in the public interest that the 836 Union should take the tea industry under its control.
With a view to controlling the industry in public interest the Act established the Tea Board (section 4) whose function it was, inter alia, to regulate the production and extent of cultivation of tea, of improving the quality of tea, of promoting co operative effort among growers and manufacturers of tea, etc., etc.
(section 10).
With the objectives aforesaid, Chapter III lays down provisions for the control over the extension of tea cultivation and Chapter IV deals with provisions for control over the export of tea and tea seed.
Chapter V lays down provisions for the imposition of duty of customs on export of tea outside India and the proceeds of the cess thus levied have to be credited to the Consolidated Fund of India.
Out of that Fund, called the Tea Fund, the expenses of the establishment created by the Tea Act have to be met.
The rest of the provisions of the Act are meant to implement the main provisions of the Act.
There are no provisions of the Tea Act which can be said to come into conflict with the provisions of the impugned Act.
In our opinion, therefore, this ground of attack also fails.
A third line of argument against the constitutionality of the Act was that it is extra territorial in its operation in so far as it purports to tax producers and dealers who may not be residents of the State of Assam.
This argument has been advanced in the interest of the appellants and petitioners from West Bengal, who have to carry their goods by road or on waterways passing through the territory of Assam, from one part of West Bengal to another.
So far as this group of cases is concerned, the main grievance of the appellants is that no doubt their goods have to pass through a portion of the territory of Assam, but the goods have been produced, packed and transported as merchandise from one part of West Bengal to another part of the same State.
It is not denied that there is some real and substantial nexus to support the taxing statute, but it is contended that relatively to the whole journey to be covered by the merchandise, the portion of the territory of Assam covered in 837 that journey is very small.
But in judging the validity of a legislation with reference to the contention based on extra territoriality it is not relevant to consider the question of the proportion between the extent of territorial nexus to the whole length of the journey.
If goods belonging to or carried by the appellants traverse any of the territory of Assam the taxation cannot be successfully assailed on this ground, once it is held that it was within the legislative competence of the Legislature imposing the tax in question.
See in this connection the observations of this Court in The Tata Iron and Steel Co. Ltd. vs The State of Bihar (1) at pp.
1369 to 1371, where Das, C. J., speaking for the majority of the Court, has examined the theory of nexus with reference to a large body of case law bearing on the question.
I respectfully adopt that line of reasoning and hold that the Act does not suffer from the vice of extra territoriality.
It is true that the incidence of the taxation may fall upon per.sons not ordinarily residing in the State of Assam or upon goods not produced in Assam, but, in this connection, it is enough to point out that what has been said above in respect of the tax being in the nature of a duty of excise applies which equal force to this part of the argument also.
The tax is leviable from such goods as traverse in their journey any part of the territory of Assam, not because the owners or the producers are residents of Assam, but because the waterway or the roadway situate in the territory of Assam has been utilised for a portion of the journey.
It is clear, therefore, that there is no infirmity attaching to the Act on the ground that it is extra territorial in its operation.
It only remains to consider the last ground of attack, namely, that the Act is discriminatory in character and thus infringes article 14 of the Constitution.
In this connection, it has been argued that only tea in chests and jute in bales have been selected for taxation, leaving the same commodities in other hands or in other forms, or in other receptacles (1) 107 838 free from the incidence of the taxation in question.
The Legislature has chosen to tax the transport over land or over waterways of those commodities, in chests or in bales, apparently because those are the most convenient and usually employed methods of packing for carriage of those goods to long distances.
Hence, it is not a case of choosing for the purposes of taxation one class of goods in preference to another class of the same variety.
The Legislature was out to tax the transport of those commodities and must be presumed to have selected the most convenient way of doing it.
It has not been suggested that any large amount of such commodities is transported over long distances, otherwise than in chests or bales.
Furthermore, if the Legislature has to tax something, it is not bound to tax that thing in all its forms and varieties.
It may pick and choose with a view to raising such amount of revenue as it sets out to do.
It is not for the courts to say that there were other ways of doing the thing or that all forms and varities should have been brought under the scope of the taxation.
It is open to the Legislature to impose a tax in a form and in a way which it deems most convenient for the purposes of collection and calculation of the tax.
As all the grounds of attack raised against the con stitutionality of the Act fail, the appeals and the petitions, in my opinion, should be dismissed with costs.
I have deliberately refrained from making references to or relying upon decisions from other countries like the U. section A. or Australia, because the cases decided in those countries cannot be any guide for the solution of the problems raised in this case inasmuch as the framework of the Constitution in those countries is not in pari materia with ours.
Any precedents deciding cases on the construction of statutes, which are worded differently from ours, cannot, in my opinion, be a safe guide for the decision of controversies raised in terms of our Constitution.
I regret to have to differ from the majority of the Court, but my only justification for taking a different view is that my reading of Part XIII of the 839 Constitution does not justify the inference that taxation simpliciter is within the terms of article 301 of the Con stitution.
GAJENDRAGADKAR J.
The vexed question posed by the construction of the provisions of Part XIII Of A the Constitution which has been incidentally discussed in some reported decisions of this Court falls to be Ga considered in the present group of cases.
This group consists of three appeals brought to this Court with a certificate issued by the Assam High Court under article 132 and two petitions filed under article 32.
The three appellants are tea companies, two of which (Civil Appeal No. 126 of 1958 and Civil Appeal No. 128 of 1958) carry on their trade of growing tea in the District of Sibsagar in Assam while the third (Civil Appeal No. 127 of 1958) carries on its trade in Jalpaiguri in West Bengal.
All the three companies which would be described hereafter as the appellants carry their tea to Calcutta in order that it may be sold in the Calcutta market for home consumption or export outside India.
Tea produced in Jalpaiguri has also to pass through a few miles of territory in the State of Assam, while the tea produced in Assam has to go all the way through Assam to reach Calcutta.
It appears that a very small pro portion of tea produced and manufactured in Assam finds a market in Assam itself; bulk of it finds its custom in the market at Calcutta.
Besides the tea which is carried by rail a substantial quantity has to go by road or by inland waterways and as such it becomes liable to pay the tax leviable under the Assam Taxation (on goods carried by Roads or Inland Waterways) Act, 1954 (Act XIII of 1954) (hereafter called the Act).
The Act has been passed by the Assam Legislature in order to provide for the levy of a tax on certain goods carried by road or inland waterways in the State of Assam and it has received the assent of the Governor on April 9,1954.
On behalf of the State of Assam, which will be described hereafter as respondent, its officers required the appellants to comply with the several requirements imposed by the Act, and made tax 840 demands on them in respect of the tea carried by them.
The tax thus demanded was paid by the appellants under protest, and soon thereafter petitions were filed in the Assam High Court under article 226 challenging the validity of the Act as well as the tax demands made by the officers of the respondent.
By J. their respective petitions the appellants prayed that a writ of mandamus should issue directing the respondent and its officers to forbear from giving effect to the provisions of the Act and from otherwise enforcing it against the appellants.
The petitioners also claimed alternatively a writ of prohibition or any other appropriate writ restraining the respondent and its officers from enforcing the Act against the appellants.
That is how the validity of the Act came before the Assam High Court for judicial scrutiny.
The appellants challenged the vires of the Act on several grounds.
The principal ground, however, was that the Act had violated the provisions of article 301 of the Constitution, and since it did not comply with the provisions of article 304(b) it was ultra vires.
It was also urged that tea was a controlled industry under the provisions of Act 29 of 1953, and so it was the Union Government alone which was competent to regulate the manufacture, production, distribution or transport of the said commodity ; that being so the Assam Legislature was not competent to pass the Act.
The validity of the Act was further challenged on the, ground that, though the Act purported to have been passed under Entry 56 of List 11, in substance and in reality it was a duty of excise and as such it could be enacted only under Entry 84 of List 1.
According to the appellants the Act also suffered from the vice that it was violative of the fundamental right of equality before the law guaranteed by article 14.
The correctness of these contentions was disputed by the respondent.
It urged that the Act was perfectly within the competence of the Assam Legislature under Entry 56 of List II and that the provisions of Part XIII were wholly inapplicable to it.
The respondent further pleaded that article 14 had not been violated and that there was no substance in the 841 argument that as controlled industry it is only the Union Government which could deal with it or that in reality the Act bad imposed a duty of excise.
The petitions filed by the appellants were heard by a Special Bench of the Assam High Court.
All the pleas raised by the appellants were rejected by Sarjoo Prasad, C. J. and Ram Labhaya, J., who delivered,, separate but concurring judgments.
The appellants ' then applied for and obtained a certificate from the High Court under article 132 ; that is how the three appeals have come to this Court, and they raise for our decision all the points which were argued before the High Court.
Naturally the principal contention which has been urged before us at length centres round the applicability of Part XIII.
The two petitions filed under article 32 raise substantially the same question.
The petitioners are tea companies which carry on the trade of growing and manufacturing tea in Jalpaiguri in West Bengal.
The respondent has attempted to subject the petitioners to the provisions of the Act, and the petitioners have challenged the authority of the respondent to levy a tax against them under the Act on the ground that the Act is ultra vires.
Since the principal question raised in these appeals appeared to be of considerable importance in which other States may also be interested we directed that notice should be issued to the Attorney General of India and the Advocates General in all the States of India.
Accordingly the Attorney.
General appeared before us and the States of Bihar, Madras, Punjab, Rajasthan and Uttar Pradesh have also been heard.
The challenge to the vires of the Act on the ground that it contravenes article 301 necessarily raises the question about the construction of the relevant provisions in the said Part. article 301 with which Part XIII begins provides that " subject to the other provisions of this Part trade, commerce and intercourse through.
out the territory of India shall be free ".
The appellants contend that this provision imposes a limitation on the legislative power of the State Legislatures as well as the Parliament, and the vires of the Act will 842 have to be judged on that basis.
The words used in article 301 are wide and unambiguous and it would be unreasonable to exclude from their ambit a taxing law which restricts trade, commerce or intercourse either directly or indirectly.
On the other band, the respondent the Attorney General, and the other States have urged that taxing laws stand by themselves; 'they are governed by the provisions of Part XII and no provision of Part XIII can be extended to them.
In the alternative it has been suggested that the provisions of Part XIII should be applied only to such legislative entries in the Seventh Schedule which deal with trade, commerce and intercourse.
This alternative argument would bring within the purview of Part XIII Entry 42 in List I which refers to interState trade and commerce, Entry 26 in List II which deals with trade and commerce, within the State subject to the provisions of Entry 33 in List III, and Entry 33 in List III which deals with trade and commerce as therein specified.
The arguments thus presented by both the parties appear prima facie to be logical and can claim the merit of attractive simplicity.
The question which we have to decide is which of the contentions correctly represents the true position in law.
Does truth lie in one or the other contention raised by the parties, or does it lie midway between those contentions ? This problem has to be resolved primarily by adopting a fair and reasonable construction of the relevant Articles in Part XIII; but before we attempt that task it would be relevant to deal with some general considerations.
Let us first recall the political and constitutional background of Part XIII.
It is a matter of common knowledge that, before the Constitution was adopted, nearly two thirds of the territory of India was subject to British Rule and was then known as British India, while the remaining part of the territory of India was governed by Indian Princes and it consisted of several Indian States.
A large number of these States claimed sovereign rights within the limitations imposed by the paramount power in that behalf, and they pur ported to exercise their legislative power of imposing 843 taxes in respect of trade and commerce which inevitably led to the erection of customs barriers between themselves and the rest of India.
In the matter of such barriers British India was governed by the provisions of section 297 of the Constitution Act, 1935.
To the provisions of this section we will have occasion later to refer during the course of this judgment.
Thus, prior to 1950 the flow of trade and commerce was impeded at several points which constituted the boundaries of Indian States.
After India attained political freedom in 1947 and before the Constitution was adopted the historical process of the merger and integration of the several Indian States with the rest of the country was speedily accomplished with the result that when the Constitution was first passed the territories of India consisted of Part A States which broadly stated represented the Provinces in British India, and Part B States which were made up of Indian States.
This merger or integration of Indian States with the Union of India was preceded by the merger and consolidation of some of the States interse between themselves.
It is with the knowledge of the trade barriers which had been raised by the Indian States in exercise of their legislative powers that the Constitution makers framed the Articles in Part XIII.
The main object of article 301 obviously was to allow the free flow of the stream of trade, commerce and intercourse throughout the territory of India.
In drafting the relevant Articles of Part XIII the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stability and progress of the federal policy which had been adopted by the Constitution for the governance of the country.
Political freedom which had been won, and political unity which had been accomplished by the Constitution, had to be sustained and strengthened by the bond of economic unity.
It was realised that in course of time different political parties believing in different economic theories or ideologies may come in power in the several constituent units of the Union, and that may conceivably give rise to local and 844 regional pulls and pressures in economic matters.
Local or regional fears or apprehensions raised by local or regional problems may persuade the State Legislatures to adopt remedial measures intended solely for the protection of regional interests without due regard to their effect on the economy of the nation as a whole.
The object of Part XIII was to avoid such a possibility.
Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustaining and improving living standards of the country.
The provision contained in article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of a mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of a directive principle of State policy ; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country.
In appreciating the significance of these general consi derations we may profitably refer to the observations made by Cardozo, J., in C.A.F. Seelig, Inc. vs Charles H. Baldwin(1) while he was dealing with the commerce clause contained in article 1, section 8, cl. 3 of the American Constitution.
" This part of the Constitution ", observed Cardozo J., " was framed under the dominion of a political philosophy less parochial in range.
It was framed upon the theory that the peoples of the several states must sink or swim together and that in the long run prosperity and salvation are in union and not division ".
There is another general consideration which has been pressed before us by the learned Attorney General and the States to which reference must be made.
It is argued that in determining the scope and reach of the freedom embodied in article 301 we should bear in mind the fact that to the extent to which the frontiers of this freedom are widened to that extent is the legislative power of the States curtailed or limited.
The Legislatures of the States have plenary powers to (1) ; , 523; , 1038.
845 legislate in respect of topics covered by the legislative entries in Parts II and III.
If the words used in article 301 receive the widest interpretation as contended by the appellants it would obviously mean that the State Legislatures would not be able to legislate on several entries in the said Lists without adopting the procedure prescribed by article 304(b).
In fact it would be unreasonable to impose such a limitation on the legislative power of the State Legislatures and thereby affect their freedom of action.
Whilst appreciating this argument it may be pertinent to observe that what appears as a curtailment of, or limitation on, the powers of the State Legislatures prescribed by article 304(b) day, from the point of view of national economy, be characterised as a safeguard deliberately evolved to protect the economic unity of the country ; even so it may be assumed that in interpreting the provisions of article 301 and determining the scope and effect of Part XIII we should bear in mind the effect of our decision on the legislative power of the States and also of Parliament.
Having thus referred to some general considerations let us now proceed to examine the question as to whether tax laws are wholly outside the purview of Part XIII.
In support of the argument that Part XIII does not apply to tax laws the learned Attorney General has emphasised the fact that the power to levy a tax is an essential part of sovereignty itself, and he has suggested that this power is not subject to judicial review and never has been held to be so.
In this connection he has invited our attention to the observa tions made in Cooley 's " Constitutional Limitations " on the power of taxation. 'The power to impose taxes ", says the author, " is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restriction whatever, except such as rest in the discretion of the authority which exercises it " (1).
The author then has cited the observations of Marshall, C. J., in McCulloch vs Maryland (2) where the learned Chief Justice has (1) Cooley 's " Constitutional Limitations ", Vol. 2, 8th Ed., p. 986.
(2) ; , 428: ; , 607.
108 846 stated that " the power of taxing the people and their property is essential to the very existence of the government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the government may choose to carry it.
The only security against the abuse of this power is found in the structure of the government itself ".
Basing himself on this character of the taxing power of the State the learned Attorney General has asked us to hold that Part XIII can have no application to any statute imposing a tax.
In our opinion this contention is not wellfounded.
The statement of the law on which reliance has been placed is itself expressed to be subject to the relevant provisions of the Constitution; for instance, the same author has observed " It is also believed that that provision in the Constitution of the United States which declares that the citizens of each state shall be entitled to all the privileges and immunities of the citizens of the several states will preclude any state from imposing upon the property which citizens of other states may own, or the business which they may carry on within its limits, any higher burdens by way of taxation than are imposed upon corresponding property or business of its own citizens" (p. 1016).
Putting the same propositions in terms of our Constitution it cannot be suggested that the power of taxation can, for instance, violate the equality before the law guaranteed by article 14 of the Constitution.
Therefore the true position appears to be that, though the power of levying tax is essential for the very existence of the government, its exercise must inevitably be controlled by the constitutional provisions made in that behalf.
It cannot be said that the power of taxation per se is outside the purview of any constitutional limitations.
It is true that in Ramjilal vs Income tax Officer, Mohindargarh (1) it has been held that " since there is a special provision in article 265 of the Constitution that no tax shall be levied or collected except by authority of law, el.
(1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the (1) [1051] S.C.R. 127.
847 imposition or collection of tax, and inasmuch as the right conferred by article 265 is not a right conferred by Part III of the Constitution, it could not be enforced under article 32".
It is clear that the effect of this decision is no more than this that the protection against the imposition and collection of taxes, save by the authority of law, directly comes under article 265 and cannot be said to be covered by cl.
(1) of article 31.
It would be unsafe to assume that this decision is, or was intended to be, an authority for the proposition that the levy of a tax by taxing statute can, for instance, violate article 14 of the Constitution.
The next question which needs examination is whether tax laws are governed only by Part XII of the Constitution and not by Part XIII.
The argument is that Part XII is a self contained code; it makes all necessary provisions, and so the validity of any taxing statute can be judged only by reference to the provisions of the said Part.
Article 265 provides that "no tax shall be levied or collected except by authority of law".
It is emphasised that this Article does not contemplate that its provision is subject to the other provisions of the Constitution, and so there would be no justification for applying Part XIII to the taxing statutes.
It is also pointed out that restrictions and other exceptions which the Constitution wanted to prescribe in respect of taxation have been provided for by articles 274, 276, 285, 287 and 288, and so we need not look beyond the provisions of this Part in dealing with tax laws.
In our opinion this argument fails to take notice of the fact that article 265 itself inevitably takes in article 245 of the Constitution when in substance it says that a tax shall be levied by authority of law.
The authority of law to which it refers and under which alone a tax can be levied is to be found in article 245 read with the corresponding legislative entries in Schedule VII.
Now, if we look at article 245 which deals with the extent of laws made by Parliament and by the Legislatures of States it begins with the words " subject to the provisions of this Constitution "; in other words, the power of Parliament and the Legislatures of the States to make laws including 848 laws imposing taxes is subject to the provisions of this Constitution and that must bring in the application of the provisions of Part XIII.
Therefore the argument based on the theory that tax laws are governed by the provisions of Part XII alone cannot be accepted.
The power to levy taxes is ultimately based on article 245, and the said power in terms is subject to the provisions of the Constitution.
On the other hand, the opening words of article 301 are very significant.
The doctrine of the freedom of trade, commerce and intercourse enunciated by article 301 is not subject to the other provisions of the Constitution but is made subject only to the other provisions of Part XIII; that means that once the width and amplitude of the freedom enshrined in article 301 are determined they cannot be controlled by any provision outside Part Xlll.
This position incidentally brings out in bold relief the important part, which the Constitution makers wanted the doctrine of freedom of trade to play in the future of the country.
It is obvious that whatever may be the content of the said freedom it is not intended to be an absolute freedom; absolute freedom in matters of trade, commerce and intercourse would lead to economic confusion, if not chaos and anarchy; and so the freedom guaranteed by article 301 is made subject to the exceptions provided by the other Articles in Part XIII.
The freedom guaranteed is limited in the manner specified by the said Articles but it is not limited by any other provisions of the Constitution outside Part XIII.
That is why it seems to us that article 301, read in its proper context and subject to the limitations prescribed by the other relevant Articles in Part XIII, must be regarded as imposing a constitutional limitation on the legislative power of Parliament and the Legislatures of the States.
What entries in the legislative lists will attract the provisions of article 301 is another matter; that will depend upon the content of the freedom guaranteed; but wherever it is held that article 301 applies the legislative competence of the Legislature in question will have to be judged in the light of the relevant Articles 849 of Part XIII; this position appears to us to be inescapable.
On behalf of the respondent it was suggested before us that the scope and extent of the application of article 301 can well be determined in the light of section 297 of the Constitution Act of 1935.
Section 297 reads thus: " 297(1).
No Provincial Legislature or Government shall (a) by virtue of the entry in the Provincial Legislative List relating to trade and commerce within the Province, or the entry in that List relating to the production, supply, and distribution of commodities, have power to pass any law or take any executive action prohibiting or restricting the entry into, or export from the Province of goods of any class or description ; or (b) by virtue of anything in this Act have power to impose any tax, cess, toll, or due which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the Province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality.
(2) Any law passed in contravention of this section shall, to the extent of the contravention, be invalid.
There is no doubt that the prohibition prescribed by this section was confined to the Provincial Governments and Provincial Legislatures and did not apply to the Central Government or Central Legislature.
It is also true that the said prohibition had reference to the entries in the Provincial Legislative List relating to trade and commerce, and to production, supply and distribution of commodities.
The section also deals with prohibitions and restrictions in respect of import of goods into, or their export from, a Province.
Likewise discrimination against goods manufactured or produced outside the Province or goods produced in other localities is also prohibited.
The argument 850 is that when the Constitution adopted article 301 it had section 297 in view and the only substantial change which it intended to make was to extend the application of the principles enunciated in the said section to the Union Government and the Union Parliament, and to apply it to the territory which had subsequently become a part of India as indicated by the relevant 'Articles; the essential content of freedom of trade and commerce as prescribed by the said section, however, continues to be the same.
In support of this argument, reliance has been placed on the observations made by Venkatarama Aiyar, J., in the case of M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh (1).
In that case the vires of some of the provisions of the Sales Tax Laws Validation Act, 1956 (7 of 1956), were challenged on several grounds.
In dealing with one of the points raised in support of the said challenge Venkatarama Aiyar, J., who delivered the majority judgment, considered the content of Entry 42 in List 1.
It had been urged before the Court that the said entry should be liberally construed and should be held to include the power to tax, and in support of this contention reliance was placed on certain American and Australian decisions.
This argument was repelled and it was held that Entry 42 in List I is not to be interpreted as including taxation.
In coming to this conclusion the learned judge made certain general observations pointing out that it would not be always safe to rely upon American or Australian decisions in interpreting the provisions of our Constitution.
Said the learned judge, " the threads of our Constitution were no doubt taken from other Federal Constitutions but when they were woven into the fabric of our Constitution their reach and their complexion underwent changes.
Therefore, valuable as the American decisions are as showing how the question is dealt with in sister Federal Constitution great care should be taken in applying them in the interpretation of our Constitution ".
He made a similar comment about section 92 of the Commonwealth of Australia Constitution Act and (1) ; , 1483 84. 851 the decisions thereunder, and in that connection he observed: ', We should also add that article 304(a) of the Constitution cannot be interpreted as throwing any light on the scope of article 301 with reference to the question of taxation as it merely reproduces section 297(1)(b) of the Government of India Act, and as there was no provision therein corresponding to article 301 section 297(1)(b) could not have implied what is now sought to be inferred from article 304(a) ".
The learned Attorney General has relied on these observations.
It would be noticed that, incidental as these observations are, what the learned judge was considering was the scope and effect of section 297(1)(b) of the Government of India Act, 1935, and he held that the content of the said section cannot be enlarged in the light of the provisions of article 304(a).
No doubt the observations would seem to show that the learned judge thought that article 304(a) cannot throw any light on the scope of article 301 with reference to the question of taxation ; but it is clear that the question of construing the said Articles did not fall to be considered, and was not obviously argued before the Court.
With respect, it may be pointed out that in the happy phraseology adopted by the learned judge himself, in the setting of Part XIII and particularly in the light of the wide words used in article 301, the reach and complexion of article 304(a) is wider than section 297(1)(b) and does include reference to taxation.
Then as to the merits of the argument that section 297 of the Constitution Act of 1935 should virtually determine the scope of article 301, we are reluctant to accept the assumption that the only change which the Constitution makers intended to make by adopting article 301 was to extend the application of section 297 to the Union Government and the Parliament.
Just as the Constitution makers had before them the said section they were also familiar with corresponding clauses included in the Federal Constitutions of other countries.
The history of judicial decisions interpreting section 92 of the Australian Constitution must have been present to their minds as also the history of the growth and development of the American Law under 852 the commerce clause in the American Constitution.
Besides, we feel considerable hesitation in accepting the view that the makers of the Constitution did not want to enrich and widen the content of freedom guaranteed by section 297.
They knew that the Constitution would herald a new and inspiring era in the history of India and they, were fully conscious of the importance of maintaining the economic unity of the Union of India in order that the federal form of government adopted by the Constitution should progress in a smooth and harmonious manner.
That is why we are inclined to hold that the broad and unambiguous words used in article 301 are intended to emphasise that the freedom of trade, commerce and intercourse guaranteed was richer and wider in content than was the case under section 297; how much wider and how much richer can be determined only on a fair and reasonable construction of article 301 read along with the rest of the Articles in Part XIII.
In our opinion, therefore, the argument that tax laws are outside Part XIII cannot be accepted.
That takes us to the question as to whether article 301 operates only in respect of the entries relating to trade and commerce already specified.
Before answering this question it would be necessary to examine the scheme of Part XIII, and construe the relevant Articles in it.
It is clear that article 301 applies not only to inter State trade, commerce and intercourse but also intrastate trade, commerce and intercourse.
The words " throughout the territory of India " clearly indicate that trade and commerce whose free dom is guaranteed has to move freely also from one place to another in the same State.
This conclusion is further supported by articles 302 and 304(b) as we will presently point out.
There is no doubt that the sweep of the concept of trade, commerce and intercourse is very wide; but in the present case we are concerned with trade, and so we will leave out of consideration commerce and intercourse.
Even as to trade it is really not necessary to discuss or determine what trade exactly means; for it is common ground that the activity carried on by the appellants 853 amounts to trade, and it is not disputed that transport of goods or merchandise from one place to another is so essential to trade that it can be regarded as its integral part.
Stated briefly trade even in a narrow sense would include all activities in relation to buying and selling, or the interchange or exchange of commodities and that movement from place to place is the very soul of such trading activities.
When article 301 refers to the freedom of trade it is necessary to enquire what freedom means.
Freedom from what? is the obvious question which falls to be determined in the context.
At this stage we would content ourselves with the statement that the freedom of trade guaranteed by article 301 is freedom from all restrictions except those which are provided by the other Articles in Part XIII.
What these restrictions denote may raise a larger issue, but in the present case we will confine our decision to that aspect of the matter which arises from the provisions of the Act under scrutiny.
It is hardly necessary to emphasise that in dealing with constitutional questions courts should be slow to embark upon an unnecessarily wide or general enquiry and should confine their decision as far as may be reasonably practicable within the narrow limits of the controversy arising between the parties in the particular case.
We will come back again to article 301 after examining the other Articles in Part XIII.
article 302 confers on the Parliament power to impose restrictions on trade, commerce and intercourse.
It provides that Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.
It would be immediately noticed that the reference made to a restriction on the freedom of trade within any part of the territory of India as distinct from freedom of trade between one State and another clearly indicates that the freedom in question covers not only inter State trade but also intrastate trade.
Thus the effect of article 302 is to 109 854 provide for an exception to the general rule prescribed, by article 301.
Restrictions on the freedom of trade can be imposed by Parliament if they are required in the public interest so that the generality of freedom guaranteed by article 301 is subject to the exception s provided by article 302.
That takes us to article 303.
It reads thus: " 303.
(1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.
(2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.
" The first part of this Article is in terms an exception or a proviso to article 302 as is indicated by the nonobstante clause.
This clause prohibits Parliament from making any law which would give any preference to one State over another or would make any discrimination between one State and another by virtue of the relevant entries specified in it.
In other words, in regard to the entries there specified, the power to impose restrictions cannot be used for the purpose of giving any preference to one State over another or making any discrimination in that manner.
It is obvious that the reference to the Legislature of the State in this clause cannot be reconciled with the non obstante clause; but the object of including the Legislature of a State appears to be to emphasise that like Parliament even the Legislature of a State cannot give any preference or make any discrimination.
Sub Article (2) is an exception to sub article
(1) of article 303.
It empowers the Parliament to make a law giving or authorising to give any preference or making 855 any discrimination, but this power can be exercised only if it is declared by law made by the Parliament that it is necessary so to do for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India ; in other words, it is only when Parliament is faced with the task of meeting an emergency created by the scarcity of goods in any particular part of India that it is authorised to make a law making a discrimination, or giving preference, in favour of the part thus affected.
On behalf of the States strong reliance is placed on the fact that article 303(1) expressly refers to the entries relating to trade and commerce in any of the Lists in the Seventh Schedule, and it is urged tbat this gives a clear indication as to the scope of the provisions of article 301 itself There is some force in this contention ; but on the whole we are not prepared to hold that the reference to the said entries should govern the construction of article 301.
The setting in which the said entries are referred to would of course determine the scope and extent of the prohibition prescribed by article 303 (1); but that cannot be pressed into service in determining the scope of article 301 itself.
It is significant that article 303(1) does not refer to intercourse and in that sense intercourse is outside its sphere.
It is likely that having authorised Parliament to impose restrictions by article 302 it was thought expedient to prohibit expressly the said power of imposing restrictions from being used for the purpose of giving any preference in so far as the relevant entries are concerned.
It may also be that the primary object of confining the operation of article 303(1) to the said entries was to introduce a corresponding limitation on the power of Parliament to discriminate under article 302.
However that may be, in our opinion the limitation thus introduced in article 303(1) cannot circumscribe the scope of article 301 or otherwise affect its construction.
Besides, as we will presently point out, there are other Articles in this Part which indicate that tax laws are included within article 301, and if that be so, the reference to the said entries in article 303(1) cannot 856 limit the application of article 301 to the said entries alone.
Article 304 reads thus: "Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
" The effect of article 304(a) is to treat imported goods on the same basis as goods manufactured or produced in any State; and it authorises tax to be levied on such imported goods in the same manner and to the same extent as may be levied on goods manufactured or produced inside the State.
We ought to add that this sub Article assumes that taxation can be levied by the State Legislature on goods manufactured or produced within its territory and it provides that outside goods cannot be treated any worse.
How a tax can be levied on internal goods is, however, provided by article 304(b).
The non obstante clause referring to article 301 would go with article 304(a), and that indicates that tax on goods would not have been permissible but for article 304(a) with the non obstante clause.
This incidentally helps to determine the scope and width of the freedom guaranteed under article 301 ; in other words article 304(a) is another exception to article 301.
Article 304(b) empowers the State Legislature to impose reasonable restrictions on the freedom of trade with other States or within its own territory.
Again, the reference to the territory within the State supports the conclusion that article 301 covers the movement of 857 trade both inter State and intrastate.
Article 304(b) is to be read with the non obstante clause relating to article 301 as well as article 303, and in substance it gives power to the State Legislature somewhat similar to the power conferred on the Parliament by article 302.
The reference to article 303 in the non obstante clause has presumably been made as a matter of abundant( caution since the Legislature of a State has been included in article 303(1).
There are, however, obvious differences in the powers of the Parliament and State Legislatures.
In regard to an act which the State Legislature intends to pass under article 304(b) no bill can be introduced without the previous sanction of the President, and this requirement has obviously been inserted in order that regional economic pressures which may inspire legislation under the said clause should be duly examined in the light of the interest of national economy; such legislation must also be in the public interest which feature is common with the provision contained in article 302; such legislation must also satisfy the 'further test that the restrictions imposed by it are reasonable.
That is another additional restriction imposed on the powers of the State Legislatures.
Thus there are three conditions which must be satisfied in passing an Act under article 304(b),the previous sanction of the President must be obtained, the legislation must be in the public interest, and it must impose restrictions which are reasonable.
It is of course true that if the previous sanction of the President is not obtained that infirmity may be cured by adopting the course authorised by article 255.
The result of reading article 304(a) and (b) together appears to be that a tax can be levied by a State Legislature on goods manufactured or produced or imported in the State and thereby reasonable restrictions can be placed on the freedom of trade either with another State or between different areas of the same State.
Tax legislation thus authorised must therefore be deemed to have been included in article 301, for that is the obvious inference from the use of the non obstante clause.
Article 305 saves existing laws and laws providing 858 for State monopolies.
It is unnecessary to deal with this Article.
Its object clearly was not to interrupt or to Affect the operation of the existing laws except in so far as the President may by order otherwise direct.
Article 306 is relevant.
It reads thus: " Notwithstanding anything in the foregoing provisions of this Part or in any other provisions of this Constitution, any State specified in Part B of the First Schedule which before the commencement of this Constitution was levying any tax or duty on the import of goods into the State from other States or on the export of goods from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State, continue to levy and collect such tax or duty subject to the terms of such agreement and for such period not exceeding ten years from the commencement of this Constitution as may be specified in the agreement: Provided that the President may at any time after the expiration of five years from such commencement terminate or modify any such agreement if, after consideration of the report of the Finance Commission constituted under article 280, he thinks it necessary to do so." This Article has been subsequently deleted by section 29 and Schedule to the Constitution (Seventh Amendment) Act, 1956, but its initial inclusion in Part XIII throws some light on the scope of article 301.
Laws made by any State specified in Part B of the First Schedule levying any tax or duty on the import of goods into the State from other States or the export of goods from the State to other States were expressly saved by a article 306 because it was realised that they would otherwise be hit by article 301.
In other words, taxing statutes or statutes imposing duties on goods would, but for article 306, have attracted the application of article 301.
Let us now revert to article 301 and ascertain the width and amplitude of its scope.
On a careful examination of the relevant provisions of Part XIII as a whole as well as the principle of economic unity 859 which it is intended to safeguard by making the said provisions, the conclusion appears to us to be inevitable that the content of freedom provided for by article 301 was larger than the freedom contemplated by section 297 of the Constitution Act of 1935, and whatever else it may or may not include, it certainly includes movement of trade which is of the very essence of all trade and is its integral part.
If the transport or the( movement of goods is taxed solely on the basis that the goods are thus carried or transported that, in our opinion, directly affects the freedom of trade as contemplated by article 301.
If the movement, transport or the carrying of goods is allowed to be impeded, obstructed or hampered by taxation without satisfying the requirements of Part XIII the freedom of trade on which so much emphasis is laid by article 301 would turn to be illusory.
When article 301 provides that trade shall be free throughout the territory of India primarily it is the movement part of the trade that it has in mind and the movement or the transport part of trade must be free subject of course to the limitations and exceptions provided by the other Articles of Part XIII.
That we think is the result of article 301 read with the other Articles in Part XIII.
Thus the intrinsic evidence furnished by some of the Articles of Part XIII shows that taxing laws are not excluded from the operation of article 301 ; which means that tax laws can and do amount to restrictions freedom from which is guaranteed to trade under the said Part.
Does that mean that all tax laws attract the provisions of Part XIII whether their impact on trade or its movement is direct and immediate or indirect and remote ? It is precisely because the words used in article 301 are very woe, and in a sense vague and indefinite that the problem of construing them and determining their exact width and scope becomes complex and difficult.
However, in interpreting the provisions of the Constitution we must always bear in mind that the relevant provision " has to be read not in vacuo but as occurring in a single complex instrument in which one part may 860 throw light on another ".
(Vide: James V. Commonwealth of Australia (1)).
In construing article 301 we must, therefore, have regard to the general scheme of our Constitution as well as the particular provisions in regard to taxing laws.
The construction of article 301 should not be determined on a purely academic or doctrinnaire considerations ; in construing the said 'Article we must adopt a realistic approach and bear in mind the essential features of the separation of powers on which our Constitution rests.
It is a federal constitution which we are interpreting, and so the impact of article 301 must be judged accordingly.
Besides, it is not irrelevant to remember in this connection that the Article we are construing imposes a constitutional limitation on the power of the Parliament and State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to be for public good and would not be subject to judicial review or scrutiny.
Thus considered we think it would be reasonable and proper to hold that restrictions freedom from which is guaranteed by article 301, would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade.
Taxes may and do amount to restrictions ; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301.
The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld.
If the said argument is accepted it would mean, for instance, that even a legislative enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an additional wage bill may indirectly affect trade or commerce.
We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its (1) ,613.
861 movement? It is in the light of this test that we propose to examine the validity of the Act under scrutiny in the present proceedings.
We do not think it necessary or expedient to consider what other laws would be affected by the interpretation we are placing on article 301 and what other legislative entries would fall under Part XIII.
We propose to confine our decision to the Act with which ' we are concerned.
If any other laws are similarly challenged the validity of the challenge will have to be examined in the light of the provisions of those laws.
Our conclusion, therefore, is that when article 301 provides that trade shall be free throughout the territory of India it means that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves.
It is the free movement or the transport of goods from one part of the country to the other that is intended to be saved, and if any Act imposes any direct restrictions on the very movement of such goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfies the requirements of article 302 or article 304 of Part XIII.
At this stage we think it is necessary to repeat that when it is said that the freedom of the movement of trade cannot be subject to any restrictions in the form of taxes imposed on the carriage of goods or their movement all that is meant is that the said restrictions can be imposed by the State Legislatures only after satisfying the requirements of article 304(b).
It is not as if no restrictions at all can be imposed on the free movement of trade.
Incidentally we may observe that the difference in the provisions contained in article 302 and article 304(b) would prima facie seem to suggest that where Parliament exercises its power under article 302 and passes a law imposing restrictions on the freedom of trade in the public interest, whether or not the given law is in the public interest may not be justiciable, and in that sense Parliament is given the sole power to decide what restrictions can be imposed in public interest as 110 862 authorised by article 302.
On the other hand article 304(b) requires not only that the law should be in the public interest and should have received the previous sanction of the President but that the restrictions imposed by it should also be reasonable.
Prima facie the requirement of public interest can be said to be not justiciable and may be deemed to be satisfied by the sanction of the President; but whether or not the restrictions imposed are reasonable would be justiciable and in that sense laws passed by the State Legislatures may on occasions have to face judicial scrutiny.
However this point does not fall to be considered in the present proceedings and we wish to express no definite opinion on it.
Let us then examine the material provisions of the Act.
As we have already pointed out the Act has been passed providing for the levy of tax on certain goods carried by roads or inland waterways in the State of Assam.
Section 2(11) defines a producer as meaning a producer of tea and including the person in charge of the garden where it is produced.
Section 3 is the charging section.
It provides that manufactured tea in chests carried by motor vehicles etc., except railways and airways shall be liable to tax at the specified rate per lb.
of such tea and this tax shall be realised from the producer.
It also makes similar provisions for jute with which we are not concerned in the present proceedings.
Section 6 provides for taxing authorities and their powers.
Section 7 provides, inter alia, that every producer shall furnish returns of the manufactured tea carried in tea chests ,in such form and to such authority as may be prescribed.
Section 8 makes a provision for licensing of balers who are persons owning or possessing pressing machines for the compression of jute into bales.
Section 9 prescribes the procedure for levying the assessment ; and section 10 provides for the cancellation of assessment in the cases specified.
Section 11 deals with the assessment in cases of evasion and escape; section 12 with rectification, and section 13 with penalty for non submission of returns and evasion of taxes.
Section 19 provides for notice of demand, and is.
20 lays down when 863 tax becomes payable.
This Act has been passed by the Assam Legislature under Entry 56 in List 11 and naturally it purports to be a tax on goods carried by roads or by inland waterways.
It is thus obvious that the purpose and object of the Act is to collect taxes on goods solely on the ground that they are carried by road or by inland waterways within the area of the, State.
That being so the restriction placed by the Act on the free movement of the goods is writ large on its face.
It may be that one of the objects in passing the Act was to enable the State Government to raise money to keep its roads and waterways in repairs; but that object may and can be effectively achieved by adopting another course of legislation ; if the said object is intended to be achieved by levying a tax on the carriage of goods it can be so done only by satisfying the requirements of article 304(b).
It is common ground that before the bill was introduced or moved in the State Legislature the previous sanction of the President has not been obtained ; nor has the said infirmity been cured by recourse to article 255 of the Constitution.
Therefore we do not see how the validity of the tax can be sustained.
In our opinion the High Court was in error in putting an unduly restricted meaning on the relevant words in article 301.
It is clear that in putting that narrow construction on article 301 the High Court was partly, if not substantially, influenced by what it thought would be the inevitable consequence of a wider construction of article 301.
As we have made it clear during the course of this judgment we do not propose to express any Opinion as to the possible consequence of the view which we are taking in the present proceedings.
We are dealing in the present case with an Act passed by the State Legislature which imposes a restriction in the form of taxation on the carriage or movement of goods, and we hold that such a restriction can be imposed by the State Legislature only if the relevant Act is passed in the manner prescribed by article 304(b).
This question can be considered from another point of view.
When a State Legislature passes an Act under Entry 56 of List II its initial legislative 864 competence is not in dispute.
What is in dispute is whether or not such legislative competence is subject to the limitations prescribed by Part XIII.
Now what does an act passed under the said Entry purport to do ? It purports to put a restraint in the form of taxation on the movement of trade, and if the movement of trade is regarded as an integral part of trade itself, the Act in substance puts a restriction on trade itself.
The effect of the Act on the movement of trade is direct and immediate; it is not indirect or remote; and so legislation under the said Entry must be held to fall directly under article 301 as legislation in respect of trade and commerce.
In some of the decisions of this Court, in examining the validity of legislation it has been considered whether the impugned legislation is not directly in respect of the subject matter covered by a particular Article of the Constitution.
This test was applied, for instance by Kania, C. J., in the case of A. K. Gopalan vs The State of Madras (1).
It was also adopted by this Court in the case of Ram Singh vs The State of Delhi (2).
It is no doubt true that the points which arose for decision in those cases had reference to the fundamental rights guaranteed by articles 19, 21 or 22 ; but we are referring to those decisions in order to emphasise that the test there adopted would in the present case lead to the conclusion that the Act with which we are concerned is invalid.
The true approach according to Kania, C.J., is only to consider the directness of the legislation.
Now, if the directness of legislation has to be considered it is clear that the Act imposes a tax on the carriage of goods and that immediately takes it within the purview of Part XIII.
In the course of arguments the learned Attorney General invited us to apply the test of pith and substance, and he contended that if the said test is applied the validity of the Act can be sustained.
In support of his argument he has relied on the observations made by Das, C. J., in the case of The State of Bombay vs R.M.D. Chamarbaugwala (3).
In that case the Court (1) (1950] S.C.R. 88.
(2) ; (3) ; 865 was called upon to consider the validity of the Bombay Lotteries and Prize Competitions Control and Tax (Amendment) Act, 1952.
The challenge to the Act proceeded on two grounds, (1) that it violated the fundamental right guaranteed under article 19(1)(g) and (2) that it offended against the provisions of article 301.
The challenge on the first ground was repelled because it was held that gambling cannot be treated as trade or business under article 19(1)(g).
This conclusion was sufficient to repel also the other ground on which the, validity of the Act was challenged because, if gambling was not trade or business under article 19(1)(g), it was also not trade or commerce under article 301.
On the conclusion reached by this Court that gambling is not a trade this position would be obvious.
Even so, the learned Chief Justice incidentally applied the test of pith and substance, and observed that the impugned act was in pith and substance an act in respect of betting and gambling, and since betting or gambling was not trade, commerce or business " the validity of the Act had not to be decided by the yardstick of reasonableness and public interest laid down in articles 19(6) and 304 ".
In this connection it may, with respect, be pointed out that what purports to be a quotation from Lord Porter 's judgment in Commonwealth of Australia & Ors.
vs Bank of New South Wales(1) has not been accurately reproduced.
In fact, referring to phrases such as 'pith and substance ' Lord Porter has observed that " they no doubt raise in convenient form an appropriate question in cases where the real issue is one of subject matter, as when the point is whether a particular piece of legislation is a law in respect of some subject within the permitted field.
They may also serve useful purpose in the process of deciding whether an enactment which works some interference, with trade, commerce and intercourse among the States is nevertheless untouched by section 92 as being essentially regulatory in character " (pp. 312, 313).
These observations would indicate that the test of pith and substance is generally and more appropriately applied when a dispute arises as to the 866 legislative competence of the legislature, and it has to be resolved by reference to the entries to which the impugned legislation is relatable.
When there is a conflict between two entries in the legislative lists, and legislation by reference to one entry would be competent but not by reference to the other, the doctrine of pith and substance is invoked for the purpose of determining the true nature and character of the legislation in question (Vide: Prafulla Kumar Mukherjee vs Bank of Commerce Ltd., Khulna (1) and Subrahmanyan Chettiar vs Muttuswami Goundan (2) .
But even the application of the test of pith and substance yields the same result in the present proceedings.
The pith and substance of the legislation is taxation on the carriage of goods and that clearly falls within the terms of article 301.
At the commencement of this judgment we have stated that the complexity of the problem which we are called upon to decide in the present proceedings has been incidentally mentioned or considered in some of the reported decisions of this Court.
We may in that connection refer to two of such decisions at this stage.
In The State of Bombay vs The United Motors (India) Ltd. (3), Patanjali Sastri, C. J., observed that the freedom of inter State trade and commerce declared in article 301 is expressly subordinated to the State power of taxing goods imported from sister States provided only no discrimination is made in favour of similar goods of local origin.
According to the learned Chief Justice the commercial unity of India is made to give way before the State power of imposing any non discriminatory tax on goods imported from sister States.
This observation would suggest that article 304(a) and (b) deal with taxes and to that extent it is inconsistent with the argument that tax laws are outside Part XIII.
The next case in which this question has been incidentally discussed is in Saghir Ahmed vs The State of U. P. (4).
In that case the impugned provisions of the U. P. Road Transport Act, 1951 (U. P. Act II of (1) (1947) L.R. 74 I.A. 23.
(2) (3) ; (4) ; 867 1951), were declared to be unconstitutional on two other grounds which had no direct connection with the challenge under Part XIII of the Constitution.
Even so, Mukherjea, J., as he then was, who spoke for the Court, has referred to the problem raised by Part XIII as " not quite free from difficulty " and has indicated its pros and cons which were urged before the Court.
One of the points thus urged was that article 301 provides safeguards for carrying on trade as a whole as distinct from the rights of an individual to carry it on.
In other words the said Article was concerned with the passage of commodities or persons either within or without the State frontiers but not directly with individuals carrying on the trade or commerce.
The right of individuals, it was said, was dealt with under article 19(1)(g) so that the two Articles had been framed in order to secure two different objects.
To the same effect are some of the observations made by Das, C. J., in the case of R. M. D. Chamarbaugwala (1).
It is unnecessary on the present occasion to consider whether the fields covered by article 19(1)(g) and article 301 can be distinguished in the manner suggested in the said observations.
It may be possible to urge that trade as a whole moves inevitably with the aid of human agency, and so protection granted to trade may involve protection even to the individuals carrying on the said trade.
In that sense the two freedoms may overlap.
However, it is unnecessary to pursue this point any further in the present proceedings.
Before we conclude we would like to refer to two decisions in which the scope and effect of the provisions of section 92 of the Australian Constitution came to be considered.
We have deliberately not referred to these decisions earlier because we thought it would be unreasonable to refer to or rely on the said section or the decisions thereon for the purpose of construing the relevant Articles of Part XIII of our Constitution.
It is commonplace to say that the political and historical background of the federal polity adopted by the Australian Commonwealth, the setting of the Constitution itself, the distribution of powers and the general scheme of the Constitution are different, and so it (1) ; 868 would not be safe to seek for guidance or assistance from the Australian decisions when we are called upon to construe the provisions of our Constitution.
In this connection we have already referred to the note of warning struck by Venkatarama Aiyar, J., against indiscriminate reliance being placed on Australian and American decisions in interpreting our Constitution in the case of M. P. V. Sundararamier & Co. (1).
The same caution was expressed by Gwyer, C. J., as early as 1939 when he observed in The Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (2) " there are few subjects on which the decisions of other Courts require to be treated with greater caution than that of federal and provincial powers, for in the last analysis the decision must depend upon the words of the Constitution which the Court is interpreting; and since no two Constitutions are in identical terms it is extremely unsafe to assume that a decision on one of them can be applied without qualification to another.
This may be so even where the words or expressions used are the same in both cases, for a word or a phrase may take a colour from its context and bear different senses accordingly ".
Even so the reported decisions of this Court show that in dealing with constitutional problems reference has not infrequently been made to Australian and American decisions; and that, we think, brings out the characteristic feature of the working of the judicial process.
When you are dealing with the problem of construing a constitutional provision which is none too clear or lucid you feel inclined to inquire how other judicial minds have responded to the challenge presented by similar provisions in other sister Constitutions.
It is in that spirit that we propose to refer to two Privy Council decisions which dealt with the construction of section 92 of the Australian Constitution.
The first paragraph of section 92 of the Australian Constitution, around which has grown, in the words of Lord Porter a " labyrinth where there is no golden thread ", reads thus: " On the imposition of uniform (1) ; 1483 84.
(2) , 5. 869 duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free ".
The part played by Frederick Alexander James, who carried on the trade of growing and processing dried fruits, in securing judicial pronouncements on the true scope and effect of the said section is wellknown.
He fought three valiant legal battles in which he successfully asserted his right as a trader against legislative encroachment.
In James V. State of South Australia (1) section 20 of the Dried Fruits Export Control Act, 1924, was struck down.
In James V. Cowan (2) section 28 was challenged, whereas in the last case of James V. Commonwealth of Australia (3) James had claimed a declaration that the Dried Fruits Act 11 of 1928 and 5 of 1935 and the regulations framed thereunder were invalid as offending against section 92 of the Constitution.
It is to the observations made by the Privy Council in the last case to which we wish to refer.
Referring to the word " free " used in the said section Lord Wright observed that the said word in itself is vague and indeterminate; it must take its colour from the context.
Then he referred to the fact that " 'free trade ' ordinarily means freedom from tariffs ", but he immediately added that " free " in section 92 cannot be limited to freedom in the last mentioned sense.
According to this judgment, every step in the series of operations which constitute the particular transaction is an act of trade, and control under the State law of any of these steps must be an interference with its freedom as trade.
In this connection it was also observed that not much help is to be got by reflecting that trade may still be free though the trader has to pay for the different operations such as tolls, railway rates and so forth; it would thus appear that the result of this decision is that imposition of tolls, railway rates and so forth might impede the freedom of trade contemplated by section 92, which in other words supports our conclusion that a tax may amount to a restriction under article 301.
(1) ; (3) ,613.
(2) III 870 In the case of Commonwealth of Australia vs Bank of New South Wales (1) to which reference has already been made in connection with the test of pith and substance the Privy Council was examining the validity of section 46 of Banking Act (Commonwealth) (No. 57 of 1947) in the light of the provisions of section 92 of the Australian Constitution.
In deciding the said question one of the tests which was applied by Lord Porter was : " Does the act not remotely or incidentally (as to which they will say something later) but directly restrict the inter State business of banking ", and he concluded that " two general propositions may be accepted, (1) that regulation of trade, commerce and intercourse among the States is compatible with its absolute freedom, and (2) that section 92 is violated Only when a, legislative or executive act operates to restrict such trade, commerce and intercourse directly and immediately as distinct from creating Some indirect or consequential impediment which may fairly be regarded as remote ".
This decision thus justifies the conclusion we have reached about the scope and effect of article 301.
In the result we hold that the Act has put a direct restriction on the freedom of trade, and since in doing so it has not complied with the provisions of article 304(b) it must be declared to be void.
In view of this conclusion it is unnecessary to consider the other points urged in support of the challenge against the validity of the Act.
The three appeals and the two petitions are accordingly allowed and writs or orders directed to be issued as prayed.
The appellants and the petitioners will be entitled to their costs from the respondent.
The validity of the Assam Taxation (on Goods carried by Roads or lnland Waterways) Act, 1954 hereinafter referred to as the, Act, is challenged by certain producers of tea in the States of West Bengal and Assam.
The Act was passed by the Assam Legislature and received the assent of the Governor of Assam on April 9, 1954.
To the introduc tion of the Bill (which was enacted into the Act) in 871 the State Legislature, the previous sanction of the President was not obtained : nor did the President assent to the Act.
By section 3 of the Act,, it is provided inter alia that " manufactured tea in chests carried by motor vehicles, cart, trolly, boat, animal and human agency or any other means except, railways and airways shall be liable to a tax of one anna per pound of such tea and this tax shall be realised from the producer".
" Producer " is defined by section 2 cl.
(2) as meaning a producer of tea and included a person in charge of the garden where tea is produced.
By section 4, tax is charged on the total net weight carried during the return period.
Section 7 provides that every producer and dealer shall furnish a return of manufactured tea carried in chests.
By section 23, cl.
(3), the Commissioner of Taxes is authorised to recover taxes and penalties due under the Act as arrears of land revenue.
Sections 27 and 28 impose a duty upon the producers to maintain accounts in the forms prescribed under the Act and to preserve the same and to producer them whenever called upon, to the Commissioner or other persons as may be appointed by the Government in that behalf The rules framed under the Act make it obligatory upon the producers to submit quarterly returns to the Superintendent of Taxes and to maintain the registers in the forms prescribed and failure to maintain registers is penalised.
In exercise of the powers conferred by section 7, sub section
(3), the Commissioner of Taxes issued a notification in the Assam Government Gazette notifying for general information that returns under the Act and the Rules thereunder for the period between June 1, 1954 and September 30, 1954, shall be furnished on or before October 30, 1954, and for the subsequent quarters on or before the dates specified therein.
Three producers who transported their tea by road or by inland waterways to Calcutta in the State of West Bengal challenged by petitions under article 226 of the Constitution filed in the High Court of Assam, tile authority of the Legislature of the State of Assam to enact the Act on the plea that the Act violated the guarantee of freedom of trade, commerce and intercourse under 872 article 301 of the Constitution.
The High Court rejected the plea raised by the petitioners, and against the orders passed, three appeals with certificates of fitness under article 132 of the Constitution have been preferred.
Two other producers have challenged the vires of the Act by petitions under article 32 of the Constitution presented to this court.
The principal question canvassed in these proceedings is about the competence of the Assam Legislature to enact the Act.
The producers contend that by article 301 of the Constitution, trade, commerce and intercourse being declared free throughout the territory of India, the statute authorising imposition of restrictions or burdens on that freedom by levying tax under the authority of an Act which does not conform to the conditions prescribed by the Constitution is invalid.
Item 56 of List II of the seventh schedule to the Constitution authorises the State Legislature to impose taxes on goods and passengers carried byroad or on inland waterways.
In terms, the tax imposed by the Act is a tax on goods carried by road and inland waterways and is not of the nature of a duty of excise.
If the vires of the Act are to be adjudged solely in the light of the power conferred by article 246 cl.
(3) read with item 56 of List 11 of the seventh schedule, the tax must be regarded as within the competence of the State.
But the exercise of legislative power of the Parliament and the State Legislatures conferred by the legislative lists is restricted by diverse provisions of the Constitution.
By article 301, it is declared that subject to the provisions of Part XIII of the Constitution, trade, commerce and intercourse throughout the territory of India shall be free.
The language of the Article is general; it admits of no implications and of no exceptions bar those expressly imposed by Part XIII.
It comprehensively sets out the guarantee of freedom and defines in terms, clear and precise, that trade, commerce and intercourse throughout the territory of India subject to the provisions of Part XIII, shall be free, i.e., trade, commerce and intercourse shall not, except to the extent expressly permitted, be prohibited, controlled, burdened or impeded.
Our 873 Constitution even though in form federal, has in diverse provisions thereof, emphasised the unity of India; and with a view to promote that unity appears to have guaranteed, subject to specific restrictions, freedom of trade, commerce and intercourse throughout the territory.
The Article is not merely declaratory of State policy like the directive principles defined by Part IV of the Constitution which are expressly not made enforceable by any court though the principles are " fundamental in the governance of the country '.
It incorporates a restriction on the exercise of power by Governmental agency legislative as well as execu tive.
Besides placing an irremovable ban on the executive authority, it restricts the legislative power of the Parliament and the State legislatures conferred by articles 245, 246 and 248 and the relevant items in the legislative lists relating to trade, commerce and intercourse.
On the exercise of the legislative power to tax trade, commerce and intercourse, restrictions are prescribed by certain provisions Contained in Part XII, e.g., articles 276, 286, 287, 288 and 289: but these restrictions do not exhaustively delimit the periphery of that power.
The legislative power to tax is restricted also by the fundamental freedoms contained in Part III, e.g., articles 14,15(1),19(1)(g) and 31(1) and is further restricted by Part XIII.
Article 245, cl.
(1), of the Constitution expressly provides that the legislative powers of the Parliament and the State Legisla tures to make laws are subject to the provisions of the Constitution ; and article 301 is undoubtedly one of the provisions to which the legislative powers are subject.
The power of taxation is essentially an attribute of the sovereignty of the State and is not exercised in consideration of the protection it affords or the benefit that it confers upon citizens and aliens.
Its content is not measured by the apparent need of the amounts sought to be collected, and its incidence does not depend upon the ability of the citizens to meet the demand.
But it is still not an unrestricted power.
By article 265 of the Constitution, the power to tax can be exercised by authority of law alone and the Constitution affirmatively grants the power of taxation 874 under diverse heads under the three lists of the seventh schedule.
The power of taxation has there.
fore to be exercised by the Legislature strictly within the limits prescribed by the Constitution, and any alleged transgression either by Parliament or the State Legislature of the limits imposed by the Constitution is justiciable.
Trade and commerce do not mean merely traffic in goods, i. e., exchange of commodities for money or other commodities.
In the complexities of modern conditions, in their wide sweep are included carriage of persons and goods by road, rail, air and waterways, contracts, banking, insurance transactions in the stock exchanges and forward markets, communication of information, supply of energy, postal and telegraphic services and many more activities too numerous to be exhaustively enumerated which may be called commercial intercourse.
Movement of goods from place to place may in some instance,% be an important ingredient of effective commercial intercourse, but movement is not an essential ingredient thereof Dealings in goods and other commercial activities which do not import a concept of movement are as much part of trade and commerce as transactions involving movement of goods.
The guarantee of freedom of trade and commerce is not addressed merely against prohibitions, complete or partial; it is addressed to tariffs, licensing, marketing regulations, price control, nationalisation, economic or social planning, discriminatory tariffs, compulsory appropriation of goods, freezing or stand still orders and similar other impediments operating directly and immediately on the freedom of commercial intercourse as well.
Every sequence in the series of operations which constitutes trade or commerce is an act of trade or commerce and burdens or impediments imposed on any such step are restrictions on the freedom of trade, commerce and inter course.
What is guaranteed is freedom in its widest amplitude freedom from prohibition, control, burden or impediment in commercial intercourse.
Not merely discriminative tariffs restricting movement of goods are included in the restrictions which are hit by 875 Art 301, but ball taxation on commercial intercourse, even imposed as a measure for collection of revenue is so hit.
Between discriminatory tariffs and trade barriers on the one hand and taxation for raising revenue on commercial intercourse, the difference is one of purpose and not of quality.
Both these forms of burden on commercial intercourse trench upon the freedom guaranteed by article 301: The guarantee of freedom is again not merely against burdens or impediments on inter State movement: nor does the language of article 301 guarantee freedom merely from restrictions on trade, commerce and intercourse as such.
Articles 302, 303, 304 and 306, which I will presently advert to, make it abundantly clear that the freedom contemplated was freedom of trade, commerce and intercourse in all their varied aspects inclusive of all activities which constitute commercial intercourse and not merely from restrictions on " trade, commerce and intercourse as such ".
Article 301 as has already been observed enunciates a fetter upon the exercise of legislative power under the entries in the lists of the seventh schedule concerning or relating to trade, commerce and intercourse.
The basic principle underlying article 301 appears to have been adopted from the Constitution of the Australian Commonwealth.
In the American Constitution, by the 8th section, article 1, power to regulate commerce is granted; but the freedom of commerce as guaranteed by our Constitution is not found enunciated in the Constitution of the United States.
Section 92 of the Constitution of the Commonwealth of Australia provides by the 1st paragraph that " on the imposition of uniform duties of customs, trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free ".
That guarantee of freedom of trade, commerce and intercourse though Dot as extensive as the guarantee enshrined in our Constitution, is of the same pattern.
But our Constitution has made a sig nificant departure from the Australian Constitution, Whereas by section 92 of the Australian Constitution, 876 freedom of trade, commerce and intercourse is guaranteed among the States, i.e., at inter State level, our Constitution has made trade, commerce and intercourse free throughout the territory of India.
The freedom guaranteed by our Constitution is more pervasive: it is freedom of trade, commerce and intercourse intraState as well as inter State.
But this extension of the area of its operation does not alter the content of that freedom.
It is freedom from tax burdens as well as other impediments.
Section 92 of the Commonwealth of Australia Act does not encompass the wide freedom guaranteed by our Constitution it protects trade, commerce and intercourse from restrictions in inter State commerce; but in my judgment, the interpretation put by the Judicial Committee of the Privy Council in James vs Commonwealth of Australia (1) upon the meaning of the expression " free " in section 92 is not on that account less illuminating in the interpretation of article 301 of our Constitution which is largely based on that section of the Australian Constitution.
Lord Wright in delivering the judgment of the Board in James vs Commonwealth of Australia (1) (supra) at pp.
627.628 observed : " ' Free ' in section 92 cannot be limited to freedom in the last mentioned sense (freedom from tariffs).
There may at first sight appear to be some plausibility in that idea, because of the starting point in time specified in the section, because of the sections which surround, section 92, and because proviso to section 92 relates to customs duties.
But it is clear that much more is included in the term; customs duties and other like matters constitute a merely pecuniary burden; there may be different and perhaps more drastic ways of interfering with freedom, as by restriction or partial or complete prohibition of passing into or out of the State.
Nor does " free " necessarily connote absence of discrimination between inter State and intrastate trade.
No doubt conditions restrictive of freedom of trade among the States will frequently 'involve a discrimination; but that is not essential or decisive. . (1) 877 A compulsory seizure of goods may include indifferently goods intended for intrastate trade and goods intended for trade among the States.
Nor can freedom be limited to freedom from legislative control; it must equally include executive control Every step in the series of operations which constitute the particular transaction is an act of trade; and control under the State law of any of these steps must be an interference with its freedom as trade.
" These observations made in the context of a guarantee against obstruction to the flow of interstate trade and commerce, involved the " conception " of " freedom from customs duties, imports, border prohibitions and restrictions of every kind : the people were to be free to trade with each other, and to pass to and fro among the States, without any burden, hindrance or restriction based merely on the fact that they were not members of the same State ".
Freedom guaranteed by article 301 is however not absolute: it is subject to the provisions contained in Part XIII of the Constitution.
Article 302 authorises Parliament to impose restrictions on the freedom of trade, commerce and intercourse between one State and another or within any 'part of the territory of India as may be required in the public interest.
The Constitution has therefore circumscribed the guarantee under article 301 by authorising the Parliament to impose restrictions thereon.
Such restrictions on trade, commerce and intercourse may be intrastate as well as inter State: the only condition which the restrictions must fulfil is that they must be imposed in the public interest.
The learned Attorney General urged that the courts are incompetent to adjudge whether the quantum, and the incidence of a tax imposed by a Legislature in exercise of its powers are in the public interest, and therefore it must be inferred that articles 301 and 302 do not deal with freedom from taxation and the limits which may be placed thereon.
Counsel urged that in the modern political thought, exercise of the sovereign power of taxation is not restricted to collection of revenue for governmental 112 878 purposes; it is reported to for diverse purposes, often with a view to secure a pattern of social order ensuring justice, liberty and equality amongst citizens.
That the courts may not in adjudging upon the validity of a restriction imposed by a parliamentary statute, lightly enter upon an investigation whether the amount sought to be recovered and its incidence are in the public interest, is not a ground for holding that article 302 does not deal with restrictions which may be placed upon trade, commerce and intercourse by the imposition of taxes.
The courts will normally rely upon the wisdom of the Parliament and presume that taxes are generally imposed in the public interest: but that does not exclude the jurisdiction of the court in a given case to enter upon an enquiry whether an impugned legislation satisfies the constitutional test.
If an enquiry into the validity of a burden or impediment imposed on the freedom of trade, commerce 'and intercourse imposed otherwise than by levying a tax is within the competence of the court, the restraint which the courts put upon their own functions by raising a presumption of constitutionality in dealing with a burden imposed by a taxing statute cannot be forged into a fetter upon their jurisdiction.
By el.
(b) of article 304, the State Legislatures are invested with similar authority to impose restrictions on the freedom of trade, commerce and intercourse with or within the State as may be required in the public interest.
The territorial extent of the operation of the laws which may be made under articles 302 and 304(b) may not from the very nature of the jurisdiction exercised by the Legislatures be co extensive, but subject thereto, the Parliament and the State Legislatures are entrusted in exercise of legislative authority with powers to restrict freedom of trade, commerce and intercourse.
Why the Constitution should have enacted that the Parliamentary law may impose restrictions as may be required in the public interest and the State law may impose reasonable restrictions as may be required in the public interest, it is difficult to appreciate.
It is unnecessary for the purpose of these cases to enter 879 upon a discussion whether there is any real distinction between the quality of restrictions which may be imposed by legislation by the Parliament and State Legislatures exercising authority respectively under articles 302 and 304(b) of the Constitution.
The two Articles enact that to oirucmscribe effectively the freedom of trade, commerce and intercourse, the restriction must satisfy the primary test that it is " required in the public interest ".
Clause (b) of article 304 is subject to a proviso that no Bill or amendment for the purpose of el.
(b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
The authority of the State Legislature to enact legislation imposing restrictions on trade, commerce and intercourse is therefore subject to the condition that before the Bill or amendment of a statute is moved, the previous sanction of the President must be obtained.
Legislative power of the Parliament imposing restrictions on the freedom of trade, commerce and intercourse may therefore be validly exercised if the restrictions are required in the public interest.
On the exercise of authority in that behalf by the State Legislatures, there are placed two restrictions, (1) that the restriction must be reasonable and required in the public interest, (2) that the Bill or amendment imposing restriction can be moved or introduced in the Legislature only with the previous sanction of the President.
In this context, I may refer to article 255 which provides, in so far as it is material, that no Act of the Legislature of a State shall be invalid by reason only that the previous sanction required by the Constitution was not given, if assent to that Act was given under el.
(c) where the previous sanction required was that of the President, by the President.
Even if the previous sanction of the President has not been obtained to the moving or introduction of the Bill or amendment falling within el.
(b) of article 304, the Act still would not be invalid if the President has signified his assent to the Act enacted by the Legislature.
Article 303(1) is an exception to article 302 as well as article 304(b).
Notwithstanding the wide sweep of the 880 legislative power restored by articles 302 and 304(b) to the Parliament and the State Legislatures to make laws imposing restrictions on the freedom of trade, commerce and intercourse, prohibition is imposed on the exercise of the power in making laws giving or authorising the giving of, any preference to one State over another or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the seventh schedule.
(1) of article 303 emphasises the object of the Constitution.
makers to safeguard the economic unity of the nation and to prevent discrimination between the constituent States in the matter of trade and commerce.
It is true that under cl.
(1) of article 302, the discrimination which is prohibited is under a law made by virtue of an entry relating to trade and commerce in the seventh schedule.
But thereby, discrimination which is prohibited is not limited to discrimination under laws made under items expressly relating to the trade and commerce items of the seventh schedule.
The expression " relating to trade and commerce " used in article 302(1) in my judgment includes all those entries in the lists of the seventh schedule which deal with the power to legislate, directly or indirectly in respect of activities in the nature of trade and commerce.
By el.
(2) of article 303, the rigour of cl.
(1) in the matter of laws to be enacted by Parliament is to a certain extent reduced.
That clause authorises the Parliament, but not the State Legislatures, to make laws notwithstanding el.
(1) when it is declared by law that it is necessary to make discrimination which is prohibited for the purpose of dealing with the situation arising from scarcity of goods in any part of the territory of India.
Article 304, in so far as it is material, provides that notwithstanding anything in article 301 or article 303, the Legislature of a State may by law, (a) impose on goods imported from other States (or the Union territories) any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so 881 manufactured or produced.
This clause implies that notwithstanding anything contained in article 301 or article 303, the State Legislature has the power to im.
pose tax on the import of goods to which similar goods manufactured or produced in the State are subject, provided that by taxing the goods imported from another State or Union territory, no discrimination is practised.
If article 301 and article 303 did not deal with restrictions or burdens in the nature of tax, the reason for incorporating the non obstante clause to which article 304, el.
(1), is subject, cannot be appreciated.
Undoubtedly, the provisions of Part XIII of the Constitution do not impose additional or independent powers of taxation; the powers of taxation are to be found conferred by articles 245, 246 and 248 read with the lists in the seventh schedule, and the provisions of Part XIII are limitative of the exercise of legislative power.
The circumstance that the Constitution has chosen to deal with a specific field of taxation as an exception to articles 301 and 303 (which should really be article 303(1) ) strongly supports the inference that taxation was one of the restrictions from the imposition of which by the guarantee of article 301, trade, commerce and intercourse are declared free.
Clause (b) of article 304 is subject to the proviso prescribing that the previous sanction of the President shall be obtained to the moving or introduction of a Bill or amendment imposing restrictions on the freedom of trade, commerce and intercourse.
There is however no such condition imposed in the matter of enactment of laws imposing non discriminative tariffs under el.
But on that account, the nature of the restrictions contemplated by cls.
(a) arid (b) is not in any manner different.
Clause (b) deals with a general restriction which includes a restriction by the imposition of a burden in the nature of tax.
Clause (a) deals with a specific burden of taxation in a limited field.
Article 305 protects existing laws except in so far as the President may by order or otherwise direct, and it also validates certain enactments made before the commencement of the Constitution (Fourth Amendment) Act, 1955, and authorises the Parliament 882 and the State Legislatures in future to make laws relating to matters referred to in sub cl.
(2) of cl.
(6) of article 19.
Article 306 of the Constitution which was repealed by the Constitution (Seventh Amendment) Act, 1956, provided, in so far as it is material, that notwithstanding anything in the foregoing provisions of Part XIII or any other provisions of the Constitution, a State specified in Part B of the First Schedule which before the commencement of the Constitution was levying any tax or duty on the import of goods into the State from other States or on the export of goods from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State continue to levy and collect such tax or duty subject to the terms of such agreement. . .
The marginal note of the Article refers to the power of the States specified in Part B of the First Schedule to levy tax as a power to impose restrictions on trade and commerce, and clearly supports the view that within the meaning of article 301, freedom was to include free dom from taxation and the restrictions contemplated by articles 302 and 304 contemplated imposition of burdens of the nature of taxation.
On a careful review of the various Articles, in my judgment, by Part XIII, restrictions have been imposed upon the legislative power granted by articles 245, 246 and 248 and the lists in the seventh schedule to the Parliament and the State Legislatures and those restrictions include burdens of the nature of taxation.
Therefore, the power to tax commercial intercourse vested by the legislative lists in the Parliament or the State Legislatures, is circumscribed by Part XIII of the Constitution and if the exercise of that power does not conform to the requirements of Part XIII, it would be regarded as invalid.
As observed hereinbefore, the previous sanction of the President was not obtained to the moving of the Bill which was enacted as the impugned Act.
Even though the Assam Legislature had by item 56 of the seventh schedule legislative authority to impose this tax, the State could not exercise this authority in the absence of the previous sanction of the President and 883 the invalidity of the Act imposing the tax on goods and passengers is not cured, the President not having assented to the Act at any time after it was passed by the Assam Legislature.
The argument that this view seriously restricts the " sovereignty " of the States has, in my view, little force.
Even a cursory review of our constitutional provisions clearly shows that the primary object of the Constituent Assembly was to erect a governmental machinery with a strong central Government, with the object of building up a healthy economy, and unifying the various component States, consisting of the former British Indian Provinces and the merged Indian States, by subordinating local and parochial interests to the wider national interest.
In any event, in adjudging the vires of a statute, the impact of the view which the interpretation placed by the court may produce on some cherished notion of sovereignty of the component States must be ignored.
In that view, the Assam Taxation (on Goods carried by Roads or Inland Waters) Act, 1954, must be regarded as infringing the guarantee of freedom of trade and commerce under article 301, because the Bill moved in the Assembly had not received the assent of the President as required under article 304(b) proviso, and the Act has not been validated by the assent of the President under article 255(c).
In the view expressed by me, I do not deem it necessary to enter upon certain subsidiary contentions such as the application of the " pith and substance doctrine " to the interpretation of the relevant clauses, the alleged violation by the Act of the equal protection clause of the Constitution, and the effect of Act XXIX of 1953 enacted by the Parliament, which were debated at the Bar.
In the view taken, the appeals must be allowed and the Rule in the two applications made absolute, with costs.
ORDER OF COURT: In view of the majority judgment, the appeals and the writ petitions are allowed with costs one set of hearing fees.
|
The Assam Taxation (on goods carried by Roads and Inland Waterways) Act, 1954, was passed under Entry 56 of List II of Seventh Schedule to the Constitution.
The appellants contended that the Act violated the freedom of trade guaranteed by article 301 Of the Constitution and as it was not passed after obtaining the previous sanction of the President as required by article 304(b) it was ultra vires.
The respondent urged that taxing laws were not governed by Part XIII (which contained articles 301 and 304) but only by Part XII and in the alternative that the provisions of Part XIII applied only to such legislative entries in the Seventh Schedule as dealt specifically with trade, commerce and intercourse.
Held, (per Gajendragadkar, Wanchoo and Das Gupta, JJ.) that the Act violated article 30i and since it did not comply with the provisions of article 304(b) it was ultra vires and void.
The freedom of trade, commerce and intercourse guaranteed by article 301 was wider than that contained in section 297 Of the Government of India Act, 1935, and it included freedom from tax laws also.
Article 301 provides that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves ; and if any Act imposes any direct restrictions on the movement of goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfied the requirements of article 302 or article 304.
The operation of article 301 cannot be restricted to legislation under the Entries dealing with trade and commerce.
The Assam Act directly affected the freedom contemplated by article 301.
Ramjilal vs Income tax Officer, Mohindargarh, [1951] S.C.R. 127, M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh, [1058] S.C.R. 1422, James vs Commonwealth of Australia, , The State of Bombay vs The United Motors (India) Ltd., ; , Saghir Ahmed vs The State of U.P. 810 ; , James vs State of South Australia, ; and James vs Cowan, , referred to.
Per Sinha, C. J.
The Assam Act did not contravene article 301 and was not ultra vires.
Neither the one extreme position that article 301 included freedom from all taxation nor the other that taxation was wholly outside the purview of article 301 was correct.
The freedom conferred by article 301 did not mean freedom from taxation simpliciter but only from the erection of trade barriers, tariff walls and imposts which had a deleterious effect on the free flow of trade, commerce and intercourse.
The Assam Act was a taxing statute simpliciter and did not suffer from any of the vices against which Part XIII of the Constitution was intended.
Ramjilal vs Income tax Officer, Mohindargarh, [1951] S.C.R. 127, referred to.
Further, the impugned Act was within the competence of the State Legislature and fell directly within Entry 56 of List 11 ; it was not in conflict with the Tea Act Of 1953 enacted by Parliament; it did not contravene article 14 and it was not extra territorial in operation.
The Tata Iron & Steel Co. Ltd. vs The State of Bihar, ; , followed.
Per Shah, J. The Assam Act infringed the guarantee of freedom of trade and commerce under article 301 and as the Bill was not moved with the previous sanction of the President as required by article 304(b) nor was it validated by the assent of the President under article 255(c), it was ultra vires and void.
Article 301 guarantees freedom in its widest amplitude, freedom from prohibition, control, burden or impediment in commercial intercourse.
The freedom includes not only freedom from discriminative tariffs and trade barriers but also from all taxation on commercial intercourse.
Part XIII of the Constitution places restrictions upon the legislative power granted by articles 245, 246 and 248 and the Lists and these restrictions include burdens in the nature of taxation.
James vs Commonwealth of Australia, , referred to.
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Criminal Appeal No. 152/59.
, xi Appeal by Special leave from the judgment and Order dated May 12, 1959 of the Allahabad High Court in Criminal Revision No. 1182 of 1957.
Nur ud din Ahmed, J.,B. Dadachanji, O. C. Mathur, and Ravindar Narain for the Appellants.
852 G. C. Mathur and C.A. Lal for the Respondent.
May 3.
The Judgment of the Court was delivered by KAPUR, J.
The appellants are father and son carring on business in vegetable ghee at Aligarh.
They along with Romesh, the second son of appellant Jagannath Prasad were prosecuted under section 14 (d) of the U. P. Sales Tax Act, 1948 (U.P. 15 of 1948) hereinafter called the 'Act ' and under section 471 read with section 468 and section 417 of the Indian Penal Code.
They were all acquitted of the charge under section 468.
Jagannath Prasad was convicted under section 471 and 417 of the Indian Penal Code and a. 14 (d) of the Act and was sentenced to two years ' rigorous imprisonment under a. 471, to one years ' rigorous imprisonment and a fine of Rs. 1,000/ under section 417 and to a fine of Rs. 1,000 under section 14 (d) of the Act.
Bhagwan Das was convicted under section 14 (d) of the Act and sentenced to a fine of Rs. 1, 000/ .
Romesh was acquitted.
The sentences passed on Jagannath Prasad were.
concurrent.
Their 'appeal to the Sessions Judge was dismissed and in revision to the High Court Jagannath Prasad was acquitted of the offence under a. 417 of the Indian Penal Code but the other convictions and sentences were upheld.
Against this judgment and order of the High Court of Allahabad the appellants have come to this court by special leave.
The facts leading to the appeal are these: In 1950 51, the firm of the appellants purchased vegetable ghee valued at about Rs. 3 lacs from places outside the State of U. P. in the name of four fictitious firm.
The firm made its return for that year to the Sales Tax Officer Aligarh and did not include the sale proceeds of these transactions on the ground that they had purchased them from these four firms who were supposed to be carrying 853 on business in Hathras, Aligarh, and other places in U. P. By thus not including the proceeds of the sales of these transactions the firm evaded payment of sales tax for that year on those transactions.
The return of sales tax made by the firm was accepted by the Sales Tax Officer with the consequence that the sale of goods covered by those transactions was not taxed.
A complaint was made against the Sales Tax Officer in regard to these transactions; an enquiry was held with the result that the appellants and Romesh were prosecuted and convicted as above stated.
In the High Court there was no controversy about the facts i. e. the finding of the courts below that the appellants ' firm purchased vegetable ghee from outside U. P. and did not show the sale proceeds of the sale of those goods on the ground that they had been purchased from inside the State of ' (J. P. when in reality they had been purchased from outside the State, that the statements made by the appellant Jagannath Prasad before the Sales Tax Officer were false and that the bills produced by him before the Sales Tax officer were forged.
The conviction was challenged on grounds of law alone.
Before us five points were raised: (1) that no sales tax was exigible on these transactions under a. 3A of the Act in 1950 51 and liability arose by the amendment of the Act in 1952 which gave retroactive operation to the section and became applicable to sales in dispute and therefore there could be no prosecution under an ex post facto amendment; (2) the trial of the appellants was illegal because of ' want of complaint by the Sales Tax Officer under a. 195 of the Criminal Procedure Code; (3) there was no offence under section 14 (d) of the Act; (4) forged invoices were produced by appellant Jagannath Prasad because they were called for by the Sales Tax Officer and therefore it cannot be said.
that they were used by the appellant and (5) the Sales Tax Officer having accepted 854 he invoices as genuine no prosecution could be Entertained in regard to those invoices.
Now the appellants cannot be prosecuted on the basis of any amendment subsequent to the date of the alleged offence committed by them.
Both parties are agreed on that and therefore we have to see the Act as it stood on the date when the offence is alleged to have been committed.
According to the charge the offence was committed on or about July 16, 1951, when forged invoices produced by the appellants before the Sales Tax Officer.
So what we have to see is the law as it stood on that day.
Section 3 of the Act deals with liability to tax under the Act and section 3A with single point taxation.
Under section 3 every dealer was required to pay on his turnover of each assessment year a tax at the rate of three pies a rupee.
Thus the tax was payable in regard to all sales but under section 3A (1) the tax was leviable only at a single point.
That section provided.
section 3A (1) "Notwithstanding anything contained in section 3, the State Government may, by notification in the official Gazette, declare that the turnover in respect of any goods or class of goods shall not be liable to tax except at such single point in the series of sales by successive dealers as may be prescribed".
The Government could declare the tax to be payable at a single point but there were two requirements; there had to be a notification in the Official Gazette declaring the point at which the tax was payable and in the series of sales by successive dealers it had to be "as may be prescribed" i. e. as may be prescribed by rules.
Section 3A was amended in 1952 with retrospective effect but retroactive provision is not applicable to the present proceedings.
Under section 3A a notification No. 1 (3) was issued on 855 June 8, 1948, declaring that the proceeds of sales of vegetable ghee imported from outside shall not be included in the turnover of the dealer other than the importer himself.
The effect of the notification thus was that if a dealer imported vegetable ghee from outside U. P. and sold it he was required to include the sale proceeds in his turnover but the other dealers who bought vegetable ghee from the importer in U. P. and sold it were not so required.
The appellants having thus imported the vegetable ghee from outside U. P. were required by the notification to include the proceeds in their turnover and it was to avoid this that they falsely produced forged invoices that they had purchased the vegetable ghee from those fictitious dealers within the State of U. P. and thus if the notification was an effective notification the appellants successfully evaded the payment of sales tax which under the law they were required to pay.
But it was agreed that the notification was ineffective in view of the words "as may be prescribed" because that could only be done by rules and no rules bad been made under section 3A which made every dealer liable to sales tax if he was an importer from outside U. P.
To this, extent the contention of the appellants is well founded and therefore under a. 3A merely by notification the Government could not prescribe a single point taxation as was done by the notification but that does not help the appellants very much.
Under section 3 every dealer was liable to pay sales tax on every transaction and section 3A only gave relief in regard to sales at every point and thus prevented multi point taxation.
If the notification under section 3A was ineffective, as indeed it was, the appellants were required to pay tax on all their sales and in order to escape multi point taxation they took advantage of an ineffective notification and tried the false plea of the goods having been imported by fictitious persons and their having purchased those goods from those 856 fictitious dealers and in this manner the appellants escapes payment of sales tax under section 3.
In other words they tried to take advantage of section 3A by producing false documents and thereby evaded payment of tax under section 3 which every dealer was required to pay on his turnover.
In trying to get the benefit under the ineffective notification issued under section 3A the appellants evaded payment of tax under section 3 which they were in any case liable to pay.
It cannot be said therefore that no offence was committed under section 14 (d) of the Act which provides: Section 14. ,Offences and penalties.
Any person who (a). . . (b). . . (c). . . (d) fraudulently evades the payment of any tax due under this Act, shall, without prejudice to this liability under any other law for the time being in force, on conviction by a Magistrate of the first class, be liable to a fine which may extend to one thousand rupees, and where the breach is a continuing breach, to a further fine which may extend to fifty rupees for every day after the first during which the breach continues".
It is no defence to say that the appellants were asked by the Sale,% Tax Officer to produce invoices.
The appellants were trying to get exclusion from their turnover of the sale of goods worth about 3 lacs and had made statements before the Sales Tax Officer in regard to it on July 9, 1951, and in order to prove that the goods 857 were not required to be included .,in the turnover the invoices were produced by appellant Jagannath Prasad.
When a fact has to be proved before a court or a tribunal and the court or the tribunal calls upon the person who is relying upon a fact to prove it by best evidence it can not be a defence as to the offence of forgery if that best evidence which, in this case, was the invoices turn out to be forged documents.
A person who produced those documents cannot be heard to say that he was required to prove his case by the best evidence and because be was so required be produced forged documents.
It was then submitted that the Sales Tax Officer was a court within a. 195 of the Criminal Procedure Code and in the absence of a complaint in writing by such an officer no cognizance could be taken of any offence punishable under section 471 of the Indian Penal Code.
This, in our opinion, is an equally erroneous submission.
The Sales Tax Officers are the instrumentalities of the State for collection of certain taxes.
Under the Act and the Rules made thereunder certain officers are appointed as Sales Tax Officers who have certain duties assigned to them for the imposition and collection of taxes land ID the process they have to perform many duties which are of a quasijudicial nature and certain other duties, which are administrative duties.
Merely because certain instrumentalities of state employed for the purpose of taxation have, in the discharge of their duties, to perform certain quasi judicial functions they are not converted into courts thereby.
In a recent judgment of this Court in Shrimati Ujjam Bai vs The State of U.P. (1), all the opinions were unanimous on this point that taxing authorities are not courts even though they perform quasi judicial functions.
The following observation of Lord (1) (1963) 1 S.C.R. 778. 858 Sankey L. C. in Shell Co. of Australia Ltd. vs Federal Commissioner of Taxation (1)was quoted with approval : The authorities are clear to show that there "The authorities are clear to show that there are tribunals with many of the trappings of a court which, nevertheless are not courts in the strict sense of exercising judicial power".
Lord Sankey also enumerated some negative propositions as to when a tribunal is not a court.
At p. 297 his lordship said : "In that connection it may be useful to enumerate some negative propositions on this subject : 1.
A tribunal is not necessarily a Court in this strict sense because it gives a final decision.
Nor because it hears witnesses on oath.
Nor because two or more contending parties appear before it between whom it has to decide.
Nor because it gives decisions which affect the rights of subjects.
Nor because there is an appeal to a Court.
Nor because it is a body to which a matter is referred by another body.
See Rex vs Electricity Commissioners Hidayatullah J., 'in Shrimati Ujjam Bhai(2) case described Sales tax authorities thus : "The taxing authorities are instrumentalities of the State.
They are not a part of the legislature, nor are they a part of the judiciary.
Their functions are the assessment and collection of taxes and in the process of assessing taxes, they follow a pattern of action which is considered Judicial.
They are not thereby converted into Courts of Civil judicature.
They still (1) , 283.
(2) (1963) 1 S.C R. 778. 859 remain the instrumentalities of the State and are within, the definition of State" in article 12".
No doubt the Sales Tax officers have certain powers which, are similar to the powers exercised by courts. but still they are not courts as understood 'in section 195 of the Criminal Procedure Code.
In sub section 2 of B. 195 it is provided: section 195(2) "In clauses (b) and (e) of sub section.
(1) the term "Court" includes a Civil Revenue or Criminal Court, but does not include a Registrar or Sub Registrar under the Indian Registration Act, 1877".
It cannot be, mid that a Sales Tax Officer, is a I Revenue Court.
Under section 2(a) of the Act an assessing authority is defined to mean any person authorised by the State Government to make assessment under the Act and under R. 2(h) 'a Sales, Tax Officer means : "Sales Tax Officer" means a Sales Tax Officer of a circle appointed by the State Government to perform the duties and exercise the powers of an assessing authority in such circle".
Thus under the Act a Sales Tax Officer is only an amassing authority.
Under section 7 of the Act, if the Sale*. Tax Officer, after making such enquiries,as he thinks necessary is, satisfied that a return made is correct and, complete, he shall assess the tax on the basis thereof ' and it no return is submitted he, can make such enquiries as he considers necessary and then determine the turnover of a dealer, Thus his determination depends upon enquiries he may make and which he may, consider necessary.
Sections 9, 10 and 11 of the Act deal with Appeals, Revisions and Statement of the Case to the High court.
Under a. 13 power.
is given 860 to a Sales Tax Officer to require the production of all accounts, documents and other information relating to business and accounts and registers ,shall be open to inspection of the Sales Tax Officer at all reasonable times.
He has the power to enter any office, shop, godown, vehicle or any other place in which business is done which is a power destructive of the Sales Tax Officer being a Court which is a place where justice is administered as between the parties whether the parties are private persons or one of the parties is the State.
Under section 23 certain secrecy is attached to documents filed before the Sales Tax officer and information received by him.
Similarly under R. 43 certain power is given to the Sales Tax Officer to calculate turnover when goods are sold for consideration other than money and this is after such enquiry as he considers necessary.
All these provisions show that the Sales Tax Officer cannot be equated with a Court.
In our opinion therefore the Sales Tax Officer is not a Court.
In Krishna vs Goverdhansiah(1), it was held that the Income Tax Officer is not law court within the meaning of section 195 of the Criminal 's Procedure Code and this view was accepted by this court in Shrimati Ujjam Bai 's(2) case.
In Brajnandan Sinha vs Jyoti Narain(3), a Commissioner appointed under the Public Enquiries Act 1950 was held not to be a court.
Shell Co. of Australia vs Federal Commissioner of Taxation (4) was referred to in that case.
At p. 967 the following passage from Halsbury 's Laws of England, Hailisham Edition, Vol. 8, p. 526 was approved: "Many bodies are not courts, although they have to decide questions, and in so doing have to act judicially, in the sense that the proceedings must be conducted with fairness (1) A.I.R. (1954) Mad.
(2) (1963) 1 S.C.R. 778.
(3) ; (4) (1931) A.C. 275,2B3. 861 and impartiality, such as assessment committees, guardian committees, the Court of referee constituted under the Unemployment Insurance Acts to decide claims made on the Insurance funds the benchers of the Inns of Courts when considering the conduct of one of their members, the General Medical Council when considering questions affecting the position of a medical man" That passage is now contained in Vol. 9 of the 3rd Edition at p. 343.
But it was submitted that the Sales Tax officer while acting as an assessing authority is a court within the meaning of section 195 (2) of the Procedure Code because by the amendment of 1923 the definition of the word "court" was enlarged substituting the word "includes" in place of the word "means" and the section now reads as has been set out above.
Undoubtedly by this change the legislature did mean to make the definition of the word "court" wider but that does not enlarge the definition of the words "Revenue Court".
The track of decision which was pressed on our attention is based primarily on a full bench judgment of the Bombay High Court in In re Punemchand Maneklal(1).
In that case an Income tax Collector was held to be a Revenue Court within the meaning of the word as used in section 195.
The learned Chief Justice who gave the judgment of the court proceeded on the basis that inquiries conducted according to the Forms of judicial procedure under Chapter IV of the Incometax Act were proceedings in a Revenue Court.
This was on the ground that under the law as it then stood revenue questions were generally removed from the cognizance of civil courts and the officers charged with the duty of deciding disputed question relating to revenue between an individual and the (1) , Bom.
862 Government would be invested with the functions of &,,Revenue Court".
This view was followed by the Bombay High Court in State vs Nemchand Pashvir Patel After referring to the various powers which were given to the Sales Tax Officers under the B " bay Sales Tax Act that Court proceeded to say that the Sales Tax Officers under the Bombay Sales Tax Act were Revenue Courts because ' they had jurisdiction to decide Questions relating to revenue, are exclusively empowered with the powers which are normally attributes of a court or a tribunal land are authorised to adjudicate upon a disputed question of law or fact relating to the rights of the citizens.
The Madras High Court in In re B. Nataraja Iyer held that a Divisional Officer hearing appeals; under the Income tax Act was a court within the meaning of a. 476 of the Criminal Procedure Code but a Tehsildar who was the original assessing authority was not because there was no lis before him.
There is one passage in the judgment of Sundara Ayyar J., which is of significance.
It was said: "I may observe that I am prepared agree with Dr. Swaminathan that more.
authority to receive evidence would not make the officer recording it a Court".
At page 84, it was said that the determination of the assessment in the first instance may not be of a court although the assessing officer may have the power to record statements.
But an appeal against the assessment is dealt with by the Collector in the manner in which an appeal is ' disposed of by ' a Civil Court.
In this connection reference may be; made to the statement of the law contained in the judgment of Venkatarama Ayyar J., in Shri Virinder Kumar Satyawadi vs The State of Punjab (2).
There, (1) (1956)7 S.C.R. 404.
(2) , 1018.
863 the, distinction between a quasi judicial tribunal and a court,was given as follows "It may be stated broadly that what disti nguished a Court from a quasi judicial tribu nal is that it is charged with a duty to decide disputes in a judicial manner and declare, the rights of parties in a definitive judgment.
,To decide in a judicial manner involves that the parties are entitled as a matter of right to be heard in support of their claim and to adduce evidence in proof of it.
And it also imports an obligation on the part of the authority to decide the matter on a consideration of the evidence adduced and in accordance with law.
When a question therefore arisen as to whether an authority created by an Act is a Court as, distinguished from a quasi judicial tribunal, what has to: be decided.is whether having regard to the provisions of the Act it possesses all the attributes of a Court".
Dealing with quasi judicial tribunals it was observed in Gullapelli Negeswara Rao vs The State of Andhra Pradesh(1) : ",The concept of a quasi judicial act, implies that the act is not wholly judicial, it describes only a duty cast on the executive body or authority to,conform to the norms.
of judicial procedure in performing some act in the, 'exercise of its executive power".
It is not necessary to refer to other cases because they were decided on their own facts and related to different tribunals.
In our opinion a Sales Tax Officer is not a Court within the meaning of.s.
195 of,the criminal Procedure Code and there.
fore it was not necessary for a Sales Tax Officer to (1) (1959) Supp.
1 S.C.R. 319, 353 4. 864 make a complaint and the proceedings without such a complaint are not without jurisdiction.
In our opinion the appellants were rightly convicted and we therefore dismiss this appeal.
The appellant Jagannath Prasad must surrender to his bail bonds.
Appeal dismissed.
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The appellants who carry on the business in vegetable ghee purchased vegetable ghee from outside U. P. in the name of four fictitious firms.
In their return of sales tax they did not include the sale proceeds of these transactions on the ground that they had purchased from the four firms and that under a notification made under section 3A of the U. P. Sales Tax Act, tax was leviable only at a single point on the sale by the outside suppliers to these four firms.
In support of this the appellant No. 1 made a false statement before the Sales tax Officer and also filed forged bill,.
before him.
The return was accepted by the Sales Tax Officer with the result that the sales covered by these transactions were not taxed.
The appellants were tried and convicted for offence under section 471 Indian Penal Code for using forged documents and under section 14(d) of the Act for fraudulently evading payment of tax due under the Act.
The appellants contended that the trial for the offence under section 471 was illegal as no complaint had been made by the Sales Fax Officer as required by section 14 (d) of the Act was not made out as no tax was payable under 'section 3A because the notification issued thereunder was invalid.
Held, that the Sales Tax Officer was not a Court within the meaning of section 195 Code of Criminal Procedure and it was not necessary for him to make a complaint for the prosecution of the Appellants under section 471 Indian Penal Code.
A Sales Tax Officer was merely an instrumentality of the State for purposes of assessment and collection of tax and even if he was required to perform certain quasi judicial functions, he was not a part of the judiciary.
The nature of the functions, of a Sales Tax Officer and the manner prescribed for their 851 performance showed that he could not be equated with a Court.
Nor could he be said to be a Revenue Court.
Though the definition of Court in section 195 of the Code Was enlarged by the substitution of the word "include" for the word "means" by the amendment of 1923, it did not change the definition of "Revenue Court.
" Smt.
Ujjam Bai vs The State of U. P. (1963) 1 S.C.R. 778), Shell Co. of Australia Ltd. vs Federal Commissioner of Taxation and Brajnandan Sinha vs Jyoti Narain ' ; , applied.
Krishna vs Gocerdhanaiah, A. I. R. , approved.
In re: Punamchand Maneklal (1914) 1. L. R. and State vs Nemchand Pashvir Patel, (1956) 7 section T. C. 404 not approved.
In re : R. Nataraja Iyer (1914) 1. L. R. and Shri Virender, Kumar Satyawadi vs The Sate of Punjab,[1955] 2 section C. R. 1013 referred to.
Held, further that the appellants were rightly convicted under section 14 (d) of the Act.
Sales tax was payable under s.3 of the Act in respect of all sales.
But under s.3A it was leviable only at a single point if the Government issued a notification declaring the point at which tax was payable and it was so prescribed by the rules.
Under the notification issued by the Government tax was payable only by the dealer who imported the goods and sold them.
The appellants having imported the ghee were liable to pay the tax on the sales of this ghee which they fraudulently evaded.
Though the notification was ineffective as no rules were made under the Act prescribing the single point, it did not help the appellants, as the only effect of this was that section 3A did not come into play.
In trying to get the benefit of the ineffective notification under section 3 A the appellants evaded payment of tax under section 3 which they were liable to pay.
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ivil Appeal No. 229 of 1976.
From the Judgment and Order dated 6.9.1974 of the Kerala High Court in A.S. No. 76 of 1974.
section Padmanabhan, K. Prasonthi and N. Sudha Karan for the Appellant.
Ms. Shyamla Pappu, G. Vishwanathan lyer, V.B. Saharya and Mrs. Sarla Chandra for the Respondents.
The Judgment of the Court was delivered by PUNCHHI, J.
This appeal by special leave is against the judgment and decree dated 6.9.
1974 passed by the High Court of Kerala in A.S. No. 76 of 1974 whereby the High Court reduced the decree of the trial court to one fourth disal lowing the remaining three fourth on the ground that the same was barred by limitation.
The plaintiff appellant hereinbefore us ventures to have the decree of the trial court restored.
Since defendant respondent No. 2, Santu Mohammed Rawther is to meet the established liability, there is an effort on his behalf, though quite belated, to seek leave to cross object to the partial decree of the suit.
The facts giving rise thereto were indeed diverse and varied which got involved in four suits disposed by the trial court by a common judgment, in the first instance, in April, 1967.
Four appeals, were filed by the aggrieved parties before the High Court out of which three were dis posed of by a common judgment on 11 9 1972.
The fourth appeal arising from O.S. No. 141 of 1965 was allowed grant ing permission to the plaintiff appellant herein to amend the plaint so as to base his money suit on the basis of two promissory notes with the aid of acknowledgments contained in some documents.
The trial court in pursuance of the order of remand granted a decree against the defendants for a sum of Rs.56,769.80, with interest thereon at 6 1/4 per cent from 11 11 1964 till 31 7 1955 and thereafter at 6 per cent per annum till payment, with proportionate costs against the estate of 436 Vellappa Rawther in the hands of defendants 2 to 10; and another personal decree for a certain sum against the first defendant respondent which presently is not in dispute.
The High Court on appeal preferred by defendant respondents No. 2 and 4 10 in Original Suit No. 141 of 1965 (the only one surviving) modified the decree reducing it to the one fourth of the decreed sum and focussed the liability on defendant respondent No. 2 absolving others of the remaining liability on the bar of limitation.
Such view was taken on the facts established that the liability to discharge debts of Vellap pa Rawther deceased incurred by means of two promissory notes dated 23 11 1960 and 5 1 1961 for Rs.25,000 and Rs.50,000 respectively, after the death of Vellappa Rawther on 26 6 1962, was individually on his heirs proportionate to the extent of their share in the estate devolving on them and since the debt had become time barred, acknowledgment of the same by defendant respondent No. 2 as well as partial payment of the debt by him rendered him alone liable to meet liability to the extent of one fourth related to the share of the estate which as a Muslim heir he received from the deceased.
In this appeal it is claimed on behalf of the plaintiff appellant that the acknowledgment and partial payment afore referred to saved limitation against all and thus the entire debt could be recovered from defendant respondent No. 2, he being in possession of the estate lying joint, and thus the High Court was in error in upsetting the decree of the trial court.
It has been urged on behalf of the appellant that the integrity of the two debts of Rs.25,000 and Rs.50,000 creat ed by two promissory notes Exhibits B 14 and B 15 could not be broken on the footing that the liability to discharge those debts stood devolved on the heirs of the deceased debtor, proportionate to their shares known to Mahomedan Law.
It has also been urged on behalf of the appellant that the acknowledgment of liability made by defendant respondent No. 2 would under section 18 of the Limitation Act save limitation not only against him but as against other heirs as well, since he is supposed to have acted as a representa tive, agent or partner on their behalf.
Further, it has been urged on behalf of the appellant that part payment made by defendant respondent No. 2 would save limitation under section 19 of the Limitation Act against the other co heirs of the deceased Mahomedan debtor.
The view taken by a learned Single Judge of the Andhra Pradesh High Court in Mohd. Abdul Qadeer vs Azarnatullah Khan and 8 Others, [1974] 1 Andhra Weekly Reporter 98 has been pressed into service to contend that though under the Mahomedan Law each heir is liable for the debts of the deceased to the extent only of a share of the debts, proportionate to his share of the es tate, but so far as the cre 437 ditor is concerned, the identity and integrity of the debt remains unimpaired by the death of the original promisor, and no several debts emerge in place of one debt.
However, in all fairness it was in the next breath pointed out to us that another Single Judge of the same High Court in Vasantarn Sambasiva Rao vs Sri Krishna Cement and Concrete Works, Tenali, [1977] Andhra Law Times Reports at 528 doubted the view in Mohd. Abdul Qadeer 's case (supra) on the basis of a division bench case of that Court taking the view that section 19 of the Limitation Act emphasised not the identity or integrity of the debt, but the due authori sation by one of the debtors or the other to make part payment towards debt due from them, and further that the concept of identity and integrity of the debt due from several heirs was foreign to sections 19 and 20.
Before we proceed any further it would be apposite to clearly recapitulate and re state the principles of Mahome dan Law on the subject.
A five judge bench of this Court in N.K. Mohammad Sulaiman vs N.C. Mohammad Ismail and Others, at page 940 culled out certain well settled and well accepted principles.
Some of these are as under: "The estate of a muslim dying intestate devolves under the Islamic Law upon his heirs at the moment of his death i.e., the estates vests immediately in each heir in proportion to the share ordained by the personal law and the interest of each heir is separate and distinct.
Each heir is under the personal law liable to satisfy the debts of the deceased only to the extent of the share of the debt proportionate to his share in the estate.
" It is plain from the afore quotation that the debt of the deceased gets divided in shares by operation of Muslim Personnal Law amongst the heirs proportionate to their shares in the estate.
The theory of sanctity of the integri ty of the debt is apparently foreign in the case of a de ceased muslim leaving debt and some estate both being divis ible amongst his heirs.
A.A.A. Fyzee in his Outlines of Muhammadan Law (4th Edition) at page 385 quotes Mulla to say: "Proceeding logically, the first principle to be borne in 438 mind is that each heir is liable for the debts of the de ceased in proportion to the share he receives of the inheri tance.
For instance, a Muslim dies leaving three heirs, who divide the estate amongst themselves in accordance with their rights.
A creditor of the deceased sues two of the heirs and not the third; the two heirs sued will each be liable to pay a part of the debt proportionate to his own share of the inheritance, and they will not be made to pay the whole of the debt, either jointly or severally (h).
" In Principles of Mahomedan Law by Mulla, 17th Edition, sections 43 and 46 provide: "43.
Extent of liability of heirs for debts Each heir is liable for the debts of the deceased to the extent only of a share of the debts proportionate to his share of the estate (d).
Suit by creditor against heirs If there be no executor or administrator, the creditor may proceed against the heirs of the deceased, and where the estate of the deceased has not been distributed between the heirs, he is entitled to execute the decree against the property as a whole without regard to the extent of the liability of the heirs inter se (h).
" The question whether the ownership of a Muhammadan intestate devolves immediately on his heirs, and such devo lution is not contingent upon, and suspended till, payment of such debts was answered authoritatively almost a century ago by a Full Bench of the Allahabad High Court in Jafri Begam vs Amir Muhammad Khan, [1885] Vol.
7 ILR Allahabad Series in the negative.
Rather it was authoritatively set tled (see page 843 of the Report) that Muhammadan heirs are independent owners of their specific shares, and if they take their shares subject to the charge of the debts of the deceased, their liability is in proportion to the extent of their shares.
These observations in Jafri Begam 's case (supra) are prime roots of the theory as to the divisibility of the debt in the hands of heirs of a Muslim intestate.
So it would be right to treat it settled that muslim heirs are independent owners of their specific shares simultaneously in the estate and debts of the deceased, their liability fixed under the Personal Law proportionate to the extent of their shares.
In this state 439 of law it would be unnecessary to refer to other decisions of various High Courts touching the subject.
So we proceed on the footing that as many heirs, as are defending this cause, there are debts in that number.
Now it is time to advert to Exhibits B7 and B51.
Exhibit B7 is a letter by defendant respondent No. 2 to the plain tiff appellant stating that he will pay off all the amounts due to the plaintiff and to everyone else within two months.
The trial court construed this to be an acknowledgment of the debt.
The High Court agreed with that finding that the document contained an acknowledgment in writing.
Practically nothing was said against this finding before the High Court.
Then we have Exhibit B51 which is styled as a consent deed, executed by defendant respondent No. 2 authorising the first defendant respondent to dispose of two motor cars for a sum of Rs. 13,000 and discharge the liabilities of his deceased father arising out of the two promissory notes Exhibit B 14 and B 15 aforesaid.
The trial court found that Exhibit B51 created an agency in favour of defendant respondent No.1 within the meaning of section 19 of the Limitation Act.
The High Court agreed with the view of the trial court and came to the conclusion that the deed Exhibit B51 contained an acknowledgment and the two endorsements made on the respec tive promissory notes Exhibit B 14 and B 15 coupled by a payments of sums towards the debt by the duly authorised agent of defendant respondent No. 2 could well be regarded as payments attracting extension of limitation under section 19 of the Limitation Act.
Having recorded that finding the High Court directed itself to the question whether payments thus made would extend limitation as against the other heirs also and held in the negative.
The conclusion is that ac knowledgment Exhibit B7 and endorsements on Exhibits B 14 and B 15 on the authority of Exhibit B51 were held to have extended the period of limitation only against defendant re spondent No. 2.
Though we have been addressed to take a contrary view on reinterpretation of these documents but, having heard learned counsel in that behalf we are inclined to agree with the High Court and leave the matter undis turbed denying ourselves treading in the field of facts.
Sub section (1) of section 18 of the Limitation Act (corresponding section 19 of the repealed Act IX of 1908) provides as follows: "Where, before the expiration of the prescribed period of a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or 440 right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
" Sub section (2) of section 20 (corresponding to section 21 of the repealed Act IX of 1908) says that nothing in the said sections (being sections 18 and 19) renders one of several joint contractors, partners, executors or mortgagees chargeable by reason only of a written acknowledgment signed by, or of a payment made by, or by the agent of, any other or others of them.
The heirs of a muslim dying intestate on whom falls the liability to discharge the debt, proportionate to their respective shares in the estate devolved, can hardly be classified as joint contractors, partners, executors or mortgagees.
As held above they are by themselves independent debtors; the debt having been split by operation of law.
Inter se they have no jural relationship as co debtors or joint debtors so as to fail within the shadow of contrac tors, partners, executors or mortgagees or in a class akin to them.
They succeed to the estate as tenants in common in specific shares.
Even a signed written acknowledgment by the principal or through his agent would bind the principal and not anyone else standing in jural relationship with the principal in accordance with section 20(2).
The Muslim heirs inter se have no such relationship.
In this view of the matter, we take the view that the High Court was right in confining the acknowledgment of the debts only to respondent No. 2 and not extending the acknowledgment to the other co heirs for their independent position.
Section 19 of the Limitation Act, (corresponding to section 20 of the repealed Act IX of 1908).
so far as is relevant for our purpose, provides that where payment on account of debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made.
In the context, if the debt is one and indivisible, payment by one will interrupt limitation against all the debtors unless they come within the exception laid down in section 20(2) which has been taken note of earlier.
And if the debt is susceptible of division and though seemingly one consists really of several distinct debts each one of which is pay 441 able by one of the obligors separately and not by the rest, section 20 keeps alive his part of the debt which has got to be discharged by the person who has made payment of inter est.
It cannot affect separate shares of the other debtors unless on the principal of agency, express or implied, the payment can be said to be a payment on their behalf also.
See in this connection Abheswari Dasva and Another vs Babu rali Shaikh and Others, AIR 1937 Cal. 191.
The payment made on account of debt by defendant respondent No. 2 as an independent debtor, and not as an agent, express or implied, on behalf of other co heirs could hardly, in the facts established, here be said to be a payment on behalf of all so as to extend period of limitation as against all.
We are thus of the considered view that the High Court was right in confining the extension of limitation on payment of a part of debt only against defendant respondent No. 2, proportion ate to his share of the estate devolved on him which was one fourth.
We are further of the view that the High Court was right in holding the suit against other co heirs to be barred by limitation relating to their shares of the debt.
Lastly it was urged by learned counsel for the appellant that even though the debts of the deceased be taken to be divisible and devolving separately on the heirs in propor tion to their shares, the plaintiff still could proceed to recover the entire debt from defendant respondent No. 2 since he was still continuing in possession of the estate and had not parted with it by means of partition to the other co heirs.
This argument cannot sustain for a moment in view of the clear statement of law made by the Allahabad High Court in Jafri Begam 's case (supra) at pages 841 42.
Such a question has been driven therein to the realm of procedural law and held to be not part of substantive law constituting any rule of inheritance.
The property of the co heirs supposedly in possession of defendant respondent No. 2 cannot be touched directly in his hand unless the co heirs being parties to the suit are held liable to pay their share of the debt; the debt being recoverable.
But here it involves a factual aspect on which there is not enough material on the record or the matter having been examined by the court below.
We decline to take up this issue at this stage.
For the reasons aforesaid we find no merit in this appeal and dismiss it.
We equally find no merit in the belated cross objection of defendant respondent No. 2, leave of which was sought during the course of the hearing of the appeal.
We decline to entertain the request.
There shall be no order as to costs.
R.S.S. Appeal dismissed.
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One Vellappa Rawther, deceased, had incurred debt by means of two promissory notes for Rs.25,000 and Rs.50,000.
In the suits filed on the basis of the promissory notes, the Trial Court granted a decree against the estate of Vellappa Rawther in the hands of defendants 2 to 10.
The High Court on appeal modified the decree reducing it to one fourth of the decreed sum and focussed the liability on defendant Respondent No. 2 absolving others of the re maining liability on the bar of limitation.
Such view was taken as the facts established that the liability to dis charge debts of Vellappa Rawther after his death was indi vidually on his heirs proportionate to the extent of their share in the estate devolving on them, and since the debt had become time barred, acknowledgment of the same by de fendant respondent No. 2 as well as partial payment of the debt by him rendered him alone liable to meet liability to the extent of one fourth related to the share of the estate which as a Muslim heir he received from the deceased.
Before this Court, it was claimed on behalf of the appellant that under sections 18 and 19 of the Limitation Act the acknowledgment and partial payment saved limitation against all and thus the entire debt could be recovered from defendant respondent No. 2, he being in possession of the estate lying joint.
Dismissing the appeal, this Court, HELD: (1) The debt of the deceased gets divided in shares by operation of Muslim Personal Law amongst the heirs proportionate to their shares in the estate.
The theory of sanctity of the integrity of the 434 debt is apparently foreign in the case of a deceased muslim leaving debt and some estate both being divisible amongst his heirs.
[247G] Mohd.
Abdul Qadeer vs Azamatullah Khan and 8 Others, [1974] 1 Andhra Weekly Reporter 98; Vasantam Sambasiva Rao vs Sri Krishna Cement and Concrete Works, Tenali 1977 Andhra Law Times Reports at 528; N.K. Mohammad Sulaiman vs
N.C. Mohammad Ismail and Others, at 940, re ferred to.
(2) It would be right to treat it settled that muslim heirs are independent owners of their specific shares simul taneously in the estate and debts of the deceased, their liability fixed under the personal law proportionate to the extent of their shares.
[248H] Jafri Begum vs Amir Muhammad Khan, [1885] Vol.
7 ILR Allahabad series, referred to.
(3) The heirs of a muslim are by themselves independent debtors; the debt having been split by operation of law.
Inter se, they have no jural relationship as co debtors or joint debtors so as to fall within the shadow of contrac tors, partners, executors or mortgagees or in a class akin to them.
They succeed to the estate as tenants in common in specific shares.
[250D] (4) Even a signed written acknowledgment by the princi pal or through his agent would bind the principal and not anyone else standing in jural relationship with the princi pal in accordance with section 20(2) of the Limitation Act.
The Muslim heirs inter se have no such relationship.
[250E] (5) If the debt is one and indivisible, payment by one will interrupt limitation against all the debtors unless they come within the exception laid down in section 20(2).
And if the debt is susceptible of division and though seem ingly one consists really of several distinct debts each one of which is payable by one of the obligors separately and not by the rest, section 20 keeps alive his part of the debt which has got to be discharged by the person who has made payment of interest.
It cannot affect separate shares of the other debtors unless on the principal of agency, express or implied, the payment can be said to be a payment on their behalf also.
[250H; 251A] Abheswari Dasya and Another vs Baburali Shaikh and Others, AIR 1937 Cal. 191, referred to.
435 (6) The property of the co heirs supposedly in posses sion of defendant respondent No. 2 cannot be touched direct ly in his hand unless the co heirs being parties to the suit are held liable to pay their share of the debt; the debt being recoverable.
[251F]
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6568.txt
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Appeal No. 65 of 1975.
From the Judgment and Order dated 3.12.
1973 of the Gujarat High Court in I.T.R. No. 35 of 1972.
1169 T.A. Ramachandran, Mrs. J. Ramachandran and S.C. Ratelh for the Appellant.
V.S. Desai and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal by certificate is di rected against the judgment of the High Court of Gujarat.
Assessee is assessed as an individual and she derived income from "other sources" being in the shape of interest, dividends etc.
The relevant year of assessment is 1966 67.
During this year assessee claimed deduction of Rs.26986 being interest paid to Barivallabndas Kalidas Estate on loans taken by her.
The Income tax Officer found that out of the loans real investment was of a sum of Rs. 1250 only.
He disallowed the claim to the extent of Rs. 10,275 on propor tionate basis.
According to him this claim could not be admitted under section 57(iii) of the Income tax Act of 1961.
Assessee 's first appeal to the Appellate Assistant Commissioner was rejected.
The Appellate Authority relied upon the ratio of the decision of the Bombay High Court in Bai Bhuriben Ballubhai vs Commissioner of Income tax, Bombay North Cutch and Saurashtra.
[1956] ITR (XXIX) 543 and dis missed the appeal.
In further appeal before the Tribunal the claim of the assessee was reiterated by contending that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted.
It was further contended that the assessee instead of liquidating the investments which were return oriented, found it commercially expedient and viable to raise a loan instead of disturbing the investments and, therefore, the claim became admissible in law.
The Tribunal did not accept this contention and observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business.
The Tribunal also relied upon the ratio of Bombay High Court decision referred to above.
As the Tribunal dismissed the appeal assessee asked for the case to be stated to the High Court and the following question was referred for its opinion: "Whether on the facts and in the circumstances of the case, 1170 payment of interest to the extent of Rs. 10.27 was not an admissible deduction under section 57(iii) of the Incometax Act?" The High Court referred to various authorities and decided against the assessee by concluding that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental.
The High Court further found that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and therefore did not come under section 57(iii) of the Act.
It is not disputed by Mr. Ramchandran for the assessee that unless the claim comes within the purview of section 57(iii) of the Act it would not be admissible as a deduc tion.
That section as far as relevant provides: "The income chargeable under the head 'income from other sources ' shall be computed after making the following deductions, namely: (i). (ii) . (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the pur pose of making or earning such income; P r ovided . . . . . . .
E x p l a n a t ion: . . . . . . .
In order that the claim for the deduction could be sustained, it was for the assessee to satisfy the Income tax Officer that the loan interest in respect of which is claimed as deduction was laid out or expended wholly and exclusively for earning the income from out of which the deduction was claimed.
There is no dispute that the provi sion of section 57 of the Act corresponds to section 12(2) of the Act of 1922.
Dealing with a claim under section 12(2) of the 1922 Act this Court in Eastern Investments Ltd. vs Commissioner of Income tax, West Bengal, [ 1 summarised the position of law thus: "On a full review of the facts it is clear that this transaction was voluntarily entered into in order indirectly to facilitate 1171 the carrying on of the business of the company and was made on the ground of commercial expediency.
It therefore falls within the purview of Section 12(2) of the Income tax Act.
1922, before its amendment . . " "This being an investment company, if it borrowed money and utilised the same for its investments on which it earned income.
the interest paid by it on the loans will clearly be a permissible deduction under section 12(2) of the Income tax Act.
" In Commissioner of Income tax, West Bengal vs Rajendra Prasad Moody, 19 this Court observed: "The determination of the question before us turns on the true interpretation of section 57(iii) and it would, therefore.
be convenient to refer to that section, but before we do so, we may point out that section 57(iii) occurs in a fasciculus of sections under the heading "F Income from other sources".
Section 56, which is the first in this group of sections, enacts in sub section (1) that specified in section 14, Items A to B, shall be chargeable to tax under the head "Income from other sources" and sub section (2) includes in such income various items, one of which is "divi dends".
Dividend on shares is thus income chargeable under the head "Income from other sources".
Section 57 provides for certain deductions to be made in computing the income chargeable under the head "Income from other sources" and one of such deductions is that set out in clause (iii).
which reads as fol lows: . . . " "The expenditure to be deductible under section 57(iii) must be laid out or expended wholly and excluSively for the pur pose of making or earning such income In the said decision this Court clearly indi cated that: "It is the purpose of the expenditure that is relevant in determining the applicability of section 57(iii) and that purpose must be making or earning of income.
" The taxing authorities as also the High Court have clearly recorded a 1172 factual finding facts that the expenditure in this case was to meet the personal liability of payment of income tax and wealth tax and annuity.
From the order of the Tribunal as also the judgment of the High Court it appears that the assessee had taken the stand that even if the claim relating to income tax and wealth tax was not admissible.
that part of the claim relatable to annuity deposit should have been admitted as it fetched interest.
We are inclined to agree with the High Court that so far as meeting the liability of income tax and wealth tax is concerned it was indeed a personal one and payment thereof cannot at all be said to be expenditure laid out or expended wholly and exclusively for the purpose of earning income.
So far as annuity deposit is concerned the Tribunal and the High Court have come to the right conclusion that the dominant purpose was not to earn income by way of interest but to meet the statutory liabili ty of making the deposit.
The test to apply is that the expenditure should be wholly and exclusively for the purpose of earning the income.
The fact finding authorities have come to the conclusion that no part of the expenditure came within the purview of section 57(iii,) of the Act.
Mr. Ramchandran then maintained that even if there was an indirect link between the expenditure and the income earned, the claim would be admissible and relied upon the observations of Bose.
J. in Eastern Investments Case.
No attempt has been made by the assessee to point out before the taxing authorities or even before the High Court by placing the necessary facts to justify such a claim.
On mere assumptions such a point cannot be allowed to be raised here for consideration.
In fact unless the loan is incurred for meeting the liability connected with the sources itself it would ordinarily be difficult to entertain the claims for deduction.
This appeal has to fail and the order of the High Court has to be affirmed.
We accordingly dismiss the appeal but leave the parties to bear their respective costs.
A.P.J. Appeal dismissed.
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The assessee, assessed as an individual, derived income from "other sources" in the shape of interest, dividends etc.
In the assessment year 1966 67 she claimed deduction of Rs.26,986 being interest paid on loans taken by her, under section 57(iii) of the Income Tax Act, 1961.
The income Tax Officer found that out of the loans real investment was Rs.1,250 only.
He disallowed the claim of Rs.10,275 on proportionate basis.
The Appellate Assistant Commissioner relying upon the ratio of the decision in Bai Bhuriben Lallubhai vs Commissioner of Income tax, Bombay North Cutch and Saurashtra, [1956 ITR (XXIX) 543] dismissed the appeal of the assessee.
Before the Tribunal the assessee contended: (1) that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted and (2) that the asses see instead of liquidating the investments which was return oriented, found it commercially expedient and viable to raise a loan instead of disturbing the investments and, therefore, the claim became admissible.
The Tribunal reject ing the contentions and dismissing the appeal observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business.
On reference, the High Court held that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental and that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and.
therefore.
did not come under section 57(iii) of the Act.
1168 Dismissing the appeal of the assessee the Court.
HELD: 1.
Unless the claim comes within the purview of section 57(iii) of the Income Tax Act.
1961 it would not be admissi ble as a deduction.
[1170C] 2.
The test to apply is that the expenditure should be wholly and exclusively for the purpose of earning the in come.
[1172C] Eastern Investments Ltd. vs Commissioner of income tax, West Bengal, and Commissioner of Income tax, West Bengal vs RaJendra Prasad Moody. , followed.
In order that the claim for deduction could be sus tained, it was for the assessee to satisfy the Income Tax Officer that the loan, interest in respect of which is claimed as deduction, was laid out or expended wholly and exclusively for earning the income from out of which the deduction was claimed.
[1170F G] 4.
The Income Tax Authorities as also the High Court have clearly recorded a factual finding of facts that the expenditure in this case was to meet the personal liability of payment of income tax and wealth tax and annuity and that no part of the expenditure came within the purview ors.
57(ii) of the Act.
[1171H 1172A, D] 5.
This Court is inclined to agree with the High Court that so far as meeting the liability of income tax and wealth tax is concerned, it was indeed a personal one and payment thereof cannot at all be said to be expenditure laid out or expended wholly and exclusively for the purpose of earning income.
So far as annuity deposit is concerned.
the Tribunal and the High Court have come to the right conclu sion that the dominant purpose was not to earn income by way of interest but to meet the statutory liability of making the deposit.
[1172B C] 6.
Unless the loan is incurred for meeting the liability connected with the sources itself it would ordinarily be difficult to entertain the claims for deduction.
[1172F]
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5339.txt
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Appeal No. 2003/71 (From the Judgment and Order dated 5 12 1969 of the Madras High Court in Tax Case No. 40 of 1965) S.T. Desai, P.L. Juneja and R.N. Sachthey, for the appellant.
G. Venkatarama Sastry, K.R. Ramamani and J. Ramamurthi for the respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by certificate is directed against a Full Bench judgment of the Madras High Court dated December 5, 1969 Alladi Kuppuswami vs Controller of Estate Duty, Madras(1) by which the reference made to the High Court by the Central Board of Revenue was answered in favour of the accountable person and against the Revenue.
The case involves an interesting and important question of law in respect of ambit and scope of sections 7(1) & (2) as also 39 of the (1) 7 707SCI/77 724 Estate Duty Act, 1953 hereinafter referred to as 'the Act '.
In order to decide the question of law arising in the ap peal, it may be necessary to set out briefly the facts of the case.
Sri Alladi Krishnaswami Iyer died some time.before the passing of the , but during his life time he had settled certain properties absolutely on his wife Smt.
Alladi Venkatakshmamma to be referred in short as 'Smt.
Alladi ' and he had also declared certain other properties to from part of the joint family properties.
Sri Alladi Krishnaswami Iyer hereafter to be referred to as "Shri Alladi" was a member of the Hindu coparcenary consisting of himself, his wife and three sons.
In the instant case we are only concerned with the joint family properties left by Shri Alladi.
Alladi died on January 5, 1956 a few months before the passing of the and the Assistant Controller of Estate Duty valued her estate at a total amount ot Rs. 7,25,527 including a sum of Rs. 2,02,271 being the value of her the share in the joint family properties.
The dispute in the present case centres round the inclusion of the aforesaid sum of Rs 2,02,271/ .
The Revenue assessed the estate duty on the footing that as Smt.
Alladi was a member of the Hindu coparcenary her interest in the joint family proper ties passed on her death to the other three sons and the value of this interest being 1/4th the heirs would be liable to pay estate duty on the value of the 1/4th share assessed at Rs. 2,02,271/ .
The accountable persons raised several contentions before the Revenue including the question as to whether or not the Act would apply to agricultural lands as also whether interest on certain fixed deposits in Govern ment securities would be assessable under the Act.
It appears, however, that before the High Court the respondent pressed only the question relating to the inclusion of the value of 1/4th share of Smt.
Alladi valued at Rs. 2,02,271/ .
The respondent filed an appeal before the Board and contended that as Smt.
Alladi died as a Hindu widow she possessed no coparcenary interest which could pass on her death: her interest merged without any benefit accruing or arising to the coparceners and hence section 7 sub section
(1) had no application.
The plea taken by the respondent did not find favour with the Central Board of Revenue which upheld the order of the Assistant Controller of Estate Duty.
Thereupon the respondent moved the Board of Revenue to make a reference to the High Court of Madras for decision of the questions of law involved in the case.
The Board ac cordingly referred the following questions to the High Court: "1.
Whether, on the facts and in the circumstances of the case, one fourth share of the deceased in the joint family properties, to which she was entitled under section 3 of the Hindu Women 's Rights to Property Act, 1937, was correctly included in her estate as property deemed to pass on her death under section 7 of the ? 2.
Whether the , in so far as it seeks to levy duty on agricultur al lands, is ultra vires of the legislative powers of the Union Legislature ? 725 3.
Whether, on the facts and in the circumstances of the case, the accrued inter est on fixed deposits and Government securi ties up to the date of death of the deceased was correctly included in her estate under section 34(2) of the ? Although three questions had been referred to the High Court by the Board at the hearing of the appeal the respondent gave up questions Nos. 2 and 3 and confined his arguments only to question No. 1 which falls for determination in this case.
The High Court, relying mainly on the decisions of the Privy Council in Attorney General of Ceylon vs Arunacha lam Chettiar;(1) and Gartside vs Inland Revenue ' Commission ers(2) came to the conclusion that the interest of Smt.
Alladi was not a coparcenary interest which could have passed under section 7 (1) of the Act and as the said interest was incapable of valuation was not exigible to estate duty.
Thereafter the appellant applied to the High Court for granting a certificate of fitness for leave.
to appeal to this Court and the same having been granted the appeal has now been placed before us for hearing.
The respondent reiterated his contentions before us and submitted that section 7(1) of the Act had no application to the facts of the present case, and therefore, the share of Smt.
Alladi was not exigible to estate duty.
The appellant, however, submitted that a Hindu widow had a coparcenary interest in the joint family properties which could be valued on the basis of the factors enumerated in section 39 of the Act, the High Court was in error in holding that the interest of Smt.
Alladi was not capable of any valuation.
The appellant, therefore, submitted that the High Court had not correctly appreciated the legal nature and character of the interest of the Hindu widow conferred on her by virtue of the Hindu Women 's Rights to Property Act, 1937.
In our opinion the answer to the problem would naturally lie in a correct interpretation of ss 7(1) & (2) of the Act as also on a true construction of section 3(2) of the Hindu Women 's Rights to Property Act, 1937 as amended by Act 11 of 1938.
It is true that while this Court has had occasions to interpret the provisions of the Hindu Women 's Rights to Property Act, 1937 hereafter referred to as the Act of 1937 ' on several occasions, yet the exact point which arises in this case has not yet been determined by this Court.
In order to understand the implications Of the arguments advanced by counsel for the parties.
before us, it may be necessary to extract the relevant provisions of the Act as also of the Act of 1937.
Section 7 sub sections
(1) & (2) of the Act run thus: "7.
Interests ceasing on death, (1) Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasing on the death of the deceased shall be deemed to pass on the deceased 's death to the extent to which a benefit accrues I.T.R. (E.D.) 20 (2) (1968) A.C5.53 70 I.T.R. 663 (II. L.) 726 or arises by the cesser of such interest, including, in particular, a coparcenary inter est in the joint family property of a Hindu family governed by the Mitakshara, Marumakkat tayam or Aliyasantana law.
(2) If a member of a Hindu coparcenary governed by the Mitakshara school of law dies, then the provisions of sub section (1) shall apply with respect to the interest of the deceased in the coparcenary property only : (a) if the deceased had completed his eighteenth year at the time of his death, or (b) where he had not completed his eighteenth year at the time of his death,.
if his father or other male as cendant in the male line was not a coparcener of the same family at the time of his death.
" It would be seen that section 7(1) consist of two parts the first part refers to the interest of the deceased which ceases on his death and according to this part two condi tions are necessary before there is a passing of the inter est (1) that there must be a cesser of the interest by virtue of the death of the deceased; and (2) that as a result of such cesser a benefit accrues or arises.
The second part of sub section
(1) contains an inclusive category which brings within the fold of sub section
(1) a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayarn or Aliyasantana law.
In the instant case, we are mainly concerned with the Mitakshara law.
We might dispose of a short argument ad vanced by Mr. S.T. Desai in support of the appeal on this question.
It was submitted that the words "governed by the Matakshara, Marumakkattayam or Aliyasan ana law" clearly show that the coparcenary interest has been used in a wide sense and cannot be restricted to the strict coparcenary interest known to the Mitakshara law alone In the view which we take in this case, however, it is not at all neces sary to go into this point.
The main question for determi nation is as to whether the interest acquired by a Hindu widow under the Act of 1937 can be said to be a coparcenary interest in the legal sense of the term.
Once a Hindu widow is held to have a coparcenary interest, then there would be no difficulty in treating her as a member of the Hindu coparcenary, in which case her interest could be easily valued according to the relevant provision of section 39 of the Act which runs thus: "39.
(1) The value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint family property governed by the.
Mitakshara school of a Hindu law which ceases on the death of a member thereof shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death.
" In order to understand the content and charac ter of the interest which a Hindu widow gets by virtue of the statutory provisions con tained in 727 the Act of 1937 there can be no doubt that prior to the passing of the Act of 1937 a Hindu woman had no right or interest at all in a Hindu coparcenary.
She was neither a copar cener nor a member of the coparcenary nor did she have any interest in it, except the right to get maintenance.
She also had no right to demand partition of the coparcenary property after the death of her husband.
The Act of 1937 introduced broad and important changes by bettering the rights of a Hindu widow and conferring on her the same interest as pos sessed by her husband.
Sub sections (2) and (3) of section 3 of the Act of 1937 run thus: "(2) When a Hindu governed by any school of Hindu law other than the Dayabhaga school or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provisions of sub section (3), have in the property the same interest as he himself had." "(3)Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu Woman 's estate, provided however that she shall have the same right of claiming parti tion as a male owner.
The words "the same interest as he himself had" in sub section (2) of section 3 of the Act of 1937 clearly indicate that the statute gave effect to the well settled doctrine of Hindu Shastric Law that the persons of the.
husband after his death continues through his wife who is the surviving half of the husband and the husband continues to live through the widow so long as the widow is alive.
It was this concept of the Hindu Law which was sought to be recognised and given effect to by the Act of 1937.
In these circumstances, therefore, when ' the Legislature used the expression "the same interest as he himself had" it would include all the bundle of rights possessed by the husband which would de volve on the wife and if there were to be any limitations on those rights they were spelt out by subs.
(3) itself, name ly, that while the Hindu widow would have the same right and interest as her husband, her interest would only be the limited interest known as a Hindu Woman 's estate.
Sub section (2) of section 3 of the Act of 1937 further conferred on the widow the right to demand partition and on partition she was entitled to get the same share as her husband.
Thus the position appears to be that a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two qualifications, viz., (1) that she had only a limited interest; and (2)that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband there was no question of her getting interest in the Hindu copar cenary by birth which is one of the most important incidents of a Hindu coparcenary.
All the other rights of a coparcener were duly conferred on her by the Act of 1937.
Dwelling on the content and import of the nature of the interest of a Hindu widow this Court pointed out in Jaisri Sahu vs Rajdewan 728 Dubey & Others(1) that on the death of her husband the properties vested in the widow and she fully represented the estate.
In this connection, this Court made the following observations: "When a widow succeeds as heir to her hus band, the ownership in the properties, both legal and beneficial, vests in her.
She fully represents the estate, the interest of the reversioners therein being only spes succession 'section The widow is entitled to the full beneficial enjoyment of the estate and is not accountable to any one.
It is true that she cannot alienate the properties unless it be for necessity or for benefit to the estate, but this restriction on her powers is not one imposed for the benefit of reversion ers but is an incident of the estate as known to Hindu law.
" Similarly in a later case in Potti Lakshmi Perumallu vs Potti Krishnavenamma(2) this Court reiterated that a Hindu widow was the surviving half of her husband and so long as she was alive the husband continued to live in her.
This 'Court observed as follows: "The decisions also recognise that though the widow does not, by virtue of the interest given to her by the new law become a coparcener she being entitled to claim parti tion of the joint family property is in the same position in which her deceased husband would have been in the matter of exercise of that right.
That is to say, according to these decisions her interest is a fluctuating one and is liable to increase or decrease according as there are accretions to or dimi nutions of the property.
In our opinion these decisions lay down the law correctly.
" It may be pertinent to note that in the aforesaid case the Court was considering the nature of the interest which a widow derived by virtue of the statutory substitution con tained in s.3(2) of the Act of 1937.
It was also pointed out that like other coparceners of a Hindu coparcenary the interest of a widow until separated by a partition continued a fluctuating one which was liable to increase case or decrease with the deaths or additions in the family.
In Satrughan Isser vs Smt.
Subujpari & Others(3) this Court pointed out that the interest conferred on a Hindu widow arose by statutory substitution and the Act of 1937 introduced changes which were go far alien to the structure of a Hindu coparcenary.
In this connection the Court observed as follows: "The Act in inventing the widow of a member of a coparcenary with the interest which the member had at the time of his death has introduced changes which are alien to the (1) , 564 565.
(2) ; , 33.
(3) ; 729 structure of a coparcenary.
The interest of a widow arises not by inheritance nor by survi vorship, but by statutory substitution: A Hindu coparcenary under the Mitakshara school consists of males alone: it includes only those members who acquire by birth or adoption interest in the coparcenary property.
The essence of coparcenary property is unity of ownership which is vested in the whole body of coparceners.
While it remains joint, no individual member can predicate of the undi vided property that he has a definite share therein.
The interest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners: it is only on partition that the coparcener can claim that he has become entitled to a definite share.
The two principal incidents of coparcenary property are: that the interest of coparceners devolves by survivorship and not by inheri tance; and that the mate issue of a coparcener acquires an interest in the coparcenary property by birth, not as representing his father but in his own independent right ac quired by birth." As pointed out above the essence of coparce nary property is the unity of ownership which is vested in the whole body of coparceners and the two principal incidents of coparcenary property are that the interest of coparceners devolves by survivorship and not by inheri tance and that the male issue of a coparcener acquires an interest in the coparcenary property by birth and not as representing his father.
Alter having described the incidents of a Hindu coparcenary, the Court proceeded to observe as follows: "By the Act (Act of 1937) certain anti thetical concepts are sought to be reconciled.
A widow of a coparcener is invested by the Act with the same interest which her husband had at the time of his death in the property of the coparcenary.
She is thereby introduced into the coparcenary, and between the surviv ing coparceners of her husband and the widow so introduced, there arises community of interest and unity of possession.
But the widow does not on that account become a copar cener: though invested with the same interest which her husband had in the property she does not acquire the right which her husband could have exercised over the interest of the other copareeners.
Because of statutory substitu tion of her interest in the coparcenary property in place of her husband, the right which the other coparceners had under the Hindu law of the Mitakshara school of taking that interest by the rule of survivorship remains suspended so long as that estate enures.
* * * She has still power to make her interest definite by making a demand for partition, as a male owner may.
If the widow 730 after being introduced into family to which her husband belonged does not seek partition, on the termination of her estate her interest will merge into the coparcenary property.
" Again this Court did not approve of the as sumption made by some Courts that the fight vested in the widow was liable to revert to the coparcenary, even where, on demand for partition it became separated from the copar cenary property, and in this connection this court observed as follows: "The assumption that though the right vested in the widow by the Act is a right of property which may on demand for partition become separated from the coparcenary property it is still liable to revert to the coparce nary on the determination of the widow 's estate, does not give full effect to the statutory conferment upon the widow of the same right of claiming partition as a mate owner".
Finally this Court approved of certain obser vations made by the Madras High Court in Parappagari Parappa alias Hammanthappa and Another vs Parappagari Nagamma and others(1) where Subba Rao J.as he then was, made the following observations: "She could ask for partition and sepa rate possession of her husband 's share.
In case she asked for partition, her husband 's interest 'should be worked out having regard to the circumstances obtaining in the family on the date of partition.
If she divided herself from the other members of the family during her lifetime, on her demise the succession would be traced to her husband on the basis that the property was his separate property.
If there was no severance, it would devolve by survivorship to the other members of the joint Hindu family :" It is, therefore, manifest from the aforesaid deci sion that if the widow had not chosen to exercise her right of partition, there is no severance of the Hindu coparcenary and on her death the interest of the widow merges in the coparcenary property or lapses to the other coparceners.
As already indicated above, this Court in Satrughan vs Smt.
Sabujpari & others (supra) had taken the same view and had con firmed the Division Bench decision of the Patna High Court in Smt.
Sabujpari and another vs Satrughan Isser and others(2), where the Patna High Court after considering the entire law on the subject, observed thus: "After having considered the various authorities and the various aspects of the case, my conclusions are that, under the Provisions of the Act a widow of a deceased coparcener is placed in same position as the deceased coparcener was, for the reason of the fiction that half the body of the deceased husband survived in the widow; that, like her husband, the widow also is entitled to effect severance of the joint status (2) A.I.R. 1958 Pat. 405, 410. 731 of the family by an unequivocal expression of intention separate;* * * that in case the widow does not exercise her right of partition and dies without expressing any intention to separate, the interest of the husband, which she enjoyed, goes by survivor ship to the other members of the joint family.
" We find ourselves in complete agreement with the observations made by the Patna High Court to which one, of us (Untwalia, J., as he then was) was a party.
The view taken by the Patna High Court in the aforesaid case was later on approved by a Full Bench of the Patna High Court in Mst.
Khatrani Kuer vs Smt.
Tapeshwari Kuer(1).
In State Bank of India vs Ghamandi Ram (dead) through Shri Gurbux Rai(2), this Court, while dealing with the incidents of Hindu coparcenary, observed as follows: "According to the Mitakshara School of Hindu Law all the property of a Hindu joint family is held in collective ownership by all the coparceners in a quasi corporate capa city.
* * * The incidents of coparcenership under the Mitakshara law are: first, the lineal male descendants of a person up to the third generation, acquire on birth ownership in the ancestral properties is common; secondly, that no alienation of the property.
any time work out their rights by asking for partition; thirdly, that till partition each member has got ownership ex tending over the entire property, conjointly with the rest; fourthly, that as a result of such co ownership the possession and enjoyment of the properties is common; fifthly, that no alienation of the property is possible unless it be for necessity, without the concurrence of the Coparceners, and sixthly, that the interest of a deceased member lapses on his death to the survivors.
A coparcenary under the Mitakshara School is a creature of law and cannot arise by act of parties except in so far that on adoption the adopted son be comes a coparcener with his adoptive father as regards the ancestral properties of the lat ter." Thus analysing the ratio of a aforesaid case regarding the incidents of a Hindu coparcenary it would appear that a Hindu coparcenary has six essential characteristics, namely, (1) that the lineal male descendants up to the third genera tion acquire an independent right of ownership by birth and not as representing their ancestors; (2) that the members of the coparcenary have the right to work out their rights by demanding partition; (3) that until partition, each member has got.
ownership extending over the entire property con jointly with the.
rest and so long as no partition takes place, it is difficult for any copercener to predicate the share which he might receive; (4) that as a result of such co ownership the possession and enjoyment of the property iS common; (5) that there can be no alienation of the property without (1) A.I.R. 1964 Pat 261.
[19691 3 S.C.R, 681,686.
732 the concurrence of the other coparceners unless it be for legal necessity; and (6) that the interest of a deceased member lapses on his death and merges in the coparcenary property.
Applying these tests to the interest of a Hindu widow who has been introduced into a coparcenary by virtue of the Act of 1937, we find that, excepting condition No. (1), all other conditions are fully satisfied in case of a Hindu widow succeeding to the interest of her husband in a Hindu coparcenary.
In other words, after her husband 's death the Hindu widow under the Act of 1937 has got the right to demand partition, she cannot predicate the exact share which she might receive until partition is made, her dominion extends to the entire property conjointly with the other members of the coparcenary, her possession and enjoy ment is common, the property cannot be alienated without concurrence of all the members of the family, except for legal necessity, and like other coparceners she has a fluctuating interest 'in the property which may be increased or decreased by deaths or additions in the family.
It is manifest that she cannot fulfil the first condition, because she enters the coparcenary long after she is born and after she is married to her husband and acquires his interest on his death.
Thus, short of the first condition, she possess es all the necessary indicia of a coparcenary interest.
The fact that before the Act of 1956, she had the characteristic of a widow estate in her interest in the property does not detract any the less from this position.
It must follow as a logical corollary that though a Hindu widow cannot be a coparcener, she has coparcenary interest and she is also a member of a coparcenary by virtue of the rights conferred on her under the Act of 1937.
There is yet another important aspect of the matter which has to be considered.
At the time when the was passed in 1953, the Legislature was fully aware of the statutory interest conferred on a widow by virtue of the Act of 1937 and the incidents thereof.
In these circum stances it is not reasonable to infer that the Legislature could have intended that though a Hindu widow has got the Same interest as her husband in the Hindu coparcenary and has also the right to demand partition and her interest which is a fluctuating.
one would lapse to the other copar ceners in case of her death without seeking partition in the same manner as that of other coparceners, yet it should be exempt from estate duty.
The sheet anchor of the argument of the respondent was the Privy Council decision in Arunachalam Chettiar 's case (supra).
In the first place, the facts of that case are clearly distinguishable from the facts of the present case.
In that case, the Hindu undivided family consisted of father, son and some female members.
According to the Privy Council, the females were merely entitled to maintenance.
The females there could not have any interest in the coparcenary nor could any such argument be advanced because there was no statute similar to the Act of 1937.
Moreover, in the Estate Duty Ordinance which was being construed by the Privy Council there was neither any provision like the inclusive part of sub section
(1) and sub section
(2) of section 7 nor any provision similar to section 39 of the Act.
In these circumstances, we do not see how the Privy Council decision in Arunachalam Chattiar 's case 733 (supra) can be called in aid to support the contention of the respondent.
In the instant case, once it is held, as it must be, that Smt.
Alladi was a member of the Hindu coparce nary, her interest was undoubtedly a coparcenary interest which lapsed on her death and merged into the coparcenary.
It was also clearly capable of valuation, unlike the posi tion in Arunachalam Chettiar 's case where the Privy Council was construing a provision similar to section 40 of the Act, which, in our opinion, has no application in the present case, it being covered by section 39 of the Act.
A fortiori the same observations apply to the case of Gertside vs Inland Revenue Commissioners (supra).
That case has no application here where we are concerned with the concept of a Hindu coparcenary which is totally alien to the estates contem plated under the English Acts.
For these reasons, there fore, we are clearly of the opinion that the two cases relied upon by the High Court do not appear to be of any assistance in deciding the points at issue in the present appeal, and the High Court was in error in basing its deci sion on the aforesaid cases ignoring the decisions of this Court as also the peculiar and special provisions of the Act.
Finally, it was vehemently contended by Mr. Sastri for the respondent that the right of a Hindu widow under the Act of 1937 was merely a statutory substitution of a new status by her introduction into the copercenary and she could not be treated either as a coparcener or a me, tuber of the copercenary or to possess any kind of coparcenary interest.
While we agree that the widow after the introduction in the coparcenary could not be held to have become a coparcener, because one of the essential characteristics of a coparcen er, namely, acquisition of interest by birth, is wholly wanting in her case, yet when the Legislature which was fully aware of the status of a Hindu widow under the Shas tric Law chose to improve her status by conferring a new right on her under the Act of 1937, and with this avowed object clothed her with all the rights and concomitants of a coparcener 's interest, it is futile to contend that the widow could not be treated either as a member of the Hindu coparcenary or as having been conferred coparcenary interest in the property.
Even though the widow is not a coparcener in the strictly legal sense of the term, the interest which she has is the same interest as her husband and that is the coparcenary interest with the only limitation placed on her by section 3(3) of the Act of 1937, namely, that her interest would be the limited interest of a Hindu widow.
The conclu sion is therefore inescapable that Smt.
Alladi did possess a coparcenary interest which lapsed on her death and merged into the coparcenary and the case was clearly covered by the inclusive part of sub section
(1) of section 7 and under section 39 the value of the benefit accruing or arising from the cesser of her coparcenary interest was to be determined by taking the principal value of the share in the joint family property which would have been allotted to her, had there been a partition immediately before her death.
The last plank of the argument of the respondent was that the being a fiscal statute should be construed strictly so as to give every benefit of doubt to the subject.
There can be no quarrel with this proposition but when the phraseology of a particular section of the statute takes within its sweep the transaction which is 734 taxable, it is not for the Court to strain and stress the language of the section so as to enable the tax payer to escape the tax.
In the view that we take in this case, it is manifest that the legislative intent reflected in the Act of 1937 and the Estate Duy Act, 1953, must be given full effect.
Summarising, therefore, the position that emerges is as follows: By virtue of the provisions of the Act of 1937 a Hindu widow undoubtedly possesses a coparcenary interest as con templated by section 7( 1 ) of the Act and she is also a member of a Hindu copercenary as envisaged by section 7(2) of the Act.
On the death of Smt.
Alladi, therefore, there was clearly a cesser of her interest and her interest merged in the coper cenary property and by reason of the inclusive part of sub section (1 ) of section 7, it must be taken to have passed on her death and was hence exigible to estate duty.
Since Smt Alladi was a member of the copercenary, this interest of her 's which passed on her death was liable to be valued in accordance with the method provided by section 39 of the Act.
The interpretation of section 40 of the Act is not free from difficulty, but as the present case squarely falls within the ambit of section 7 (1 ) latter part and sub section
(2) of section 7 of the Act which attracts section 39, it is not at all necessary for us to enter into the complex domain of the scope and ambit of section 40 of the Act in this case.
The result is that the appeal is allowed, the judgment of the High Court is set aside and the question referred to the High Court is answered in the affirmative.
There will be no order as to costs.
S.R. Appeal allowed.
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Shri Alladi was a member of the Hindu coparcenary con sisting of himself his wife (Smt.
Alladi) and three sons.
Shri Alladi who died before the came into force, during his life time had settled certain proper ties absolutely on his wife and had also declared certain other properties to form part of the joint family proper ties.
Alladi died on January 5, 1956, a few months before the passing of the .
The Assistant Controller of Estate Duty valued her estate at a total amount of Rs. 7,25,527/ including a sum of Rs. 2,02,271/ being the value of her 1/4th share in the joint family properties, on the footing that as Smt.
Alladi was a member of the Hindu coparcenary, her interest in the joint family properties.
passed on her death to the other three sons and the value Of this interest being 1/4th, the heirs would be liable to pay estate duty on the value of the 1/4th, share.
The respondent filed an appeal before the Central Board of Revenue and contended that as Smt.
Alladi died as a Hindu widow she possessed no coparcenary interest which could pass on her death; her interest merged without any benefit accruing or arising to the coparceners and hence section 7 subsection (1) had no application.
This plea did not find favour with the Board.
which upheld the order of the Assistant Controller of Estate Duty as correct.
The Board further held that the Hindu widow 'section estate created by section 3(2) of the Hindu Widows Rights to Property Act, 1937, was an interest in property which ceased on the death of the widow attracting estate duty.
Thereupon, the respondent moved the Board to make reference to the High Court of Madras for decision of the questions of law involved in the case.
The Board referred three questions to the High Court under section 64(1) of the Act, but at the time of the hearing of the reference, the respondent confined his arguments only to the following issue, namely "Whether on the facts and in the circumstances of the case 1/4th share of the deceased in the joint family properties to which she was entitled under section 3 of the Hindu Womens Rights to Property Act, 1937, was correctly included in her estate as property deemed to pass on her death under section 7 of the ." The High Court relying on the decisions of the Privy Council in Attorney General of Ceylon vs Arunachalam Chettiar and Gartside vs Inland Revenue Commissioners ; held that the interest of Smt.
Alladi was not a coparcenary interest which could have passed under section 7(1) of the Act and as the said interest was incapable of valuation, it was not exigible to estate duty and thus held against the Revenue and in favour of the accountable person.
Allowing the appeal by certificate, the Court, HELD: (1) By virtue of the provisions of the Act of 1937 a Hindu widow undoubtedly possess a coparcenary interest as contemplated by section 7(1) of the Act and she is also a member of the Hindu coparcenary as envisaged by section 7(2) of the Act.
[734 B] 722 (2) Prior to the passing of the Act of 1937 a Hindu Woman had no right interest at all in a Hindu coparcenary.
The Act of 1937 bettered the rights a Hindu widow and conferred on her by section 3 the same interest as possessed her husband.
[727 A] (3) The words "the same interest as he himself had" in sub section (2) of section 3 of the Act of 1937 clearly indicate that the statute gave effect to the well settled doctrine of Hindu shastric law that the persons of the husband after his death continues through his wife who is a surviving half and the husband continues to live through the widow so long as the widow is alive.
When the Legislature used the expres sion ' "the same interest as he himself had", it would in clude all the rights possessed by the husband which could devolve on the wife.
Thus, a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two qualifications, namely, (i) she had only a limited interest and (ii) that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband, there was no question of her getting interest in the Hindu copar cenary by birth which is one of the most important incidents of a Hindu coparcenary.
[727 D E] (4) The essence of coparcenary property is the unity of ownership which is vested in the whole body of coparceners and the two principal incidents of coparcenary are that the interest of coparceners devolve by survivorship and not by inheritance and that the male issue of a coparcenary ac quires an interest in the coparcenary property by birth and not as representing his father.
[729 D E] (5) A Hindu coparcenary has six essential characteris tics, namely, (i) that the lineal male descendants upto the third generation acquire an independent right of ownership by birth and not as representing their ancestors; (ii) that the members of the coparcenary have the right to work out their rights by demanding partition; (iii) that until parti tion, each member has got ownership extending over the entire property jointly with the rest and so long as no partition takes place it is difficult for any coparcener to predicate the share which he might receive; (iv) that as a result of such co ownership the possession and enjoyment of the property is common; (v) that there can be no alienation of the property without the concurrence of the other copar ceners unless it be for legal necessity and (vi) that the interest of a deceased member lapses on his death and merges in the coparcenary property.
Applying these tests to the interest of a Hindu widow who has been introduced into a coparcenary by virtue of the Act of 1937, it will be seen, that short of the first condition she possesses all the necessary indicia of a coparcenary interest.
The fact that before the Act of 1956 she had the characteristic of a widow estate in her interest in the property does not detract any the less from this position.
Therefore, though a Hindu widow cannot be a coparcener she has conarcenary interest and is also a member of the coparcenary by virtue of the rights conferred on her under the Act of 1937.
[731 F H, 732 A B D] State Bank of India vs Ghamandi Ram (dead) through Shri Gurbax Rai 686 applied.
(6) If the widow has not chosen to exercise her right of partition, there no severenee of the Hindu coparcenary and on her death the interest of the widow merges in the copar cenary property or lapses to the other coparceners.
Parappagari Parappa alias Harmmanthappa and Anr.
vs Parappagari Nagaman and Ors.
ILR 1954 Madras 183; S.T. Sabujpari and Anr.
vs Satrughan Isser and Ors.
AIR 1958 Patna 405, 410 and Mst.
Khatrant Kuer vs Smt.
Tapeskwari Kuer AIR 1964 Pat 261, approved.
(7) It was not the intent of the legislature which was folly aware of the statutory interest conferred on a Hindu widow by virtue of the Act of 1937 and the incidents thereof that though a Hindu widow has got the same interest as her husband in the Hindu coparcenary and has also the right to demand 723 partition and her interest is a fluctuating one would lapse to the other coparceners in case of her death without seek ing partition in the same manner as that of other coparcen ers, yet it should be exempt from estate duty.
In the instant case, Smt.
Alladi was a member of the Hindu coparce nary, her interest was undoubtedly a coparcenary interest which lapsed on her death and merged into the coparcenary.
It was clearly capable of valuation, it being covered by section 39 of the Act.
The High Court was in error in basing its decision on the Arunachalam Chettiar 's case and also in Gartside 's case ignoring the decisions of this Court and also the peculiar and special provisions of the Act.
A C] Attorney General of Ceylon vs Arunchalam Chettiar 34 ITR (E.D.) 20 and Gattside vs Inland Revenue Commissioners ; ITR 663 (H.L.) held inapplicable.
(8) It is wrong to contend that the widow could not be treated either as a member of the Hindu coparcenary or as having been conferred coparcenary interest in the property.
Even though the widow is not a coparcener in the strictly legal sense of the term, the interest which she has is the same interest as her husband and that is the coparcenary interest with the only limitation placed on her by section 3(3) of the Act of 1937, namely, that her interest would be limited interest, of a Hindu widow.
In the instant case, Smt.
Alladi possessed a coparcenary interest which lapsed on her death and merged into the coparcenary and was clearly covered by the inclusive part of sub section
(1) of section 7 and under section 39, the value of the benefit accruing or arising from the cesser of the coparcenary interest was to be deter mined by taking the principal value of the share and the joint family property which would have been allotted to her had there been partition immediately before her death.
The present case squarely falls within the ambit of section 7(1) latter part and sub section
(2) of section 7 of the Act which at tracts section 39.
By reason of the inclusive part of sub a.
(1) of section 7 it must be taken to have passed on her death and was hence exigible to estate duty.
[733 D G] (9) When the phraseology of a particular section of the statute takes within its sweep the transaction which is taxable, it is not for the court to strain and stress the language of the section so as to enable the tax payer to escape the tax.
The legislative intent reflected in the Act of 1937 and , must be given full effect to.
[733 H, 734 A]
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3812.txt
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Civil Appeal No. 533 of 1979.
From the judgment and order dated 2nd January, 1979 of the High Court of Kerala in original Petition No. 4935 of 1974 D. and Special Leave Petition No. 81 OF 1971.
From the judgment and order dated the 27th July, 1971 of the Kerala High Court in O.P. No. 4706 of 1969.
T.S. Krishnamoorthy Iyer, C.J. Balakrishnan, K Prabhakaran, P. Parameswaran and A.S. Nambiar for the appellant in C.A. No. 533/79.
P. Govindan Nair, Mrs. Baby Krishnan, K.R. Nambiar and K.M.K Nair for the respondent in C.A. No. 533/79.
S.B. Sahariya and V.B. Sahariya for the petitioner in S.L.P. No. 81/72.
The Judgment of the Court was delivered by SEN, J.
This appeal.
by special leave, is directed against a judgment of the Kerala High Court by which the High Court dismissed the writ petition of the appellants who are manufacturers of medicinal and toilet preparations containing alcohol and upholding the constitutional validity of sections 12A, 12B, 14(e) and (f) and 68A of the Abkari Act, 1077 (1 of 1077) (hereinafter called 'the Act '), introduced by the Abkari (Amendment) Act, 1967 (10 of 1967), and rr. 13 and 16 of the Kerala Rectified Spirit Rules, 1972.
The main question in the appeal is as to the legislative competence of the State to enact a law relating to medicinal and toilet preparations containing alcohol under Entry 8, List II of the Seventh Schedule to the Constitution.
The appellants, by virtue of a licence in Form 25 granted under the and a licence in Form Ll granted under the (hereinafter referred to as 'the Central Act ') are entitled to manufacture the drugs specified therein.
They filed a writ petition in the High Court complaining that they were entitled to the supply of alcohol free of duty for the manufacture of their medicinal and toilet 525 preparations under r. 21 of the Medicinal and Toilet Preparations A (Excise Duties) Rules, 1956 (hereinafter referred to as 'the Central Rules '), and r. 8 of the Kerala Rectified Spirit Rules, 1972, and challenged the validity of the impugned provisions mainly on the ground that the State Legislature has no power to enact the law relating to medicinal and toilet preparations as the topic of legislation is within the exclusive domain of Parliament under Entry 84, List I of the Seventh Schedule to the Constitution.
The High Court held that there was no conflict between the impugned provisions and the Central law as they dealt with different subjects.
The impugned provisions, as introduced by the Abkari Amendment) Act, 1967, in so far as they are relevant, are as follows: Section 12A reads: 12A.
No preparation to which liquor or intoxicating drug is added during the process of its manufacture or in which alcohol is self generated during such process shall be manufactured in excess of the quantity specified by the Commissioner: Provided that in specifying the quantity of a medicinal preparation, the Commissioner shall have due regard to the total requirement of that preparation for consumption or use in the State.
Section 12B provides: 12B. (1) No person shall utilise liquor or intoxicating drug in the manufacture of any preparation, in excess of the quantity specified by the Commissioner and except under and in accordance with the terms and conditions of a licence granted by the Commissioner in that behalf: G Provided that where such preparation is a medicinal preparation, Commissioner shall, in specifying the quantity of liquor or intoxicating drug have due regard to the total requirement of such medicinal preparation for consumption or use in the State.
526 Section 14 provides: 14.
The Commissioner may, with the previous approval of the Government . . . (d) prescribe the mode of supervision that may be necessary in a . manufactory where preparations containing liquor or intoxicating drugs are manufactured, to ensure the proper collection of duties, taxes and other dues payable under this Act or the proper utilisation of liquor or intoxicating drugs; (e) prescribe the size and nature of the establishment necessary for such supervision and the cost of the establishment and other incidental charges in connection with such supervision to be realised from the licensees: and (f) prescribe the allowance for wastage of alcohol that may occur in (i) . . (ii) the process of manufacture of any preparation containing alcohol; and (iii) . .
Section 68A provides that the Government shall appoint an Expert Committee consisting of the Drugs Controller, the Chemical Examiner to the Government, two representatives each one of them shall be a non official, of the Allopathic, Indigenous and Homoeopathic systems of medicine appointed by the Government, and an officer of the Excise Department not below the rank of Deputy Commissioner; and the Committee shall advise the Commissioner (a) as to whether a medicinal preparation is a bona fide medical preparation or not; and (b) as to the total requirements of medicinal preparations containing liquor or intoxicating drugs or in which alcohol is self generated during the process of their manufacture, for the whole of the State during one year.
Before this Court the constitutional validity of the impugned provisions was mainly challenged on these grounds, namely: (I) The State Legislature had no legislative competence to enact the impugned 527 provisions because the field was occupied by the provisions of the A (the Central Act) and the Medicinal and Toilet Preparations (Excise Duties ) Rules, 1956 (the Central Rules), and alternatively, the impugned provisions are violative of the fundamental right guaranteed in article 19(1) (g) of the Constitution.
(2) The Parliament having made a declaration in section 2 of the Industries (Development and Regulation) Act, 1951, declaring "Drugs and Pharmaceuticals" to be a scheduled industry, being item 22 of the First Schedule thereof, the power of the State Legislature to make a law in respect of medicinal and toilet preparations containing alcohol is taken away.
(3) The provisions made in section 14(e) of the Act for the collection of supervisory charges was clearly invalid in as much as (a) they are in conflict with r. 45 of the Central Rules, and (b) they could not be sustained as a fee as there was no quid pro quo.
(4) Rule 13 of the Kerala Rectified Spirit Rules, 1972, providing for the levy of excise duty as excess wastage of alcohol in the manufacture of medicinal and toilet preparations cannot be supported in terms of the charging provision contained in section 17 of the Act.
We cannot accept any of these contentions With regard to the first ground, it was submitted that the conferral of power on the Commissioner under section 12A of the Act to restrict the quantity of medicinal and toilet preparations to which liquor or intoxicating drug is added during the process of its manufacture with the requirement that the Commissioner shall, in specifying such quantity, have due regard to the total requirements of consumption or use in the State, the prohibition contained in section 12B of the Act that no person shall utilise liquor or intoxicating drug in the manufacture of any preparation, in excess of the quantity so specified by the Commissioner and the condition that no person shall manufacture any such preparations except under and in accordance with the terms and conditions of a licence granted by him, is clearly contrary to the general scheme of the Central law and in particular, rr. 18 and 21 of the Central Rules.
In this respect, it was said that under r. 18 of the Central Rules, rectified spirit ordinarily had to be supplied to a manufacturer from a distillery or a spirit warehouse of the State in which the manufactory is situate, and the manufacturer was not precluded from obtaining his requirements of rectified spirit from sources outside the State.
Under r. 21, rectified spirit had to be issued without previous payment of duty for the manufacture of medicinal and toilet preparations containing alcohol subject to the condition that 528 manufacturer enters into a bond in Form Bl with sufficient security as laid down in r. 96, towards due payment of duty and observance of the rules.
It is submitted that the State Legislature has no power to make any such law imposing restrictions on a person carrying on the business of manufacture and sale of medicinal and toilet preparations containing alcohol in as much as the matter relates to an occupied field.
There is no merit in these contentions.
The enactment of the by Parliament under Entry 84, List I of the Seventh Schedule of the Constitution, or the framing of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 by the Central Government in exercise of their rule making power under section 19 of the Act, for the purpose of levying duties of excise on medicinal and toilet preparations containing alcohol etc., do not prevent the State Legislature from making a law under Entry 8, List II of the Seventh Schedule to the Constitution with respect to 'intoxicating liquors ', or a law under Entry 51, List II for levying excise duties on alcoholic liquor for human consumption.
In order to appreciate the contention regarding the applicability of the doctrine of 'occupied field ', it is necessary to examine the scheme of both the enactments.
The scheme of the Act, as reflected in the preamble, is that it is an Act "to consolidate and amend the law relating to the import, export, transport, manufacture, sale and possession of intoxicating liquor and all intoxicating drugs in the State of Kerala".
It is not necessary to set out all the provisions of the Act in question, but reference may be made to the definitions of expressions 'spirit ', 'liquor ', 'country liquor ', 'foreign liquor and 'intoxicating liquor ' defined in sections 3(9), (10), (12), (13) and (14).
The expression 'liquor ' as defined in section 3(10) reads: 3(10). 'Liquor ' includes spirits of wine, methylated spirits, spirits, wine, toddy, beer, and all liquid consisting of or containing alcohol.
Section 12(1) provides: 12(1).
No liquor or intoxicating drug shall be manufactured. except under the authority and subject to the terms and conditions of licence granted by the Commissioner in that behalf, or under the provisions of section 21, 529 Section 15 provides: 15(1).
No liquor or intoxicating drug shall be sold with out a licence from the Commissioner, provided that a person having the right to the toddy drawn from any tree may sell the same without a licence to a person licensed to manufacture or sell toddy under this Act.
B Section 17 provides: 17.
A duty of excise or luxury tax or both shall, if the Government so direct, be levied on all liquor and intoxicating drugs: . . . (f) issued from a distillery, brewery, winery or other manufactory or warehouse licensed or established under section 21 or section 14; or The Act is clearly relatable to the State 's power to make a law on the topics of legislation covered by Entries 8 and 51, List II of the Seventh Schedule to the Constitution which read as under: 8.
Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors.
Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India: (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry.
The legislative history of the Central Act is well known.
Under Entry 40, List II of the Seventh Schedule to the Government of 530 India Act, 1935, medicinal and toilet preparations containing alcohol etc., were subjected to Provincial excise duties.
Under the Constitution, the entry relating to the excise duty on medicinal and toilet preparations containing alcohol was transferred to the Union List.
In the light of experience gained, there was necessity to achieve a synthesis from a vast body of existing rules and regulations in force in the States having regard to the sole object of the measure, namely, to bring about uniform treatment in excise matters.
This was a highly complicated subject because, firstly, the excise duty was to be collected and retained by the State Governments, and, secondly, a certain amount of flexibility in statutory operations was necessary if spurious medicines were not to defeat the policy of prohibition which is one of the Directive Principles of State Policy under article 47 of the Constitution.
Some of the provisions of the Central Act are so designed as to lay down only broad principles.
Matters of detail, such as classification of the preparations as capable or not capable of being used as ordinary alcoholic beverages, regulation for the purpose of the Act, of production, storage and movement, were left to be regulated by rules.
Parliament accordingly enacted the , to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol.
The Act is relatable to Entry 84, List I of the Seventh Schedule to the Constitution, which reads: 84.
Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry.
The scheme of the Central Act is to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol etc.
The Act is entitled as "An Act to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol, opium.
Indian hemp or other narcotic drug or narcotic".
Section 2 is the definition Section and 531 the expression 'dutiable goods ' as defined in section 2(c) takes in medicinal and toilet preparations specified in the Schedule.
The expression 'medicinal preparation ' is defined in section 2(g) as: 2(g). 'medicinal preparation ' includes all drugs which are a remedy or prescription prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals; It is not necessary to refer to the definition of toilet ' preparation in section 2(k) as it is not relevant for the present purpose.
Section 3 is the charging section which levies duties of excise on all 'dutiable goods ' manufactured in India and also lays down the mode of collection of the said duties.
Section 3 (1) reads: 3(1).
There shall be levied duties of excise, at the rates specified in the Schedule, on all dutiable goods manufactured in India.
Section 6 prohibits any person from engaging in the production or manufacture of any dutiable goods etc., except under the authority and in accordance with the terms and conditions of the licence granted under the Central Act.
Section 19 (1) empowers the Central Government to make rules to carry out the purposes of the Act, and sub section
(2) thereof specifies the various matters in respect of which such rules may be made.
Section 21 provides for the repeal and savings.
The Schedule to the Act contains a description of 'dutiable goods ' and the rates of duty payable thereon.
In exercise of the powers conferred by section 19 (1) of the Central Act, the central Government framed the Central Rules which practically deal with all the facets of manufacture and production of medicinal and toilet preparations, as required in cls.
(i) to (xxi) of sub section
(2) thereof, with the ultimate object of providing a machinery for collection of duty on the said preparations.
Chapter IV of the Central Rules deals with 'Manufacture '.
Rule 18 in Chapter IV provides that rectified spirit shall ordinarily be supplied to a manufacturer from a distillery.
Of the State in which the manufactory is situated.
It further provides that the manufacturer is not precluded from obtaining his requirements of rectified spirit from sources outside the State.
Rule 21 provides that rectified spirit H shall be issued without previous payment of duty to a manufacturer of medicinal and toilet preparations containing alcohol.
Rule 33 532 provides for taking of samples of the manufactured product for analysis for determining the strength of alcohol and medicaments.
Rule 38 provides for wastage in manufacture.
Rule 45(1) enjoins that the officer in charge shall exercise such supervision as is required to ensure that alcohol issued for a certain preparation is added to the materials which go to make that preparation and that no portion of such alcohol is diverted to other purposes.
These rules are intended and meant to carry out the main object of the Central Act, i.e. to levy and collect duties of excise on medicinal and toilet preparations containing alcohol etc.
It is the charging section which gives the true index to the a real character of a tax.
The nature of the machinery by which the tax is to be assessed is not of assistance, except in so far as it may throw light on the general character of the tax.
The charging section in section 3 of the Central Act clearly shows that it does not seek to levy a duty of excise on alcoholic liquor for human consumption falling within Entry 51, List II of the Seventh Schedule, but to levy a duty of excise on medicinal and toilet preparations containing alcohol etc.
The topic of legislation under Entry 84, List I of the Seventh Schedule is not 'duties of excise on alcoholic liquors for human consumption ' but 'duties of excise on medicinal and toilet preparations containing alcohol etc '.
There can be little doubt that the Central Act must, in pith and substance, be attributed to Entry 84, List I.
In determining whether an enactment is a legislation 'with respect to ' a given power, what is relevant is not the consequences of the enactment on the subject matter or whether it affects it, but whether, in its pith and substance, it is a law upon the subject matter in question.
The Central and the State Legislations operate on two different and distinct fields.
The Central Rules, to some extent, trench upon the field reserved to the State Legislature, but that is merely incidental to the main purpose, that is, to levy duties of excise on medicinal and toilet preparations containing alcohol.
Similarly, some of the impugned provisions may be almost similar to some of the provisions of the Central Rules, but that that does not imply that the State Legislature had no competence to enact the provisions.
It is sufficient to say upon the first ground that the impugned legislation is confined to 'intoxicating liquor ', that is, to ensure proper utilisation of rectified spirit in the manufacture of medicinal and toilet preparations and, therefore, within the powers granted 533 to the State Legislature under Entry 8, List II.
It further seeks to regulate the manufacture of bona fide medicinal preparations and prevent misuse of rectified spirit in the manufacture of spurious medicinal and toilet preparations containing alcohol capable of being used as ordinary alcoholic beverages.
It was suggested that the provisions are identical with the provisions contained in the Central Rules and, in particular, to rule 45(1) and, therefore, the legislation is in the occupied field.
The answer is that the enumeration of 'intoxicating liquor ' in Entry 8, List II, confers exclusive power to the State to legislate in respect of medicinal and toilet preparations containing alcohol.
In Prafulla Kumar Mukherjee and Ors.
vs Bank of Commerce Ltd., Khulna(1) the Privy Council in dealing with the question or distribution of powers laid down the tests that in order to see whether an Act is in respect of a particular subject, one must look to "its true nature and character"; "its pith and substance".
Lord Porter, in delivering the judgment of the Judicial Committee, observed: "As Sir Maurice Gwyer, C.J. said in the Subramanyam Chettiar Case: ' It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely inter twined that blind observance to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere.
Hence the rule which has been evolved by the Judicial Committee, whereby the impugned statute is examined to ascertain its 'pith and substance ', or 'its true nature and character ', for the purpose of determining whether it is legislation with respect to matters in this list or in that" .
The doctrine of 'pith and substance ' evolved by the Privy Council has been followed by this Court throughout.
Thus, in State of Bombay vs F. N. Balsara(2) Fazl Ali, J., followed the decision of the Judicial Committee, reiterated: 534 "If the Act, when so viewed, substantially falls within the powers expressly conferred upon the Legislature which enacted it, then it cannot be held to be invalid, merely because it incidentally encroaches on matters which have been assigned to another Legislature.
" In such matters of seeming conflict or encroachment of jurisdictions, what is more important is the true nature and character of the legislation.
A necessary corollary of the doctrine of pith and substance is that once it is found that in pith and substance the impugned Act is a law on a permitted field, any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact the law.
The main thrust of the argument is the decision of this Court in Hyderabad Chemical and Pharmaceutical Works Ltd. vs State of n Andhra Pradesh and Ors(1) which, we are afraid, is clearly distinguishable.
There the Court was concerned with the question whether r. 36 of the Medical Preparations and Spirituous Rules, 1345 Fasli, framed under the Hyderabad Abkari Act, 136 Fasli which provided that "the expenses of the establishment for the supervision of the work shall be borne by the pharmaceutical laboratory (licensee) as per the decision of the Commissioner of Excise", was still enforceable having regard to section 21 of the Central Act and r. 143 of the Central Rules.
It was held that the effect of section 21 of the Central Act was that so far as the Hyderabad Act applied to the use of alcohol in the manufacture of medicinal and toilet preparations, the Act must be deemed to have been repealed and, therefore, r. 36 could not survive.
In that case, the Court was concerned with the levy of supervisory charge at the stage of manufacture of medicinal and toilet preparations, and not with the levy of supervisory charges at the stage of the supply and utilisation of rectified spirit in the manufacture of medicinal and toilet preparations.
This is clear from an observation at p. 380 of the Report to the effect: The supervisory staff which has to be paid for under r. 36 therefore is meant for the supervision of the manufacture of medicinal preparations and it is for that purpose only that expenses have to borne by the laboratory con 535 cerned.
The purpose of the rule therefore is clearly covered by the Act and the Rules framed thereunder and it cannot survive the Act and the rules in view of section 21 of the Act and r 143 of the 1956 Rules, and the proviso to s 21 cannot be availed of by the State.
While repelling the contention that r. 36 could still be good law as it was meant to carry out the general law relating to alcohol and intoxicating drugs, the Court pointed out that the Central Rules make no provision for recovery of supervisory charges, the intention being that the duty under the Act would cover all expenses for enforcing it and observed (1) We are of opinion that there is no force hl this contention either.
In the first place, as we have already indicated, the main object of the supervisory staff mentioned in r. 36 is to supervise the manufacture of medicinal preparations.
In that connection the supervisory staff will certainly see that the alcohol supplied is used for the purpose for which it is supplied and it is not used in any other manner.
Rule 36 is only concerned with seeing that the manufacture of medicinal preparations is made properly and is done under the supervision of the establishment attached to each laboratory; and it is only incidentally that in that connection the establishment is also to see that the alcohol supplied is not used otherwise than for the purpose of manufacture.
Further, the Central Act, which the Court was considering, was a fiscal measure.
The whole object and purpose of that Act is to levy a duty of excise on medicinal and toilet preparations containing alcohol.
The Central Rules have mainly been framed to achieve this object.
Rule 45(1) on which reliance was placed, reads: 45(1).
The officer in charge shall exercise such supervision as is required to ensure that alcohol issued for a certain preparation is added to the materials which go to make that preparation and that no portion of such alcohol is diverted to other purposes.
The provision is merely incidental to the main purpose, i.e., collection of excise duty on medicinal and toilet preparations containing alcohol.
536 There can be no doubt that the impugned Act is relatable to Entry 8, List II of the Seventh Schedule.
In Balsara 's case(1) the Court held that the expression 'liquor ' in Entry 31, List II of the Seventh Schedule to the Government of India Act, 1935, took within its sweep all liquids containing alcohol.
In dealing with the question, Fazal Ali, J. Observed: The framers of the Government of India Act, 1935, could not have been entirely ignorant of the accepted sense in which the word 'liquor ' has been used in the various excise Acts of this country and, accordingly I consider the appropriate conclusion to be that the word 'liquor ' covers not only those alcoholic liquids which are generally used for beverage purposes and produce intoxication, but also all liquids containing alcohol.
It may be that the latter meaning is not the meaning which is attributed to the word 'liquor ' in common parlance especially when that word is prefixed by the qualifying word 'intoxicating ', but in my opinion having regard to the numerous statutory definitions of that word, such a meaning could not have been intended to be excluded from the scope of the term 'intoxicating liquor ' as used in entry 31 of List II.
It is not disputed by the appellants that the impugned Act does not levy a duty of excise on medicinal and toilet preparations containing alcohol, but they contend that, whatever be the intention, the State Legislature had, in fact, encroached upon an occupied field.
The contention is, in our opinion, wholly misconceived.
The main purpose of the impugned Act is to consolidate the law relating to manufacture, sale and possession of intoxicating liquor and intoxicating drugs which squarely falls under Entry 8, List II of the Seventh Schedule, while the main object of the Central Act is to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol falling under Entry 84, List I of the Seventh Schedule.
When the frame work of the two enactments is examined, it would be apparent that the Central and the State Legislations operate in two different and distinct fields.
In the matter of making rules or detailed provisions to achieve the object and purpose of a legislation, there may be some provisions seemingly overlapping or encroaching upon the forbidden field, but 537 that does not warrant the striking down the impugned Act as ultra virus the State Legislature.
The alternative contention that the impugned provisions are violative of article 19(1)(g) of the Constitution, is wholly devoid of any merit.
No citizen has any fundamental right guaranteed under article 19(1)(g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors.
The power to legislate with regard to intoxicating liquor carries with it the power to regulate the manufacture, sale aud possession of medicinal and toilet preparations containing alcohol, not for the purpose of interfering with the right of citizens in the matter of consumption or use for bona fide medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on under the guise of medicinal and toilet preparations.
It was within the competence of the State Legislature to prevent the noxious use of such preparations, i.e. their use as a substitute for alcoholic beverages.
The general test for determining what medicinal preparations containing alcohol are capable of being misused and, therefore, must be considered intoxicating within the meaning of the term 'intoxicating liquor ', is the capability of the article in question tor use as a beverage.
The impugned provisions have been enacted to ensure that rectified spirit is not misused under the pretext of being used for medicinal and toilet preparations containing alcohol.
Such regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health.
Section 12A of the Act provides that no preparation to which liquor or intoxicating drug is added during the process of its manufacture or in which alcohol is self generated during such process shall be manufactured in excess of the quantity specified by the Commissioner: Provided that in specifying the quantity of a medicinal preparation, the Commissioner shall have due regard to the total requirement of that preparation for consumption or use in the State.
Section 12 provides that no person shall utilise liquor or intoxicating drug in the manufacture of any preparation, in excess of the quantity specified by the Commissioner and except under and in accordance with the terms and conditions of a licence granted by the Commissioner in that behalf: Provided that where such preparation is a medicinal preparation, the Commissioner shall, in 538 specifying the quantity of liquor or intoxicating drug, have due regard to the total requirement of such medicinal preparation for consumption or use in the State.
Now, section 68A provides for the Government to appoint an Expert Committee to advise the Commissioner as to whether a medicinal preparation is a bona fide medicinal preparation or not and as to the total requirement of the medicinal preparations containing alcohol or intoxicating drug or in which alcohol is self generated during the process of their manufacture for the whole of the State during one year.
The challenge to the validity of sections 12A and of the Act is mainly based on the words "shall have due regard to the total requirement of such medicinal preparations for consumption or use in the State "occurring in the provisions thereof.
The submission is that the quantity of medicinal preparations manufactured by the appellants would be restricted looking to the total requirements of such preparations for consumption or use in the State.
The medicines are in demand not only in the State, but throughout the country and to limit consideration by the Commissioner in granting a licence only to the requirements of preparations for consumption or use in the State, would be an unreasonable restriction on the fundamental right guaranteed under article 19(1) (g) of the Constitution.
We do not think that the impugned provisions contained in sections 12A and 12B have that effect.
All that the provisions ordain is that the Commissioner shall 'have regard to the total requirements for use and consumption within the State '.
The expression 'shall have regard to ' had been subject to judicial interpretation in Ryots of Garabandho and other villages vs Zamindar of Parlakimidi and Anr.(1) It only means 'take into consideration '.
Understood in the light of this judicial exposition, the Commissioner only has to take into account the total requirements within the State as an element which should enter the assessment and no more.
As a necessary corollary, it follows that in fixing the quantity of medicinal and toilet preparations to which alcohol is added or in which it is self generated, normally the Commissioner shall have regard to larger requirements of the manufacturer, if the manufactured product has a market outside the State.
As a corollary, it must result in the consequence that in the case of medicinal and toilet preparations which are capable of being misused as alcoholic beverages, or which are not bona fide medicinal preparations in the opinion of the Expert Committee, the Commissioner may totally prohibit the manufacture of such pre 539 parations.
The restrictions imposed by section 12B as to the alcoholic content of medicinal and toilet preparations and the requirement that they shall not be manufactured except and in accordance with the terms and conditions of a licence granted by him, are nothing but reasonable restrictions within the meaning of article 19(6).
The impugned provisions, therefore, cannot be struck down as offending article (1) (g) of the Constitution.
As regards the second ground, the contention that Parliament having made the requisite declaration in section 2 of the Industries (Development and Regulation) Act, 1951 declaring "drugs and pharmaceuticals" to be a scheduled industry, being item 22 of Schedule I thereof, the State Legislature was denuded of its competence to enact the impugned provisions under Entry 8, List II, cannot be accepted.
In Ishwari Khetan Sugar Mills (P) Ltd. vs State of Uttar Pradesh(1), this Court held that the legislative power of the States under Entry 24, List II is eroded only to the extent of control assumed by the Union by reason of a declaration made by Parliament in respect of a 'declared industry ' as spelt out by a legislative enactment under Entry 52, List I, and the field occupied by such enactments is the measure of erosion.
But subject to such erosion, on the remainder the State Legislature will still have power to legislate in respect of a declared industry without, in any way, trenching upon the occupied field.
Now, the impugned Act, in pith and substance, is not a legislation under Entry 24, List II and, therefore, the question really does not arise.
The third ground that the levy of supervisory charges under s.14(e) of the Act and r.16(4) of the Kerala Rectified Spirit Rules, 1972 being in conflict with r. 45(1) of the Central Rules, is constitutionally impermissible, cannot be accepted.
The submission rests on a misconception as to the scope and effect of the decision of this Court in the Hyderabad Chemicals and Pharmaceutical 's case (supra).
As we have already explained, the Court in that case was concerned with the levy of supervisory charges at the stage of manufacture of medicinal and toilet preparations and not with the levy of supervisory charges at the stage of supply and utilisation of rectified spirit in the manufacture of medicinal and toilet preparations.
There can be supervision at both the stages.
Merely because the Central Rules made no provision for realisation of supervisory charges at the stage of manufacture of medicinal and toilet preparations, does not imply 540 that the State has no power to prescribe the mode of supervision in a manufactory where preparations containing intoxicating liquor or intoxicating drugs are manufactured, or to ensure proper collection of duties, taxes and other dues payable under the Act, or to the proper utilisation of liquor or intoxicating drug.
The provision contained in section 14(e) of the Act is clearly relatable to the State 's power to make a law under entry 8, read with Entry 51(a), List II of the Seventh Schedule.
It necessarily follows that section 14(e) of the Act is valid in so far as it provides that the Commissioner may prescribe the size and nature of the establishment for such supervision and the cost of establishment and other incidental charges in connection with such supervision to be realised from the licensee.
There is no f ' warrant for the submission that the framing of such an incidental provision like r. 45(1) of the Central Rules takes away the State 's power to recover supervisory charges from the licensee.
There still remains the question whether the levy of supervisory charges must be regarded as a fee and, therefore, cannot be sustained, there being no quid pro quo.
In support of the contention, reliance is placed on the decision in Indian Mica Micanite Industries vs The State of Bihar and Ors.(1) The distinction between a 'tax ' and a 'fee ' is well settled.
The question came up for consideration for the first time in this Court in the Commissioner, H.R.E. Madras vs Lakshmindra Thirtha Swamiar of Shirur Mutt.(2) Therein, the Court speaking through Mukherjee, J. quoted with approval the definition of 'tax ' given by Latham, C.J. in Matthews vs Chickoory Marketing Board(3).
In that case, the learned Chief Justice observed: A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered.
Dealing with the distinction between 'tax ' and 'fee ' the learned Judge observed :(4) It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without 541 the tax payer 's consent and the payment is enforced by law.
A The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax.
This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State.
As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the tax payer and the public authority.
Another feature of taxation is that as it is a part of the common burden, the quantum of imposition upon the tax payer depends gene rally upon his capacity to pay.
Coming now to fees, 'a fee ' is generally defined to be a charge for a special service rendered to individuals by some Governmental agency.
The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed.
Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay.
These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all cases. .
If, as we hold, a fee is regarded as a sort of return or consideration for services rendered, it is absolutely necessary that the levy of fees should on the face of the legislative provision, be co related to the expenses incurred by Government in rendering the services.
The same view was reiterated by this Court in Mahant Sri Jagannath Ramanuj Das vs The State of Orissa(1) and in Ratilal Pannchand Gandhi vs The State of Bombay.
(2) 'Fees ' are the amounts paid for a privilege, and are not an obligation, but the payment is voluntary.
Fees are distinguished 542 from taxes in that the chief purpose of a tax is to raise funds for the support of the Government or for a public purpose, while a fee may be charged for the privilege or benefit conferred, or service rendered or to meet the expenses connected therewith.
Thus, fees are nothing but payment for some special privilege granted or service rendered.
Taxes and taxation are, therefore, distinguishable from various other contributions, charges, or burdens paid or imposed for particular purposes and under particular powers or functions of the Government.
It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence, are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure for rendering the service is not by itself decisive.
That is because the Constitution did not contemplate it to be an essential element of a fee that it should be credited to J a separate fund and not to the consolidated fund.
It is also increasingly realised that the element of quid pro quo stricto senso is not always a sine qua non of a fee.
It is needless to stress that the element of quid pro quo is not necessarily absent in every tax.
We may, Din this connection, refer with profit to the observations of Seervai in his Costitutional Law, to the effect: (1) It is submitted that as recognised by Mukherjee, J. him self, the fact that the collections are not merged in the consolidated fund, is not conclusive, though that fact may enable a court to say that very important feature of a fee was present.
But the attention of the Supreme Court does not appear to have been called to article 266 which requires that all revenues of the Union of India and the States must go into their respective consolidated funds and all other public moneys must go into the respective public accounts of the Union and the States.
It is submitted that if the services rendered are not by a separate body like the Charity Com missioner, but by a government department, the character of imposition would not change because under article 266 the moneys collected for the services must be credited to the consolidated fund.
It may be mentioned that the element of quid pro quo is not necessarily absent in every tax.
(emphasis added) Our attention has been drawn to the observations in Kewal Krishan Puri & Anr vs State of Punjab and Ors.
(2) 543 The element of quid pro quo must be established A between the payer of the fee and the authority charging it.
It may not be exact equivalent of the fee by a mathematical precision, yet, by and large, or predominantly, the authority collecting the fee must show that the service which they are rendering in lieu of fee is for some special benefit of the payer of the fee.
To our mind, these observations are not intended and meant as laying down a rule of universal application.
The Court was considering the rate of a market fee, and the question was whether there was any justification for the increase in rate from Rs. 2/ per every hundred rupees to Rs. 31 .
There was no material placed to justify the increase in rate of the fee and, therefore, it partook the nature of a tax.
It seems that the Court proceeded on the assumption that the element of quid pro quo must always be present in a fee.
The traditional concept of quid pro quo is undergoing a transformation.
It seems obvious that.
in the case of a manufacturer of medicinal and toilet preparations containing alcohol in a bonded manufactory, the imposition of the cost of establishment under section 14(e) of the Act calculated in accordance with the nature and extent of that establishment could not be said to be an imposition of a duty of excise, but is a price for his franchise to carry on the business.
If an exaction is to be classed as a duty of excise, it must, of course, be a tax; its essential distinguishing feature is that it is a tax imposed "upon" or "in respect of ' or "in relation to" goods: Matthews vs Chickory Marketing Board (l).
The exaction is in truth, as it purports to be, simply a fee payable as a condition of a right to carry on a business.
No one has a fundamental right to the supply of rectified spirit which is an intoxicating liquor.
It is up to the State to control and regulate its supply from a distillery or a spirit warehouse in the State under and in accordance with terms and conditions of a licence or permit its import from outside by grant of a privilege and charge a fee for the same.
A fee may be charged for the privilege or benefit conferred, or service rendered, or to meet the expenses connected therewith.
A fee may be levided to meet the cost of supervision and maybe, something more.
It is in consideration for the privilege, licence or service.
The State is undoubtedly entitled to levy H 544 excise duty on the rectified spirit issued from a distillery under section 17(f) of the Act read with r. 13 of the Kerala Rectified Spirit Rules, 1972, but it refrained from making any such levy by reason of r. 21 of the Central Rules and has, therefore, by proviso to r. 8, allowed a manufacturer of medicinal and toilet preparations to draw rectified spirit from a distillery without payment of duty.
It is thus a privilege conferred on the licensee.
To claim the privilege he must comply with the conditions prescribed.
If one of the condition is the payment of cost of establishment under section 14(e) of the Act read with r. 16(4) of the Central Rules, the manufacturer of such preparations must necessarily bear the burden as the licensee gets services in return in lieu of such payment.
The decision in the Indian Mica Micanite Industries case (supra) on which reliance is placed furnishes a complete answer to the appellant 's contention.
The Court there was concerned with the validity of supervisory charges of the excise establishment from a consumer and not from the manufacturer under the Bihar and Orissa Excise Act, 1915.
It was clearly indicated that the burden of the cost of supervisory charges must fall on the manufacturer and not on the consumer because there was no co relationship between the levy of fee and the services rendered.
Further, though there was a double duty on the manufacturer as well as the consumer, the Court did not strike down the levy on the consumer because it was observed that the question of co relationship between the services rendered and the fee levied is essentially a question of fact.
In dealing with the question whether the impugned levy could be justified as a fee on the basis of the law as enunciated by this Court, it was observed : (1) According to the finding of the High Court the only services rendered by the Government to the appellant and to other similar licensees is that the Excise Department have to maintain an elaborate staff not only for the purposes of ensuring that denaturing is done properly by the manufacturer but also for the purpose of seeing that the subsequent possession of.
denatured spirit in the hands either of a wholesale dealer or retail seller or any other licensee or permit holder is not misused by coverting the denatured spirit into alcohol fit for human consumption and thereby 545 evade payment of heavy duty.
So far as the manufacturing A process is concerned, the appellant or other similar licensees have nothing to do with it.
They are only the purchasers of manufactured denatured spirit.
Hence the cost of super vising the manufacturing process or any assistance rendered to the manufacturers cannot be recovered from the consumers like the appellant.
Further, under Rule 9 of the Board 's rules the actual cost of supervision of the manufacturing process by the Excise Department is required to be borne by the manufacturer, There cannot be a double levy in that regard.
(emphasis added) The Court then went into the question whether there was any corelationship between the services rendered and the fee levied and whether the levy in question was not disproportionate to the value of the services rendered by the State, and observed: D In the opinion of the High Court the subsequent transfer of denatured spirit and possession of the same in the hands of various persons such as whole sale dealer, retail dealer or other manufacturers also requires close and effective supervision because of the risk of the denatured spirit being converted into palatable liquor and thus evading heavy duty.
Assuming this conclusion to be correct, by doing so, the State is rendering no service to the consumer.
It is merely protecting its own rights.
Further in this case, the State which was in a position to place material before the Court to show what services had been rendered by it to the appellant and other similar licensees, the costs or at any rate the probable costs that can be said to have been incurred for rendering those services and the amount realised as fees has failed to do so.
On the side of the appellant, it is alleged that the State is collecting huge amounts as fees and that it is rendering little or no service in return.
The co relationship between the services rendered and the fee levied is essentially a question of fact.
Prima facie, the levy appears to be excessive even if the State can be said to be rendering some service to the licensees.
The State ought to be in possession of the material from which the co relationship between the levy and the services 546 rendered can be established at least in a general way.
But the State has not chosen to place those materials before the Court.
Therefore the levy under the impugned Rule can not be justified.
Nevertheless, the Court remitted the matter to the High Court with a direction that opportunity be given to the State to place material to show that the value of the services rendered has reasonable co relationship with the fee charged.
We fail to see how the decision in the Indian Mica Micanite case (supra) can be of any help to the appellants.
The portions extracted above clearly show that the levy of service charges on the manufacturer are valid.
There is a broad co relationship between the fee collected and the cost of the establishment.
Under section 14(e) of the Act it is provided that the Commissioner, with the previous approval of the Government, may prescribe the size and nature of the establishment necessary for supervision of a manufactory and the cost of the establishment and other incidental charges in connection with such supervision be realised from the licence.
There can be no doubt that the supervisory staff is deployed in a bonded manufactory by the Government for its own protection to prevent the leakage of revenue, but there is no denying the fact that a licensee undoubtedly receives a service in return.
The cost of the establishment levied under section 14(e) of the Act is to be collected from the licensee in the manner provided by r. 16(4) of the Kerala Rectified Spirit Rules, 1972, relevant part of which reads: (4) All the transactions in the spirit store shall be conducted only in the presence of an Excise officer not below the rank of an Excise Inspector.
Such officer shall be assisted by at least two Excise Guards.
The cost of establishment of such officer and the guards shall be payable by the licensee in advance in the first week of every month as per countersigned chalan to be obtained from such officer.
The rate at which the cost of establishment is to be paid by the licensee shall be fixed by the Commissioner from time to time and intimated to the licensee in writing There is admittedly no provision made in the Central Rules for the recover of supervisor charges, perhaps because as the Court 547 Observed in the Hyderabad Chemicals and Pharmaceutical 's case A (supra) it was felt that the duty on medicinal and toilet preparations containing alcohol would be sufficient to defray the cost of such supervision.
But the absence of such a provision in the Central Rules, as we have already indicated, does not deprive the State from making a provision in that behalf.
It is true that the supervisory charges are in the nature of a compulsory exaction from a licensee and the collections are not credited to a separate fund, but are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure incurred in rendering the service.
However, as observed in Government of Madras vs Zenith Lamp and Electricals Ltd. (1) followed in State of Rajasthan vs Sajjanlal Panjawat and Ors.
(2), that by itself is not decisive, by reason of article 266 of the Constitution.
lt is equally true that normally a fee is uniform and no account is taken of the paying capacity of the recipient of the service, but absence of uniformity will not make it a tax if co relationship is established (see Commissioner, H.R.E. Madras vs Lakshmindra Thirtha Swamiar of Shirur Mutt and Government of Madras vs Zenith Lamp and chemicals Ltd. supra).
The cost of supervisory charges can be sustained even if they are regarded as a fee for services rendered by the State or its instrumentalities.
The last ground on which the appellants took their stand is even less tenable.
It is urged that r. 13 of the Kerala Rectified Spirit Rules, 1972, providing for the levy of excise duty on excess wastage of alcohol in the manufacture of medicinal and toilet preparations cannot be supported in terms of the charging provision contained in section 17 of the Act.
Rule 13 reads as follows: 13(1) If the rectified spirit imported or purchased P under these rules is used for the manufacture of medicinal and toilet preparations which duty of excise is leviable under the (Central Act 16 of 1955), no duty shall be collected under the Abkari Act 1 of 1077 on so much quantity of alcohol, as is present in the finished product.
(2) The assessment of duty under the Medicinal and Toilet Preparations Excise Duties) Act, 1955 (Central Act 548 16 of 1955) being applicable only to the quantity of spirit existing in the finished product, all spirit wasted during the course of manufacture of any medicinal or toilet preparation shall be assessable to duty under the Abkari Act, 1 of 1077.
Provided that the Government may, in consultation with the Drugs Controller and the Chemical Examiner, by notification in the Gazette.
permit such allowance as they think fit for such wastages occurring during the manufacture.
No exception is taken to r. 13(1) which provides that no duty shall be collected under the Act on so much quantity of alcohol "as is present in the finished product".
The objection is to the validity of r. 13(2) in so far as it enables the levy of duty on excess wastage of alcohol.
We find it difficult to appreciate the contention that r. 13(2) cannot be supported in terms of the charging provision in section 17(f).
Rule 13(2) is nothing but a corollary of r. 13(1).
On a combined reading of section 17(f) and r. 8 read with the proviso thereof, no duty is chargeable on alcohol actually used in the manufacture of medicinal and toilet preparations.
The Government fully realised that some margin for wastage should be allowed and, therefore inserted the proviso to r. 13(1).
It provides that the Government may, in consultation with the Drugs Controller and the Chemical Examiner, by notification in the Gazette, permit such allowance as they think fit for such wastages occurring during the manufacture.
Beyond the permissible limit, the State has the right to levy a duty on excess wastage of alcohol, i.e. On alcohol not accounted for.
In the connected Special Leave Petition, the petitioner, P. Krishna Wariyar, Managing Trustee, Arya Vaidyasala, Kottakkal, who is engaged in the business of manufacture for sale of ayurvedic medicinal preparations, challenges the validity of sections 12A, 56A and 68A of the Act and rr. 5, 6 and 7 of the Kerala Spirituous Preparations Rules.
Apart from the question of legislative competence, two other grounds were raised: (1) the power to restrict the quantity of medicinal preparations to be manufactured, by the Commissioner under section 12 cannot be exercised in relation to ayurvedic preparations as alcohol is self generated in the process of manufac 549 ture; and (2) the impugned provisions offend against article 301 of the Constitution.
As regards the Rules, it was generally said that they constitute unreasonable restrictions on the fundamental right guaranteed under article 19(1) (g) of the Constitution.
None of these contentions can prevail.
It is to be observed that restriction imposed by section 12A of the Act as to the quantity of medicinal preparations to be manufactured relates not only to such preparations to which alcohol is added, but also to medicinal preparations in which alcohol is self generated.
There can be no doubt that ayurvedic asavas and aristhas which are capable of being misused as alcoholic beverages can come within the purview of the definition of 'liquor ' contained in section 3(10) of the Act being of the Spirituous Preparations (Control) Rules, 1969 liquids containing alcohol The contention that Note to r. 3(1) is an unreasonable restriction on the freedom of trade guaranteed under article 19(1) (g) of the Constitution has no substance.
It provides that unless otherwise declared by the Expert Committee, asavas and aristas and other preparations containing alcohal are deemed to be spurious if their self generated alcohol content exceeds 12% by volume.
It is a matter of common knowledge that such preparations are always likely to be misused as a substitute for alcoholic beverages and, therefore, the restriction imposed by section 12A is a reasonable restriction within the meaning of s 19(6) of the Constitution, So far as the contention based on article 301 of the constitution is concerned, it is urged that there is demand for the petitioner 's medicinal preparations not only in the State, but throughout the country and to limit the quantity to be manufactured, taking into account the requirements of the State alone, is but an abridgment on the freedom of inter State trade and commerce.
In our opinion, section 12A has no such effect.
As already stated, the expression 'shall have regard to ' as interpreted by the Judicial Committee in the Ryots of Garobandho 's case (supra), means 'shall take into consideration '.
All that the provision enjoins is that the Commissioner shall have regard to the total requirements for consumption and use in the State, while fixing the quantity of the medicinal preparations to be manufactured.
Furthermore, the challenge with regard to article 301 does not arise as, admittedly, the Bill was reserved for the assent of the President, and 550 is, therefore, protected by article 304(b) of the Constitution.
It is not disputed that the provisions are regulatory in nature and they impose reasonable restrictions on the freedom of trade.
For these reasons, both the Appeal and the Special Leave Petition must fail and are dismissed with costs.
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The appellants, who were manufacturers of medicinal and toilet preparations containing alcohol challenged the constitutional validity in their writ petitions under article 226 of the Constitution of the provisions of sections 12A, 12B, 14(e) and (f ), 56A and section 68A of the Kerala Abkari Act, 1967 (Act No. X of 1967) and Rules 13 and 16 of the Kerala Rectified Spirit Rules, 1973 and rr.
5, 6 and 7 of the Kerala Spiritious Preparations Rules, 1969 on the ground that the State Legislature had no power to enact a law relating to medicinal and toilet preparations as the topic of the legislation was within the exclusive domain of Parliament under Entry 84, List I of the Seventh Schedule of the Constitution and also on the ground that they were violative of article 19(1) (g) read with article 301 of the Constitution.
The High Court dismissed the writ petition holding that there was no conflict between the impugned provisions and the Central law, i.e., the or the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 framed thereunder as they dealt with different subjects.
The High Court further held that the impugned provisions do not offend against article 19(1) (g) or article 301 of the Constitution.
In the appeal and the special leave petition to this Court it was contended on behalf of the appellants (t) The State Legislature had no legislative competence 520 to enact the impugned provisions because the field was occupied by the provisions of The (The Central Act) and the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 (the Central Rules), and alternatively, the impugned provisions are violative of the fundamental right guaranteed in article 19(1) (g) of the Constitution.
(2) "Drugs and Pharmaceuticals" having been declared by Parliament under section 2 of the Industries Development and Regulation) Act, 1951 to be a scheduled industry, being item 22 of the First Schedule thereof, the power of the State Legislature to make a law in respect of medicinal and toilet preparations containing alcohol was taken away.
(3) The provisions made in section 14(e) of the Act for the collection of supervisory charges was clearly invalid in as much as (a) they are in conflict with r. 45 of the Central Rules, and (b) they could not be sustained as a fee as there was no quid pro quo.
(4) Rule 13 of the Kerala Rectified Spirit Rules, 1972, providing for the levy of excise duty as excess wastage of alcohol in the manufacture of medicinal and toilet preparations cannot be supported in terms of the charging provision contained in section 17 of the Act.
(S) The power to restrict the quantity of ayurvedic asavas and arishtas in which alcohol is self generated in the process of manufacture having regard to the total requirement of such medicinal preparations for consumption or use in the State is an unreasonable restriction on The fundamental right to carry on trade or business guaranteed under An.
19(1) (g) and was also violative of article 301 as there was demand for such medicinal preparations not only in The Slate but throughout the country.
Dismissing The Appeal and Special Leave Petition, ^ HELD: (l) The Central and State Acts operate in two separate and distinct fields and are not in conflict with each other.
While the main purpose of the impugned Act is to consolidate the law relating to manufacture, sale and possession of intoxicating liquors and intoxicating drugs, a subject which falls under Entry 8 of List II of the Seventh Schedule, the main object of the Central Act is lo provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol falling under Entry 84 List I. [536 G F] 2(i).
The enactment of the by Parliament under Entry 84, List I of the Seventh Schedule of the Constitution, or the framing of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 by the Central Government in exercise of their rule making power under section 19 of the Act, for the purpose of levying duties of excise on medicinal and toilet preparations containing alcohol etc., do not pre vent the State Legislature from making a law under Entry 8, List II of the Seventh Schedule to the Constitution with respect to 'intoxicating liquors ' or a law under Entry 51 List II for levying excise duties on alcoholic requirements for human consumption.
[528 C D] (ii) It is the charging section which gives the true index to the real character of a tax.
The nature of the machinery by which the tax is to be assessed is not of assistance, except in so far as it may throw light on the general character of the tax.
The charging section in section 3 of the Central Act clearly shows that it does not seek to levy a duty of excise on alcohol liquor for human consumption falling within Entry 51 List II of the Seventh Schedule, but to levy a duty of 521 excise on medicinal and toilet preparations containing alcohol etc.
The topic of legislation under Entry 84, List I of the Seventh Schedule is 'duties of excise on medicinal and toilet preparations containing alcohol etc.
The Central Act must in pith and substance, be attributed to Entry 84, List.
[532 C E] (iii) The Central and the State Legislations operate on two different and distinct fields.
The Central Rules, to some extent, trench upon the field reserved to the State Legislature, but that is merely incidental to the main purpose, that is, to levy duties of excise on medicinal and toilet preparation containing alcohol.
Some of the impugned provisions may be almost similar to some of the provisions of the Central Rules, but that does not imply that the State Legislature had no competence to enact the provisions.
The State Legislation is confined to 'intoxicating liquor ', that is, to ensure proper utilisation of rectified spirit in the manufacture of medicinal and toilet preparations and, therefore, within the powers granted to the State Legislature under Entry 8, List II.
It further seeks to regulate the manufacture of bona fide medicinal preparations and prevent misuse of rectified spirit in the manufacture of spurious medicinal and toilet preparations containing alcohol capable of being used as ordinary alcoholic beverages.
[532 F 533 A] (iv) The enumeration of 'intoxicating liqour ' in Entry 8, List II, confers exclusive power to the State to legislate in respect of medicinal and toilet preparations containing alcohol.
[533 B] (v) In matters of seeming conflict or encroachment of jurisdictions, what is more important is the true nature and character of the legislation.
A necessary corollary of the doctrine of pith and substance is that once it is found that in pith and substance the impugned Act is a law on a permitted field, any incidental encroachment on a forbidden field does not affect the competence of the legislature to enact the law.
[534 B C] Prafulla Kumar Mukherjee and Ors.
vs Bank of Commerce Ltd. Khulna A.I.R. 1947 PC 60 at 65 and State of Bombay vs F. N. Balsara ; at 694 5 referred to.
(vi) There can be no doubt that the impugned Act is relatable to Entry 8, List II of the Seventh Schedule.
[536 A] (vii) When the frame work of the two enactments is examined, it would be apparent that the Central and the State Legislature operate in two different and distinct fields.
In the matter of making rules or detailed provisions to achieve the object and purpose of a legislation, there may be some provisions seemingly overlapping or encroaching upon the forbidden field, but that does not warrant the striking down of the impugned Act as ultra vires the State Legislature.
[536 G 537 A] Hyderabad Chemical and Pharmaceutical Works Ltd. vs State of Andhra Pradesh and Ors.
; distinguished.
(viii) No citizen has any fundamental right guaranteed under article 19(1) (g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors, The power to legislate with regard to intoxicating liqour carries with it the power to regulate the manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for the 522 purpose of interfering with the right of citizens in the matter of consumption or use for bonafide medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on under the guise of medicinal and toilet 'preparations.
It was within the competence of the State Legislature to prevent the noxious use of such preparations i.e. their use as a substitute for alcoholic beverages.
[537B D] In the instant case the provisions have been enacted to ensure that rectified spirit is not misused under the pretext of being used for medicinal and toilet preparations containing alcohol.
Such regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health.
[537 E] (ix) All that the provisions of sections 12A and 12B ordain is that the Commissioner "shall have due regard to the total requirement of such medicinal preparations for consumption or use in the State".
The Commissioner has, therefore, only to take into account the total requirements within the State as an element which should enter the assessment and no more.
As a necessary corollary, it follows that in fixing the quantity of medicinal and toilet preparations to which alcohol is added or in which it is self generated, normally the Commissioner shall have regard to larger requirements of the manufacture, if the manufactured product has a market outside the State.
The restrictions imposed by section 12B as to the alcoholic content of medicinal and toilet preparations and the requirement that they shall not be manufactured except and in accordance with the terms and conditions of a licence granted by him, are nothing but reasonable restrictions within the meaning of article 19(6).
The impugned provisions, therefore, cannot be struck down as offending article 19(1) (g) of the Constitution.
[538 E 539 B] 3.
The State Act, in pith and substance, is not a legislation under Entry 24, List 11 and, therefore, the question does not arise.
[539 E 539 B] 4(i) (a) The provision contained in section 14(e) of the Act is clearly relatable to the State 's power to make a law under Entry read with Entry 51(a), List II of the Seventh Schedule.
section 14(e) of the Act is valid in so far as it provides that the Commissioner may prescribe the size and nature of the establishment for such supervision and the cost of establishment and other incidental charges in connection with such supervision to be realised from the licensee.
There is no warrant for the submission that the framing of such an incidental provision like r. 45(1) of the Central Rules takes away the State 's power to recover supervisory charges from the licensee.
[540 B C] (b) 'Fees ' are the amounts paid for a privilege and are not an obligation.
Fees are distinguished from taxes in that the chief purpose of a tax is to raise funds for the support of the Government or for a public purpose, while a fee may be charged for the privilege or benefit conferred, or service rendered or to meet the expenses connected therewith.
Thus, fees are nothing but payment for some special privilege granted or service rendered.
Taxes and taxation are, therefore, distinguishable from various other contributions, charges, or burdens paid or imposed for particular purposes and under particular powers or functions of the Government.
It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence, are taken to the Consolidated Fund of the State and are not separately appropriated towards the expenditure for rendering the service is not by itself decisive.
It is also increasingly realised that the element of quid pro quo stricto sensu is not 523 always a sine qua non of a fee.
It is needless to stress that the element of quid A pro quo is not necessarily absent in every tax, [541 G 542 D] Mahant Shri Jagannath Ramanuj Das vs The State of Orissa ; , Ratilal Panachand Gandhi vs The State of Bombay [1954] SCR 1055, Constitutional Law of India by H.M. Seervai, 2nd Edn.
Vol. 2, p. 1252, para 22.39 & Kewal Krishan Puri & Anr.
vs State of Punjab & Ors.
at 1230 referred to.
(ii) In the case of a manufacturer of medicinal and toilet preparations containing alcohol in a bonded manufactory, the imposition of the cost of establishment under section 14(e) of the Act calculated in accordance with the nature and extent of that establishment could not be said to be an imposition of a duty of excise, but is a price for his franchise to carry on the business.
[543 D E] (iii) No one has a fundamental right to the supply of rectified spirit which is an intoxicating liquor.
It is upto the State to control and regulate its supply from a distillery or a spirit warehouse in the State under and in accordance with the terms and conditions of a licence or permit its import from outside by grant of a privilege and charge a fee for the same.
A fee may be charged for the privilege or benefit conferred, or service rendered, or to meet the expenses connected therewith.
A fee may be levied to meet the cost of supervision and may be something more.
It is in consideration for the privilege, licence or service.
The State is undoubtedly entitled to levy excise duty on the rectified spirit issued from a distillery under section 17(f) of the Act read with r. 13 of the Kerala Rectified Spirit Rules, 1972 but it refrained from making any such levy by reason of rule 21 of the Central Rules and has, therefore, by proviso tc) rule 8 allowed a manufacturer of medicinal and toilet preparations to draw rectified spirit from a distillery without payment of duty.
It is thus a privilege conferred on the licensee.
To claim the privilege he must comply with the conditions prescribed If one of the conditions is the payment of cost of establishment under section 14(e) of the Act read with rule 16(4) of the Central Rules, the manufacturer of such preparations must necessarily bear the burden s the licensee gets services in return in lieu of such payment.
[543 G 544 C] 5.
Rule 13(2) is nothing but a corollary of rule 13(1).
On a combined reading of section 17(f) and rule 8 read with the proviso thereof, no duty is chargeable on alcohol actually used in the manufacture of medicinal and toilet preparations.
The Government realised that some margin for wastage should be allowed and, therefore, inserted the proviso to rule 13(2), which provides that the Government may, in consultation with the Drugs Controller and the Chemical Examiner, by notification in the Gazette, permit allowance for wastage occurring during the manufacture.
Beyond the permissible limit, the State has the right to levy a duty on excess wastage of alcohol, i.e. on alcohol not accounted for.
[548 D F] 6.
The restriction imposed by section 12A of the Act as to the quantity of medicinal preparations to be manufactured relate not only to preparations to which alcohol is added but also to medicinal preparations in which alcohol is self generated.
There can be no doubt that ayurvedic asavas and aristhas which are capable of being misused as alcoholic beverage and come within the purview of the definition of 'liquor ' contained in section 3(10) of the Act being liquid containing alcohol.
The contention that Note to rule 3(1) is an unreasonable restriction on the freedom of trade guaranteed under.
Article 19(1) (g) of the Constitution has no substance.
[549 B D] 524
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4450.txt
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Civil Appeal No. 2551 (NT) of 1988.
From the Judgment and Order dated 7.7.1982 of the Allahabad High Court in S.T.R. No.33 of 1982.
A.K. Srivastava for the Appellant.
R.R. Agarwal and C.P. Pandey for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
The appeal is disposed of by the Judgment herein.
The appeal relates to the assessment year 1976 77, period being 1.4.76 to 3.1.77 under the U.P. Sales Tax Act, 1948 (hereinafter called the Act).
The dealer runs a Roller Flour Mills under the name and style of M/s. Mool Chand Shyam Lal Roller Flour Mills, Agra in which Atta, Maida, Suji, Bran and Refraction are manufactured.
For the manufacture of Atta, Maida and Suji the wheat is supplied by the Food Corporation of India and Regional Food Controller under the U.P. Roller Flour Mills (Regulation of use of Wheat) Order.
The sale price of the said wheat products i.e. Atta, Maida, Suji has been fixed by the State Government from time to time under U.P. Roller Flour Mills (Ex Mill Price Control) Order, 1975 under the notifications issued by the Government.
The State Government has further issued the notification No. ST.
4602/29 Wheat 127/175 dated 28th June, 1975 under the U.P. Roller Flour Mills (Ex Mill Price) Control Order, 1975 fixing the ex mill price of the sales of wheat products and also authorised the mills in the said notification to realise the proportionate amount of octroi, terminal tax, purchase tax or sales tax, duty or excise duty 752 payable by the mills on the wheat crushed in addition to the fixed ex mill price.
The dealers have realised the amount of the wheat products as fixed by the U.P. Roller Flour Mills (Ex Mill Price) Control Order, 1975 and have also realised the amount of the wheat sales tax or wheat purchase tax and octroi on the wheat used in the manufacture of wheat products, for the sale of Atta, Maida, Suji, Bran and refraction in accordance with the aforesaid notification.
The dealers have further realised the proportionate amount of the wheat purchase tax and wheat sales tax and octroi as consideration of the sale price in addition to the sale price fixed by the State Government on the sales of wheat products.
It is the case of the revenue that the amount of wheat sales tax and wheat purchase tax as well as the octroi, paid by the dealers for the purposes of purchases of wheat, which was used for the manufacture of wheat products, has been kept in the separate account in the account books of the dealer.
It is further the case of the revenue that the amount of wheat sales tax and wheat purchase tax, which the dealer paid for the purposes of purchase of wheat, was collected by the dealer as part of the sale price of the wheat products.
For the assessment year 1976 77 the assessment order was passed on 22nd February, 1979 under Rule 41(7) of the U.P. Sales Tax Rules read with section 18(3) of the Act for the period from 1.4.76 to 3.1.77 by which the assessing authority while passing the assessment order has accepted the contention of the dealer that the amount of the wheat purchase tax, wheat sales tax and octroi charged separately by the dealer in the cash memo of sale of Atta, Maida and Suji are the part of the turnover and included in the disclosed turnover of the dealer.
The assessing authority in the regular assessment had treated this wheat purchase tax, wheat sales tax and octroi which were paid by the dealer separately in the cash memos and the wheat products sold by the dealer, as part of the ex mill price of the wheat product.
The assessing authority had imposed the tax on this amount treating it as a part of the turnover of the dealer.
But after the completion of the assessment, the Assistant Commissioner (Assessment) issued a notice under section 15 A(1)(qq) of the Act to show cause as to why penalty should not be imposed in respect of the realisation of wheat purchase tax and wheat sales tax during the aforesaid period.
A reply was filed by the dealer to the said notice.
The Assistant Commissioner by his order dated 24th February, 1979 imposed a sum of Rs.25,000 as penalty under section 15 A(1)(qq).
Section 15 A(1)(qq) reads as follows: "(qq) realises any amount as sales tax, or purchase tax, where no sales tax or purchase tax is legally payable or in excess of the amount of tax, legally payable under this Act: or" 753 In the aforesaid circumstances after an inquiry as it may deem necessary the assessing authorities may direct that such dealer shall pay, by way of penalty, in addition to the tax, if any payable by him mentioned therein.
Against the aforesaid order of the Assistant Commissioner, the dealer filed an appeal before the Deputy Commissioner (Appeals).
The Deputy Commissioner (Appeals) dismissed the appeal and confirmed the order of imposition of penalty.
Against the said order of the Deputy Commissioner (Appeals) the dealer filed a second appeal before the Tribunal.
The Tribunal also upheld the order of the lower authorities and dismissed the appeal.
Against the judgment and order passed by the Tribunal, the dealer moved the High Court by way of a revision.
The High Court allowed the revision.
The High Court held that on the facts found, it should be examined if the excess realisation was of sales or purchase tax thus incurring penal liability under sub clause (qq) of sub section (1) of section 15 A or it was excess realisation of price over and above that the assessee was entitled to charge from its customers under Notification No. 4602 of the Essential Commodities Act.
It was urged that the assessee did not commit any breach of the Act.
It was contended that the assessee was entitled to realise price and the purchase tax from customers under notification but if it realised more than it was excess realisation by way of price, there would be breach of the Control Order for which no penalty could be levied under this Act.
What the assessee has realised from customers was price and not tax.
Section 15 A postulates as set out hereinbefore under clause (qq) certain conducts.
As it is apparent from the provisions set out above, that the realisation must be by the dealer of the amount as sales tax or purchase tax where no sales tax or purchase tax was legally payable or in excess of the amount of tax legally payable under the Act.
Therefore, it is necessary that realisation must be of the sales tax or purchase tax, secondly, that realisation must be in excess and thirdly the amount of tax should be legally payable under the Act.
The High Court has construed the expression "as" in the beginning of the sub clause as significant.
Penalty is leviable for excess realisation of tax, therefore, realisation of the amount should be as tax and not in any other manner.
Then excess should be over and above the amount of tax legally payable.
This expression obviously means tax payable under the Act, rules or notification.
Therefore, realisation by the assessee from customers should not be of only sales or purchase but it should be of the tax legally payable.
If the purchaser realises more money that by itself will not attract the penal provisions.
In the instant case, the High Court noted that it has been found that the dealer charged sales tax at 754 the rate of Rs.5 per quintal.
There is no finding that it was in excess of tax leviable or legally payable under the Act.
The excess thus charged was in contravention of the provisions of the notification.
But that alone was not sufficient for initiation or levy of penalty under subclause (qq) of section 15 A(1) of the Act.
It has to be realised as sales as purchase tax and the tax so charged must have been in excess of tax payable.
The assessing authorities have not found in the instant case that Rs.5 per quintal was in excess of tax payable under the Act.
On behalf of the revenue, our attention was drawn to sub clause (b) of sub section (2) of section 8 A of the Act.
The said sub clause read as follows: "(b) Where sales tax is payable on any turnover by a dealer (including a commission agent or any of the persons mentioned in the Explanation to clause (c) of Section (2), registered under this Act, such a dealer may recover an amount, equivalent to the amount of sales tax payable, from the person to whom the goods are sold by him, whether on his behalf or on behalf of his principal.
" This is a method of realisation in case of indirect tax.
Penalty can be levied or is leviable for realisation of excess of tax legally payable and not for contravention of section 8 A(2)(b).
Realisation of excess amount is not impermissible but what is not permissible is realisation of excess amount as tax.
The High Court noted that the assessee did not act fairly in this case.
By way of price it realised from its customers more than what is was entitled to under notification No. 4602 but in order to avoid any consequences under the Essential Commodity such as suspension or cancellation of its licence etc.
the excess realisation was shown as amount covered by Explanation II of the Notification.
On these facts the High Court found that the provisions of section 15 A(1)(qq) were not applicable.
It has to be borne in mind that the imposition of a penalty under the Act is quasi criminal and unless strictly proved the assessee is not liable for the same.
In that view of the matter, the High Court was right in the view it took.
There is no scope for interference under Article 136 of the Constitution.
The appeal, therefore, fails and is dismissed accordingly.
There will be no order as to costs.
R.S.S. Appeal dismissed.
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The respondent dealer who runs Roller Flour Mills was supplied wheat by the Food Corporation of India and Regional Food Controller for the manufacture of Atta, Maida, Suji etc.
The sale price of the wheat products was fixed by the State Government under the U.P. Roller Flour Mills (Ex Mill Price) Control Order, 1975.
The notification issued under the Control Order also authorised the mills to realise in addition to the fixed ex mill price, the proportionate amount of octrol, terminal tax, purchase tax or sales tax, etc.
payable by the mills on the wheat crushed.
Accordingly, the respondent realised this amount.
The respondent further realised the proportionate amount of the wheat purchase tax and wheat sales tax and octroi, as consideration of the sale price in addition to the sale price fixed by the State Government.
For this excess realisation, the Assistant Commissioner (Assessment) imposed a penalty under section 15 A(1)(qq) of the U.P. Sales Tax Act, 1948 treating it as realisation of tax in excess of tax payable.
The respondent 's appeals before the Deputy Commissioner (Appeals) and the Tribunal failed.
The High Court, however, allowed the revision.
Dismissing the appeal, it was, ^ HELD: (1) Penalty under the Sales Tax Act is leviable for excess realisation of tax.
Therefore, realisation of the amount should be as tax and not in any other manner.
[753G] (2) The excess amount charged was in contravention of the provisions of the Control Order.
But that alone was not sufficient for initiation or levy of penalty under sub clause (qq) of section 15 A (1) of the 751 Act.
The excess amount has to be realised as sales or purchase tax and the tax so charged must have been in excess of tax payable.
[754A B] (3) Realisation of excess amount is not impermissible but what is not permissible is realisation of excess amount as tax.
[754E] (4) The imposition of a penalty under the Act is quasi criminal and unless strictly proved the assessee is not liable for the same.
If the purchaser realises more money, that by itself will not attract the penal provisions.
[754F G]
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5773.txt
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tion (Civil) No. 112 of 1990 etc.
(Under Article 32 of the Constitution of India.) P.S. Poti.
E.M.S. Anam, V.J. Francis and M.N. PopIi for the Petitioners.
T.S. Krishnamurthy Iyer, G. Viswanatha Iyer, A.S. Nambi ar.
K.R. Kurup.
section Balakrishanan, Vijay Kumar, T.T. Kunhi Kannan.
section Vasudevan and P.K. Manohar for the Respond ents.
564 The Judgment of the Court was delivered by AHMADI, J.
In special leave petitions, leave granted.
An autonomous body called the Kerala Water and Waste Water Authority was constituted with effect from 1st April, 1984 under Section 3(1) of the Kerala Water and Waste Water Ordinance, 1984 (No, 14 of 1984) which Ordinance was brought into force w.e.f.
1st March, 1984.
This ordinance was re placed by similar Ordinances issued from time to time, the last being Ordinance No. 27 of 1986 which was in turn re placed by the Kerala Water Supply and Sewerage Act, 1986 (Act No. 14 of 1986), (hereinafter called 'the Act '); Sec tion 1(3) whereof provides that it shall be deemed to have come into force on 1st March, 1984.
This Act, besides pro viding for the establishment of an autonomous authority to be called the Kerala Water Authority, makes provision for the development and regulation of water supply and waste water collection and disposal and for matters connected therewith.
There is no dispute that the functions which were carried on by the Public Health Engineering Department (PHED) were transferred to the autonomous body on the enact ment of the Ordinance No. 14 of 1984.
After the enactment of the Act, every person working in the PHED became the employ ee of the Kerala Water Authority (for short 'the Authority ') by virtue of Section 19(1) of the Act, which reads as under: "Transfer of employees to the Authority Save as otherwise provided in this section, every person who was employed in the Public Health Engineering Department of the Government shall, on and from the appointed day become an employee of the Authority and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions, and with the same rights and privileges as to pension, gratuity and other matters as he would have held the same on the appointed day if this Act had not come into force and shall continue to do so until his employment in the Authority is terminated or until his remuneration or other terms and conditions of service are revised or altered by the Authority under or in pursuance of any law or in accordance with any provision which for the time being governs his service: Provided that nothing contained in this sub section shall apply to an employee in the cadres of the Administrative ? 565 Officers, Financial Assistants Divisional Accounts, Typists and Stenographers, who, by notice in writing given to the Government and the Authority within such time as the Govern ment may, by general or special order, specify, intimates his intention of not becoming an employee of the Authority: Provided further than an employee referred to in the preced ing proviso shall continue to be an employee under the Government and shall be provided elsewhere in any post or other service under the Government.
" Sub sections (3) and (6) of Section 19 make it clear that such transfer of service shall not entitle the employee to claim any compensation under the nor shall it amount to retrenchment or abolition of post under any extant rule, regulation or order applicable to Government servants.
Thus, the erstwhile staff of the PHED was by the thrust of Section 19(1) transferred on the establishment of the Authority.
This would naturally concern those persons only who were in the employment of the PHED before the establishment of the Authority w.e.f.
1st April, 1984.
The staff members employed by the Authority after its constitution were naturally appointed under the provisions of the concerned statute.
Since the Act has retrospective effect, reference may be made to Section 8(1) of the Act which reads thus: "Appointment of officers and staff Subject to the provi sions of sub section (2), the Authority may appoint for the purpose of enabling it to carry out its powers, duties and functions under this Act, a Secretary and such other offi cers and staff as may be required against posts duly sanc tioned by it: Provided that the Authority shall obtain the previous ap proval of the Government for the creation of post above the rank of the Executive Engineer.
" By virtue of Section 8(3), except as provided by sub sec tions (1) & (2), the appointment and conditions of service of the officers and employees of the Authority are to be governed by rules made by the Government from time to time.
Although the Act is deemed to have come into force w.e.f.
1st March.
1984, Section 69 became effective 566 from the date of publication of the Act in the Gazette i.e. 4th August, 1986.
That section reads as follows: "Amendment of Act 19 of 1970 With effect from the date of publication of this Act in the Gazette, the Kerala Public Service Commission (Additional functions as respects certain Corporations and Companies) Act, 1970 (19 of 1970) shall have effect subject to the following amendment, namely: in clause (a) of Section 2, the words and figures "or the Kerala Water Authority" established under section 3 of the Kerala Water Supply and Sewerage Act 1986;", shall be added at the end.
" Even though Act 19 of 1970 stood so amended by the force of Section 69, actual effect could be given after issuance of Notification No. G.O. (MS) No. 38/88/P & ARD dated 30th July, 1988 on which date item (LIII) was added to the rele vant rules as "Amendment of the Rules In the Kerala Public Service Com mission (consultation by Corporation and Companies) Rules, 1971, in Clause (d) of rule 2, after item (LII), the follow ing item shall be added, namely: (LIII) The Kerala Water Authority.
" This amendment was considered necessary with a view to bringing the Authority within the purview of PSC so that it may seek the advice of that body on matters relating to the methods of recruitment of its employees, etc.
From the above discussion it becomes clear that the employees of the Authority can be divided into four distinct groups, viz., (i) those who were in the employment of PHED before the constitution of the Authority and were trans ferred to the Authority (ii) those whom the Authority em ployed between 1st April.
1984 and 4th August, 1986 (iii) those who were appointed between 4th August, 1986 and 30th July, 1988 and (iv) those who were appointed after 30th July, 1988.
The petitioners in this batch of matters are serving in different capacities, such as, cleaners, pump operators, draftsmen, drivers, etc.
They claim that they were appointed through the Employment Ex 567 change between 1981 and 1988.
They contend that they have been compelled to approach this Court as their services are likely to be terminated as has been done in the case of a few of their colleagues.
They contend that till the issuance of the notification dated 30th July.
1988 amending the concerned PSC rule (amendment extracted earlier) there was no question of the Authority consulting the PSC and there fore, appointments made prior to that date cannot be termed as irregular or unauthorised and cannot be determined on that ground.
They contend that as in a few cases the High Court of Kerala failed to appreciate this true legal posi tion and refused to grant relief to employees whose services were threatened, the Managing Director of the Authority issued instructions to his subordinates to terminate the services of similarly placed employees, thereby compelling the present petitioners to approach this Court so that all such employees are uniformly governed by this Court 's order.
They point out that in Civil Appeals Nos. 472 to 478 of 1988 arising from the High Court decision.
and Writ Petitions (Civil) Nos. 857 and 1135 of 1987, this Court passed the following order on 1st February, 1988: "Special leave granted.
Heard counsel for the parties.
We are of the view that in the facts and circumstances of these cases the services of such of the appellants as pos sess the requisite qualifications should be regulated in accordance with the Kerala Public Service Commission (Addi tional functions as respects certain Corporations and Compa nies) Act, 1970 and until such regularisation is made, no appointment on similar posts from outside be made.
If there be any excess employees now in service employment, it will be open to the Authority to terminate their services on condition that as and when vacancies arise, they shall first be considered for appointment keeping the direction indicat ed above in view.
Recruitments in future will, however, be in accordance with the Kerala Public Service Commission (Additional functions as respects certain Corporations and Companies) Act, 1970 and the Kerala Water Supply and Sewerage Act, 1986.
" Thereafter in another batch of special leave petitions Nos. 4385 to 4387 of 1988 this Court passed the following order on 24th March, 1988: 568 "Heard learned counsel for parties.
The only direction which we can give in the facts and circumstances of the case will be in case after all those who have been regularly selected by the Public Service Commission are appointed and thereaf ter any vacancies are left, the same should be given to those who, like the petitioners, have already been in serv ice taking into consideration their seniority.
Every step should be taken by the Water Authorities to regularise the services of such people who can be appointed under our direction as indicated above.
There will be no further direction in this case.
The other person who may be thrown out of employment on account of the direction of the Water Authority which is impugned before us, may appear before the Public Service Commission in the next examination, The State of Kerala has informed us that age bar would be waived.
The petitions are disposed of accordingly.
" The Authority treated these orders as confined to the work men who had filed the proceedings and did not extend the ratio to others similarly placed.
Not only that, the Author ity, contend the petitioners, placed different interpreta tions on the aforesaid orders and continued to terminate the services of the employees.
Another group of writ petitions Nos.
525,527,528, and 503 of 1988 came up before this Court on 28th November, 1988 when this Court passed the following Order: "Mr. Krishna Murthy Iyer appearing for the Kerala Water Authority states that the claims of the petitioners can be divided into three categories, namely (1) those who had been employed by Public Health Engineering Department before the Kerala Water Authority was constituted, (2) those who get employed between 1.4.1984 and 1986 and (3) the persons appointed after 1986.
The Kerala Water Authority is given three months ' time to examine the individual cases of these groups and take its decision accordingly.
We direct the Authority to place its conclusions before the Court before giving effect to them.
Status quo as on today will continue until further orders.
" The grievance of the petitioners is that no action was taken by the Authority within the time allowed nor has it taken any action till today to implement the said order.
The petitioners also contend that the employees are compelled to knock at the doors of different courts as the Authority continues to terminate the services of the employees 569 not with standing the aforequoted orders passed by this Court.
Mr. P.S. Poti, the learned counsel for the petition ers, therefore, made a fervent appeal that this Court should pass an order laying down guidelines for the regularisation of the services of not only the petitioners but also all others similarly placed so that these low income group employees are not required to knock at the doors of differ ent courts to protect themselves from the threatened arbi trary action of the Authority terminating their services.
In other words he wants this Court to formulate a scheme for the regularisation of the services of all similarly placed employees which would put an end to all pending cases and future cases which are bound to arise if the Authority continues its present policy.
The claims made by the employees in this group of cases is contested mainly on the plea that their tenure and serv ice conditions were regulated by Rule 9(a)(i) of the Kerala State and Subordinate Service Rules, 1958 (hereinafter called `the Rules ') which were statutory in character and were, therefore, binding on the Authority as well as the employees.
It is contended that the employees belonging to different categories were appointed on different dates by the PHED prior to 1st April, 1984 under this rule and, therefore, their services could only be regulated thereun der.
After the autonomous Authority was constituted w.e.f.
1st April, 1984 on the enactment of Ordinance 14 of 1984, the Authority passed a Resolution No. 8 on 25th April, 1984 adopting the aforesaid Rules and hence all appointments made after 1st April, 1984 also came to governed by Rule 9(a)(i) of the Rules till Section 69 of the Act came into force w.e.f.
4th August, 1986 and not 30th July, 1988 when the relevant rule was amended by the introduction of item (LIII) referred to earlier.
Appointments made after 4th August, 1986 are clearly subject to the requirement of Section 69 of the Act and the Authority cannot act in contravention there of.
Had it not been for Court orders restraining the Author ity from terminating their services, the services of all those who were governed by Rule 9(a)(i) would have been terminated on the expiry of 180 days.
The text of that rule may be noticed at this stage: "Where it is necessary in the public interest, owing to an emergency which has arisen to fill immediately a vacancy in a post borne on the cadre of a service, class or category and there would be undue delay in making such appointment in accordance with these rules and the Special Rules, the appointing authority may appoint a person, otherwise than in accordance with the said rules, temporarily.
" 570 The first proviso is not relevant for our purpose but reli ance was placed on the second proviso which reads as under: "Provided further that a person appointed under this clause by direct recruitment to a post other than teaching post and a post covered by the proviso to clause (iii) of rule 10(b)] shall not be allowed to continue in such post for a period exceeding three months." (i.e. one hundred eighty days) The rule further requires that a person appointed under clause (i) should be replaced as soon as possible by a member of the service or an approved candidate qualified to hold the post under the said rules.
Such replacement must take place in the order of seniority based on length of temporary service in the unit.
It is, therefore, the case of the Authority that appointments made under this rule were purely temporary, not to exceed three months, and had to be terminated on the expiry of the said period and it was not open to the Authority to continue their services even by reappointment unless fresh candidates were not available for reappointment through employment exchange.
Therefore, had it not been for the restraint orders issued by different Courts, the Authority contends it was under an obligation to act in conformity with the above rules.
However, as regards those who had joined service prior to 1st April.
1984 in different categories, the Authority passed a resolution on 30th January, 1987 to the following effect: "Resolved to recommend the Government the regularisation of the service of the employees recruited in the erstwhile PHED and still working in the Kerala Water Authority.
" The Government, it seems, has not taken any decision in this behalf as yet.
Since the counter filed on behalf of the State Government is silent on this point we inquired of the learned counsel for the State to clarify the position.
We were told that since the Authority was an autonomous body it was free to regularise the services of such employees, if it so desired, without the concurrence of the State Government.
While admitting the fact that appointments were made from the lists submitted by various District Employment Officers, the Authority contends that as the appointments were gov erned by Rule 9(a)(i) they could not ensure beyond three months and the termination of their employment did not fall within the ambit of `retrenchment ' as understood under the 571 .
In any case even otherwise the application of that law is specifically excluded by Section 19(3) of the Act and hence the benefit of that law cannot be extended to the employees of the Authority.
The contention that the action of the Authority to terminate the services is violative of Article 14 is repelled on the plea that acting in conformity with a statutory Rule 9(a)(i) can never be branded as arbitrary.
Lastly it is contended that the Authority was not directed to apply this Court 's orders passed in some of the proceedings referred to earlier to all similarly situated employees as the Court 's orders were based on `the fact and circumstances of these cases ' and were not intended to be of general application.
With refer ence to the order of 24th March, 1988 it is said that the Authority has moved a review application which is pending.
The Authority contends that as there is no infringement of any fundamental right, the writ petitions brought under Article 32 of the Constitution cannot be sustained.
The above is the stand taken by the Authority.
The State Govern ment has by and large supported this stand and, therefore, we need not restate the contentions raised in their counter.
The respondents, therefore, contend that the employees are not entitled to any relief whatsoever and the appeals/peti tions deserve to be dismissed with costs.
The question of regularisation in service must be exam ined keeping in mind the historical as well as the constitu tional perspectives.
During the colonial rule industrial growth in the country was tardy and most of the large sized industries were controlled by British interests.
These establishments employed Indian labour on wages far below the sustenance levels.
Men, women and even children were required to work for long hours in thoroughly unhygien ic conditions.
Because of large scale unemployment there was a surplus labour market which the employers could and did exploit.
This virtually forced the labour to accept employ ment on terms unilaterally dictated by the employers.
The relationship between the employer and the employee being purely contractual, the hire and fire rule governed.
Those were the days of laissez faire when contractual rights were placed above human rights.
The concepts of dignity of labour and fair remuneration for work done were wholly alien.
The workers had to work in appalling conditions and at low wages with no job security.
After we attained independence the pace of industrial growth accelerated.
Our Constitution makers were aware of the hardships and insecurity faced by the working classes.
The Preamble of our Constitution obligates the State to secure to all its citizens social and economic justice, besides political justice.
By the 42nd Amendment, the Pream 572 ble of the Constitution was amended to say that ours will be a socialistic democracy.
In furtherance of these promises certain fundamental rights were engrafted in Part 111 of the Constitution.
The Constitution guarantees `equality ', abhors discrimination, prohibits and penalises forced labour in any form whatsoever and extends protection against exploitation of labour including child labour.
After extending these guarantees, amongst others, the Constitution makers proceed ed to chart out the course for the governance of the country in Part IV of the Constitution entitled `Directive Princi ples of State Policy '.
These principles reflect the hopes and aspirations of the people.
Although the provisions of this part are not enforceable by any court, the principles laid down therein are nevertheless fundamental in the gover nance Of the country and the State is under an obligation to apply them in making laws.
The principles laid down therein.
therefore, define the Objectives and goals which the State must endeavour to achieve over a period of time.
Therefore, whenever the State is required to make laws It must do so consistently with these principles with a view to secur ing social and economic freedom so essential for the estab lishment of an egalitarian society.
This part, therefore, mandates that the State shall strive to promote the welfare of the people by minimising the inequalities in income and eliminating inequalities in status, facilities and opportu nities; by directing its policy towards securing, amongst others, the distribution of the material resources of the community to subserve the common good; by so operating the economic system as not to result in concentration of wealth; and by making effective provision for securing the right to work as also to public assistance in cases of unemployment, albeit within the limits of its economic capacities.
There are certain other provisions which enjoin on the State certain duties, e.g. securing to all workers work, a living wage, just and humane conditions of work, a decent standard of life.
participation in management, etc., which are aimed at improving the lot of the working classes.
Thus the Pream ble promises socio economic justice, the fundamental rights confer certain justiciable socio economic rights and the Directive Principles fix the socio economic goals which the State must strive to attain.
These three together constitute the core and conscience of the Constitution.
India is a developing country.
It has a vast surplus labour market.
Large scale unemployment offers a matching opportunity to the employer to exploit the needy.
Under such market conditions the employer can dictate.
I his terms of employment taking advantage of the absence of the bargaining power in the other.
The unorganised job seeker is left with no option but to accept employment on take it or 573 leave it terms offered by the employer.
Such terms of em ployment offer no job security and the employee is left to the mercy of the employer.
Employers have betrayed an in creasing tendency to employ temporary hands even on regular and permanent jobs with a view to circumventing the protec tion offered to the working classes under the benevolent legislations enacted from time to time, One such device adopted is to get the work done through contract labour, It is in this backdrop that we must Consider the request for regularisation in service.
Before we deal with the case on hand it would be advan tageous to refer to some of the decision bearing on the question of regularisation.
In Smt.
P.K. Narayani & Ors.
vs State of Kerala & Ors,, the petition ers who had been serving as employees of the State of Kerala or its public sector undertakings for the past few years challenged the action of the employer in terminating their services to make room for the candidates selected by the Kerala Public Service Commission.
This Court directed that the petitioners and all others similarly placed should be allowed to appear at the next examination that the Public Service Commission may hold without raising the age bar; till then the petitioners and others may be continued in service provided there are vacancies.
This, clarified the Court, will not confer any right on the employees to contin ue in service or of being selected by the Commission other wise than in accordance with the extant rules and regula tions.
These directions were given to resolve what this Court described as `a human problem which has more than one facet ', Again in Dr. A.K. Jain & Ors.
v, Union of India & Ors., ; the services of ad hoc Assistant Medical Officers who were initially appointed for six months but were continued for periods ranging upto four years, were sought to be terminated to accommodate the candidates se lected by the Union Public Service Commission.
The petition ers claimed that their services should be regularised and their seniority should be fixed from the date of their initial entry in service as ad hoc appointees.
In the coun ter, the Union of India contended that `ad hoc ' appointments were made by the General Managers of the Zonal Railways to tide over temporary shortages of doctors and their tenures were extended till regular selection was made by the UPSC and appointments were made by the President of India.
Since the appointing authority was the President of India such ad hoc appointments by the General Managers of the Zonal Rail ways could not be regularised.
It was further contended that the ad hoc appointees were granted age relaxation and were asked to appear at two special selections based on interview alone held by the 574 UPSC in 1982 and 1985.
The petitioners were those ad hoc appointees who had either failed to avail of the special benefit of selection or had appeared and failed to qualify.
In the circumstances it was contended that they could not be regularised in service.
Notwithstanding the same this Court directed regularisation of services of all doctors appointed upto October 1, 1984 in consultation with UPSC on the evalu ation of their work and conduct based on the confidential reports in respect of the period subsequent to October 1, 1982.
Such regularisation was to be from the dates from which they were continuously working.
The services of those not regularised were allowed to be terminated.
The petitions of those appointed after October 1, 1984 were however dis missed.
In the case of Daily rated Casual Labour employed under P & T Department through Bhartiya Dak Tar Mazdoor Manch vs Union of India & Ors., this Court, while dealing with the question of their absorption, referred to the State 's obligations (referred to as an individual 's rights) under Part IV of the Constitution and observed as under: "Of those rights the question of security of work is of utmost importance.
If a person does not have the feeling that he belongs to an organization engaged in production he will not put forward his best effort to produce more.
That sense of belonging arises only when he feels that he will not be turned out of employment the next day at the whim of the management.
It is for this reason it is being repeatedly observed by those who are in charge of economic affairs of the countries in different parts of the world that as far as possible security of work should be assured to the employees so that they may contribute to the maximisation of produc tion.
It is again for this reason that managements and the governmental agencies in particular should not allow workers to remain as casual labourers or temporary employees for an unreasonable long period of time." This Court emphasised that unless a sense of belonging arises, the worker will not give his best and consequently production will suffer which in turn will result in economic loss to the nation.
This Court, therefore, directed the department to prepare a scheme on a rational basis for absorbing those who have worked for a continuous period of one year.
575 Tested on the above and keeping in mind the constitu tional philosophy adverted to earlier, we may now proceed to consider the main plank of the contention raised by the Authority.
But before we do so we may dispose of the non controversial part of the case.
From the pleadings in this case one thing that clearly emerges is that the Authority had taken a decision on 30th January, 1987 to regularise the services of those who were employed by the erstwhile PHED and whose services stood transferred to the Authority by the thrust of the statute.
According to the resolution extracted earlier, the Authority recommended to the State Government that the services of the employees recruited in the erstwhile PHED and who continued to work on the establishment of the Authority should be regularised.
The learned counsel for the State Government contended that since these employees were now borne on the establishment of the Authority on the statutory transfer of their services, it was for the Authority to regularise their services, and it was quite unnecessary to make a recommenda tion to the State Government in that behalf.
To put it differently, the stand of the State Government through its counsel is that the question of regularisation of the serv ices of ex PHED employees now borne on the establishment of the Authority is exclusively within the purview of the Authority and the State Government has no role to play.
That means it was wholly unnecessary on the part of the Authority to make the recommendation it made by the resolution of 30th January, 1987 to the State Government for the regularisation of the ex PHED employees serving on its establishment on that date.
To us the position, therefore, appears crystal clear that it is for the Authority and the Authority alone to regularise the services of such employees without waiting for a nod from the State Government.
The sphinx like silence on the part of the State Government for now over three years from the date of the resolution is indeed disturbing and betrays total lack of concern for this pressing human prob lem.
The second batch of workers comprise those who were appointed between 1st April.
1984 and 4th August, 1986 by the Authority itself.
Under section 8(1) of the Act the power to appoint the Secretary and other officers and staff members vests in the Authority.
Only when a post above the rank of an Executive Engineer is to be created that the sanction of the State Government becomes necessary under the proviso.
Sub section (2) to which sub section (1) is subject expects the Authority to seek the previous sanction of the Government if it desires to employ a servant of the Central or State Government on deputation and not otherwise.
It is, therefore, clear beyond any manner of doubt 576 that the power to appoint the staff members with whom we are concerned, solely vests in the Authority.
Since the Act is brought into force w.e.f.
1st March, 1984 the question of regularisation of the services of staff members appointed after that date must be examined with reference to the power found in section 8(1) of the Act.
However, the contention of the Authority is based on Rule 9(a)(i) of the Rules, which it claims to have adopted under Resolution No. 8 dated 25th April.
The Authority contends that by the thrust of this rule the appointments were limited to 180 days only and since the said rules had statutory flavour the Authority was bound to act in accordance therewith.
We have extracted the relevant part of this rule earlier.
since these rules were framed in exercise of power conferred by the proviso to Article 309 of the Constitution they are undoubtedly statu tory in character but Mr. Poti was right in his contention that they do not retain that character in their application to the staff members of the Authority since they have been adopted by the Authority under a resolution.
These rules would undoubtedly be statutory in character in their appli cation to the members of the Kerala Subordinate services for whom they were enacted but when any other authority adopts them by a resolution for regulating the services of its staff, the rules do not continue to remain statutory in their application to the staff of that Authority.
They are like any other administrative rules which do not have statu tory force.
It was not contended, as indeed it could not That these rules derive statutory force from section 64 or 65 of the Act.
Section 64 confers the rule making power on the State while section 65 empowers the Authority to make regulations with the previous approval of the Government.
It is nobody 's case that these rules were adopted after obtain ing the previous approval of the Government.
If that be so.
we must accept Mr. Poti 's submission that these rule their application to the staff members of the Authority appointed after 1 st. April, 1984 have no statutory flavour or force.
Now to the text of Rule 9(a)(i) of the Rules.
It empowers the appointing authority to appoint a person temporarily otherwise than in accordance with the rule if (i) it is necessary in public interest and (ii) where an emergency has arisen to fill any particular post which has fallen vacant, immediately.
In the present case it is diffi cult to say that all appointments made after 1st April, 1984 were required to be filled immediately because of an emergency of the type contemplated by the said rule.
On the contrary it seems appointments were routinely made in purported exercise of power conferred by this rule.
The proviso on which reliance is placed , which we have extract ed earlier.
merely states that ordinarily such appointments will be of those persons who 577 possess the requisite qualifications for the post.
If any person who does not possess the requisite qualifications is appointed under the said clause, he will be liable to be replaced by a qualified person.
Clause (iii) of Rule 9 states that a person appointed under clause (i) shall, as soon as possible, be replaced by a member of the service or an approved candidate qualified to hold the post.
Clause (e) of Rule 9, however, provided for regularisation of service of any person appointed under clause (i) of sub rule (a) if he had completed continuous service of two years on December 22, 1973, notwithstanding anything contained in the rules.
This is a clear indication that in the past the Government also considered it just and fair to regularise the services of those who had been in continuous service for two years prior to the cut off date.
The spirit underlying this treat ment clearly shows that the Government did not consider it just, fair or reasonable to terminate the services of those who were in employment for a period of two or more years prior to the cut off date.
This approach is quite consistent with the spirit of the rule which was intended to be invoked to serve emergent situations which could not brook delay.
Such appointments were intended to be stop gap temporary appointments to serve the stated purpose and not long term ones.
The rule was not intended to fill a large number of posts in the service but only those which could not be kept vacant till regular appointments were made in accordance with the rules.
But once the appointments continued for long, the services had to be regularised if the incumbent possessed the requisite qualifications as was done by sub rule (e).
Such an approach alone would be consistent with the constitutional philosophy adverted to earlier.
Even otherwise, the rule must be so interpreted, if the language of the rule permits, as will advance this philosophy of the Constitution.
If the rule is so interpreted it seems clear to us that employees who have been working on the establish ment since long, and who possess the requisite qualifica tions for the job as obtaining on the date of their employ ment, must be allowed to continue on their jobs and their services should be regularised.
It is unfair and unreasona ble to remove people who have been rendering service since sometime as such removal has serious consequences.
The family of the employee which has settled down and accommo dated its needs to the emoluments received by the bread winner, will face economic ruination if the job is suddenly taken away.
Besides, the precious period of early life devoted in the service of the establishment will be wholly wasted and the incumbent may be rendered `age barred ' for securing a job elsewhere.
It is indeed unfair to use him, generate hope and a feeling of security in him attune his family to live within his earnings and then suddenly to throw him out of job.
Such behaviour would be an 578 affront to the concept of job security and would run counter to the constitutional philosophy, particularly the concept of right to work in Article 41 of the Constitution.
There fore, if we interpret Rule 9(a)(i) consistently with the spirit and philosophy of the Constitution, which it is permissible to do without doing violence to the said rule, it follows that employees who are serving on the establish ment for long spells and have the requisite qualifications for the job, should not be thrown out but their services should be regularised as far as possible.
Since workers belonging to this batch have worked on their posts for reasonably long spells they are entitled to regularisation in service.
The third and fourth batches concern workers who were appointed between 4th August, 1986 and 30th July, 1988 and after 30th July, 1988, respectively.
Their appointments would be governed by Section 69 which became effective from 4th August, 1986.
By virtue of this section the Kerala Public Service (Additional Functions as respect certain Corporations and Companies) Act, 1970 (19 of 1970) came to be amended with effect from 4th August, 1968 on which date it came to be published in the Gazette.
Thereby in clause (a) of section 2 the "Kerala Water Authority" came to be added.
In law, therefore, the need to consult the PSC had arisen.
True it is that the consequential notification amending the 1971 Rules was issued on 30th July, 1988.
But on that account we do not think it would be proper to treat them differently.
We think it advisable to treat them as forming a single batch since the need to consult the PSC had arisen on Section 69 coming into effect from 4th August, 1986.
In the result we allow these appeals and writ petitions and make the rule absolute as under: "(1) The Authority will with immediate effect regularise the services of all ex PHED employees as per its Resolution of 30th January, 1987 without waiting for State Government approval.
(2) The services of workers employed by the Authority be tween 1st April, 1984 and 4th August, 1986 will be regula rised with immediate effect if they possess the requisite qualifications for the post prescribed on the date of ap pointment of the concerned worker.
(3) The services of workers appointed after 4th August, 1984 and possessing the requisite qualifications should be regu lated in accordance with Act 19 of 1970 provided they have put in continuous service of not less than one year, artifi cial breaks, if any, 579 to be ignored.
The Kerala Service Public Service Commission will take immediate steps to regularise their services as a separate block.
In so doing the Kerala Public Service Com mission will take the age bar as waived.
(4) The Kerala Public Service Commission will consid er the question of regularisation of the services of workers who possess the requisite qualifications but have put in less than one year 's service, separately.
In doing so the Kerala Public Service Commission will take the age bar as waived.
If they are found fit they will be placed on the list along with the newly recruited candidates in the order of their respective merits.
The Kerala Public Service Com mission will be free to rearrange the list accordingly.
Thereafter fresh appointments will issue depending on the total number of posts available.
If the posts are inade quate, those presently in employment will make room for the selected candidates but their names will remain on the list and they will be entitled to appointment as and when their turn arrives in regular course.
The list will enure for such period as is permissible under the extant rules.
(5) The Authority will be at liberty to deal with the serv ices of the workers who do not possess the requisite quali fications as may be it considered appropriate in accordance with law.
(6) Those workers whose services have been terminated in violation of this Court 's order in respect of which Contempt Petition No. 156 of 1990 is taken out shall be entitled to the benefit of this order as if they continue in service and the case of each worker will be governed by the clause applicable to him depending on the category to which he belongs and if he is found eligible for regularisation he will be restored to service and assigned his proper place.
This order will regulate the services not only of the par ties to the present petitions but also all others similarly situated including those who may be parties to other pro ceedings pending in different Courts.
If further directions are required in the matter of working out of the above order the High Court of Kerala may be approached for the same.
All the aforestated proceedings are disposed of accordingly with no order as to costs.
Y. Lal Appeals and petitions allowed.
|
Consequent upon the establishment of Kerala Water Au thority under the Kerala Water Supply and Sewerage Act, 1986, all the functions which were till then carried on by the Public Health Engineering Department (PHED) were trans ferred to the said Authority.
Contemporaneously with that every person working in the PHED became the employee of the Kerala Water Authority by virtue of Section 19(1) of the Act.
Though the said Act was given retrospective operation w.e.f.
1st March 1984, Section 69 thereof came into force from the date of publication of the Act in the Gazettee viz., 4.8.1986; actual effect could be given w.e.f. 30.7. 1988 on which date the necessary notification was issued where by the rule was amended and the Authority came within the purview of the Public Service Commission.
Thus the employees of the Authority fell into four different groups viz., (i) those who were in the employment of PHED before the constitution of the Authority and were transferred to the Authority, (ii) those whom the Authority employed be tween 1st April, 1984 and 4th August 1986, (iii) those who were appointed between 4th August 1986 and 30th July 1988, and (iv) those who were appointed after 30th July 1988.
The Authority it seems terminated the services of various em ployees.
The petitioners apprehending termination of their serv ices by the Authority filed petitions contending inter alia that they were recruited through the Employment Exchange and till the issuance of the notification dated 30.7.1988, amending the concerned PSC rule, there was no question of the Authority consulting the PSC and therefore, appointments made prior to that date could not be termed as irregular or unauthorised and could not be determined on that ground.
It is asserted by them that the High Court refused to grant relief to those employees whose services were threatened and despite favourable orders passed by this Court in cases that came before it, the Authority continued to terminate the services of employees similarly placed treating those 563 orders as having been passed in respect of only those em ployees who were before the Court.
It is, therefore, urged by them that this Court should pass orders laying down guidelines for the regularisation of the services of not only the petitioners but also all others similarly placed so that the low income employees are not required to knock at the doors of different courts for protection against the threatened arbitrary action of the Authority terminating their services.
The Authority has contested the cases on the plea that all the appointments made before or after April 1, 1984 were governed by Rule 9(a)(i) of the Rules till Section 69 came into force w.e.f. 4.8.1986 and 30.7.1988 when it was amended.
Appointments made after 4.8.1986 are clearly sub ject to the requirement of Section 69 of the Act and the Authority cannot act in contravention thereof.
Services of all those who were governed by Rule 9(a)(i) will have to be determinated on the expiry of 180 days.
Allowing the appeals as also writ petitions, this Court, HELD: Interpreting Rule 9(a)(i) consistently with the spirit and philosophy of the Constitution, which it is permissible to do without doing violence to the said rule, it follows that employees who are serving on the establish ment for long spells and have the requisite qualifications for the job, should not be thrown out but their services should be regularised as far as possible.
Since workers belonging to this batch have worked on their posts for reasonably long spells they are entitled to regularisation in service.
[388A B] P.K. Narayani & Ors.
vs State of Kerala and Ors.
, ; Dr. A.K. Jain & Ors.
vs Union of India and Ors.
, ; ; Daily rated Casual Labour employed under P & T Department through Bhartiya Dak Tar Mazdoor Manch vs Union of India and Ors., , referred to.
|
6584.txt
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ivil Appeal Nos. 2168, 2569, of 1966, 76, 123 and 560 of 1967.
Appeals by special leave from the Award dated June 30, 1966 of the Industrial Tribunal, Delhi in I.D. No. 70 of 1958.
S.T. Desai, Rameshwar Nath and Mahinder Narain, for the appellant (in C.A. No. 2168 of 1966) and respondents Nos. 1 and 2 (in C.As.
Nos. 123 and 560 of 1967).
311 H.R. Gokhale, A.K. Sen, R.P. Kapur and 1.
N. Shroff, for the appellant (in C.A. No. 256,9 of 1966) and respondent No. 3 (in C.As.
Nos. 123 and 560 of 1967).
B. Sen, 1.
D. Gupta, M.N. Shroff for 1.
N. Shroff, for the appellant (in C.A. No. 76 of 1967).
M.K. Ramamurthi, Madan Mohan, Shyamala Pappu and Vineet Kumar, for the appellant (in C.A. No. 123 of 1967), respondents Nos. 1 (a) and 4(a) (in C.A. No. 2168 of 1966), respondent No. 1 (in C.A. No. 2569 of 1966), respondent No. 1 (in C.A. No. 76 of 1967) and respondent No. 5 (in C.A. No. 560 of 1967).
V.C. Parashar and O.P. Sharma, for the appellant (in C.A. No. 560 of 1967) respondents Nos. 1 (b) and 4(b) (in C.A. No. 2168 of 1966) respondent No. 2 (in C.A. No. 2569 of 1968) and respondent No. 2 (in C.A. No. 76 of 1967).
The Judgment of the Court was delivered by Shah, J.
These appeals arise out of an award made by the Industrial Tribunal, Delhi, in I.D. Reference No. 70 of 1958.
The first three appeals are filed by the employers, and the last two by the employees.
By its award the Industrial Tribunal (Delhi, has framed two schemes relating to payment of gratuity to the workmen employed in four textile units in the Delhi region.
The employers and the workmen are dissatisfied with the schemes and they have filed these appeals challenging certain provisions of the schemes.
In the Delhi region there are four textile units; the Delhi Cloth Mills which will be referred to.
as D.C.M.; Swatantra Bharat Mills which will be referred to as S.B.M.; Birla Cotton Mills which will be referred to as B.C.M. and Ajudhia Textile Mills which will be referred to as A.T.M. The D.C.M. and S.B.M. are under one management.
On March 4, 1958, the Chief Commissioner of Delhi made a reference under sections 10(1)(d) and 12(5) of the , relating to four matters in dispute, first of which is as follows: "Whether a gratuity for retirement benefit scheme should be introduced for all workmen on the following lines and what directions are necessary in this respect ? 1.
for service less than 5 years Nil.
for service between 5 10 years 15 days ' wages for every year of service.
for service between 10 15 years 21 days ' wages for every year of service.
312 4.
for service over 15 years one month 's wages for every year of service.
" The reference related to workmen only and did not apply to the clerical staff or mistries.
There are two workmens ' Unions in the Delhi region the Kapra Mazdoor Ekta Union hereinafter called 'Ekta Union ', and the other, the Textile Mazdoor Union.
The Ekta Union made a claim principally for fixation of gratuity in addition to the benefit of provident fund admissible to the workmen under the Employees Provident Fund Act, to be computed on the consolidated wages inclusive of dearness allowance.
The Ekta Union submitted by its statement of claim that a gratuity scheme based on the region cum industry principle i.e. a uniform scheme applicable to all the four units be framed.
The Textile Mazdoor Union also supported the claim for the framing of a gratuity scheme on the basis of the consolidated wages of workmen but claimed that the scheme should be unit wise.
At the trial, it appears that both the Unions pressed for a unit wise scheme of gratuity.
The Tribunal entered upon the reference in respect of the fixation of gratuity scheme in February 1964 and made an award on June 30, 1966, operative from January 1, 1964.
The award was published on August 4, 1966.
By the award two schemes were framed one relating to the D.C.M. and S.B.M., and another relating to the B.C.M. and A.T.M.
Under the second scheme the digit by which the number of completed year of service was to be multiplied in determining the total gratuity was smaller than the digit applicable in the case of the D.C.M. and the S.B.M.
The distinction was made between the two sets of units, because the D.C.M. and S.B.M. were, in the view of the Tribunal, more prosperous units than the D.C.M. and A.T.M. The A.T.M., it was found, was a newcomer in the field of textile manufacture, and had for many years been in financial difficulties.
The D.C.M. employs more than 8,000 workmen in its textile unit; the S.B.M. has on its roll 5,000 workmen; the B.C.M. has 6,271 workmen and the A.T.M. has 1,500 workmen.
The D.C.M. and S.B.M. have a common retirement benefit scheme in operation since the year 1940.
Under the scheme gratuity payable to workmen is determined by the length of service before retirement.
The scheme of gratuity in operation in the D.C.M. and S.B.M. is as that, "In case of retirement from service of the Mills as a result of physical disability, due to over age or on account of death after a minimum of seven years '.
313 service in the concern: 7 years .
Rs. 350/ 8 years .
Rs. 425/ 9 years .
Rs. 500/ 10 years .
Rs. 575/ 11 years .
Rs. 650/ 12 years .
Rs. 725/ 13 years .
Rs. 800/ 14 years .
Rs. 875/ 15 years .
Rs. 950/ 16 years .
Rs. 1,050/ 17 years .
Rs. 1,150/ 18 years .
Rs. 1,250/ 19 years .
Rs. 1,350/ 20 years .
Rs. 1 '500/ The scale of gratuity, it is clear, is independent of the individual wage scale of the workman.
In the B.C.M. and A.T.M. units there are no such schemes.
Till the year 1958 there were no standardised wages in the textile industry.
According to the Report of the Central Wage Board for the Cotton Textile Industry which was published on November 22, 1959, there were in India 39 regions in which the textile industry was located.
The basic monthly wages of the workmen in the year 1958 varied between Rs. 18/ in Patna and Rs. 30/ in various centers like Bombay, Indore, Madras, Coimbatore, Madurai, Bhiwani, Hissar, Ludhiana, Cannanore and certain regions in Rajasthan and Delhi.
The Wage Board recommended in Paragraph 106 of its Report: "The Board has come to the conclusion that an increase at the average rate of Rs. 8 per month per worker shall be given to all workers in mills of category I from 1st January 1960, and a further flat increase of Rs. 2 per month per worker shall be given to them from 1st January 1962.
Likewise an increase at the average rate of Rs. 6 per month per worker shall be given to all the workers in mills of category 11 from 1st January 1960, and a further flat increase of Rs. 2 per month per worker shall be given to them from 1st January 1962.
These increases are subject to the condition that the said sums of Rs. 8 and Rs. 6 shall ensure not less than Rs. 7 and Rs. 5 respectively to the lowest paid, and that the increase of Rs. 2 from 1st January 1962 shall be flat for all." Category I included the Delhi region.
Since January 1, 1962, the basic minimum wage in the Delhi region is, therefore Rs. 40/Sup.
CI/69 3 314 according to the recommendations of the Wage Board.
In Bombay City and Island (including Kurla), the basic wage, according to the Report of the Wage Board, was also Rs. 30/and by the addition of Rs. 10 the basic wage of a workman came to Rs. 40/ .
The workmen in other important textile centres also get the same rates.
The Tribunal was of the view that the average basic wage of the workmen is Rs. 60/ since the implementation of the Wage Board in the Delhi region.
No argument was advanced before this Court challenging the correctness of that assumption, by the employers or the workmen.
It was also common ground that practically uniform basic wage levels prevail in all the large textile centres like Bombay, Ahmedabad, Coimbatore and Indore.
Besides the basic wage the workmen receive dearness allowance under diverse awards made by the Industrial Tribunals which "seek to neutralize the cost of living index.
" There is also a provident fund scheme under the Employees.
Provident Fund Act, 1962, whereunder 8 1/3% of the basic wage and the dearnear allowance and the retaining allowance for the time being in force is contributed by the employee.
Besides, there is a right to retrenchment compensation under the (section 25 FFF) and the Employees Insurance Scheme.
In view of the observations of this Court in Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh(1), that "It is no longer open to doubt that a scheme of gratuity can be introduced in concerns where there.
already exist other schemes such as provident fund or retrenchment compensation.
This has been ruled in a number of cases of this Court and recently again in Wenger & Co. and others vs Their Workmen(2), and Indian Hume Pipe Company Ltd. vs Their Workmen(3).
It is held in these cases that although provident fund and gratuity are benefits available at retirement they are not the same ,and one can exist with the other", no serious argument was advanced that the existence of these additional benefits disentitled the workmen to obtain benefits under a gratuity scheme if the employer is able to meet the additional burden.
But on behalf of all the employers it was, urged that (1) in determining the quantum of gratuity, basic wage alone could be taken into account and not the consolidated wage; and (2 ) it was necessary for the Tribunal to fix when introducing a gratuity scheme the age of superannuation.
On behalf of the D.C.M., S.B.M. and B.C.M. it was urged in addition, that a uniform scheme applicable to the entire industry on the region cumindustry basis should have been adopted and not a scheme or schemes applicable to individual units.
On behalf of the A.T.M. (1) , (2) [1963] II L.L.J. 403.
(3) [1959] II L.L.J. 830. 315 it was urged that its financial condition is not and has never been stable and the burden of payment of gratuity to workmen dying or disabled or on voluntary retirement from service or when their employment is terminated is excessive and the Unit was unable, to bear that burden.
It was also urged on behalf of the A.T.M. that in view of a settlement which was reached between the management and workmen it was not open to the Tribunal to ignore the settlement and to impose a scheme for payment of gratuity in favour of the workmen in this reference.
While broadly supporting the award of the Tribunal the workmen claim certain modifications.
They claim that a shorter period of qualifying service for workmen voluntarily retiring should be provided, and gratuity should be worked out by the application of a larger multiple of days for each completed year of service; that the ceiling of gratuity should be related to a larger number of months ' wages; that gratuity should be awarded for dismissal even for misconduct; that provision should be made for payment of gratuity to Badli workmen irrespective of the number of days for which they work in a year; that the expression "average of the basic wage" should be appropriately clarified to avoid disputes in the implementation of the gratuity scheme, and that the award should be made operative not from January 1, 1964, but from the date of the reference to the Tribunal.
The two schemes which have been flamed may be set out: ANNEXURE 'A ' "Gratuity scheme applicable to the Delhi Cloth Mills and the Swatantra Bharat Mills. ' Gratuity will be payable to the employees concerned, in this reference, on the scale and subject to the conditions laid down below: 1.
On the death of an employee while in the service of the mill company or on his becoming physically or mentally incapacitated for further service: (a) After 5 years continuous service and less than 10 years ' service 12 days ' wages for each.completed year of service.
(b) After continuous service of 10 years 15 days ' wages for each completed year of service.
The gratuity will be paid in each case under clauses 1(a) and 1(b) to the employee, his heirs or executors, or nominee as the case may Provided that in no case will an employee, who is in service on the date on which this scheme is brought 316 into operation be paid an mount less than what he would have been entitled to under the pre existing scheme of the Employees ' Benefit Fund Trust.
(ii) Provided further that the maximum payment to be made shall not exceed the equivalent of 15 months wages.
(iii) Provided further that gratuity under this scheme will not be payable to any employee who has already received gratuity under the preexisting scheme of the Employees ' Benefit Fund Trust.
On voluntary retirement or resignation after 15 years ' service 15 days ' wages for each completed year of service.
Provided that the maximum payment to be made shall not exceed the equivalent of 15 months ' wages.
On termination of service on any ground whatsoever except on the ground of misconduct As in clauses 1 (a) and 1 (b) above.
Provided that the maximum payment to be made shall not exceed the equivalent of 15 months ' wages.
Definitions: (a) 'Wages ' The term "wages" in the scheme will mean the average of the basic wage plus the dearness allowance drawn during the 12 months next preceding death, incapacitation, voluntary retirements, resignation or termination of service and will not include overtime wages.
(b) "Basic wages" The term "basic wage" will have the meaning as defined in paragraph 110 of the Report of the First Central Wage Board for Cotton Textile Industry.
(c) "Continuous service" means un interrupted service and includes service which may be interrupted on account of sickness, authorised leave, strike which is not illegal, lock out or cessation of work which is not due to any fault on the part of the employee: Provided that interruption in service upto six months ' duration at any one time and 18 317 months duration in the aggregate of the nature other than those specified above shall not cause the employee to lose the credit for previous service in the Mills for the purpose of calculation of gratuity, but at the same time shall not entitle him to claim benefit of gratuity for the period of such interruption.
Service for the purposes 'of gratuity will include service under the previous management whether in the particular mill or other sister mill under the same management.
(d) "Resignation" The word "resignation" will include abandonment of service by an employee provided he Submits his resignation within a period of three months from the first day of absence without leave.
(e) "Length of service" For counting "length of service: ', fraction of a year exceeding six months shall count as one full year, and six months or less shah be ignored.
"Application for gratuity" Any person eligible to claim payment of gratuity under this scheme shall, so far as possible, send a written application to the employer within a period of six months from the date its payment becomes due.
"Payment of gratuity" The employer shall pay the amount of gratuity to the employee and in the event of his death before payment to the person or persons entitled to it under clause 1 above within a period of 90 days of the claim being presented to the employer and found valid.
"Claims by persons who are no longer in service" Claims by persons who are no longer in service of the Company on the date of the publication of this award shall not be entertained unless the claims are preferred within six months from the date of publication of this award.
"Badli service" Gratuity shall be paid for only those years of Badli service in which the employee has worked for not less than 240 days.
318 9.
"Proof of incapacity" In proof of physical or mental incapacity, it will be necessary to produce a certificate from any one of the Medical Authorities out of a panel to be jointly drawn up by the parties.
"Nomination" (a) Each employee shall, within six months from the date of the publication of this award, make a nomination conferring the right to receive the amount of gratuity that may be due to him in the event of his death, before payment has been made.
(b) A nomination made under sub clause (a) above may, at any time, be modified by the employee after giving a written notice of his intention of doing so.
if the nominee pre deceases the employee, the interest of the nominee shall revert to the employee who may make a fresh nomination in respect of such interest.
" ANNEXURE 'B ' "Gratuity scheme applicable to the Birla Cotton Spg.
& Wvg.
Mills and the Ajudhia Textile Mills.
Gratuity will be payable to the employees concerned in this reference, on the scale and subject to the conditions laid down below: 1.
On the death o/an employee while in the service of the Mill company or on his becoming physically or mentally incapacitated for further service: (a) After 5 years continuous service and less than 10 years service One fourth month 's wages for each competed year of service.
(b) After continuous service of 10 years One third month 's wages for each completed year of service.
The gratuity will be paid in each case under clauses 1(a) and 1(b) to the employee, his heirs or executors, or nominee, as the case may be.
Provided that the maximum payment to be made shah not exceed the equivalent of 12 months ' wages.
On voluntary retirement or resignation after 15 years service On the same scale as in 1 (b) above.
Provided that the maximum payment to be made shall not exceed the equivalent of 12 months ' wages.
On termination of service by the employer for any reason whatsoever eXcePt on the ground of misconduct As in clauses 1(a) and 1(b) above.
319 provided that the maximum payment to be made shall not exceed the equivalent of 12 months ' wages." [Clauses 4 to 10 of Annexure 'B ' are the same I as in Annexure 'A ' and need not be repeated.] Whether against the A.T.M. the Tribunal was incompetent to make an award framing a .scheme for payment of gratuity may first be considered.
Counsel for the A.T.M. urged that there was a settlement between the workmen and the management of the A.T.M. in consequence of which the Tribunal was incompetent to make an award.
The facts on which reliance was placed are these: After ,the dispute was referred .to the Industrial Tribunal, there were negotiations between the management of the A.T.M. and workmen represented by the two Unions and an agreement was reached, the terms whereof were recorded in writing.
Clauses 6 and 11 (4) of the agreement relate to the claim for gratuity: "6.
The workmen agree not to claim any further increase in wages, basic or dearness, or make any other demand involving financial burdens on the Company either on their initiative or as a result of any award, till such time as the Working of the mills results in profits.
The parties hereto agree to jointly withdraw in terms of this settlement, the following pending cases and proceedings before the Courts, Tribunals and Authorities and ' more especially . . . . . (4) With regard to I.D. No. 70 of 1958 the workers agree not to claim any benefits that ,may be granted under the above reference by the Hon 'ble Industrial Tribunal in case the award is.
given in favour of the workmen, subject to clause 7 above." (It is common ground that reference to el. 7 is erroneous: it should be .to cl. 6.) The workmen and the management of the unit submitted an application before the Tribunal on December 28, 1959, admitting that there had been an "overall settlement" of all the pending disputes between the management of A.T.M. and its workmen represented by the two Unions, and requested that an interim award be made in terms of the agreement insofar as the dispute related to the A.T.M. No order was passed by the Tribunal on that application.
On June 4, 1962, the Manager of the A.T.M. applied to the Tribunal that an interim award be pronounced in terms of the agreement.
The workmen had apparently changed their attitude by that time and filed a written statement and requested that the ,prayer contained in paragraph 3 of the application "be rejected 320 as impermissible in law".
The Tribunal made an order on November 26, 1962, and observed: ". the only interpretation that can be given to clause 11(4) of the settlement read with clause 7 is, that the workers of the Ajudhia Textile Mills had bound themselves not to claim any benefits that might be granted by the Tribunal in the award on the present reference, if it turns out to be in favour of the workmen unless and until the working of the Mills results in profit.
The fact that the passing of an award on the demands was envisaged under the settlement goes to show that the demands were to be adjudicated upon in any case.
The main case will now proceed in respect of all the mills and the effect of the settlement and of the application dated 28th December, 1959, and of the 5th July 1962 will be considered at the time of the final award.
" But in making the final award the Tribunal did not specifically refer to the settlement.
The terms of cl. 6 of the settlement clearly show that if it be found that the A.T.M. had acquired financial stability, it will be liable to pay gratuity to the workmen.
We are unable to agree with the contention of counsel for the A.T.M. that it was intended by the parties that the adjudication proceedings against the A.T.M. should be dropped, and after the A.T.M. became financially stable a fresh claim should be made by the workmen on which a reference may be made by the Government for adjudication of the claim for gratuity against the A.T.M.
The contention by the management of the A.T.M. that the Tribunal was incompetent to determine the gratuity payable to the workmen of the A.T.M. must therefore fail.
The other contention raised on behalf of the A.T.M. that its financial position was "unstable" need not detain us.
The Tribunal has held that the A.T.M. was working at a loss since the year 1953 54 and the losses aggregated to Rs. 6.22 lakhs in the year 1958 59, but thereafter the financial position of the Unit improved.
The trading account for the period ending March 31, 1960, showed profits amounting to Rs. 3.10 lakhs.
In 1960 61 there was a surplus of Rs. 11.18 lakhs out of which adjusting the depreciation, development rebate reserve and reserve for bad and doubtful debts, there was a balance of Rs. 7.10 lakhs.
In 1961 62 the net profits of the Unit amounted to Rs. 7.48 lakhs and the A.T.M. distributed Rs. 52,500/ as dividend.
In 1962 63 there was a gross profit of Rs. 4.18 lakhs and after adjusting depreciation and development rebate reserve there was a net deficit of Rs. 30,517/ .
In 1963 64 there was a gross profit of Rs. 14.29 lakhs and after adjusting depreciation, reserve for doubtful debts, bonus to employees and development rebate reserve, there re 321 mained a net profit of Rs. 4.71 lakhs.
The Tribunal observed that by 1961 62 all previous losses of the Unit were wiped out and that even during the year 1962 63 in which there was labour unrest the gross profits were substantial and taking into consideration the reserves built by the Company "the picture was not disheartening and from the great progress that had been made since 1959 60 there was every reason to think that the Mill had achieved stability and reasonable prosperity and that it had an assured future", and the Company was in a position to meet the burden of a modest gratuity scheme.
We see no reason to disagree with the finding recorded by the Tribunal on this question.
On behalf of the D.C.M., S.B.M., and B.C.M. it was urged that normally gratuity schemes are framed on the region cum dustry principle, i.e., a uniform scheme applicable to all Units in an industry in a region is framed, and no ground for departure from that rule was made out.
It was urged that this Court has accepted invariably the region cum industry principle in fixing the rates at which gratuity should be p.aid.
In our judgment no such rule has been enunciated by this Court.
In Bharatkhand Textile Mfg. Co. Ltd. vs Textile Labour Association, Ahmedabad(1), this Court in dealing with the question whether the Industrial Court had committed an error in dealing with the claim for gratuity on industry wise basis negatived the contention of the employers that the unit wise basis was the only basis which could be adopted in fixing the rates of gratuity.
It was observed at p. 345: "Equality of competitive conditions is in a sense necessary from the point of view of the employers themselves; that in fact was the claim made by the Association which suggested that the gratuity scheme should be framed on industry wise basis spread over the whole of the country.
Similarly equality of benefits such as gratuity is likely to secure contentment and satisfaction of the employees and lead to industrial peace and harmony.
if similar gratuity schemes are framed for all the units of the industry migration of employees from one unit to another is inevitably checked, and industrial disputes arising from unequal treatment in that behalf are minimaised.
Thus, from the point of view of both employers and employees industry wise approach is on the whole desirable.
" It is clear that the Court rejected in that case the argument that rates of gratuity should be determined unit wise: the Court did not rule that in all cases the region cum industry principle should be adopted in fixing the rates of gratuity.
That was made explicit in a later judgment of this Court: Burhanpur Tapti Mills Ltd. vs (1) ; 322 Burhanpur Tapti Mills Mazdoor Sangh(x).
This Court observed at p. 456: ". it has been laid down by this Court that there are two general methods of fixing the terms of a gratuity scheme.
It may be fixed on the basis of industry cum region or on the basis of units.
Both systems axe admissible but regard must be had to the surrounding circumstances to select the right basis.
Emphasis must always be laid upon the financial position of the employer and his profit making capacity whichever method is selected." In Garment Cleaning Works vs Its Workmen(1) this Court observed at p. 713: ". it is one thing to hold that the gratuity scheme can, in a proper case, be flamed on industry cum region basis, and another thing to say that industry cum region basis is the only basis on which gratuity scheme can be framed.
In fact, in a large majority of cases gratuity schemes are drafted on the basis of the units and it has never been ,suggested or held that such schemes are not permissible.
" The Tribunal in the award under appeal observed: "There are . . certain peculiar features in the textile industry in this region which militate against an indnstry cum region approach.
Apart from the fact that one of the four units, namely, the Ajudhia Textile 'Mills is a much weaker unit than the rest and has passed through a chequered career during its existence, it has to be borne in mind that two of the units namely D.C.M. and S.B.M. which axe sister concerns, already have some sort of a gratuity scheme providing for two important retiral benefits, namely, death and physical disablement on a scale which is independent of wage variations and is not unsubstantial at least for categories in the lower levels.
" The Tribunal further observed: "if a common scheme is framed for the entire textile industry at Delhi i.e. for all the four units the quantum of benefits under that scheme will naturally have to be much lower in consideration of the financial condition of the Ajudhia Textile Mill, than if a unit wise scheme is framed.
Moreover in a common scheme of gratuity the quantum of benefits to be provided will have to be (1) (2) ; [1961] I L.L.J. 513.
323 lower than the benefits already available to workmen in the D.C.M. and S.B.M. units for the most important contingencies for which gratuity benefits are meant, namely, death and retirement on account of physical or mental incapacity.
Such a lowering of the quantum of benefits would not in my view be desirable as it would create legitimate discontent.
" In our judgment, no serious objection may be raised against the reasons set out by the Tribunal in support of the view that unitwise approach should be adopted in the reference before it and not the region cum industry approach.
No case is there/ore made out for interference with the award made determining the rates of gratuity unit wise.
We also agree with the Tribunal that on the terms of the reference it was incompetent to fix the age of superannuation forworkmen.
We are unable to hold that a gratuity scheme may be implemented only if the age of superannuation of the workmen is determined by the award.
Support was sought to be derived by counsel for the employers in support of his plea from the observations made by this Court in Burhanpur Tapti Mills Ltd. 's case(D, where in examining the nature of gratuity, it was observed: "The voluntary retirement of an inefficient or old ' or worn out employee on the assurance that he is to get a retiral benefit leads to the avoidance of industrial disputes, promotes contentment among those who look for promotions.
, draws better kind of employees and improves the tone and morale of the industry.
It is beneficial all round.
It compensates the employee who as he grows old knows that some compensation for the gradual destruction of his wage earning capacity is being built up.
By inducing voluntary retirement of old and worn out workmen it confers on the employer a benefit akin to the replacing of old and worn out machinery.
" There is, in our judgment, nothing in these observations which justifies the view that a gratuity scheme cannot be effective unless it is accompanied by the fixation of the age of superannuation for the workmen in the industry.
There is another objection to the consideration of this claim made on behalf of the employers.
By the express terms of reference the Tribunal is called upon to adjudicate on the question of fixation of gratuity: there is no .reference either expressly or by implication to the fixation of the age of superannuation and in the absence of any reference relating to the fixation of the age of (1) [1965] 1 LL.J. 453.
324 superannuation, the Tribunal was not competent to fix the age of superannuation.
A gratuity scheme may, in our judgment, be implemented even without fixing the age of superannuation.
The gratuity scheme in operation in the D.C.M. and S.B.M. has been effectively in operation without any age of superannuation for the workmen in the two units.
An enquiry into the question of fixing the age of superannuation did not arise out of the terms of reference.
No such claim was made by workmen and ' even in the written statement filed by the employers no direct reference was made to the fixation of the age of superannuation, nor was there any plea that before framing a gratuity scheme the Tribunal should provide for the age of superannuation.
We agree with the Tribunal that fixation of the age of superannuation was not incidental to the ,framing of the gratuity scheme 'and it was neither necessary nor desirable that it should be fixed.
Counsel for the employers urged that the Tribunal committed a serious error in relating the computation of gratuity payable to the workmen on retirement on the consolidated monthly wage and not on the basic wage.
"Gratuity" in its etymological sense means a gift especially for services rendered or return for favours received.
For some time in the early stages in the adjudication of industrial disputes, gratuity was treated as a gift made by the employer at his pleasure and the workmen had no right to claim it.
But since then there has been a long line of precedents in which it has been ruled that a claim for gratuity is a legitimate claim which the workmen may make and which in appropriate cases may give rise to an industrial dispute.
In Garment Cleaning Works ' case(1) it was observed that gratuity is not paid to the employees gratuitously or merely as a matter of boon.
It is paid to him for the service rendered by him to the employer.
The same view was expressed in Bharatkhand Textile Mfg. Ltd. 's case(2) and Calcutta Insurance Ltd. vs Their Workmen(a).
Gratuity paid to workmen is intended to help them after retirement on superannuation, death, retirement, physical incapacity, disability or otherwise.
The object of providing a gratuity scheme is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer.
It is one of the 'efficiency devices ' and is considered necessary for an 'orderly and humane elimination ' from industry of superannuated or disabled employees who, but for such retiring benefits, would continue in employment even though they function inefficiently.
It is not paid to an employee .gratuitously or merely as a matter of boon; it is paid to him for long and meritorious service rendered by him to the employer.
(1) (2) ; (3) [1967] II L.L.J. 1.
325 On the findings recorded by the Tribunal all the textile units in the Delhi region are able to meet the additional financial burden, resulting from the imposition of a gratuity scheme.
The D.C.M. and S.B.M. have their own schemes which enable the workmen to obtain substantial benefit on determination of employment.
The B.C.M. though a weaker unit is still fairly prosperous and is able to bear the burden: so also the A.T.M.
But the important question is whether these four units should be made liable to pay gratuity computed on the consolidated wage i.e., basic wage plus the dearness allowance.
The Tribunal was apparently of the view that in determining the question the definition of the word "wages.
" in the industrial Disputes Act, 1947, would come to the aid of work men.
The expression "wages" as defined in section 2(rr) of the means all remuneration, capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment and includes among other things, such allowances (including dearness allowance) as the workman is for the time being entitled to.
But we are unable to hold that in determining the scope of an industrial reference, words used either in the claim advanced or in the order of reference made by the Government under section 10 of the must of necessity have the meaning they have under the .
Merely because the expression "wages" includes dearness allowance within the meaning of the , the Tribunal is not obliged to base a gratuity scheme on consolidated wages.
The Tribunal has observed that the basic average wage of a workman in the textile industry in the Delhi region may be taken at Rs. 60/ per month, and the dearness allowance at Rs. 100/per month, and even if full one month 's basic wage is adopted as the minimum quantum of benefits to be allowed in the case of wage group with service of 5 years and more the scale of benefit would be very much lower than the present scale in the two contingencies provided in the Employees Benefit Fund Trust Scheme in operation in the D.C.M. and S.B.M. And observed the Tribunal: "In view of the limitations of the terms of reference, the quantum cannot exceed 15 days ' wages for every year of service from 5 to 10 years and 21 days ' wages for every year of service from 10 15 years.
Any schemes framed within the limitations of the terms of reference on the basis of basic wage alone will therefore mean a scale of benefits much lower than even the present scheme under the Employees Benefit Fund Trust.
Such 326 a scheme cannot, therefore, be framed without causing grave injustice and acute discontent, because it will mean the deprivation of even the present scale of benefits in the case of a large body of workers.
In order to maintain, so far as possible, the present level of benefits I have, therefore, no alternative but to frame for these two units a scheme based on basic wage plus dearness allowance.
" A scheme of gratuity based on consolidated wages was also justified in the view of the Tribunal because it "was also necessary to compensate for the ever diminishing market value of the rupee".
The Tribunal did however observe that normally gratuity is based not on the consolidated wage but on basic wage.
But since 13,000 workmen out of a total of 20,000 workmen in the region would stand to lose the benefits granted to them under a voluntary scheme introduced by the D.C.M. and S.B.M. a departure from the normal pattern should be made and gratuity should be based on the consolidated monthly wage.
In our judgment, the conclusion of the Tribunal cannot be supported.
The primary object of industrial adjudication is, it is said, to adjust the relations between the employers and employees or between employees inter se with the object of promoting industrial peace, and a scheme which deprives workmen of what has.
been granted to them by the employer voluntarily would not secure industrial peace.
But on that account the Tribunal was not justified in introducing a fundamental change in the concept of a benefit granted to the workmen in the textile industry all over the country by numerous schemes.
, The appropriate remedy is to introduce reservations protecting benefits already acquired and to frame a scheme consistent with the normal pattern prevailing in the industry.
We consider it fight to observe that in adjudication of industrial disputes settled legal principles have little play: the awards made by industrial tribunals are often the result of ad hoc determination of disputed questions, and each determination forms a precedent for determination of other disputes.
An attempt to search for principle from the law built up on those precedents is a futile exercise.
To the Courts accustomed to apply settled principles to facts determined by the application of the judicial process, an essay into the unsurveyed expanses of the law of industrial relations with neither a compass nor a guide, but only the pillars of precedents is a disheartening experience.
The Constitution has however invested this Court with power to sit in appeal over the awards of Industrial Tribunals which are, it is said, rounded on the somewhat hazy background of maintenance of industrial peace, which secures the prosperity of the industry and improvement of the conditions of workmen employed in the industry, and in 327 the absence of principles precedents may have to be adopted as guides some what reluctantly to secure some reasonable degree of uniformity of harmony in the process.
But the branch of law relating to industrial relations the temptation to be crusaders instead of adjudicators must be firmly resisted.
It would not be out of place to remember the statement of the law made in a different context but nonetheless appropriate here by Douglas, J., of the Supreme Court of the United States in United Steel Workers of America vs Enterprise Wheel and Car Corporation(1): ". as arbitrator does not sit to dis pense his own brand of industrial justice.
He may of course look for guidance from many sources, yet his award.
is legitimate only so long as it draws its essence from the collective bargaining agreement.
When the arbitrator 's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.
" We may at once state that we are not for a moment suggesting that the law of industrial relations developed in Our country has proceeded on lines parallel to the direction of the law in the United States.
One of the grounds which appealed to the Tribunal in relating to the rate of gratuity to the consolidated wage was the existence of a gratuity scheme in the D.C.M. & S.B.M. and the assumption that the Tribunal in adjudicating a dispute is always, in exercise of its jurisdiction, limited when determining the rate of gratuity to the multiple number of days of service in the order of reference, and cannot depart therefrom.
We are unable to hold that Industrial Tribunal is subject to any such restriction.
Its power is to adjudicate the dispute.
It cannot proceed to adjudicate disputes not referred: but when called upon to adjudicate whether a certain scheme "on the lines indicated" should he framed, the basic guidance cannot be deemed to impose a limit upon its jurisdiction.
As already stated, gratuity is not in its present day concept merely a gift made by the employer in Iris own discretion.
The workmen have in course of time acquired a right to gratuity on determination of employment provided the employer can afford having regard to his financial condition, to pay it.
There is undoubtedly no statutory direction for payment of gratuity as it is in respect of provident fund and retrenchment compensation.
The conditions for the grant of gratuity are, as observed in Bharatkhand (1) ; 325 Textile Mfg. Co. Ltd. 's case(1), (i) financial capacity of the employer; (ii) his profit making capacity; (iii) the profits earned by him in the past; (iv) the extent of his reserves; (v) the chances of his replenishing them; and (vi) the claim for capital invested by him.
But these are not exhaustive and there may be other material considerations which may have to be borne in mind in determining the terms and conditions of the gratuity scheme.
Existence of other retiring benefits such as provident fund and retrenchment compensation or other benefits do not destroy the claim to gratuity: its quantum may however have to be adjusted in the light of the other benefits.
We may repeat that in matters relating to the grant of gratuity and even generally in the settlement of disputes arising out of industrial relations, there are no fixed principles, on the application of which the problems arising before the Tribunal or the Courts may be determined and often precedents of cases determined adhoc are utilised to build up claims or to resist them.
It would in the circumstances be futile to attempt to.
reduce the grounds of the decisions given by the Industrial Tribunals, the Labour Appellate Tribunals and the High Courts to the dimensions of any recognized principle.
We may briefly refer to a few of the precedents relating to the grant of gratuity.
In May and Baker (India) Ltd. vs Their Workmen(2) the claim of the workmen to fix gratuity on the basis of gross salary was rejected by the Industrial Tribunal and the quantum was related to basic salary i.e., excluding dearness allowance.
The view taken by the Tribunal was affirmed by this Court.
In British India Corporation vs Its Workmen(3) the existing gratuity scheme directed payment of gratuity in terms of consolidated wages.
The Tribunal however modified the scheme while retaining the basis of consolidated wages which was held to be justified and reasonable.
This Court observed that prima facie gratuity is awarded not by reference to consolidated wages but on basic wages and the Tribunal had made a departure from that.
But in the view of the Court no interference with the scheme framed by the Tribunal was called for.
In British Paints (India) Ltd. vs Its Workmen(4) the Court followed the judgment in May and Baker (India) Ltd.(a) that it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wage excluding dearness allowance.
But the same principle was not adhered to in all cases.
For instance in Hindustan Antibiotics Ltd. vs Their Workmen(5), it was observed: (1) ; (2) [1961] II L.L.J. 94 (S.C.).
(3) [1965] II L.L.J. 556 (S.C.).
(4) [1966] I L.L.J. 407.
(5) [1967] I L.L.J. 114 (S.C.)==A.I.R. 329 "The learned counsel for the Company then argued that there is a flagrant violation or departure from the accepted norms in fixing the wage structure and the dearness allowance and therefore, as an exceptional case, we should set aside the award of the Tribunal and direct it to.
re fix the wages.
" In that case the Tribunal had awarded gratuity related to consolidated wages and without any contest the order of the Tribunal was confirmed.
In Remington Rand of India vs The Workmen(1) it was contended on behalf of the employer that the Tribunal was not justified in awarding gratuity on the basis of consolidated wages and should have awarded it on the basic wages alone.
In dealing with that plea this Court Observed that the Tribunal was on the facts of the case justified in proceeding in that way.
It is not easy to extract any principle.from these cases; as precedents they are conflicting.
If the matter rested there, we could not interfere with the conclusion of the Tribunal, but the Tribunal has failed to take into account the prevailing pattern in the textile industry all over the country.
The textile industry is spread over the entire country, in pockets some large other small.
There are large and concentrated pockets in certain regions and smaller pockets in other regions.
Except in two or three of the smaller States, textile units are to be found all over the country.
It is a country wide industry and in that industry, except in one case to be presently noticed, gratuity has never been granted on the basis of consolidated wages.
Out of 39 centres in which the textile industry is located there is no centre in which gratuity.
payable to workmen in the textile industry pursuant to awards or settlements is based on consolidated wages.
In the two principal centres viz., Bombay and Ahmedabad, schemes for payment .of gratuity to workmen in the textile industry the rates of gratuity are related to basic wages.
The B.C.M. have tendered before the Tribunal a chart setting out the names of textile units in which the gratuity is paid to the workmen on basic wages.
These are the Textile Units, Bhavnagar (Gujarat) Shahu Chhatrapati Mills, Kolhapur (Maharashtra); Jivajirao Cotton Mills, Gwalior (Madhya Pradesh); Madhya Pradesh Mill owners Association, (Indore), Bombay, Ahmedabad (Gujarat); New Sherrock Spg.
& Wvg.
Co. Ltd. Nadiad (Gujarat); Raja Bahadur Motilal Mills, Poona (Maharashtra); Shree Gajanan Wvg.
Mills, Sangli (Maharashtra); T.I.T. Bhiwani (Haryana); Jagatjeet Cotton Mills, Phagwada (Punjab); 36 Textile Mills in West Bengal; and Umed Mills (Rajasthan).
It is true that the chart does not set out the gratuity schemes, if any, in all the 39 centres referred to in the Report of the First Wage Board, but the chart relates to a fairly representative segment of the industry.
No evidence has been (1) [1968] I L.L.J. 542.
Cl/69 4 330 placed before the Court to prove that in determining gratuity payable under any other scheme in a textile unit the rate is related to consolidated wages.
The two large centres in which the industry is concentrated are Bombay and Ahmedabad.
In Rashtriya Mill Mazdoor Sangh, Bombay, vs Millowners Association Bombay(1), a scheme was framed by the Industrial Court, exercising power under the Bombay Industrial Relations Act 11 of 1947, in which the quantum of gratuity was related to the basic wages alone.
In paragraph 27 at p. 583 the Tribunal rejected the argument advanced by counsel for the workmen that since benefits like provident fund, retrenchment compensation, State Insurance Scheme, are granted in terms of monthly wages, gratuity should also be related to consolidated wages.
They observed that in a large majority of awards of the Labour Appellate Tribunals and Industrial.
Tribunals gratuity had been awarded in terms of basic wages, and that, "The basic wages reflect the differentials between the workers more than the total wages, as dearness allowance to all operatives is paid at a flat rate varying with the cost of living index.
The gratuity schemes for the supervisory and technical staff as well as for clerks are also in terms of basic wages.
" They accordingly related gratuity with the average basic wage earned by the workman during the twelve months preceding death, disability, retirement, resignation or termination of service.
The scheme in the Bombay region was adopted in the dispute between the Textile Labour Association and the Ahmedabad Mill Owners Association.
The award is reported in the Textile Labour Association, Ahmedabad vs Ahmedabad Millowners ' Association(2).
The question whether gratuity should be fixed on the basis ,of consolidated wages was apparently not mooted, but it was accepted on both the sides that gratuity should be related to basic wages.
An appeal against that decision in the Ahmedabad Millowners ' Association case(2) was brought before this Court in Bharatkhand Textile Manufacturing Co. Ltd. 's case(3), but no objection was raised to the award relating gratuity to basic wages.
In the report of the Central Wage Board for the Cotton Textile Industry, 1959, in paragraph 110 gratuity was directed to be given on the basis.
of wages plus the increases given under paragraph 106, but excluding the dearness allowance.
The only departure from the prevailing pattern to which our attention is invited was made by the Labour Appellate Tribunal in regard to the textile units in the Coimbatore Region: Rajalakshmi Mills Ltd. vs Their Workmen(4).
There was apparently (1) [1967] Industrial Court Reporter 561.
(2) [1958] I L.LJ. 349.
(3) ; (4) [1957] II L.L.J. 426.
331 no discussion on the question about the basis on which gratuity should be awarded.
The Labour Appellate Tribunal observed: 2. "In all the appeals there is a contest by the mills on the subject of gratuity, and it is contended that the gratuity as awarded is too high.
Both sides had much to say on the subject of the gratuity scheme as given by the adjudicator.
During the course of the hearing we indicated to the parties the lines on which the gratuity scheme could be suitably altered to meet their respective points of view.
We accordingly give the following scheme in substitution of the scheme at Para 85 of the award: 'All persons with more than five years and less than ten years ' continuous service to their credit, on termination of their service by the company, except in cases of dismissals for misconduct involving moral turpitude, shall be p.aid gratuity at the rate of ten days ' average rate of pay inclusive of dearness allowance for each completed year of service. ' . . . . . ." But this award was modified later by the Industrial Tribunal in Coimbatore District Mill Workers ' Union and Others vs Rajalakshmi Mills Co. Ltd.(1) The earlier award made in 1957 was sought to be reviewed before the Industrial Tribunal.
The Tribunal observed that it would be the duty of the Tribunal to modify a gratuity scheme based upon some agreement or settlement if the terms of that agreement are found to be onerous and oppressive.
The Tribunal stated that the original scheme was not applicable to all the units and taking into consideration the statutory provident fund scheme and "the fact that recently basic wages and dearness allowance have leaped up", there was No. justification for including the dearness allowance in any new scheme that might be framed for the new Mills; and that it would be most undesirable to have two sets of gratuity schemes in the same region with varying rates.
In the view of the Tribunal there should be a uniform scheme for all the Mills, old and new, and on that ground also the retention of the dearness allowance under the old scheme must be refused.
Counsel for the workmen relied upon an award made by the Industrial Tribunal in the Chemical Unit belonging to the D.C.M. which is published in D.C.M. Chemical Works vs Its Workmen(2).
In that case gratuity was related to consolidated wages.
The unit though belonging to the D.C.M. is entirely independent of the tex (1) [1964] I L.L.J. 638.
(2) [1962] 1L.L.J. 388.
332 tile unit.
The Company was treating that unit as separate from the textile unit and distinct for the purpose of recruitment of lab.our, sales and conditions of service for the workmen employed therein.
The Chemical Unit had separate muster rolls for its employees and transfers from one unit to.
the other, even where such transfers were possible, considering the utterly different kinds of businesses carried on in the different units, usually took place with the consent of the employee concerned.
In upholding the gratuity scheme which was based on the consolidated wages, this Court observed: "As to the burden of the scheme, we do not think that, looking at it from a practical point of view and taking into account the fact that there are about 800 workmen in all in the concern, the burden per year would 'be very high, considering that the number of retirements is between three to four per centum of the total strength." The gratuity scheme was in a chemical unit, and not in a textile unit.
The judgment of this Court merely affirmed the award of the Tribunal and sets out no reasons why gratuity should be related to consolidated wages.
We do not regard the affirmance by this Court of the award of the Industrial Tribunal as an effective or persuasive precedent justifying a variation from the normal pattern of gratuity schemes in operation in the textile industry all over the country.
It is clear that in the gratuity schemes operative at present to which our attention has been invited, in force in the textile industry payment of gratuity is related not to consolidated wages but to basic wages.
It is true that under the scheme which is in operation in the D.C.M. and S.B.M. payment which is related to the length of service may in some cases exceed the maximum awardable under a scheme of gratuity benefit related to basic wages.
That cannot be a ground for making a vital departure from the prevailing pattern in the other textile units in the country.
But it may be necessary to protect the interest of the members governed by the original scheme.
Determination of gratuity is not based on any definite rules.
In each case it must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions, examined in the light of the auxiliary benefits which the workmen may get on determination of employment.
If all over the country in the textile centres payment of gratuity is related to the basic wages and not on consolidated wages any innovation in the Delhi region is likely to give rise to serious industrial disputes in other centres all over the country.
The award if confirmed would not ensure industrial peace: it is likely to foment serious unrest in 333 other centres.
If maintenance of industrial peace is a governing principle of industrial adjudication, it would be wise to maintain a reasonable degree of uniformity in the diverse units all over the country and not to make a fundamental departure from the prevailing pattern.
We are, therefore, of the view that the Tribunal 's award granting gratuity on the basis of consolidated wage cannot be upheld.
Tiffs modification will not, however, affect the existing benefits which are available under the schemes framed by the D.C.M. and S.B.M. insofar as those two units are.
concerned.
Mr. Ramamurthi for the workmen also.
contended that in the matter of relating gratuity to wages consolidated or basic the principle of region cum industry should be applied and an "overall view of similar and uniform conditions in the industry ' in different centres" should not be adopted.
It was also urged that the basic wage is very low and the class of wage to which gratuity was related played a very important part in the determination of gratuity.
The basic wage is however low in all the centres and if it does not play an important part in other centres, we see no reason why it should play only in the Delhi region a decisive part so as to make a vital departure from the scheme in operation in the other centres in the country.
We are strongly impressed by the circumstance that acceptance of the award of the Tribunal in the present case is likely to create conditions of great instability all over the country in the textile industry.
In that view, we decline to uphold the order of the Tribunal fixing gratuity on the basis of consolidated wages inclusive of dearness allowance.
We may refer to the contentions advanced by counsel for the workmen in the two appeals filed by them.
It was urged,, that the Tribunal was in error in denying to the workmen gratuity when employment is determined on the ground of misconduct.
It was urged that it is now a rule settled by decisions of this Court that the employer is bound to pay gratuity notwithstanding termination of employment on the ground of misconduct.
It may be noticed that in the Rashtriya Mill Mazdoor Sangh 's case(1) and in the Ahmedabad Millowners ' Association case(2) provision was expressly made denying gratuity to the workmen dismissed for misconduct.
But in later cases a less rigid approach was adopted.
In Garment Cleaning Works case(3) tiffs Court observed: "On principle, if gratuity is earned by an employee for long and meritorious service, it is difficult to understand why.
the benefit thus earned by long and meritorious service should not be available to the employee even though at the end of such service he may have been found guilty of misconduct which entails his dismissal.
Gratuity is not paid to the employee gratui (1) [1957] Industrial Court Reporter, 561.
(2) [1958] I L.L.J. 349.
(3) 334 tously or merely as a matter of boon.
It is paid to him for the service rendered by him to the employer, and when it is once earned, it is difficult to understand why it should necessarily be denied to him whatever may be the nature of misconduct of his dismissal.
" In later judgments also the Courts upheld the view that the denial of the right to gratuity is not justified even if employment is determined for misconduct.
In Motipur Zamindari (P) Ltd. vs Their Workmen ( 1 ), this Court opined that the workmen should not be wholly deprived o.f the benefit earned by long and meritorious service, even though at the end of such service he may be found guilty of misconduct entailing his dismissal, and therefore the condition in a gratuity scheme that no gratuity should be payable to a workman dismissed "for misconduct involving moral turpitude" should be held unjustified.
The Court therefore modified the condition and directed that while paying gratuity to a workman who was dismissed for misconduct only such amount should be deducted .from the gratuity due to him in respect of which the employer may have suffered loss by the misconduct of the employee.
A similar view was expressed in Remington Rand of India Ltd. 's case (2).
In Calcutta Insurance Company Ltd. 's case(3) however protest was raised against acceptance of this rule without qualification.
Mitter, J., observed at p. 9 that it was difficult to concur in principle with the opinion expressed in the Garment Cleaning Works case(4).
Mitter, J., observed: "We are inclined to think that it (gratuity) is paid to a workman to ensure good conduct throughout the period he serves the employer. 'Long and meritorious service must mean long and unbroken period of service meritorious to the end.
As the period of service must be unbroken, so must the continuity of meritorious service be a condition for entitling the workman to gratuity.
If a workman commits such misconduct as causes financial loss to his employer, the employer would, under the general law, have a right of action against the employee for the loss caused, and making a provision for withholding payment of .gratuity where such loss was caused to the employer does not seem to aid to the harmonious employment of labourers or workmen.
Further, the misconduct may be such as to undermine the discipline in the workers a case in which it would be extremely difficult to assess the financial loss to the employer.
" (1) [1965] II L.L.J. 139.
(2) [1968] I L.L.J. 542.
(3) [1967] II L.L.J. 1.
(4) 335 "Misconduct" spreads over a wide and hazy spectrum of industrial activity: the most seriously subversive conduct rendering an employee wholly unfit for employment to mere technical default are covered thereby.
The parliament enacted the , which by section 15 has authorised the appropriate Government to make rules to carry out the purposes of the Act and in respect of additional matters to be included in the Schedule.
The Central Government has framed certain model standing rules by notification dated December 18, 1946, called 'The Industrial Employment (Standing Orders) Central Rules, 1946 '.
In Sch.
I Model Standing Orders cl. 14 provides: (1) . . . . . . (2) A workman may be suspended for a period not exceeding four days at a time, or dismissed without notice or any compensation in lieu of notice, if he is found to be guilty of misconduct.
(3) The following acts and omissions shall be treated as misconduct : (a) wilful insubordination or disobedience, whether alone or in combination with others, to any lawful and reasonable order of a superior, (b) theft, fraud or dishonesty in connection with the employer 's business or property, (c) wilful damage to or loss of employer 's goods or property, (d) taking or giving bribes.
or any illegal gratification, (e) habitual absence without leave or absence without leave for more than 10 days, (f) habitual late attendance, (g) habitual breach of any law applicable to the establishment, (h) riotous or disorderly behaviour during working hours at the establishment or any act subversive of discipline, (i) habitual negligence or neglect of work, (j) frequent repetition of any act or omission for which a fine may be imposed to a maximum of 2 per cent of the wages in a month, (k) striking work or inciting.
others to strike work in contravention of the provisions of any law, or rule having the force of law." ' 336 A bare perusal of the Schedule shows that the expression "misconduct" covers a large area of human conduct.
On the one hand are the habitual late attendance, habitual negligence and neglect of work: on the other hand are riotous or disorderly behaviour during working hours at the establishment or any act subversive of discipline, wilful insubordination or disobedience.
Misconduct falling under several of these latter heads of misconduct may involve no direct loss or damage to the employer, but would render the functioning of the establishment impossible or extremely hazardous.
For instance, assault on the Manager of an establishment may not directly involve the employer in any loss or damage which could be equated in terms of money, but it would render the working of the establishment impossible.
One may also envisage several acts of misconduct not directly involving the establishment in any loss, but which are destructive of discipline and cannot be tolerated.
In none of the cases cited any detailed examination of what type of misconduct would of would not involve to the employer loss capable of being compensated in terms of money was made: it was broadly stated in the eases which have come before this Court that notwithstanding dismissal for misconduct a workman will be entitled to gratuity after deducting the loss occasioned to the employer.
If the cases cited do not enunciate any broad principle we think that in the application of those cases as precedents a distinction should be made between technical misconduct which leaves no trail of indiscipline, misconduct resulting in damage to the employer 's property, which may be compensated by forfeiture of gratuity or part thereof, and serious misconduct which though not directly causing damage such as acts of violence against the management or other employees or riotous or disorderly behaviour, in or near the place of employment is conducive to grave indiscipline.
The first should involve no forfeiture: the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct and the third may entail forfeiture of gratuity due to ' the workmen.
The precedents of this Court e.g. Wenger & Co. vs Its Workmen(1), Remington Rand of India Ltd. case(2) and Motipur Zamindari (P) Ltd. 's case(a) do not compel us to hold that no misconduct however grave may be visited with forfeiture of gratuity.
In our judgment, the rule set out by this Court in Wenger & Co. 's case(1) and Motipur Zamindari (P) Ltd. 's case(3) applies only to those cases where there has been by actions wilful or negligent any loss occasioned to the property of the employer and the misconduct does not involve acts of violence against the management or other employees, or riotous or dis (1) [1963] II L.L.J. 403.
(2) [1968] I L.L.J. 542 (S.C.).
(3) [1965] II L.L.J. 139 (S.C.).
337 orderly behaviour in or near the place of employment.
In these exceptional cases the third class of cases the employer may exercise the right to forfeit gratuity: to hold otherwise would be to put a premium upon conduct destructive of maintenance of discipline.
It was urged on behalf of the workmen that the minimum period of 15 years fixed for voluntary retirement is too long and it should be reduced to 10 years.
In Hume Pipe Co. Ltd. vs Their Workmen(1) and Hydra (Engineers) Private Ltd. vs The Workmen(2) the minimum period for qualifying for gratuity on voluntary retirement was fixed at 15 years.
In other cases a shorter period of 10 years was adopted: Garment Cleaning Works(a); British Paints (India) Ltd.(4); Calcutta Insurance Co. Ltd.(5), and Wengel & Company(x).
Counsel for the employers have accepted that qualifying length of service for voluntary retirement should be reduced to 10 years.
Counsel for the employers have also accepted that having regard to all the circumstances, notwithstanding the direction given by the Tribunal and the schemes prevailing in the other parts of the country in the textile industry, the maximum gratuity should not exceed 20 months ' basic wages and not 15 months ' as directed by the Tribunal.
Further counsel for the D.C.M. and S.B.M. have agreed that in case of termination of employment on voluntary retirement one full months basic wages for each completed year of service not exceeding 20 months ' wages should be granted to workmen.
Counsel for the B.C.M. has agreed that gratuity at the rate of 21 days ' wages for each completed year of service in case of voluntary retirement or resignation after 10 years ' service may be awarded as gratuity to the workmen.
Counsel for the A.T.M. has shown no disinclination to fall in line with this suggestion.
Counsel for the A.T.M. has also not objected to appropriate adjustments in view of the concessions made by the management of the D.C.M., S.B.M. and B.C.M.
It was urged by counsel for the workmen that in providing that gratuity shall be paid to Badli workmen for only those years in which a workman has worked for 240 days, the Tribunal has committed an error.
It was urged that a Badli workman has to register himself with the management of the textile unit and is required every day to attend the factory premises for ascertaining whether work would be provided to him, and since a Badli workman has to remain available throughout the year when the factory is open, a condition requiring that the Badli workman has worked for not less than 240 days to qualify for gratuity is unjust.
We (1) [1959] II L.L.J. 830.
(2) C.A. No. 1934 of 1967 decided on April 30, 1968.
(3) (4) [1966] I L.L.J. 407 (S.C.) (5) [1967] II L.L.J. 1 (S.C.).
(6) [1963] II L.L.J. 403 (S.C.) 338 are unable to agree with that contention.
If gratuity is to be paid for service rendered, it is.
difficult to appreciate the grounds on which it can be said that because for maintaining his name on the record of the Badli workmen, a workman is required to attend the Mills he may be deemed to have rendered service and would on that account be entitled also to claim gratuity.
The direction is unexceptionable and the contention must be rejected.
It was also urged by Mr. Ramamurthi that the expression "average of the basic wage" in the definition of "wages" in cl. 4 of the Schemes is likely to create complications in the implementation of the Schemes.
He .urged that if the wages earned by a workman during a month are divided by the total number of working days, the expression "wages" will have an artificial meaning and especially where the workman is old or disabled or incapacitated from rendering service, gratuity payable to him will be substantially reduced.
We do not think that there is any cause for such apprehension.
The expression "average of the basic wage" can only mean the wage earned by a workman during a month divided by the number of days for which he has worked and multiplied by 26 in order to arrive at the monthly wage for the computation of gratuity payable.
Counsel for the employers agree to this interpretation.
It was then urged that whereas the reference to.
the Industrial Tribunal was made by the Delhi Administration sometime in March 1958, the award is .given effect to from January 1, 1964, and for a period of nearly six years the workmen have been deprived of gratuity, when the delay in the disposal of the proceedings was no.t due to.
any fault or delaying tactics on the part of the workmen.
The reference was made in the first week of March, 1958.
The Textile Mazdoor Union then applied to be impleaded on September 15, 1958, the D.C.M. and S.B.M. moved the High Court of Punjab at Delhi and obtained an order for stay of proceedings in writ petition filed against the order of the Tribunal impleading the Textile Mazdoor Union.
That writ petition was dismissed in February 1961 and the proceedings were resumed on December 12, 1962.
Thereafter preliminary issues were decided and on December 3, 1963, ,an interim award relating to other disputes was made.
It must, however, be noticed that there were four claims and the claim relating to gratuity was taken in hand by the Tribunal after disposal of the other claims.
Neither party was dilatory in the prosecution of any claim before the Tribunal.
It has also to be noticed that in the D.C.M. and S.B.M. there was in fact a gratuity scheme already in operation.
The liability of the A.T.M. to pay gratuity arises after that unit acquired sufficient financial stability and it is not suggested that the unit had acquired financial stability before January 1, 1964.
The is.sue remains a live issue only in respect of the B.C.M.
It is true that the gratuity 339 scheme of the D.C.M., and S.B.M. was related only to the length of service and did not take into account the varying rates of wages received by the workmen.
But the question if at all would, be one of making minor adjustments in the liability of the two units to pay gratuity in the event of gratuity being payable under this award at a higher rate than the gratuity awardable under the scheme already in operation in the two units.
If in respect of the A.T.M. which had no scheme gratuity for all practical purposes becomes operative from January 1, 1964, we do not see any reason why in respect of the B.C.M. any different rule should be provided for.
Again, the Tribunal has fixed January 1, 1964, as the date for the commencement of the schemes.
Giving the schemes effect before January 1, 1964, may rake up cases.
in which the workmen have left the establishments many years ago.
It would not be conducive to industrial peace to allow such questions to be raised after this long delay.
The question is not capable of solution on the application of any principle and must be decided on the consideration of expediency.
We do not think that any ground is made out for altering the award of the Industrial Tribunal in this behalf.
It was then urged that in any event the workmen of the D.C.M. and S.B.M. should not be deprived of the right to gratuity under the scheme of the two u,nits, if gratuity at a higher rate is payable to them under the voluntary scheme.
This contention must be accepted.
We direct that in respect of all workmen of the D.C.M. and S.B.M. who were employed before January 1, 1964, and continued to remain employed till that date, gratuity at the higher of the two rates applicable to each workman when he becomes entitled to gratuity either computed under the Employees Benefit Fund Trust scheme of the D.C.M. and S.B.M. or under the terms of this award shall be paid.
Workmen employed after January 1, 1964, will be entitled to the benefit of this award alone.
Industrial disputes have given rise to considerable strife holding up development of industry and the economic welfare of the nation.
Awards have been made by the Tribunals often on considerations adhoc and based on no principle and Courts have upheld or modified those awards without enunciation of any definite or generally accepted principle.
In the present case we have been largely guided b37 the consideration of securing a reasonable degree of uniformity in the fixation of gratuity in the textile industry, for, in our view, a departure made from the prevailing pattern in one region is likely to give rise to claims all over the country for modification of the gratuity schemes in operation, and have been accepted as fixing the basis.
of gratuity schemes.
If having regard to the deteriorating value of the rupee, it is thought necessary that more generous benefits should be available to the 340 workmen by way of gratuity, the remedy lies not before the adjudicators or the Courts, but before the legislative branch of the State.
In respect of the bonus, provident fund, retrenchment compensation, State Insurance Schemes as well as medical benefits, legislation has been introduced bringing a reasonable degree of certainty in the laws governing the various benefits available to the workmen and we are of the view that even in respect of gratuity a reasonably uniform scheme may be evolved by the Legislatures which could prevent resort to the adjudicators in respect of this complicated matter of dispute between the employers and the employees.
It may no.t be difficult to evolve a scheme which would meet the legitimate claims.
of both the employers and the employees and which might, while eliminating cause for friction, ' simultaneously conduce to greater certainty in the administration of the law governing industrial disputes, and secure benefits to the employers as well as the employees and conduce to the prosperity of the industry as well as of the workmen.
We propose to summarise the effect of our judgment: (1) A unit wise approach in framing the gratuity scheme for the four units was appropriate, and on the terms of the reference the plea of the employers to fix the age of superannuation was beyond the scope of reference.
The financial condition of the D.C.M., S.B.M. and B.C.M. justifies imposition of gratuity schemes as from January 1, 1964.
Even the A.T.M. which is the weakest of the four units is financially stable from the date on which the award becomes operative; (2) The settlement between the workmen and the A.T.M. did not operate to bar the jurisdiction of the Tribunal to make the scheme of gratuity payable to the workmen of the A.T.M.; (3) That the Tribunal was in error in relating gratuity awardable to the workmen to the consolidated wage; (4) That the minimum period for .
qualifying for voluntary retirement should be reduced to 10 years and one months basic wage in the case of D.C.M. and S.B.M. and 21 days ' basic wage in the case of B.C.M. and A.T.M. for each completed year of service should be paid but not exceeding 20 months wages in the aggregate.
(This direction is made with the consent of the Advocates of the employers); 341 (5) That workmen dismissed or discharged from service for misconduct will not be entitled to gratuity if guilty of conduct involving acts of violence against the management or other employees, or riotous or disorderly behaviour in or near the place of employment; (6) No modification need be made with regard to Badli workmen; (7) The award needs no modification with regard to the date of operation of the award; and (8) The workmen of the D.C.M. and S.B.M. who commenced service and continued to serve till January 1, 1964, and thereafter will be entitled to elect at the time when gratuity becomes due to claim gratuity either on the scheme in force under the Employees Benefit Fund Trust of the employers or under this award.
We have made some incidental changes to streamline the scheme.
On the view we have taken of the schemes, Annexure 'A 'relating to the D.C.M. and S.B. M. of the award will be modified in the following respects: In clause 1 (a) instead of "12 days ' wages", the expression "20 days ' wages" will be substituted; In clause 1 (b) for the expression "15 days ' wages", the expression "1 month 's wages" will be substituted; In proviso (ii) to clause 1 for the expression "15 months ' wages", the expression "20 months ' wages" will be substituted; In clause 2 for the expression.
"15 days ' wages", the expression "1 months wages will be substituted; and for the expression ' 15 years service , 10 years service will be substituted; In the proviso to clause 2 for the expression "15 months ' wages", the expression "20 months ' wages" will be substituted; In clause 3 in the proviso for the expression "15 months ' wages", the expression "20 months ' wages" will be substituted; Clause 3 will be followed by an Explanation: "Explanation.
The expression "misconduct" means acts involving violence against the management or other employees, or riotous or disorderly behaviour in or near the place of employment.
342 Where the workman is guilty of conduct which involves the management in financial loss, the loss occasioned may be deducted from the gratuity payable." In clause 4 the words "plus the dearness allowance" will be omitted.
The remaining clauses will stand unaffected except that for the words "within six months from the date of publication of this Award" ' the words "within six months from the date of this judgment" will be substituted.
Annexure 'B ' relating to the B.C.M. and A.T.M. will be modified in the following respects: In clause 1 (a) for the expression "one fourth month 's wages", the expression "15 days ' wages" will be substituted; In clause 1 (b) for the expression "one third month 's wages", the expression "21 days ' wages" will be substituted; In the proviso for the expression "12 months ' wages", the expression "20 months ' wages" will be substituted; In clause 2 for the words "15 years ' service", the expression "10 years ' service" will be substituted; In clause 3 in the proviso for the expression "12 months ' wages", the expression "20 months ' wages" will be substituted and it will be followed by the Explanation of "misconduct" as in Annexure 'A '.
In clause 4 the words "plus the dearness allowance" will be omitted.
There will be no order as to costs in these appeals.
V.P.S. Award modified accordingly.
|
In the Delhi region there are four textile units.
namely, the D.C.M., the S.B.M., the B.C.M., and the A.T.M. The D.C.M. and the S.B.M. are under one management.
Since 1940 they had also a common retirement benefit scheme with a scale of gratuity.
The ' workmen in all the units were receiving basic wages plus dearness allowance.
On March 4, 1958, an industrial dispute between the four units and their workmen was referred to the Industrial Tribunal and one of the matters in dispute related to gratuity.
The Tribunal in its award framed two schemes relating to the payment of gratuity, one relating to D.C.M. and S.B.M., and the other, to B.C.M. and A.T.M. They were made operative from January 1, 1964.
Both employers and employees appealed to this Court.
On the questions: (1 ) Whether in view of a settlement between the management of A.T.M. and its workmen it was open to the Tribunal to ignore the settlement and impose the scheme on the management; (2) Whether in view of the unstable financial condition of A.T.M. the burden of payment of gratuity on A.T.M. was excessive; (3) Whether a uniform scheme applicable to the entire industry on the region cum industry basis should have been adopted instead of schemes applicable to individual units; (4) Whether in determining the quantum of gratuity, basic wage alone should be taken into account and not the consolidated wage including dearness allowance; (5) Whether in deciding this question, an overall view of similar and uniform conditions in the industry in different centers in the country, could he taken into consideration; (6) Whether it was not necessary for the Tribunal to fix the age of superannuation when introducing a gratuity scheme; (7) Whether gratuity should have been awarded even in cases of dismissal for misconduct; (8) Whether provision should have been made for payment of gratuity to badli workmen irrespective of the number of days for which they worked in a year; (9) Whether the schemes should have been made operative from the date of reference; and (10) What is the scope of the expression 'average of the basic wage '.
HELD: (1) The settlement between the workmen and management of A.T.M. did not bar the jurisdiction of the Tribunal to make the Scheme of gratuity applicable to A.T.M. [340] Under the settlement all that was agreed to was, that an award should be made and if it he found that A.T.M. acquired financial stability then it would be liable to pay the gratuity to its workmen.
It was not agreed that the proceedings before the Tribunal should be dropped and that it 308 was only after A.T.M. became financially stable that a fresh claim should be made by the workmen.
[320 D F] (2) The trading accounts of A.T.M. showed that since 1959 60 the Mills had achieved some stability, and that by 1961 62 all previous losses were wiped out.
Therefore, though it was a much weaker unit than the others, it was financially stable from the date on which the scheme became operative.
[321 A C] (3) A unit wise approach in framing the gratuity scheme 'for the four units was appropriate in the present case.
[323 B C; 340 D E] No inflexible rule has been laid down by this Court that gratuity schemes should he framed only on the region cure industry principle.
In the present case, if a common scheme was framed for the entire industry in Delhi for all four units, in view of the financial condition of A.T.M., the benefits under such a scheme would be not only low, but would be lower than the existing benefits available to workmen in the D.C.M. and S.B.M. Units.
[321 C D, H; 322 E F, H] Garment Cleaning Works vs Its Workmen, [1962] 1 S.C.R. 711: and Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh, , followed.
Bharatkhand Textile Mfg. Co. vs Textile Labour Association ; , explained.
(4) The Tribunal was in error in relating the gratuity awardable to the workmen to the consolidated wage instead of the basic wage.
[340 G] (a) In determining the scope of an industrial reference words used, either in the claim or in the order of reference, should not necessarily be given the meaning they have under the Industrial Disputes Act.
Therefore, merely because the expression "wages" in the Act includes dearness allowance, the Tribunal could not base the gratuity scheme on consolidated wages.
[325 D F] (b) An industrial tribunal cannot adjudicate on disputes not referred; but when called upon to adjudicate ' whether a certain scheme, on the terms indicated in the reference should be framed, such basic guidance does not limit its jurisdiction.
The Tribunal, in this case, was in error in thinking that in determining the rate of gratuity it was limited to the number of days of service in the order of reference as the applicable multiple.
On that assumption, since the gratuity would be too low if only basic wage was chosen, it was not justified in choosing consolidated wage.
The proper procedure would have been to choose only the basic wage and fix upon a larger number of days of service as the appropriate multiple.
[327 E H] (c) The decisions of this Court in May and Baker (India) Ltd. vs their Workmen, [1961] II L.L.J. 94 (S.C.), British India Corporation vs Its Workmen, [1965] II L.L.J. 556 (S.C.), British Paints (India) Ltd. vs Its Workmen, , Hindustan Antibiotics Ltd. vs Their Workmen, and Remington Rand of India vs The Workmen, are conflicting and no principle can be extracted as to whether basic wage or consolidated wage should be considered for purposes of gratuity.
Ordinarily, in those circumstances, this Court would not have interfered with the conclusion of the Tribunal choosing consolidated wage; but, the Tribunal had failed 309 to take into account the prevailing pattern in the textile industry all over the country.
It is country wide industry and in that industry, gratuity has never been granted on the basis of consolidated wages.
[329 C F; 330 A] (d) The primary object of industrial adjudication is to adjust the relations between employers and employees with the object of promoting industrial peace.
If the basic wage alone is taken for purposes of gratuity, it would produce in the present case, a scheme which deprives the workmen of the D.C.M. and S.B.M. of benefits which had been granted to them under the voluntary scheme introduced by the management of those two units and disturb industrial peace therein.
But on that account, the Tribunal was not justified in introducing a fundamental change in the concept of gratuity granted by numerous schemes in the textile industry all over the country.
The appropriate remedy is to frame a scheme consistent with the normal pattern prevailing in the industry and introduces reservations protecting benefits already acquired.
[326 C F] (e) In the report of the Central Wage Board for the cotton textile industry, also, gratuity was directed to be given on the basis of wages excluding dearness allowance.
[330 G] (f) In D. C.M. Chemical Works vs Its Workmen, this Court affirmed the award relating gratuity to consolidated wages.
Though the unit also belonged to D.C.M. it is a unit entirely independent of the textile unit.
So, it cannot be regarded as an effective or persuasive precedent justifying variation from the normal pattern of gratuity schemes in operation in the textile industry all over the country.
[331 H; 332 A B, D E] (5) If all over the country, in textile centres, payment of gratuity.
is related to the basic wage and not to the consolidated wage any innovation Delhi region alone is likely to give rise to serious industrial disputes in other centres in the country.
If maintenance of industrial peace is a governing principle of industrial adjudication, it would be wise to maintain a 'reasonable degree of uniformity in the diverse units all over the country and not to make a fundamental departure from the prevailing pattern.the basic wage is low in all other centres, and if it does not play an important part, there is no reason why it should play, only in the Delhi region, a decisive part so as to make a vital departure from schemes in operation in other centres in the country.
The acceptance of the award the Tribunal in the present case is likely to create conditions of great instability in other parts of the country in the textile industry.
Therefore, the Tribunal 's award granting gratuity on the basis of consolidated wage could not be upheld.
[332 G H; 333 A E] (6) It is not necessary, for a gratuity scheme to be effective, that here should be fixation of the age of superannuation.
[323 C D] Burhanpur Tapti Mills Case, , referred Further, on the terms of the reference the plea of the employers to fix the age of superanuation was beyond the scope of the 'reference, nor was such fixation incidental to the framing of the scheme.
[323 H 324 c] (7) The object of providing a gratuity scheme is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer.
It is therefore not correct to say that no misconduct, however grave, may not be visited with forfeiture of gratuity.
Misconduct could be (a) 310 technical misconduct which leaves no trail of indiscipline; (b) misconduct resulting in damage to the employers ' property which may be compensated by forfeiture of gratuity or part thereof; and (c) serious misconduct such as acts of violence against the management or other employees or riotous or disorderly behaviour in or near the place of employment which, though not directly causing damage, is conducive to grave indiscipline.
The first should involve no forfeiture, the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct, and the third will entail forfeiture of gratuity due to the workmen.
[324 F G; 336 D F; 341 A B] Garment Cleaning Works vs Its Workmen, ; (1961) I L.LJ. 513, Wenger & Ca.
vs Its Workmen, [1963] II L.L.J. 403 (S.C.), Motipur Zamindari (P) Ltd. vs Their Workmen, [1965] II L.LJ.
139 (S.C.) Calcutta Insurance Co. vs Their Workmen, [1967] II L.LJ. 1 (S.C.), and Remington Rand of India vs The Workmen, [1968] I L.L.J. 542 (S.C.).
referred to.
(8) The award does not require to be modified with regard to badli workmen.
If gratuity is to be paid )for service rendered then there are no grounds for holding that a badli workman must be deemed to have rendered service giving rise W a claim of gratuity, merely because, for maintaining his name on the record of the badli workmen, he is required to attend the mills.
[338 A B] (9) The award needs no modification with regard to the date of commencement of the schemes.
The liability of A.T.M. to pay gratuity arose after it acquired sufficient financial stability and the unit acquired financial stability only from January 1, 1964.
If in respect of the A.T.M. which had no scheme.
gratuity becomes operative from January 1, 1964, there is no reason why respect of B.C.M. any different rule should be provided for.
As regards D.C.M. and S.B.M. there was already a more advantageous gratuity scheme in operation and the workmen in those two units were not prejudiced by directing the scheme applicable to them, to commence from January 1, 1964.
If effect was given to the schemes before January 1, 19 '64, it may rake up cases in which workmen have left the establishment many years ago and it would not be conducive to industrial peace to allow such questions to be raised after a long delay.
In the absence of any principle, the matter must be decided on considerations of expediency.
[338 G H; 339 A D] (10) The expression 'average of the basic wage ' means wage earned by a workman during a month, divided by the number of days for which he had worked, and multiplied by 26 in order to arrive at the monthly wage for the computation of gratuity payable.
[333 C D] [Appropriate directions modifying the schemes were accordingly given.]
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2488.txt
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tition Nos.
43 of 1981, 51 53, 415 18/81, 5465 5562/83, 1751 52/81 and 7763 7890 of 1983.
676 Dr. L. M. Singhvi, B. Kanta Rao, Lakshmi Kant Pandy and J. Eswara Prasad for the Petitioners.
M. section Ganesh, Ms. Lata Krishnamoorty and T.V.S.N. Chari for the Respondent.
The Judgment of the Court was delivered by DESAI, J.
Should article 32 of the Constitution lend its assistance to petitioners in this group of petitions so that the poor in Andhra Pradesh can be successfully deprived of their staple simple breakfast ? Even an imaginary marginal dent in the profits of the hoteliers stirs it into action by an easy resort to a writ petition under article 32 and an ex parte stay which itself is success even if the petition ultimately fails because in the meantime the measure which may possibly affect their profits is kept under suspended animation and the profit being continuously derived from scattered consumers is not refundable and the unjust enrichment is enjoyed with impunity.
This case amply illustrates the point.
Hoteliers of Andhra Pradesh raised a hue and cry when the Government of Andhra Pradesh the first respondent enacted and proclaimed in exercise of the powers conferred by Sec. 3 of the (1955 Act for short) read with the notification of the Ministry of Agriculture and Irrigation dated June 9, 1978, the Andhra Pradesh Catering Establishments (Fixation and Display of Prices of Foodstuffs) Order.
1978 (1978 Order for short) dated September 8, 1978 whereby it was made obligatory for the catering establishments to display the prices of all foodstuffs served by the establishment and simultaneously fixed the maximum price of seven items of food comprising the poorman 's menu in the State of Andhra Pradesh.
The seven items enumerated in the Schedule appended to the 1978 Order include idli, vada, upma, sada dosa, puree, coffee, tea and a rice plate (scheduled items for short).
3 of the Order prescribed maximum prices of the scheduled items of food and cl. 4 makes it obligatory to display in English and principal language of the area the weight or measure and price of every item of foodstuff offered for sale in the establishment.
There were consequential provisions such as power to issue directions, power to call for information, power of entry, search & seizure and power to grant exemption as also power to amend the Schedule.
A clarificatory notification was issued on October 3, 1978 giving certain directions.
677 The Schedule and the rates set out therein were modified by the Amending Order dated December 11, 1980.
The amendment catered to an upward revision of the prices.
It seems some further negotiations took place between the Minister of Civil Supplies and Labour on the one hand and hoteliers on the other which led to a notification dated January 5, 1981 (1981 Order for short) giving further upward revision in maximum price of scheduled items and the scheduled items were reduced from 7 to 6 deleting rice place.
Ignoring this latest order which replaced the earlier orders, the petitioners approached this Court and obtained an ex parte stay of the implementation of Orders dated September 5, 1978 and December 11, 1980.
In fact, but for the intervention by the Court staying the operation of earlier orders, the order dated January 5, 1981 was not stayed yet effectively the petitioners succeeded in putting into cold storage the price fixation order leaving them free to charge any price unhampered and uninhibited by any governmental action.
Dr. L.M. Singhvi, who led on behalf of the petitioners made two submissions which have nothing to do with the validity or legality of the impugned Orders.
He submitted that the Court should give a direction to the State Government to re examine the prices of inputs and overhead charges so as to arrive at such maximum price of the scheduled commodities as to ensure a reasonable return on the investment which would render the restriction on the fundamental right to carry on trade, reasonable and satisfy article 19 (1) (g) of the Constitution.
He next submitted that there are certain directions in the 1978 and 1981 orders which are impossible of compliance and, therefore, the petitioners should be heard before they are compelled to implement the conditions.
Neither of the submissions has any impact on the validity of the impugned Orders.
It may, however, be pointed out how the petitioners suppressing material facts succeeded in obtaining an ex parte stay order.
In the counter affidavit filed by one Mr. D. Muralikrishna, Director of Civil Supplies, it was stated that after the Order dated December 11, 1980 was issued the hoteliers resorted to some agitation which led to the Minister of Civil Supplies calling a meeting of the hoteliers.
What transpired at this meeting may be extracted from the counter affidavit: "The Minister for Civil Supplies therefore convened a meeting at Hyderabad on 31.12.80 with the representatives of hoteliers all over the State and the Joint Collectors.
At the said meeting all the issues involved were thoroughly 678 discussed.
After prolonged discussions, the hoteliers of the districts have agreed unanimously for reducing the prices in respect of 6 items of foodstuffs excluding meals and an undertaking to that effect was signed by the hoteliers at 1.30 a.m. on 1.1.1981.
" A copy of the undertaking is produced at Annexure 'B ' to the counter affidavit which inter alia also provided that the rates of the scheduled items determined with the consent of the hoteliers will be reviewed after three months.
What is now demanded is that the State Government should examine the prices of inputs and overhead charges and determine afresh the maximum prices of the scheduled items, which was very much an integral part of an over all agreement between the State Government and the hoteliers.
After suppressing this material fact from the Court in the petition, the petitioners obtained an ex parte stay order on January 12, 1981 and this was suppression of such a material fact as would disentitle the petitioners to any relief at the hands of this Court.
That apart review at reasonable interval is implicit in any price fixation measure.
The second submission that the petitioners be heard to point out the impossibility of complying with some of the conditions of the Orders is merely to be stated to be rejected.
If the real bone of contention was the maximum price of scheduled items which was to be thrashed out by discussion, it is not possible to accept the submission that the petitioners would not have put forth their grievances about the impossibility of complying with some of the conditions of the impugned orders.
There is not a whisper about it in the agreement Annexure 'B ' and we do not find anything very unusual or impracticable in the conditions prescribed in the impugned orders.
Mr. B. Kanta Rao who appeared for some of the petitioners urged that the State Government is not competent to issue any price control measure in respect of cooked food because the which confers power to issue orders in respect of essential commodities does not confer any power to issue any order in respect of cooked food.
3 of confers power on the Central Government by an order to provide for regulating or prohibiting the production, distribution and supply and trade in essential commodity or for securing their equitable distribution and availability at fair prices.
The power to fix price of essential commodity is implicit in the power conferred by of the Act and what is implicit in Sec.
3 (1) is made explicit by cl.
(c) of sub section (2) of Sec. 3 which provides that an order made under Sec. 3 (1) may provide (c) for controlling the price at which essential commodity may be bought or sold.
Clause (a) of Sec.
2 defines 'essential commodity ' to mean any of the items which include. (v) foodstuffs, including edible oilseeds and oils.
The submission is that the expression 'foodstuffs ' in its etymological and grammatical sense would mean raw foodstuffs or appropriately called food grains such as wheat, rice, jawar, bazra, maize etc.
but not cooked food which is a perishable commodity.
We see no justification for giving a restricted meaning to the expression 'foodstuffs '.
If power to control prices of raw foodstuffs such as rice or wheat is conferred by Sec. 3, we see no justification for that power not comprehending within its fold the power to regulate prices of articles made out of such raw foodstuffs.
Expression such as 'foodcrops ' 'spices ' and 'condiments ' indicate different species of articles of food but the general expression 'foodstuffs ' was interpreted to include spices and condiments also.
In the State of Bombay vs Virkumar Gulabchand Shah(1) this Court construed the expression 'foodstuffs ' in cl.
(3) of the Spices (Forward Contract Prohibition) Order of 1944 read with Sec. 2 (a) of the Essential Supplies (Temporary Powers) Act, 1946 to include turmeric.
After examining the definition of expression 'foodstuffs ' in Oxford English Dictionary and Webster 's International Dictionary and some decisions bearing on the subject, this Court held that the expressions 'food ' and 'foodstuffs ' can be used in both a wide and a narrow sense and that the circumstances and background can alone determine which is proper in any given case.
After examining the object and the intendment underlying enactment of Essential Supplies (Temporary Powers) Act, 1946, this Court held that if turmeric is a commodity essential to the life of the community it must be covered by the expression 'foodstuffs '.
Accordingly, it was held that the expression 'foodstuffs ' has been used in a wider sense in 1946 Act.
It may be recalled that the was enacted for the control of the production, supply and distribution of and trade and commerce in essential commodities.
It has the same object as the 1946 Act and therefore, the expression 'foodstuffs ' in 1955 Act must receive the same construction.
If that be so, the expression 'foodstuffs ' must obviously include cooked food also.
Further the expression 'food ' has generally been understood to mean nutritive material absorbed or taken into the body of an 680 organism which serves for purposes of growth work or repair and for the maintenance of the vital process.
What human beings consume is styled as food and what animals consume is described as animal feed.
This distinction has to be borne in mind.
Expression 'foodstuffs ' is made of two expressions, 'food ' plus 'stuff '.
In other words, the stuff which is used as food would be foodstuff.
Therefore, foodstuff is that which is taken into the system to maintain life and growth and to supply waste of tissue.
If the raw foodstuff with a view to making it consumable by human beings undergoes a change of its condition by the process of cooking, the derivative is none the less foodstuff.
If raw rice is foodstuff, does rice when boiled in water cease to be foodstuff.
As the Chinese by an accidental fire in a hut where there were pigs learnt the advantage of consuming cooked food in place of raw food, the submission of Mr. Kanta Rao would make us march backward by centuries and be a disgrace to modern culinary article And 'food crop ' is another expression defined in the 1955 Act.
Therefore, the expression 'foodstuff ' as used in the 1955 Act comprehends cooked food.
The contention of Mr. Kanta Rao, therefore, must be negatived.
It was next contended that the maximum price of scheduled items fixed under the impugned orders is economically unprofitable and the same have been arrived at without scientifically examining the price of inputs and overhead charges and the reasonable return on investment and therefore, the exercise of fixing maximum price suffers from the vice of arbitrariness and must be declared unconstitutional as being violative of article 14.
While canvassing the submission, some attempt was made both on the side of the petitioners as well as on the side of the State to take us through the labyrinth of the tables drawn up by both side showing prices of inputs and overhead charges.
We declined to be involved in the vortex of this cost accountant 's exercise as we are neither experts of the subject nor we consider it necessary to undertake this exercise.
The argument proceeded that the prices of inputs have escalated so high that the maximum prices determined by the impugned orders have become uneconomical.
For this malaise, petitioners have to thank themselves because it was an integral part of their agreement with the Minister of Civil Supplies on December 31, 1980 that the maximum prices fixed by the impugned orders would be re examined on the expiration of the three months from the date of the agreement.
Instead of honoring this agreement, the petitioners within a span of 12 days rushed to this Court and obtained ex parte stay order wholly suppressing the fact that the orders 681 impugned in these petitions have already been replaced by the latest order dated January 5, 1981.
Petitioners who have behaved in this manner are not entitled to any consideration at the hands of the Court.
In order to illustrate how the Court is not the forum for scientifically structuring prices of commodities, it may be pointed out that the petitioners in their price structure tables have added in respect of each scheduled item 24% of wages.
Totalling the wages for seven items the wage bill accumulates at 175%.
And that is equally true of other overhead charges.
Add to this numerous other items of food sold by petitioners in their establishments and the utter unsustainability of their claim becomes manifest.
We would however, reject the contention about the mechanics of price fixation on the short ground that petitioners, ordinarily do not serve only the scheduled items, but they have large establishments catering to various tastes and delicacies.
No price fixation order need guarantee profit to an establishment in respect of each unit of article served or sold.
It is the over all picture in the trade or commerce that needs to be examined.
Petitioners have not shown that in their over all turnover they have since the promulgation of impugned orders suffered losses.
And this situation never fructified because the 1978 Order was kept in suspended animation for a period of two years and when the latest order dated January 5, 1981 was promulgated, it was still born at the hands of the Court because of the ex parte stay order obtained by the petitioners.
And we reject this contention for the additional reason as laid down by a Constitution Bench of seven learned Judges of this Court in Prag Ice & Oil Mills & Anr.
vs Union of India(1) where Chandrachud, C.J. observed as under; "In the ultimate analysis, the mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted in the generality of cases as valid." 682 Not the slightest case is made out for departure from the proposition laid down by this Court as extracted hereinabove.
Before we conclude, we would like to pin point the unfair advantage which the petitioners have obtained by ex parte stay suppressing the material fact that the later order had already replaced the earlier orders and the latest order was issued with their consent.
In the Writ Petition No. 43/81 the prayer clause reads as under: "Issue a writ of mandamus or any other appropriate writ or order holding that G.O. Ms. No. 548 dated 8.9.1978 and G.O. Ms. No. 626 dated 11.12.1980 of the Government of Andhra Pradesh and the notification issued by the Collector, the second respondent herein dated 16.12.1980 in pursuance of the said impugned Orders as ultra vires, unconstitutional and void and quash the same.
" The bone of contention was not the power exercised by the State Government but the maximum prices fixed in exercise of the power conferred on the State Government.
The maximum prices were to be regulated as per the order dated January 5, 1981, and even though this Court was moved for ex parte stay on January 12, 1981, the fact that the latest order dated January 5, 1981 has replaced the earlier orders was suppressed from the Court.
And peculiarly the State Government did not pursue vigorously its latest notification dated January 5, 1981 because its operation was not stayed by the Court.
However, the entire notification fixing the price of the menu of the poormen was put under suspended animation leaving the hoteliers to extort any price to suit their greed.
Now that we are dismissing these petitions and vacate the stay orders, the notification fixing the maximum prices will revive and can be enforced.
But in the meantime the poor of Andhra Pradesh were made to pay by their nose for their simplest menu and the difference between maximum price fixed by the impugned notification and the prices charged by the hoteliers would be unjust enrichment of the hoteliers undeservedly enjoyed with the assistance of the court by the exercise of the constitutional power under article 32 of the Constitution, and there is no way of depriving this unjust enrichment The Court 683 set up for justice, including socio economic justice, unfortunately lent its assistance to such unjust enrichment and yet we are helpless.
For the reasons herein discussed, we find no merits in any of the contentions canvassed on behalf of the petitioners and therefore, these petitions fail and they are dismissed with costs in each.
H.L.C. Petition dismissed.
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The Government of Andhra Pradesh, in exercise of powers conferred under the promulgated the Andhra Pradesh Catering Establishments (Fixation and Display of Prices of Foodstuffs) Order, 1978 fixing the maximum prices of seven items of cooked food listed in the Schedule thereto.
As the hoteliers in the State raised a hue and cry, the State Government effected an upward revision of the prices fixed by an Amending Order dated December 11, 1980.
The hoteliers were not satisfied with that and negotiations were held between them and the Minister of Civil Supplies and as a consequence another order dated January 5, 1981 was issued effecting yet another upward revision in the maximum prices fixed and also reducing the number of scheduled items from seven to six.
Ignoring this order which replaced the earlier orders, the petitioners approached this Court questioning the validity of the earlier orders and obtained an ex parte stay.
The contentions raised were: (i) that the State Government was not competent to issue any price control measure in respect of 'cooked food ' as the expression 'foodstuffs ' under the Act means raw foodstuffs only; and (ii) that the fixation of maximum prices of scheduled items under the impugned orders was arbitrary and violative of article 14 inasmuch as the prices were economically unprofitable as the same had been arrived at without scientifically examining the prices of inputs, over head charges, etc.
Dismissing the petitions, ^ HELD: 1.
The expression 'foodstuffs ' in section 2(a) (v) of the includes cooked food.
If power to control prices of raw foodstuffs such as rice or wheat in conferred by section 3, there is no justification for that power not comprehending within its fold the power to regulate prices of articles made out of such raw foodstuffs.
[678 A C] (i) The has the same object as the 1946 Act and therefore the expression 'foodstuffs ' in the 1955 Act must receive 675 the same construction which it received under the 1946 Act.
Expressions such as 'food crops ', 'spices ' and 'condiments ' indicate different spices of articles of food but the general expression 'foodstuffs ' was interpreted in the context of the 1946 Act to include spices and condiments also.
It was pointed out that although expressions 'food ' and 'foodstuffs ' could be used in both a wide and a narrow sense, the expression 'foodstuffs ' had been used in a wider sense in the 1946 Act.
[679 D G] State of Bombay vs Virkumar Gulabchand Shah, ; referred to.
(ii) The expression 'food ' has generally been understood to mean nutritive material absorbed or taken into the body of an organism which serves for purposes of growth, work or repair and for the maintenance of the vital process.
What human beings consume is styled as food and what animals consume is described as animal feed.
This distinction has to be borne in mind.
The expression 'foodstuffs ' is made of two expressions, 'food ' and 'stuff '.
In other words, the stuff which is used as food would be foodstuff.
Therefore, foodstuff is that which is taken into the system to maintain life and growth and to supply for waste of tissue.
If raw foodstuff with a view to making it consumable by human beings undergoes a change in its condition by the process of cooking, the derivative is none the less foodstuff.
[679 H, 680 A B] (iii) That the expression 'foodstuff ' as used in the 1955 Act comprehends cooked food is also clear from the fact that 'food crop ' has been separately defined in the Act.
[680 D] 2.
(a) The mechanics of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted in the generality of cases as valid.
[681 G H] Prag Ice & Oil Mills & Anr.
vs Union of India, ; relied on.
(b) The petitioners ordinarily do not serve only the scheduled items, but they have large establishments catering to various tastes and delicacies.
No price fixation order need guarantee profit to an establishment in respect of each unit of article served or sold.
It is the overall picture in the trade or commerce that needs to be examined.
The petitioners have not shown that in their overall turnover they have since the promulgation of impugned orders suffered losses.
And this situation never fructified because the 1978 Order was kept in suspended animation for a period of two years and when the latest order dated January 5, 1981 was promulgated, it was still born at the hands of the Court because of the ex parte stay order obtained by the petitioners.
[681 D F]
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4650.txt
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Appeal No. 303 of 1963.
Appeal from the judgment and order dated September 5, 1960 of the Orissa High Court in Appeal under Orissa High Court Order No. 4 of 1956.
N. C. Chatterjee, Ranadey Chaudhuri, G. section Chatterjee and section C. Majumdar, for the appellant.
C. K. Daphtary, Attorney General, N. D. Karkhanis and R. N. Sachthey, for respondent No. 1.
The Judgment of the Court was delivered by Bachawat, J.
On November 29, 1947, the Indian Chemical Products, Ltd., a limited company, was incorporated having its registered offices in Baripada, Mayurbhanj and in the town of Calcutta.
Its authorised capital is Rs. 25 lakhs divided into 25,000 shares of Rs. 100 each.
The company has seven share holders.
The Maharaja of Mayurbhanj subscribed and paid for 7,500 shares.
The remaining six shareholders hold 150 shares only.
All the shareholders are signatories to the memorandum of association of the company.
The State of Orissa claims that by reason of the constitutional changes since the declaration of independence, all the shares held by the Maharaja of Mayurbhanj have now vested in it by operation of law.
The State also based its claim to the shares on a formal instrument of transfer executed by the Maharaja.
On March 16, 1950, the Government of Orissa lodged the share scrip and the transfer deed with the company, and requested it to make the necessary changes in the share register.
The Government as also the Maharaja, through his agent, the Imperial Bank of India, repeatedly requested the company to register the Secretary to the Government of Orissa,, Finance Department as the holder of the shares in place of the Maharaja.
There was protracted correspondence in the matter for over three L/S5SCI 26(a) 382 years and eventually on May 16, 1953, the board of directors of the company refused to register the transfer.
On December, 1, 1953, Sri section K. Mandal, attorney for the State of Orissa, requested the company to record the name of the State as the owner of the shares in the share register, but the company declined to do so.
On February 9, 1955, the State of Orissa filed ' an application under section 38 of the Indian Companies Act, 1913 in the High Court of Orissa asking for rectification of the share register by inserting its name as the holder of the shares in place of the Maharaja.
The company and the Maharaja were impleaded as respondents.
The application was contested by the company only.
On November 22, .1956, Ray, J. allowed the application.
On September 13, 1957, he passed a supplemental order directing the filing of the notice of rectification with the Registrar within a fortnight.
On September 5, 1960, a Division Bench of the High Court dismissed the appeal preferred by the company.
The company now appeals to this Court on a certificate granted by the High Court.
Both courts concurrently held that (1) the title to the shares vested in the State of Orissa by operation of law; (2) the, refusal of the board of directors to register the transfer was mala fide; (3) the State of Orissa was entitled to rectification of the share register and a proper case for the exercise of the Court 's jurisdiction under section 38 of the Indian Companies Act, 1913 had been made out; (4) the petition was not liable to be dismissed on the ground that the State had asked the company to register the name of the Secretary to the Government of Orissa, as the shareholder in place of the Maharaja.
The appellate Court also held that under the articles of association of the company the board of directors had no power to refuse registration of a transfer where the transfer was by operation of law.
The appellant challenges the correctness of these findings.
The courts below concurrently found that the 7,500 shares were held by the Maharaja in his capacity as ruler of the State of Mayurbhanj.
This finding is amply supported by the documentary evidence on the record and is no longer challenged.
The State of Mayurbhanj was one of the feudatory States of Orissa under the suzerainty of the British Crown.
As from August 15, 1947, with the declaration of independence the paramountly of the British Crown lapsed.
Thereafter, steps were taken for the integration of the State with the Dominion of India.
On October 17, 1948, the Maharaja of Mayurbhanj signed an agreement for the merger of the State with the Dominion.
By article 1 of this agreement, the Maharaja completely ceded to the Dominion his sovereignty over the State of Mayurbhanj as from November 9, 1948.
Article 4 of the agreement allowed the Maharaja to retain the ownership of his private properties only as distinct from the State properties.
On and from November 9, 1948, as a necessary 383 consequence of the cesser of sovereignty all the public properties of the State including the 7,500 shares in the company vested in the Dominion.
By operation of law in consequence of the change of sovereignty, all the public properties of the State which were vested in the Maharaja as the sovereign ruler devolved on the Dominion as the succeeding sovereign.
As from January 1, 1949, the Government of India in exercise of its powers under section 3(2) of the Extra Provincial Jurisdiction Act (47 of 1947) delegated to the Government of Orissa the power to administer the territories of the merged State.
On August 1, 1949, the States Merger (Governors ' Provinces) Order, 1949 came into force, and in consequence of section 5(1) of the Order, all property vested in the Dominion Government for purposes of governance of the merged State became from that date vested in the Government of Orissa, unless the purposes for which the property was held were central purposes.
By a certificate dated November 10, 1953, the Government of India declared that the 7,500 shares were not held for central purposes.
Under the Constitution which came into force on January 26, 1950, the territories of the merged State were included in the State of Orissa.
By reason of these successive constitutional changes, the shares became vested in the State of Orissa.
The State is now the legal owner of the shares and the directors of the company are bound to enter its name in the register of members, unless there is one restrictive provision in the articles authorising them to refuse the registration.
The company contends that under its articles, the directors have the power to refuse the registration.
It relies on article 11, which reads: "The Board of Directors shall have full right to refuse to register the transfer of any share or shares to any person without showing any cause or sending any notice to the transferee or transferor, The Board may refuse to register any transfer of shares on which the Company has lien.
" Article 1 A attracts the regulations in Table A of the First Schedule to the Indian Companies Act, 1913 so far as they are applicable to private companies and are not inconsistent with the articles.
The regulations in Table A make a distinction between transfer and transmission of shares.
In respect of a transfer, they require that the instrument of.
transfer shall be executed both by the transferor and the transferee.
A transmission by operation of law in not such I transfer.
In In re. Bentham Mills Spinning Company(1), James, L.J. said "In Table A the word 'transmission ' 384 is put in contradistinction to the word 'transfer '.
One means a transfer by the act of the parties, the other means transmission by devolution of law.
" Article 11 refers to transfers.
A devolution of title by operation of law is not within its purview.
Being a restrictive provision, the article must be strictly construed.
In the instant case, the title to the shares vested in the State of Orissa by operation of law, and the State did not require an instrument of transfer from the Maharaja to complete its title.
, Article 11 does not confer upon the board of directors a power to refuse recognition of such a devolution of title.
We may add that we express no opinion on the question whether such an article applies to an involuntary transfer of shares by a Court sale having regard to the provisions of O.21, r. 80 of the Code 'of Civil Procedure with regard to the execution of necessary documents of transfer.
Clause 22 of the regulations in Table A read with article 1 A confers power upon the board of directors to decline registration of transmission of title in consequence of the death or insolvency of a member.
In the instant case, there is no transmission of title in consequence of death or insolvency, and clause 22 has no application.
Under the articles, the directors had therefore no power to refuse registration of the devolution of title on the State of Orissa by operation of law in consequence of the constitutional changes.
Though the State of Orissa had acquired title to the shares by operation of law, by way of abundant caution it obtained a deed of transfer and lodged it with the company together with the share scrip.
The transfer deed was duly stamped and complied with all the formalities required by law.
The claim of the State of Orissa based upon the transfer deed was within the purview of article 11.
Even with regard to this claim, the Courts below concurrently held that the board of directors acted mala fide in refusing to register the transfer.
This finding is amply supported by the materials on the record.
In spite of the fact that the State had filed with the company a certificate of the Collector of Stamp Revenue.
West Bengal, that no stamp duty was payable on the transfer, the company raised the objection that the transfer deed must be stamped.
To avoid this objection, the Government stamped the deed and again lodged it with the company.
For over three years, the directors delayed registration of the transfer on frivolous pretexts.
On May 16, 1953, the directors without assigning any reason declined to register the transfer.
Before the High Court, the company asserted that the registration was refused because the Maharaja of Mayurbhanj was under an obligation to execute an agreement conferring valuable rights on the company and the State of Orissa had failed to honour this obligation.
Reliance was, placed on cl. 6 of the company 's memorandum of association, which stated that the company and the Maharaja proposed to 385 enter into an agreement and a copy of the proposed agreement was annexed.
Clause 6 shows that there was a proposal between the parties to enter into an agreement, but there was no concluded agreement between them, nor was there any binding obligation on the Maharaja to execute an agreement.
The directors could not use their power of declining to register the transfer under article 11 for the purpose of forcing the State of Orissa to enter into the proposed agreement.
Actually, the reason given at the trial was an afterthought.
The Imperial Bank of India representing the Maharaja was pressing for registration of the transfer.
By its letter dated March 17, 1953, the company assured the Bank that the registration would be effected shortly.
Nevertheless, on May 16, 1953 the directors capriciously refused to register the transfer.
The power under article 11 to refuse registration of the trans fer is a discretionary power.
The directors must exercise this power reasonably and in good faith.
The Court can control their discretion if they act capriciously or in bad faith.
The directors cannot refuse to register the transfer because the transferee will not enter into an agreement which the directors conceive it to be for the interests of the company.
We cannot accept the contention that the petition was liable to be dismissed because the State of Orissa had asked for registration in the name of the Secretary, Finance Department.
No such objection was taken by the company, although it had taken numerous other objections.
Moreover, by letter dated December 1, 1953, Shri section K. Mandal, the attorney for the State of Orissa, had definitely called upon the company to record the name of the State as the owner of the shares in the share register.
In spite of this letter, the company refused to make the necessary registration.
The Maharaja of Mayurbhanj has ceased to be the owner of the shares.
The State of Orissa, is now their owner, and has the legal right to be a member of the company and is entitled to say that the company should recognise its membership and make an entry on the register of the fact of its becoming a member and its predecessor in title having ceased to be a member.
The name of the State of Orissa has, without sufficient reason, been omitted from the register and there is default in not entering on the register the fact of the Maharaja having ceased to be a member.
The Court 's jurisdiction under section 38 is, therefore, attracted.
The High Court rightly ordered the rectification in the exercise of its summary powers under section 38.
The jurisdiction created by section 38 is very beneficial and should be liberally exercised.
We see no reason why the Court should deny the applicant relief under section 38.
The directors of the appellant company on the most frivolous of objections have prevented the State of Orissa from becoming a 386 member for the last 16 years.
It is a matter of regret that justice has been obstructed so long.
There is no merit in this appeal.
The appeal is dismissed with costs.
The appellant company do forthwith carry out the order of rectification passed by the Courts below in case the order has not been carried out yet.
Appeal dismissed.
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As a result of constitutional changes following the Indian Independence Act, 1947, the ownership of the public properties of the Maharaja of the Mayurbhanj including certain shares in the appellant company passed to the State of Orissa.
Although the State had acquired title to these shares by operation of law, it also obtained from the Maharaja by way of abundant caution, a deed transferring these shares to it.
In 1950, the State Government lodged the share scrip and transfer deed with the company and requested it to make the necessary changes in the share register.
Despite repeated requests.
however, the directors of the company refused to do so.
In 1955 the State filed an application under section 38 of the Indian Companies Act, 1913 in the High Court of Orissa, asking for rectification of the share register by inserting its name as the holder of the share in place of the Maharaja.
The High Court allowed the application and passed a supplemental order directing the filing of the notice of rectification with the Registrar within a fortnight.
The company 's appeal before the Division Bench failed, whereupon it appealed to this Court by special leave.
It was urged on behalf of the appellant company, inter alia, that under article 11 of its Articles of Association as well as under cl. 22 of Table A read with article 1 A the directors has power to refuse registration of the transfer.
HELD: (i) In Table A which was attracted by article 1 A of the company 's Articles of Association, the word transmission is put in contradistinction to the word 'transfer '.
One means a transfer by the act of the parties, the other a transmission by devolution of law.
article If refers to transfers.
A devolution of title by operation of law is not within its purview.
Being a restrictive provision the article must be strictly construed.
In the instant case, the title to the shares vested in the State of Orissa by operation of law and the State did not require an instrument of transfer from the Maharaja to complete its title.
Article 11 does not confer upon the Board of directors a power to refuse recognition of such a devolution of title.
r383G 384C].
In re Bentham Mills Spinning Company, , referred to.
(ii)Clause 22 of the regulations in Table A read with article 1 A confers power on the Board of directors to decline registration of transmission of title in consequence of the death or insolvency of a 381 member.
In the instant case, there was no transmission of title in consequence of death or insolvency and clause 22 had, therefore no application, [384 D] (iii)In so far as the claim of the State was based on the transfer deed it fell within the purview of article 11.
But the refusal of the board of directors to register the transfer under that article was mala fide.
The power under that article was a discretionary power.
The directors must exercise that power reasonably and in good faith.
The Court can control this discretion if they act capriciously or in bad faith.
[384 E F; 385 C D] (iv)The name of the State of Orissa had without sufficient reason, been omitted from the register, and there was default in not entering on the register the fact of the Maharaja having ceased to be a member.
The Court 's jurisdiction under section 38 was, there fore, attracted.
The High Court rightly ordered the rectification in the exercise of its summary powers under section 38.
The jurisdiction created by section 38 is very beneficial and should be liberally exercised.
[385G]
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2121.txt
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Appeals Nos. 116 to 125 of 1961.
Appeals by.
special leave from the judgment and decrees dated March 4, 1955, of the former Andhra Pradesh High Court, Guntur, in section T. Appeals Nos.
83,85 88,90,91 and 119 121 of 1954.
M. C. 'Setalvad, Attorney General for India, R. Ganapathy Iyer, V. Sureshan and G. Gopalakrishnan, for the appellants (in C.As.
116 119 of 61) aid the respondents (in C.As.
120 125 of 1961).
282 A.V. Viswanatha Sastri, V. Yedantachari and T.V.R. Tatachari, for respondents 1 to 5 (in C.A. No. 116/61) and respondent No. 1 (in C.As.
Nos. 117 119/61) and the appellants in C.A. Nos.120125/61.
K.Bhimasankaram and P. D. Menon, for respondent No. 2 (in C.A.Nos.
117 119/61).
November 19.
The judgment of the Court was delivered by RAGHUBAR DAYAL, J.
These appeals arise out of the order of the Tribunal appointed under section 8 of the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948 (Madras Act XXVI of 1948), hereinafter called the Act, apportioning the advance compensation given and interim payments made in connection with the vesting of the Venkatagiri Estate in the Government of Madras as a result of a notification issued under sub section
(4) of section 1 of, the Act from the notified date, i.e., September 7, 1949.
The Act received the assent of the Governor General on April 2, 1949 and some of its sections, including sections 4 and 8, mentioned in sub section
(4) of section 1, came into force at once.
The other sections came into force with respect to the Venkatagiri Estate from the notified date.
With effect from the notified date, i.e., September 7, 1949, the entire Venkatagiri Estate stood transferred to the Government and vested in it by reason of section 3(b) of the Act.
283 Section 39 provides for the Director of Settlements to determine the basic annual sum in respect of the estate and also the total compensation payable in respect of the estate, in accordance with the provisions of the Act.
Section 54 A provides that the Government shall estimate roughly the amount of compensation payable in respect of the estate and deposit one half of that amount within six months from the notified date in the office of the Tribunal as advance payment on account of compensation.
(2) of section 50 provides for the deposit of interim payments by the Government during the period between the notified date and the final determination and deposit of the compensation payable in respect of the estate.
In respect of the Venkatagiri Estate, the Government deposited Rs. 12,11,419/ as and by way of advance payment of compensation, after deducting Rs. 7,28,500/ payable to the Government by the Estate for peishkush out of the sum of Rs. 19,39,919 8 0, half of the estimated amount of compensation payable.
The Government also deposited as interim payment Rs. 1,55,194/ for each of the Fasli years 1359 to 1362 F.
It is the distribution of these amounts in deposit as advance payment of compensation and interim payments, which is the subject matter for determination in these appeals.
To understand the various claims for payment out of these deposits, the following genealogical table will be helpful: 284 KUMARA YACHENDUR VARU | | | | Rajagopala Krishna Raja Venkata Krishna Yachendra(Deacsed) Yachendra (Deacsed) | | | | Rajagopala Krishna Raja V. Kumara Krishna Yachendra Yachendra (dead).
(Petitioner in O.P. No. 392 of 1950) | Petitioner | | | | | | | | Raja V. Venkata Raja V. Rama Raja Venkata | Krishna Krishna Rajagopala | Yachendra R.10 Yachendra Krishna Yachendra | O.P.
R.11 O.P. R.12 O.P. | No. 382/50 384/50 | | | | | | vegna Kumara Raja Venkata Rajagopala Krishna Krishna R 3.
R.4 O.P. 256/50 | | | | | Rajagopala Krishna Gopal Krishna Yachendra R 6.
| | | | Son Unnamed R 8.
Son Unnamed R 9. 285 | | Raja Maddukrishna Raja Venugopala Yachendra Krishna Yachendra (Died Issueless) | | | | Raja V. Rajeswara Rao Raja Maheswara Rao (R 14) (R 15) | | Venkata | | Gopala Minor Madanagopal Died Krishna (R 16 O.P. (R 15) No. 385 of 50) 3/50.
| | vaneethu R O.P. 3/50 286 The Venkatagiri Estate is an ancient estate in North Arcot and the necessary history of the estate for the purposes of this case is contained in the document Exhibit A 1 with which we now deal.
Kumara Yachendra Bahadur Varu, who tops the genealogical table noted above and his four sons mentioned therein, are parties to this document.
Kumara Yachendra Bahadur Varu represents also his minor son Venugopala Krishna Yachendra.
The document recites that the estate had been made over in 1878 to Rajagopala Krishna Yachendra, the eldest of the four brothers, by their father Kumara Yachendra Bahadur Varu, the then Rajah, as he wanted to devote himself to offering prayers to God for obtaining salvation.
He was said to be the sole heir to the estate, as Venkatagiri Zamindari was an impartible estate and succession to it was governed by the rule of lineal primogeniture.
In 1889, two of the brothers, Venkata Krishna Yachendra ' and Muddukrishna Yachendra, expressed a desire for the partition of the estate.
The then Rajah, i.e., Rajagopala Krishna Yachendra, the eldest brother, asserted that it was not liable for partition.
The four brothers then consulted their father and he told them : "that the Venkatagiri Zamindari was originally acquired by the valour of our ancestors in warfare, that the Zamindari is ancient, that it is an Impartible Estate which has to pass in the order of primogeniture, that at the time when the Sannad Istimdar Milk was given to the Raja of Venkatagiri who was ruling at the time of the permanent settlement th e Peshkush was settled for this Venkatagiri Samasthanam on the amount which was being paid as tribute and on the entire expenses relating to military assistance that was to be rendered lo the Nawab 's government which was in power previously that for this reason this Venkatagiri Samasthanam is not at all partible that the 287 immovable properties relating thereto and also other immovable properties acquired with the income of the said Samasthanam are not liable for partition that this is his opinion in regard to immovable properties. .
The father suggested partition of certain other property.
The terms of the final settlement between the father and his four sons are then noted.
They may be briefly mentioned.
(1) As the Venkatagiri Estate is an Impartible Estate and it passes to the eldest son by the rule of lineal primogeniture, the said Estate, the immovable properties pertaining to it and other immovable properties acquired with the income derived from the said Estate will be enjoyed by the Rajah, the eldest brother, and after his death his sons and grandsons and so on in succession shall enjoy, always the eldest male being the heir.
(2) If in the line of the said Rajah, his natural sons or adopted so s do not have male issue and that line stops short, then the properties shall be enjoyed by him who is the nearest heir and who is also the eldest to whom the impartible properties of the family pass according to law and custom and the same shall be enjoyed by his successors.
(3) The said Estate, all the properties pertaining to it, the title, power, privileges, all these shall be enjoyed fully and with all powers according to law and custom by the respective individuals who would be ruling at the respective periods subject to the condition of payment of allowances to other members of the family from the income derived from the Estate and from the properties in a manner befitting their respective status.
(4) The allowances were settled as follows Each of the brothers was to get Rs. 1,000/ per mouth 288 for the rest of his life.
After the death of each of these brothers, his male heir would continue to get this allowance of Rs. 1,000/ per month.
This amount of Rs. 1,000/ would be distributable between such male heirs and their male issues, according to Hindu Law.
If the male member died without leaving a natural son or an adopted son, the allowance was to pass the nearest agnates of the same branch according to Hindu Law and in case he left a wife or wives who had to be paid maintenance, their maintenance would be a liability on such agnate.
It was further provided that if any of the three lines of the family ceased for want of male issue, i.e., whether natural or adopted son, then subject to the condition that the wife or wives of the surviving male member of that branch who dies last shall be paid for their life time as maintenance a sum of Rs. 500/ being one half of the entire allowance of Rs. 1000/ that was being paid to the said male member, the allowance which was being paid to that branch would entirely cease.
This document has been acted upon.
In 1904, the Madras Impartible Estates Act, 1904 (Act 11 of 1904) came into force.
The Venkatagiri Estate was included in the Schedule of that Act and had to be deemed to be an impartible estate in view of section 3 of that Act.
Section 9 of that Act mentioned the persons entitled to maintenance out of the impartible estate, where for the purpose of ascertaining the succession to the impartible estate the estate had to be regarded as the property of a joint Hindu family.
In view of section 66 of the Act the Madras Impartible Estates Act of 1904 is deemed to have been repealed in its application to the Venkatagiri Estate with effect from the notified date.
The expression 'impartible estate ' in the Act means an estate governed immediately before the notified date by the Madras Impartible Estates Act, 1904 and therefore applies to this estate.
289 section 41 of the Act provides for the compensation to be deposited in the office of the Tribunal.
Section 42 provides for the; filing of claims to the compensation before the Tribunal by persons claiming any amount by way of a share or by way of maintenance or otherwise and by creditors.
By section 43, the tribunal is to inquire into the validity of the claims and determine the persons who, in its opinion, are entitled to the compensation deposited and the amount to which each of them is entitled.
Section 44 provides that as a preliminary to the final determination, the Tribunal shall apportion the compensation among such persons whose rights or interests in the estates stood transferred to the Government, including persons who are entitled to be maintained from the estate and its Income, as far as possible, in accordance with the value of their respective interests in the estate.
Its sub section
(2) provides how the value of those interests shall be ascertained, and says that in case of an impartible estate referred to in section 45, the ascertainment shall be in accordance with the provisions contained in that section and in such rules, not inconsistent with that section, as may be made by the Government in that behalf.
Section 45 is the main section for our purpose and may be quoted : "45.
(1) In the case of an impartible estate which had to be regarded as the property of a joint Hindu family for the purpose of as certaining the succession thereto immediately before the notified date, the following pro visions shall apply.
(2) The Tribunal shall determine the aggregate compensation payable to all the following persons, considered as a single group : (a) the principal landholder and his legitimate sons, grandsons, and great grandsons in 290 the male.
line living or in the womb on the notified date including sons, grandsons and great grandsons adopted before such date (who are hereinafter called 'sharers ') ; and (b) other persons who, immediately before the notified date,were entitled to maintenance out of the estate and its income either under section 9 or 12 of the Madras Impartible Estates Act, 1904, or under any decree or order of a Court, award, or other instrument in writing or contract or family arrangement, which is binding on the principal landholder (who are hereinafter called 'maintenance holders '): Provided that no such maintenance holder shall be entitled to any portion of the aggregate compensation aforesaid, if before the notified date, his claim for maintenance, or the claim of his branch of the family for maintenance, has been settled or discharged in full.
(3) The Tribunal shall next determine which creditors, if any, are lawfully entitled to have their debts paid from and out of the assests of the impartible estate and the amount of which each of them is so entitled; and only the remainder of the aggregate compensation shall be divisible among the sharers and maintenance holders as hereinafter provided.
(4) The portion of the aggregate com pensation aforesaid payable to the maintenanceholders shall be determined by the Tribunal and notwithstanding any arrangement already made in respect of maintenance whether by a decree or order of a Court, award or other instrument in writing or contract or family arrangement, such portion shall not exceed 291 one fifth of the remainder referred to in sub section (3), except in the case referred to in the second proviso to section 47, sub section (2).
(5) (a) The Tribunal shall, in determining the amount of the compensation payable to the maintenance holders and apportioning the same among them, have regard, as far as possible, to the following considerations, namely: (i) the compensation payable in respect of the estate ; (ii) the number of persons to be maintained out of the estate (iii) the nearness of relationship of the person claiming to be maintained; (iv) the other sources of income of the clai mant; and (v) the circumstances of the family of the claimant.
(b) For the purpose of securing (i) that the amount of compensation payable to the maintenance holders does not exceed the limit specified in sub section (4) and (ii) that the same is apportioned among them on an equitable basis, the Tribunal shall have power, wherever necessary, to re open any arrangement already made in respect of maintenance, whether by a decree or order of a Court, award, or otherinstrument in writing or contract or family arrangement.
(6) The balance of the aggregate compen sation shall be divided among the sharers, as if 292 they owned such balance as a joint Hindu family and a partition thereof had been effected among them on the notified date," Rajah Velugoti Kumara Krishna Yachendra, appellant in Appeal No. 117 of 1961, hereinafter called Krishna Bahadur, filed Original Petition No. 2300 of 1953 before the 'Tribunal.
Three of his sons Ramakrishna Yachendra, Rajagopala Krishna Yachendra and Movva Gopala Krishna Yachendra, appellants in Civil Appeals Nos. 118, 119 and 116 of 1961, respectively, filed separate petitions.
By their applications they raised the contentions that they were entitled to an amount in the compensation as sharers, as the impartible estate lost its character as such from the notified date and that the compensation payable with respect to their estate became partible and that in any case, they were entitled to the amount as creditors.
It was further contended that the provisions of section 45 of the Act were ultra vires the State Legislature and were discriminatory and so void and that the maintenance amount be determined with respect to the amount of compensation and not with respect to the amount of compensation minus the amount of peishkush which was payable by the estate to the Government.
None of these contentions was accepted by the Tribunal or by the Special Tribunal constituted in accordance with section 21 of the Act for bearing appeals against the orders of the Tribunal.
The Tribunal fixed Rs. 75,000/ as the amount payable to Krishna Bahadur 's branch out of the sum of Rs. 12,11,419/ deposited as advance payment of compensation and further fixed the ratio of the value of the interests of Krishna Bahadur and the two brothers of the present Rajah, in the 1/5th of the advance compensation, at 75:75:92.
The amounts 293 deposited as interim Payment were to be distributed in the same, ratio.
The present Rajah, Sarvagna Kumara Krishna, had urged before the 'tribunal that the amount of maintenance to be paid to Krishna Bahadur 's branch should be calculated on a different basis which, in brief, may be said to be that the amount to which he be; held entitled out of the compensation should bear the same proportion to the total compensation as the monthly allowance payable to him under the document Exhibit A 1 bears to the income of the Estate in 1889 when that allowance of Rs. 1,000/per month was fixed.
This contention also did not find favour with the Tribunal or the Special Tribunal on appeal.
The Rajah has therefore filed Civil Appeals Nos.
120 to 123 of 1961.
He has also filed two appeals Nos. 124 and 125 with respect to the interim payments made so Krishna Bahadur 's branch for the Fasli years 1359 and 1360 which were apportioned in accordance with the same principle which the Tribunal had adopted for the distribution of the maintenance allowance out of the advance compensation.
The points urged for the appellants in appeals Nos. 116 to 119 are (1) Venkatagiri Estate was, impartible by custom that impartibility was recognized when disputes arose in 1889, that impartibility continued under the Madras Impartible Estates Act of 1904 but ceased when the Estate vested in the Government on September 7, 1949; (2) In these circumstances, the compensation Will not bear the character of impartibility as the property,, became the property of the joint family, the coparcenary having continued all through 294 (3)Section 45 and other provisions of the Act are ultra vires the State Legislature for want of legislative competence inasmuch as the said Legislature had no power to enact a law disturbing the rights of a joint family and also because the provisions of section 45 are discriminatory and offend article 14 of the Constitution as they provide for the maintenanceholders to get 1/5th out of the compensation while the proprietor and his sons are to get 4/5ths out of it after satisfying the claims of the creditors; (4) The appellants are not maintenanceholders, but creditors; (5) The amount of peishkush payable by the Venkatagiri Estate to the Government was not to be deducted from the compensation when calculating maintenance amount payable to the maintenance.
holders.
Now, the amount of peishkush payable to the Government had to be deducted out of the amount to be deposited under sub section (1) of section 54 A in view of the provisions of its sub section
(2) which provides that from the amount to be deposited under sub section
(1) the Government shall be entitled to deduct one half of all moneys, if any, due to them in respect of peishkush.
Sub section
(4) of section 54 A authorizes the Tribunal, after such enquiry as it thinks fit, to apportion the amount deposited in pursuance of that section, among the persons mentioned in that sub section as far as possible in accordance with the value of their respective interests and further provides that the provisions of sections 42 to 46 (both inclusive), shall apply mutatis mutandis in respect of the amount so deposited.
It is true that the peshkash was a payment which the holder of the Estate had to make to the Government out of the income of the estate and that any arrears of peshkash remain a liability on the 295 estate.
It was in view of this fact that s.55(1) of the Act which takes away the right of any land holder to collect any rent which had accrued to him from any ryot before the notified date and was outstanding on that, date empowers the manager appointed under section 6 to collect such rent and to pay the balance, if any, after making certain deductions specified in the section, including any arrears of peshkash to the landholder.
The real compensation which is to be paid by the Government on the vesting of the estate must be equal to the amount of the value of the estate as such, minus the liabilities of the estate.
What is to be distributed between the various persons entitled to the compensation must be the net amount and not the theoretical compensation for the estate as such.
In this view of the matter too, the share of the maintenance holders will have to be calculated in the amount of compensation deposited, i. e., the amount of compensation minus the permissible deductions including peshkash.
It is therefore clear that the Tribunal could not have ignored the deduction of peshkash from one half of the estimated amount of compensation payable in respect of the estate and had to apportion the amount deposited after taking into consideration such deduction.
The contention for the appellants that the amount to be considered for calculating the share of the maintenance holders should have been taken at Rs. 19,00,000/ odd and not at Rs. 12,00,000/ odd, the actual amount of the deposit, is not sound.
The next question is whether the allowance is a debt owed by the Rajah landholder to his brothers to whom the allowance was to be paid.
It might have been so only if it was postulated that the Rajah had purchased the share of the other members of the family and was paying the sale price in the form of an allowance.
This is, not what the document Exhibit A 1 recites.
There is nothing in it to indicate 296 that the brothers of the Rajah to whom the estate had been made over by their father claimed a share in the estate after they had been told by their father that the estate was impartible.
The sale price is normally fixed while the amount of allowance to be payable is an indefinite quantity depending upon length of time through which each of the brother 's branches continues to have a male member.
The word 'allowance ' appears to have been used either as a dignified expression preferable in form to that of 'maintenance ' or due to the idea that the word ,maintenance ' is to be used appropriately only for the amounts to be paid to female members of the family in certain circumstances.
The allowance referred to in the deed, Exhibit A. 1, as payable to Kishen Chander, father of Krishna Bahadur, is not akin to a debt owed by the Rajah to Kishen Chander.
It is not made payable on account of certain loans taken by the Rajah, but is payable for maintenance, as the estate being impartible the other members of the family had a reasonable claim to maintenance.
The only ground urged in support of the contention that the allowance is not an allowance for maintenance is that the word 'maintenance ' is used in the document A 1 in connection with the amount payable to the widows.
A different terminology in referring to the amounts to be paid to Kishen Chander and his brothers does not change the character of the payment.
The widows were to get a share out of the same allowance when there was no male member in the particular family.
That amount cannot be a debt so long as it was payable to a male member and a maintenance when payable to a female member.
Kishen Chander himself 'referred to this amount as maintenance in earlier proceedings.
We therefore hold that the view expressed by the Courts below with respect to the nature of this allowance is correct.
297 The validity of section 45 of the Act on the ground of the ' competence of the Legislature of the State was not questioned in the High Court.
The contention, however, is that the Act was made by the State Legislature by virtue of Entry 21 in List II of the Seventh Schedule to the Government of India Act, 1935, which reads: "Land, that is to say, rights in or over land, land tenures, including the relation of land lord and tenant, and the; collection of rents transfer, alienation and devolution of agricultural land ; land improvement and agricultural loans ; colonization; Courts of Wards; Encumbered and attached estates ; treasure trove.
" The question of succession to the impartible estate does not come under this Entry and comes under Entry No. 7 of List III of the Seventh Schedule to the Government of India Act which reads : "Wills, intestacy, and succession, save as regards agricultural land.
" The reply for the respondent is that the Act can come within either item No. 9 or item No. 21 or both, of List II ' of the Seventh Schedule to the Government of India Act, 1935.
We are of opinion that the Act does not (teal with the succession to impartible estates.
The Act acquires the impartible estate which vests in the Government on the notified date.
The rights of the and holder in the estate cease on that date.
The Act was enacted by the State Legislature by virtue of item No. 9, List II, Seventh Schedule to the Government of India Act which reads: "Compulsory acquisition of land.
" The Act is not ultra vires the State Legislature Theattack on the validity of section 45 of the Act on 298 the ground of its contravening the provisions of Art 14 of the Constitution is not open to the appellants in view of article 31B which provides inter alia that not of the Acts specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void or ever to have become void on the ,round that the Act takes away or abridges any of the rights conferred by any provisions of Part III.
Article 14 is in that Part of the Constitution.
The Act is mentioned at item No. 10 in the Ninth Schedule.
We therefore hold that the provisions of section 45 of the Act are not void.
The next question for determination is whether the appellants should have got share in the compensation as "sharers ' on account of the partible character of the estate reviving on the notified date as a result of the repeal of the Impartible Estates Act, 1904.
We are concerned in these appeals with the distribution of advance compensation given and interim payments made in accordance with the provisions of the Act.
We have held the relevant provisions to be valid.
Therefore, the appellants can only ask for their share of the compensation in accordance with those provi sions.
We do not consider it necessary to decide the question whether any property ceased to be impartible after the notified date and understand that an appeal in which the question directly arises is pending against a judgment in a civil suit holding that the buildings to which sub section
(4) of section 18 applied were impartible and were owned by the Rajah.
Even if the appellants had any right in the estate, (though we do not so decide), that right ceased on the notified date in view of the provisions of section 3 of the Act and thereafter they are entitled to such rights and privileges only as are recognized or conferred by or under the Act.
Section 3 of the Act provides the consequences of notification of the estate.
The relevant portions of section 3 are : " x x x x 299 (b) .
the entire estate. shall stand transferred to the Government and vest in them. . (c) all rights and interests created in or over the estate before the notified date by the principal or any other land holder, shall as against the Government cease and determine x x x x x (e) the principal or any other landholder and any other person, whose tights stand transferred under clause (b) or cease and determine under clause (c), shall be entitled only to such rights and privileges as are recognized or conferred on him by or under this Act.
, x x x x x (g)any rights and privileges which may have accrued in the estate, to any person before the notified date, against the principal or any other landholder thereof, shall cease and determine, and shall not be enforceable against the Government or such landholder, and every such person shall be entitled only to such rights and privileges as are recognized or conferred on him by or under this Act. ' The estate was impartible up to the moment it vested in the Government on the notified date.
Whatever be the nature of the compensation payable, the distribution of the compensation between the persons who had an interest in the estate would be in accordance with the provisions of sub section
(2) of section 45 which defines "sharers ' to be the principal landholder and his legitimate sons, grandsons and the great grandsons in the main line living, or in the womb on the notified date, including sons, grandsons and great grandsons adopted before such date.
The appellants do not come under any of the persons mentioned in this 300 clause and therefore they cannot get, compensation as "sharers".
The result of our findings is that all the four appeals nos.
116 to 119 of 1961 fail.
The dispute in the remaining six civil appeals relates to the principle on which the amounts of maintenance payable to the persons entitled to it are to be calculated.
The contention is that when the net income of the estate in 1889, was about Rs ' 6,00,000/ a year, the allowance payable to each brother was Rs '.
1,000/ per month and that therefore the value of the interest of each brother in the estate came to about 1/50th of the income.
The amount payable to him now, it is urged should% bear the same proportion to the basic annual sum which is first calculated under the provisions of the Act and later capitalised to obtain the amount of compensation payable for the estate.
The relevant provisions in connection with the apportionment of the maintenance allowance applicable to impartible estates are to be found in section 45 of the Act, Sub section (3) provides for determining the amount to which the creditors of the holder ' of the estate are entitled out of the assets of the estate.
The amount due to them is first to be deducted from the compensation and out of the balance the maintenance holders as a body can have an amount equal to 1/5 th and no more.
If the amount due to them comes to less than 1/5th they will get it as they had been getting in the past.
If the , amount exceeds 1/5th of the aforesaid balance,, the tribunal has the authority, to re open any arrangement previously made in respect of maintenance and re assess the amount to paid to each maintenance holder, keeping in regard the provisions of sub section (5) There is nothing in this sub section which authorises the Tribunal to calculate the incidents of the amount of compensation on the income of the estate at the time it was fixed.
Even in the present case, the amount of 301 maintenance allowance was not.
fixed as a certain proportion of the net income of the estate but was fixed, according to document A 1, after considering several factors affecting the question as is apparent from the following statement in ' the document "The aforesaid mediator considered in full the status of all the claimants.
the status and dignity, of the Estate and all the other matters deserving consideration and settled that the said Rajha.
Rajagopala Krishna Yachendra. . of Venkatagiri should pay the allowances as mentioned below.
" We are therefore of opinion,.
that the Special Tribunal had held rightly that the apportionment of the advance payment of compensation and the interim payment had been made in accordance with the provisions of the Act.
In view of what we have stated above, we dismiss all the appeals with costs, one :hearing fee for Civil Appeals Nos.
116 to 119 and one hearing fee for C I Appeals Nos. 120 to 125.
Appeals dismissed.
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Consequent upon the notification under the Estates Abolition Act, the impartible Estate of Venkatagiri vested in the Government and on claims made under section 41 of the Act, the tribunal determined advance compensation to the various persons interested.
On appeal against the decision of the Tribunal it was contended, that (1) the impartible character of the Estate ceased when the estate vested in the Government; (2) the compensation did not bear the character of impartibility as it became the property of the joint family ; (3) section 45 was a law altering the rights of distribution of property among the members of a joint family and wag beyond the legislative competence of the State Legislature ; (4) the law was discriminatory ; (5) the appellants were not maintenance holders but creditors; (6) the amount of "Paishkush" payable to the Government ought not to have been deducted from the compensation in calculating the amounts payable to the appellants, as the holder of the estate alone was liable to pay it.
Held, that the first question was raised directly in another proceeding and it was not necessary to decide it in these proceedings which were only in respect of advance compensation.
Held, further, that in respect of such compensation the proportion of distribution could only be, in accordance with the provisions of sub section 2 of section 45 of the Act by which alone the appellants were entitled to claim advance compensation.
281 (2)that the legislation was not one in respect of wills, intestacy and succession, under Entry 7, List 3, but under Entry 9 of List 2 of the Seventh Schedule of the Constitution.
(3)that in so far as the legislation came within article 31 (B) of the Constitution it was not open to attack as offending article 14 of the Constitution.
(4)the appellants were maintenance holders howsoever they had been described in the earlier documents and that the earlier documents did not constitute them as creditors of the holders of the estate.
(5)The distributable compensation could only be arrived at afterdeducting the liabilities mentioned in the proviso to section 41 (1) due from the estate to Government from the amount of compensation for the estate and that section 54 (A) (ii) required that half of those liabilities (including Peshkash) due to the Government be deducted from half the amount of compensation which was to be distributed under section 54A (i).
Held, further, that in the other appeal proportion of 1/5th fixed by section 45 had been rightly applied and that the contention that the proportion should have been that which the allowances in the earlier documents bore to the total income in the year 1889, was not tenable.
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1549.txt
|
Petition Nos.
1345, 1635/79, 458, 935.
1418 and 1692/80.
Under Article 32 of the Constitution.
Sukumar Ghosh for the Petitioners in WP No. 1345/79.
S.N. Kacker, Govinda Mukhoty and Rathin Das for the Respondent in WP No. 1345/79.
P. Keshva Pillai for the Petitioner in WP No. 1635/79.
Rathin Das for Respondent No. 2 and Ors.
In WP No. 1635/79.
Bimal Kumar Datta, Mrs. L. Arvind and A.K. Sen Gupta for the Petitioner in WP No. 458/80.
S.N. Kacker and Rathin Das for Respondent No. 2 and Ors.
in WP No. 458/80.
S.C. Majumdar, Bimal Kumar Datta, Mrs. L. Arvind and A.K. Sen for the Petitioner in WP No. 935/80.
953 Sripal Singh for the Petitioners in WP No. 1418 of 1980 and 1692/80.
Rathin Das for Respondent Nos. 2 and Ors.
in WP Nos. 935 1418 & 1692/80.
The first plank of argument related to the constitutional validity of the 1955 Act.
The second plank of argument was confined to the validity of the West Bengal Land Reforms (Amendment) Act, 1972 (hereinafter referred to as the 'Amendment Act of 1972 ') which was in the nature of a ceiling Act prescribing a particular ceiling of the area of land which could be retained by the tenant.
So far as the Ceiling Act, viz., the Amendment Act of 1972 is concerned, it is conceded by the counsel for the petitioners that the constitutional validity of the aforesaid Act is clearly concluded by a recent decision of this Court in Waman Rao & Ors.
vs Union of India & Ors.
where a Constitution Bench of this Court rejected the various grounds of challenge in respect of the constitutionality of various ceiling Acts passed by the States concerned.
In view of this decision the learned counsel for the petitioners was fair enough to state that he does not want to press his contention regarding the constitutional validity of the Ceiling Act.
Similarly, the learned counsel for the petitioners fairly conceded that as the 1955 Act, alongwith its amendments upto 1972, has been placed in the Ninth Schedule of the Constitution, it was immune from challenge and was saved by the protective umbrella contained in article 31B of the Constitution.
In this connection, this position was made absolutely clear in Waman Rao 's case (supra) where this Court observed as follows : "Thus, in so far as the validity of Article 31B read with the Ninth Schedule is concerned, we hold that all Acts and Regulations included in the Ninth Schedule prior to April 24, 1973 will receive the full protection of Article 31B.
Those laws and regulations will not be open to challenge on the ground that they are inconsistent with or take away or abridge any of the rights conferred by any of the provisions of Part III of the Constitution.
" 954 In the instant case, it is clear that the 1955 Act as also the Amendment Act of 1972 were added to the Ninth Schedule, being entry Nos. 60 and 81, prior to April 24, 1973.
In these circumstances, it is manifest that the aforesaid Acts ale completely immune from challenge on the ground that they are violative of any of the rights enshrined in Part III of the Constitution.
The learned counsel for the petitioners, therefore, was fully justified in making the concession before us.
The argument of the learned counsel for the petitioners in W.P. No. 1345 of 1979, which has been adopted by the counsel for the petitioners appearing in other petitions, centres round the validity of (1) The West Bengal Land Reforms (Amendment) Act, 1977 (published in the Gazette Extraordinary on 3 2 1978), and (2) Section 20B, sub sections (3), (4) and (5), of the 1955 Act.
So far as the challenge to the constitutional validity of this section was concerned, it was confined only on the ground that the said sub sections were violative of article 14 of the Constitution of India as being discriminatory and arbitrary.
It was contended that once the land holder, viz., the tenant was given the right of personal cultivation and was permitted to get the land cultivated by a Bargadar on the basis that the bargadar would share half the produce, there was no warrant for not allowing the tenant to resume the land where the bargadar had voluntarily surrendered or abandoned the land.
In order to consider this argument, it may be necessary to examine the status of the bargadar under the 1955 Act.
Section 2(2) defines bargadar thus " 'Bargadar ' means a person who under the system generally known as adhi, barga or bhag cultivates the land of another person on condition of delivering a share of the produce of such land to that person and includes person who under the system generally known as kisani cultivates the land of another person on condition of receiving a share of the produce of such land from that person.
" Section 16 of the 1955 Act provides that where the tenant brings in a bargadar on the land, the produce of the land may be shared in the proportion of 50: 50 or 75; 25.
There are also provisions in the 1955 Act for enforcement of the right of the tenant to get his share of the produce from the bargadar which have not been challenged before us.
It would be seen that section 17 permits the cultivator to terminate the cultivation of the land by a bargadar and resume possession under his own cultivation if the conditions mentioned in clauses 955 (a), (b) and (d) of sub section (1) of section 17 are satisfied.
Clause (d) may be extracted thus: "That the person owning the land requires it bona fide for bringing it under personal cultivation.
" Thus, the cultivator has a right to get back the land for personal cultivation if he requires it for his bona fide use and proves the same to the satisfaction of the authority appointed under section 17(1).
It was argued by the counsel for the petitioners that on a parity of reasoning contained in section 17, there was no reason why where the bargadar had voluntarily surrendered or abandoned the land the facility of cultivating the land personally by the tenant should be denied to him.
Sub sections (3), (4) and (5) of s 20B of the 1955 Act run thus: "(3) If such officer or authority determines that the bargadar had not voluntarily surrendered or abandoned the cultivation of the land which was being cultivated by him as such and what he had been compelled by force or otherwise to surrender or abandon the cultivation of such land, such officer or authority shall restore the bargadar to the cultivation of the land, or where the bargadar is not available or is not willing to be restored to the cultivation of such land, the person whose land was so cultivated shall not resume personal cultivation of the land but he may, with the permission of such officer or authority, get the land cultivated by any person, referred to in section 49, who is willing to cultivate the land as a bargadar.
(4) If such officer or authority determines that the bargadar had voluntarily surrendered or abandoned the cultivation of the land which was cultivated by him as such, the person whose land was being so cultivated shall not resume personal cultivation of such land but he may, with the permission of such officer or authority, have the land cultivated by any person, referred to in section 49, who is willing to cultivate the land as a bargadar.
(5) Any contravention of the provisions of sub section (3) or sub section (4) shall be an offence punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
" Sub sections (3) and (4) prescribe the procedure which is to be adopted where a bargadar voluntarily surrenders or abandons the 956 cultivation of the land.
Under these provisions, the tenant is not allowed to resume personal cultivation but has to get the land cultivated by some other person with the permission of the officer or authority concerned.
Realising the force of the argument, Mr. section N. Kacker, appearing for the State of West Bengal, with his usual persuasiveness submitted that sub sections (3) and (4) are extremely harsh but the rigours of these sub sections can be softened if we read down section 17(d) and interpret it in such a way as to permit a tenant to resume the land under clause (d) of section 17 if the Bargadar voluntarily surrenders or abandons the land.
We are, however, unable to agree with this argument because it will amount not only to distorting and misinterpreting clause (d) but also to causing serious violence to its plain language, which cannot be done It would appear that clauses (a), (b) and (c) of sub section (1) of section 17 of the 1955 Act are the only grounds given on which a tenant can get the land back for his personal cultivation.
The contingency where the bargadar voluntarily surrenders or abandons the land is neither mentioned in clauses (a), (b) and (c) nor is directly or indirectly contemplated by them.
In these circumstances.
if we accept the contention of Mr. Kacker it would amount to introducing something into section 17 which is not there and this is diametrically opposed to the well known canons of interpretation We are, however, constrained to observe that there does not appear to be any logical justification for the provisions of sub sections (3) and (4) of section 20B.
It is understandable that when once the cultivator chooses to bring a bargadar on the land, the interest of the bargadar should be duly protected and has been made heritable.
So far, there can be no objection and such a course is in consonance with the object of the statute.
But when the Bargadar on his own volition surrenders or abandons the land, there is no reason why the tenant should not be allowed to resume cultivation and instead be compelled to get the land cultivated by some other person nominated by the authority concerned under section 49 of the 1955 Act.
This provision therefore appears to us to be extremely harsh and works serious injustice to the rights of the tenants particularly after the ceiling area of the tenant has been considerably reduced by the Amendment Act of 1972.
Thus, the tenant having a small area guaranteed to him for his unit, he should have at least fuller and 957 more effective rights to get that area cultivated by him or even by a bargadar of his choice subject to resuming the same, if the bargadar surrenders or abandons the land.
The amendment doubtless recognises the right of the ownership of the tenant within the ceiling area and yet to deny him the right of resuming cultivation of the land from the bargadar inducted by him after the bargadar voluntarily surrenders or abandons the same and forcing or imposing someone else to cultivate the land on behalf of the tenant appears to be contrary to the very tenor and spirit which sections 17 and 20B of the 1955 Act seem to subserve Unfortunately, however, though the provisions of sub sections (3), (4) [and (5) of section 20B, which is only a penal section] perilously border on arbitrariness and amounts to serious curbs on the fundamental right of the cultivator to pursue his occupation, we cannot however strike down these provisions because they are contained in the Amendment Act of 1972 which has been placed in the Ninth Schedule prior to April 24, 1973, and therefore fall within the protective umbrella and are immune from challenge.
It will, however, be for the legislature which is the best judge of the needs of its people to give a suitable relief to the tenant and soften the rigours of the harsh provisions of sub sections (3), (4) and (5) of section 20B on the lines indicated by us.
With these observations, the arguments of the learned counsel for the petitioners on this ground are overruled.
We now come to the second plank of the argument which comprises the challenge to the proviso and the Explanation to section 2 of the 1955 Act.
This provision having been brought into force after the 24th of April, 1973, falls beyond the ambit of article 31B and is not covered by the protective umbrella of that Article.
In these circumstances, the challenge to the constitutionality of this provision could be entertained by us.
Mr. Kacker did not controvert this position.
The impugned proviso and the Explanation which were added to clause (8) of section 2 by the West Bengal Land Reforms (Amendment Act, 1977, may be extracted thus: "Provided that such person or member of his family resides for the greater part of the year in the locality where the land is situated and the principal source of his income is produced from such land.
Explanation The term "family" shall have the same meaning as in clause (c) of section 14K" It was submitted that the proviso insists that the cultivator or member of his family must reside in the locality where the land is 958 situate for the greater part of the year and thus deprives the petitioners of their right guaranteed to them under Art 19(1) (e) and (g) of the Constitution inasmuch as it compels the petitioner to reside in the village and prevents them from either going to or residing in any other place in India.
The second ground of challenge to the constitutionality of the proviso was that it places a serious curb on the right of the petitioners to carry on their occupation other than agriculture.
As regards the first argument, we are unable to agree with the learned counsel because the object of the proviso is to safeguard the interest of the tenant himself so that he may give whole hearted attention to the personal cultivation of the land which has been secured for him by virtue of a valuable piece of agrarian reform.
If the tenant is allowed to go out of the village and reside at other places then the benefit conferred by the 1955 Act cannot be fully utilised by the tenant and would frustrate the very purpose for which agrarian reforms are meant.
Moreover, the land is given to the tenant as the tiller of the soil fundamentally for the reason that cultivation is his main source of sustenance as is mentioned in the proviso itself.
If, therefore, the principal source of sustenance of the tenant is agriculture it would be futile for the tenant to say that he should be permitted to follow other avocations or occupations in the main which will defeat the very purpose for which the proviso has been enacted.
The proviso does not debar him from following any other occupation but once a tenant wants to have the land to himself for personal cultivation he must elect whether to pursue the profession of cultivation or some other occupation.
Thus, even though there is some amount of restriction both on the right of the petitioners to reside or follow any other occupation, such a restriction cannot be said to be arbitrary or unreasonable.
It is well settled that where a restriction is imposed by the legislature in public interest in order to advance a particular purpose or carry out the dominant object.
such a restriction is undoubtedly a reasonable one within the meaning of clauses (4) and (5) of article 19 of the Constitution.
Moreover, in the instant cast, the restriction does not amount to complete deprivation of the right of the tenant to reside elsewhere because the words 'for the greater part of the year ' leave sufficient scope to the tenant to reside elsewhere for a part of the year if he so desires.
Furthermore, the Explanation adopts the definition of "family" which is the same as defined in section 14K of the 1955 Act which runs thus: "(i) himself and his wife, minor sons, unmarried daughters, if any, 959 (ii) his unmarried adult son, if any, who does not hold any land as a raiyat, (iii) his married adult son, if any, where neither such adult son nor the wife nor any minor son or unmarried daughter of such adult son holds any land as a raiyat, (iv) widow of his predeceased son, if any, where neither such widow, nor any minor son or unmarried daughter of such widow holds any land as a raiyat, (v) minor son or unmarried daughter, if any of his pre deceased son, where the widow of such predeceased son is dead any minor son or unmarried daughter of such predeceased son does not hold any land as a raiyat, but shall not include any other person.
" Thus, it is not necessary that the tenant should himself reside in the village for the greater part of the year and it is sufficient if any member of the family which includes his wife, unmarried adult, married adult, minor son and so on, remains in the village and this would amount to substantial compliance of the conditions of the proviso.
The restriction, therefore, is partial and in public interest and bears a close nexus with the object of the 1955 Act, viz, to achieve agrarian reforms.
The fundamental rights enshrined in article 19 of the Constitution are not absolute and unqualified but are subject to reasonable restrictions which may be imposed under sub clauses (4) and (5) of article 19.
Whenever a complaint of violation of fundamental rights is made the Court has to determine whether or not the restrictions imposed contain the quality of reasonableness.
In assessing these factors a doctrinaire approach should not be made but the essential facts and realities of life have to be duly considered.
Our Constitution aims at building up a socialist state and the establishment of an egalitarian society and if reasonable restrictions are placed on the fundamental rights in public interest, they can be fully justified in law.
The principles laying down the various tests of reasonableness have been very aptly enunciated in the case of State of Madras vs V.G. Row which is almost the locus classicus on the subject in question.
In that case Shastri, C.J, speaking for the Court observed as follows : "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be 960 applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
" The case has been consistently followed by later decisions of this Court right uptodate Another important factor to consider the reasonableness of restrictions is if the restrictions imposed are excessive or dispreportionate to the needs of a particular situation.
Further, if the restrictions are in implementation of the directive principles of the Constitution the same would be upheld as being in public interest because the individual interest must yield to the interest of the community at large for only then a welfare state can flourish.
Applying these tests to the facts of the present case we are satisfied that the restrictions contained in the impugned proviso cannot be said to be unreasonable for the following reasons: The dominant object of the proviso is to abolish the age old institutions of absentee land holders by insisting that the cultivator to whom land is allotted must give full and complete attention to the soil and as a result of which there will be a maximum utilisation of the agricultural resources which would increase production.
Under the Amendment Act of 1972 an adult unmarried person is entitled to hold an area up to 2.50 hectares which is equal to 6.72 acres, a tenant with a family of two or more is entitled to hold 12.36 hectares and a tenant having a family of five or more is entitled to hold 7 hectares which is equal to 12.23 acres being the maximum area permissible.
Thus, the area left to the tenant is quite vast and appreciable and if the tenant wants to bring this area under cultivation in right earnest it would hardly leave him time to quit the village and pursue other avocations of life.
It is obvious that the tenant has to remain in the village for the purpose of cultivating the lands, sowing the seeds, growing it and harvesting it.
These processes would doubt less require the presence of the tenant for a greater part of the year which is what the proviso predicates.
If the 961 tenant is permitted to leave the village for more than half the year then the very purpose of giving such a vast area for cultivation to a tenant will be foiled.
Moreover, the proviso merely insists that the tenant should remain in the village or its periphery for "greater part of the year" which appears to be not only reasonable but absolutely essential if the land has to be cultivated in a scientific manner in order to yield the maximum possible production, which would result in better and equitable distribution of agricultural products for the use of the people of the country.
Another aspect of the proviso is that the land is given to the tenant only if his main source of sustenance is from agriculture so that the land may be reserved only for the tiller of the soil and none else.
Hence, the restrictions imposed, therefore, by the proviso are undoubtedly in public interest and in consonance with the concept of promoting and accelerating agrarian reforms which is the prime need of the hour.
For these reasons, therefore, the challenge that the proviso violates article 19 (1) (e) and (g) must fail.
The last contention put forward by the petitioners was that the proviso is also violative of article 14 inasmuch as it is extremely arbitrary and discriminatory.
We are unable to uphold the challenge on the ground that the proviso violates article 14 because we do not find any element of arbitrariness in the proviso.
If the statute insists that the tiller of the soil must remain in the village for a greater part of the year in order to cultivate the land which has been given to him and thereby increase the produce.
Of the land, no serious prejudice is caused to the tenant because that is the purpose for which he has himself secured the land.
Secondly, as the proviso operates equally to all the tenants governed by it no question of discrimination at all arises.
Thus, this argument also is wholly untenable and must fail.
For the reasons given above, we hold that both the Act of 1955, including the Amendment Act of 1972, and the proviso introduced a by the Amendment Act of 1977 are constitutionally valid.
As we have made certain observations regarding the harshness of the provisions of sub sections (3), (4) and (5) of section 20B of the 1955 Act, let a copy of this judgment be sent to the Hon 'ble Chief Minister of West Bengal.
The petitions are dismissed without any order as to costs.
|
The West Bengal Land Reforms Act, 1955 permitted a tenant (land holder) to get the land cultivated by a bargadar, on the basis that the bargadar would share tho produce, and the Act contained provisions for enforcement of the right of the tenant to get such share.
Section 17 permitted the tenant to terminate the cultivation of the land by a bargadar and resume possession for his own cultivation on certain contingencies, one of them being that he requires it bona fide for personal cultivation.
The West Bengal Land Reforms (Amendment) Act, 1972 provided for the reduction in the ceiling area of the tenant, and incorporated sub sections (3), (4) and (5) of section 20B of the 1955 Act, which provided that where the bargadar had voluntarily surrendered or abandoned the cultivation of the land, the facility of cultivating the land personally by the tenant should be denied to him.
The West Bengal Land Reforms (Amendment) Act 1977 inserted a Proviso and an Explanation to clause (8) of section 2 of the 1955 Act, which provided that a person or member of his family should reside in the greater part of the year in the locality where the land is situated and the principal source of his in come is derived from the land and that 'family ' shall have the same meaning as in clause (c) of section 14.
The petitioners in their writ petitions to this Court assailed: (1) The West Bengal Land Reforms Act, 1955 as also amendments made to the said Act upto 1977, contending that the 1955 Act was constitutionally invalid and that the Amendment Act of 1972 was in the nature of a Ceiling Act prescribing a particular ceiling for the area of the land which should be retained by the tenant and that sub sections (3), (4) and (5) of section 20B of the 1955 Act were violative of Article 14 of the Constitution, as being discriminatory and arbitrary Once the tenant was given the right of personal cultivation and was permitted to get the land cultivated by a bargadar on the basis that the bargadar would share the produce, there was no warrant for not allowing the tenant to resume the land where a bargadar had voluntarily surrendered or abandoned the land and to deny the right of cultivating the land personally by the tenant, and (2) the Proviso 951 and the Explanation to section 2 of the 1955 Act deprive the petitioners of their rights guaranteed under Article 19(1)(e) and (g) of the constitution in as much as it prevents them from either going to or residing in any other place in India and places a serious curb on their right to carry on an occupation other than agriculture.
On behalf of the respondents it was submitted that the rigour of sub sections (3) and (4) can be softened if clause (d) of section 17 is read down and interpreted in a way as to permit a tenant to resume the land under clause (d) of section 17 if the bargadar voluntarily surrenders or abandons the land.
Dismissing the writ petitions: ^ HELD: 1 (i).
The West Bengal Land Reforms Act, 1955 including the Amendment Act of 1972 and the proviso introduced by the Amendment Act of 1977 are constitutionally valid.
[961 G] In the instant case the 1955 Act and the Amendment Act of 1972 having been added to the Ninth Schedule as Entry Nos. 60 and 81 prior to April 24, 1973, are immune from challenge as being violative of Part III of the Constitution.
[954 A] Waman Rao & Ors.
vs Union of India & Ors., AIR 1981 SC 271, referred to.
(ii) Clauses (a), (b) and (c) of sub section (1) of section 17 of the 1955 Act are the only grounds on which a tenant can get the land back for his personal cultivation.
The contingency where the bargadar voluntarily surrenders or abandons the land is neither mentioned, nor directly or indirectly contemplated by them.
The contention of the respondent cannot be accepted for it would introduce something into section 17 which is not there and this is diametrically opposed to the well known canons of interpretation.
[956 D E] (iii) There is no logical justification for the provisions of sub sections (3) and (4) of section 20B. When once the cultivator chooses to bring a bargadar on the land the interest of the bargadar is protected and has been made heritable.
But when the bargadar on his own volition surrenders or abandons the land, there is no reason why the tenant should not be allowed to resume cultivation and instead be compelled to get the land cultivated by some other person nominated by the authority concerned under section 49 of the 1955 Act.
This provision, therefore, appears to be extremely harsh and works serious injustice to the rights of the tenants particularly after the ceiling area of the tenant has been considerably reduced by the Amendment Act of 1972.
[956 E G] (iv) Though the provisions of sub sections (3), (4) and (5) of section 20B a perilously border on arbitrariness and amount to serious curbs on the fundamental right of the cultivator to pursue his occupation, they cannot be struck down because they are contained in the Amendment Act of 1972 which has been placed in the Ninth Schedule prior to April 24, 1973.
It will, however, be for the legislature which is the best judge of the needs of its people to give, a suitable relief to the tenant and soften the rigours of these harsh provisions.
[957 C D] (2) The object of the proviso is to safeguard the interest of the tenant himself so that he may give wholehearted attention to the personal cultivation of 952 the land.
The proviso does not debar him from following any other occupation but once a tenant wants to have the land to himself for personal cultivation he must elect whether to pursue the profession of cultivation or some other occupation.
Thus, even though there is some amount of restriction both on the right of the petitioners to reside or follow any other occupation, such a restriction cannot be said to be arbitrary or unreasonable.
[958 C, E F] In the instant case the restriction does not amount to complete deprivation of the right of the tenant to reside elsewhere because the words for the greater part of the year ' leave sufficient scope to the tenant to reside elsewhere for a part of the year if he so desires.
It is not necessary that the tenant should himself reside in the village for the greater part of the year.
It is sufficient if any member of the family which includes his wife, unmarried adult, married adult, minor son and so on remains in the village.
This would amount to substantial compliance of the conditions of the proviso.
The restriction, therefore, is partial and in public interest.
[958 G, 959 D] (3) Whenever a complaint of violation of fundamental rights is made the court has to determine whether or not the restrictions imposed contain the quality of reasonableness.
In assessing these factors a doctrinaire approach should not be made but the essential facts and realities of life have to be duly considered.
Our Constitution aims at building up a socialist state and the establishment of an egalitarian society and if reasonable restrictions are placed on the fundamental rights in public interest, they can be fully justified in law.
[959 F G] State of Madras vs V.G. Row, ; , referred to.
(4) As the proviso operates equally to all the tenants governed by it no question of discrimination arises.
[961 F]
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4363.txt
|
ions Nos. 126 and 127 of 1957.
(Under Article 32 of the Constitution of India for enforcement of Fundamental Rights).
N. C. Chatterjee and Nanak Chand, for the petitioners.
M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for the respondents.
October 31.
The following Order of the Court was delivered by DAS C.J.
In their respective separate petitions, the petitioners pray (1) for an order, direction or writ in the nature of certiorari and/or prohibition calling for the records in the case of the Assistant Collector of Land Customs & Central Excise, Amritsar, against the two petitioners and one Moshe Baruk, on the file of the Additional District Magistrate of Amritsar and for quashing the proceedings therein, and (2) for an order, direction or writ in the nature of habeas corpus for the production before this Court of the persons of the petitioners to be dealt with according to law.
The facts appearing from the records are shortly as follows: The petitioner, Leo Roy Frey, purchased a car No. C.D. from an officer of the American Embassy in Paris.
This car was sold by the petitioner Frey to the petitioner Thomas Dana, in May 1957.
On transfer, the car was registered in the name of the petitioner Dana on May 18, 1957.
Both the petitioners thereafter booked their passages through the, 824 American Express Company from Geneva to Bombay by s.s. ASIA.
The car was also shipped by the same vessel.
The two petitioners disembarked at Karachi Ion June 11, 1957, and after a brief halt at Karachi, they left together by plane for Bombay and reached Bombay on the same day.
petitioners stayed together at the Ambassador Hotel at Bombay from June 11, 1957, to the afternoon of June 19, 1957.
On the last mentioned date both of them left Bombay by plane and reached Delhi the same evening.
They occupied room No. I at Janpath Hotel and stayed there from June 19, to June 29, 1957.
After the car, which had been booked by rail from Bombay to Delhi, had arrived in Delhi, the two petitioners left Delhi and travelled together in the car from Delhi to Amritsar on June 22, 1957, and after staying the night there, they arrived at Attari Road Land Customs Station on their way out to Pakistan on June 23, 1957.
The Customs officers there required the petitioners to declare in Baggage Declaration Forms supplied to them the articles which they had in their possession, including any goods which were subject to Export Trade Control and/or Foreign Exchange restrictions and/or were dutiable.
Each of the petitioners completed his Baggage Declaration Form and handed it over to the Customs authorities duly signed by him.
On that very day the persons of each of the petitioners were also searched and certain currency and movable property which had not been included in the baggage declaration were recovered.
Amongst other things, a pocket radio and a time piece were recovered from the petitioner Dana and a pistol of 22 bore with 48 live cartridges of the same bore was recovered from the person of the petitioner Frey.
Both the petitioners were put under arrest on the same day, namely, June 23, 1957.
On June 30,1957, the petitioners were interrogated and the car was thoroughly searched.
As a result of such intensive search and minute inspection, a secret chamber above the petrol tank was discovered.
On opening the secret chamber, Indian currency to the tune of Rs. 8,50,000 and U.S. dollars amounting to 10,000 were discovered in the concealed recess and 825 seized by the police.
On July 7, 1957, notice was issued to the petitioner Dana under section 167(8) of the Sea Customs Act to show cause before the Collector why under that section penalty should not be imposed on, him and why the seized articles should not be confiscated.
A similar notice was served on the petitioner Frey, on July 9, 1957.
The petitioners made representations in writing and were also heard in person.
On July 24, 1957, the Collector of Central Excise and Land Customs made an order for the confiscation of the currency and also of the motor car with an option to the petitioner Dana to redeem the car on payment of Rs. 50,000 and also ordered confiscation of articles other than the currency recovered from the car subject to redemption on payment of Rs. 100.
The Collector was also satisfied that each of the two petitioners was equally guilty of an offence under section 167(8) of the Sea Customs Act and imposed a personal penalty of Rs. 25,00,000 on each of the petitioners, to be paid within two months from the date of the order or such extended period as the adjudicating officer might allow.
On August 12, 1957, the Assistant Collector of Customs and Central Excise, Amritsar, lodged a complaint against the two petitioners and one Moshe Baruk of Bombay before the Additional District Magistrate, Amritsar, under section 23 read with section 8 of the Foreign Exchange Regulations Act, 1947 and section 167 (81) of the , as amended by the Sea Customs (Amendment) Act, 1955.
Subsequently, a fresh complaint was filed by the same Assistant Collector of Land Customs and Central Excise against the two petitioners and the said Moshe Baruk before the Additional District Magistrate, Amritsar, ' under section 23 read with section 8 of the Foreign Exchange Regulations Act, 1947, and section 167(81) of the and s ' 120 B of the Indian Penal Code, read with section 23/23 B, Foreign Exchange Regulations Act and section 167(81), .
A case was also started against the petitioner Frey under the Indian Arms Act for being in possession of the pistol and the cartridges in contravention of the provisions of section 20 of 826 that Act.
He was ordered to be let out on bail in the sum of Rs. 10,000 with one surety in the Arms Act case, which he furnished.
The trial of the Arms Act case has concluded in the Court of the Additional District Magistrate but orders are pending.
The petitioners, Frey and Dana, were directed to be released on bail in the sum of rupees five lakhs and ten lakhs respectively, which were finally reduced by the High Court to rupees two lakhs and five lakhs respectively.
Neither of the petitioners could furnish the requisite security and they have, therefore, been in judicial custody.
They have now come forward with these applications for the reliefs already mentioned.
Their main contention, urged before us, is that they have been deprived of their liberty otherwise than in accordance with procedure established by law.
In ordinary circumstances the production of the order or warrant for the apprehension and detention of an undertrial prisoner would be a good return to a writ of habeas corpus.
But the petitioners contend that in this case there has been a violation of their fundamental right under article 20(2) of the Constitution.
Relying on the observations in the decision of the Calcutta High Court in Assistant Collector vs Soorajmal (1), and in the decision of the Madras High Court in Collector of Customs vs A. H. A. Rahiman (2), it is contended that in making the order of confiscation and penalty under section 167(8) of the , the Collector was acting judicially and therefore the petitioners have already been proceeded with and punished for the offence of importation and attempted exportation of goods, the importation or exoprtation of which is for the time being prohibited or restricted by or under chap.
IV of the , and consequently they cannot again be prosecuted and punished for the same offence.
The argument is that the pending proceedings before the Additional District Magistrate offend against the protection given to the petitioners by article 20(2) of Constitution.
That in imposing confiscation and penalties the Collector acts judicially has been held by this Court in its judgment (I) (2) A.I.R. 957 Mad.
827 pronounced on May 16, 1957, in F. N. Roy vs Collector of Customs (1).
No question has been raised as to the maximum amount of penalty that can be imposed under section 167(8) and we are not called upon to express any opinion on that point.
But the fact that the Collector of Customs acted judicially is not decisive and does not necessarily attract the protection guaranteed by article 20(2) and the question still remains whether the petitioners ' case comes within the provisions of article 20(2).
That article protects a person from being ,prosecuted and punished for the same offence more than once".
The question has to be answered as to whether the petitioners had previously been prosecuted and punished for the same offence for which they are now being prosecuted before the Additional District Magistrate.
The proceedings before the Customs authorities were under section 167(8) of the .
Under section 186 of that Act, the award of any confiscation, penalty or increased rate of duty under that Act by an officer of Customs does not prevent the infliction of any punishment to which the person affected thereby is liable under any other law.
The offences with which the petitioners are now charged include an offence under section 120B, Indian Penal Code.
Criminal conspiracy is an offence created and made punishable by the Indian Penal Code.
It is not an offence under the .
The offence of a conspiracy to commit a crime is a different offence from the crime that is the object of the conspiracy because the conspiracy precedes the commission of the crime and is complete before the crime is attempted or completed, equally the crime attempted or completed does not require the element of conspiracy as one of its ingredients.
They are, therefore, quite separate offences.
This is also the view expressed by the United States Supreme Court in United States vs Rabinowich (2).
The offence of criminal conspiracy was not the subject matter of the proceedings before the Collector of Customs and therefore it cannot be said that the petitioners have already been prosecuted and punished for the "same offence".
(1) Petition NO.
438 Of 1955.
105 (2) ; 828 It is true that the Collector of Customs has used the words " punishment " and " conspiracy ", but those words were used in order to bring out that each of the two petitioners was guilty of the offence under section 167(8) of the .
The petitioners were not and could never be charged with criminal conspiracy before the Collector of Customs and therefore article 20(2) cannot be invoked.
In this view of the matter it is not necessary for us, on the present occasion, to refer to the case of Maqbool Hussain vs The State of Bombay (1) and to discuss whether the words used in article 20 do or do not contemplate only proceedings of the nature of criminal proceedings before a court of law or a judicial tribunal as ordinarily understood.
In our opinion, article 20 has no application to the facts of the present case.
No other points having been urged before us, these applications must be dismissed.
Applications dismissed.
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The petitioners were found guilty under section 167(8) of the Sea Customs Act and the currency and other goods recovered from their possession were confiscated and heavy personal penalties imposed on them by the Collector of Central Excise and Land Customs.
Complaints were thereafter lodged against them by the Customs authorities before the Additional District Magistrate under section 120B of the Indian Penal Code, read with section 23/23B of the Foreign Exchange Regulations Act, 1947, and section i67(8i) of the Sea Customs Act, as also under other sections of the two latter Acts.
The Magistrate granted bail but they could not furnish the requisite security and were, therefore, kept in judicial custody.
By two petitions under article 32 Of the Constitution they prayed for the issue of writs of certiorari and/or prohibition for quashing the proceedings pending against them in the Court of the Magistrate as also for the issue of writs of habeas corpus.
It was contended on their behalf that in view of the provision of article 20(2) Of the Constitution they could not be prosecuted and punished twice over for the same offence and the proceedings pending before the Additional Magistrate violated the protection afforded by article 20(2) of the Constitution.
Held, that the contention was without substance and the petitions must be dismissed.
The fact that in imposing confiscation and penalties under section 167(8) of the Sea Customs Act, the Collector of Customs acts 823 judicially is not decisive and does not attract the protection of article 20(2) of the Constitution.
Section 186 of the Act does not prevent the infliction of any other punishment to which the person concerned may be liable under any other law.
F. N. Roy vs Collectoy of Customs, Petition NO.
438 Of 955, decided on May 16, 1957, referred to.
Criminal conspiracy is an offence under section 120B of the Indian Penal Code but not so under the Sea Customs Act, and the petitioners were not and could not be charged with it before the Collector of Customs.
It is an offence separate from the crime which it may have for its object and is complete even before the crime is attempted or completed, and even when attempted or completed, it forms no ingredient of such crime.
United States vs Rabinowith, ; , referred to.
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Appeal No. 426 of 1964.
Appeal by special leave from the judgment and order dated February 22, 1962 of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision No. 311 D of 1958.
S.P. Sinha and Inder Sen Sawhney, for the appellant, K. K. Jain and Bishambar Lal, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, from the judgment of the Punjab High Court dated February 22, 1962 in Civil Revision No. 331 D of 1958 whereby the High Court upheld and confirmed the judgment of the Appellate Court and set aside the judgment of the trial court staying proceedings in the suit.
The Uttar Pradesh Co operative Federation Limited (herein after referred to as the 'Society ') was registered under the Cooperative Societies Act No. II of 1912 at Lucknow and was carrying on the business of plying public carriers on Kanpur Delhi route.
The Society had been granted, for this purpose, permits by the Uttar Pradesh Government and Delhi Administration for seven vehicles.
In March, 1954, the Society entered into an agreement with the plaintiffs M/s Sunder Brothers through Bimal Kumar Jain and Dhan Kumar Jain by which they were appointed as Managing Agents for carrying on the business as public carriers.
The terms of the Managing Agency agreement were embodied in a letter dated March 2, 1954 written by the Secretary of the Society.
Clause 28 of the agreement reads as follows: "That in the event of there being any dispute regarding the terms and conditions of this agreement and your appointment hereunder as Managing Agents of the aforesaid business or any matter arising from and relating thereto or the subject matter thereof, such dispute shall be decided by arbitration as provided under Co operative Societies Act II of 1912 and you undertake and agree to be bound by the provisions for arbitration in the said Act".
The agreement was to last for a period of three years but on July 5, 1954 the Society terminated the agreement by its letter dated July 5, 1954, The plaintiffs therefore brought a suit on August 217 18, 1954 in the Court of the Subordinate Judge, First Class, Delhi praying for a declaration that the termination of the Managing Agency agreement by the Society was illegal and the plaintiffs were entitled to continue the business of Managing Agents in accordance with the terms and conditions of the agreement.
The plaintiffs prayed for a mandatory injunction restraining the defendant Society from terminating the agreement.
The Society made an application under section 34 of the Indian before the Subordinate Judge, Delhi, for an order for staying the suit.
It was claimed by the Society that the suit was not main tainable, because under section 51 of the Co operative Societies Act the dispute was to be adjudicated upon by the Registrar of Co operative Societies.
In the alternative it was alleged that by agreement between the parties the dispute was to be referred to arbitration in accordance with the Co operative Societies Act and consequently proceedings should be stayed.
The trial court stayed the proceedings but on the appeal of the plaintiffs the order of the trial court was set aside and the application of the Society under section 34 of the Indian was dismissed.
The Society moved the Punjab High Court in revision but the revision application was dismissed and the order of the lower appellate court was confirmed.
It is necessary at this stage to set out the relevant provisions of the Indian (Act 10 of 1940).
Section 34 of this Act states: "34.
Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings".
Section 46 provides as follows: "46.
The provisions of this Act, except sub section (1) of section 6 and sections 7, 12, 36 and 37, shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an 5301 16(a) 218 arbitration agreement as if that other enactment were an arbitration agreement, except in so far as this Act is in.
consistent with that other enactment or with any rules, made thereunder".
Section 47 reads as follows: "47.
Subject to the provisions of section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder: Provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending".
There was some controversy in the lower courts as to whether the arbitration under cl. 28 of the agreement was a statutory arbitration and whether section 46 of the Indian was applicable to the case.
It was argued by Mr. Sinha on behalf of the appellant Society that no statutory arbitration is created by cl. 28 of the agreement but the parties had merely agreed to act in accordance with the provisions of the Co operative Societies Act (Act 11 of 1912) and the Rules made thereunder.
It was contended that the parties had merely incorporated the statutory provisions by reference in their agreement and section 47 of the Indian will, therefore, be applicable to the case.
This legal position was not controverted by Mr. K. K. Jain appearing on behalf of the respondent.
The only question in debate was whether the lower court rightly exercised their jurisdiction under section 34 of the Indian in not granting the stay of the proceedings of the suit.
If the arbitration agreement is not to be treated as a statutory arbitration under section 46 of the but an arbitration agreement under section 47 of the Act, then the procedure to be followed for the arbitration under that agreement will be that provided under the Co operative Societies Act and the Rules framed thereunder.
Under section 47 of the Indian the arbitration will be governed only by such rules of the Co operative Societies Act and rules framed thereunder as are not inconsistent with the provisions of the Indian .
In this con nection it is necessary to refer to Rules 115, 116 and 117 of the Co operative Societies Rules framed under section 43 of the Co operative Societies Act.
Rule 115 states as follows: "Any dispute touching the business of a registered society (i) between members or past members of a society or persons claiming through a member or past member, (ii) or between a member or a past member or persons so claiming and the society or its committee or 219 any officer of the society, (iii) between the society or its committee and any officer of the society, and (iv) between two or more registered societies, shall be decided either by the Registrar or by arbitration and shall for that purpose be referred in writing to the Registrar".
Rule 116 provides: "The Registrar on receipt of a reference shall either decide the dispute himself, or refer it for decision to an arbitrator or to two joint arbitrators appointed by him or to three arbitrators, of whom one shall be nominated, by each of the parties to the dispute and the third by the Registrar who shall also appoint one of the arbitrators to act as chairman".
Rule 117 states: "In case it is decided to appoint three arbitrators (i) The Registrar shall issue a notice calling on each of the parties to nominate one person as its nominee within 15 days of the receipt of the notice.
(ii) if a party consists of more than one person, such persons shall jointly make only one nomination.
(iii) if more than one person is nominated by a party the Registrar shall appoint either one of the nominees or some other person of his own choice as the nominee of that party, (iv) if a party fails to nominate an arbitrator within the appointed time or if its nomination is not valid the Registrar may himself make the nomination, (v) if one of the arbitrators fails to attend or refuses to work as an arbitrator, the remaining arbitrators may decide the dispute.
If two of the arbitrators fail to attend or refuse to work as arbitrators and the claim is not admitted the remaining arbitrator shall refer the case to the Registrar who may authorise him to give an award or appoint one or more arbitrators to proceed, with the reference or he may decide the case himseff".
It has been observed by the High Court that it would be a difficult task for the arbitrator to investigate as to which of the rules made under the Co operative Societies Act are consistent with and which of those rules are not consistent with the provisions of the Indian and therefore it was, a fit case in which discretion of the court under section 34 of the Indian should be exercised in not staying the proceedings of the suit.
In our opinion, the reasoning of the High Court has much substance.
220 There is also another reason why there should not be a stay of the proceedings under section 34 of the Indian .
The suit was filed in 1954 and, though 12 years have elapsed, nothing has been, done in the suit and it will not be in the interest of speedy disposal of the suit between the parties if the proceedings in the suit are further stayed and the parties are referred to arbitration.
There is also another ground why the proceedings in the suit should not be stayed in the present case.
If Rules 11.5 and 116 of the Co operative Societies Rules are applicable then the reference of the dispute has to be made to the Registrar of the Co operative Societies who may either decide the dispute himself or refer the dispute to an arbitrator or two joint arbitrators appointed by him or to three arbitrators, of whom one shall be nominated by each of the parties to the dispute and the third by the Registrar who shall also appoint one of the arbitrators to act as Chairman.
It is alleged by the respondent that the Registrar of Co operative Societies is ex officio President of the Society and it was with his approval that the agreement in dispute was terminated.
It was also pointed out that the Registrar was the chief controlling and supervising officer of the Society under its bye laws.
It was submitted for the respondent that the Registrar may not, therefore, act fairly in the matter and it is improper that he should be an arbitrator in the dispute between the parties.
In our opinion, there is much validity in this argument.
The legal position is that an order of stay of suit under section 34 of the Indian will not be granted if it can be shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute between the parties.
It is, of course, the normal duty of the Court to hold the parties to the contract and to make them present their disputes to the forum of their choice but an order to stay the legal proceedings in a Court of law will not be granted if it is shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute.
Reference may be made, in this connection, to the decision of the House of Lords in Bristol Corporation vs John And & Co.(1).
This case was concerned with an application for stay of proceedings under section 4 of the English which is similar to section 34 of the Indian .
Upon the settlement of the final account there arose a bona fide dispute of a substantial character between the contractor and the engineer, who was the arbitrator under the contract, involving a probable conflict of evidence between, them.
The House of Lords held, affirming the decision of the (1)[1913] A,C. 241.
221 Court of appeal, that the fact that the engineer, without any fault of his own, must necessarily be placed in the position of a Judge and a witness is a sufficient reason why the matter should not be referred in accordance with the contract.
At pp.
247 248 of the report Lord Atkinson stated as follows: "Whether it be wise or unwise, prudent or the contrary, he has stipulated that a person who is a servant of the person with whom he contracts shall be the judge to decide upon matters upon which necessarily that arbitrator has himself formed opinions.
But though the contractor is bound by that contract, still he has a right to demand that, notwithstanding those preformed views of the engineer, that gentleman shall listen to argument and determine the matter submitted to him as fairly as he can as an honest man; and if it be shown in fact that there is any reasonable prospect that he will be so biased as to be likely not to decide fairly upon those matters, then the contractor is allowed to escape from his bargain and to have the matters in dispute tried by one of the ordinary tribunals of the land.
But I think he has more than that right.
If, without any fault of his own, the engineer has put himself in such a position that it is not fitting or decorous or proper that he should act as arbitrator in any one or more of those disputes, the contractor has the right to appeal to a Court of law and they are entitled to say, in answer to an application to the Court to exercise the discretion which the 4th section of the vests in them, "We are not satisfied that there is not some reason for not submitting these questions to the arbitrator".
In the present case the question is, has that taken place"? Lord Moulton after tracing the growth of the law of arbitration made the following observations in his speech: "But, My Lords, it must be remembered that these arbitration clauses must be taken to have been inserted with due regard to the existing law of the land, and the law of the land applicable to them is, as I have said, that it does not prevent the parties coming to the Court, but only gives to the Court the power to refuse its assistance in proper cases.
Therefore to say that if we refuse to stay an action we are not carrying out the bargain between the parties does not fairly describe the position.
We are carrying out the bargain between the parties, because that bargain to substitute for the Courts of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation, the condition that it should only be enforced if the Court thought it a proper case for its being so enforced".
222 Lord ;Parker, after pointing out that section 4 of the ' gave a discretionary power to the Court to be exercised after it was ' satisfied that there was no sufficient reason why the matter should not be referred in accordance with the submission, expressed the ' following views: "In making up its mind on this point the Court must of course give due consideration to the contract between the parties, but it should, I think, always be remembered that the parties may have agreed to the submission precisely because of the discretionary power vested in the Court under the .
They may, very well, for instance, have said to themselves, 'If in any particular case it would be unfair to allow the arbitration we are agreeing to proceed we shall have the protection of the Court".
It is manifest that the strict principle of sanctity of contract is subject to the discretion of the Court under section 34 of the Indian , for there must be read in every such agreement an implied term or condition that it would be enforceable only if the Court, having due regard to the other surrounding circumstances, thinks fit in its discretion to enforce it.
It is obvious that a party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or by sufficient reason to suspect that he will act unfairly or that he has been guilty of continued unreasonable conduct.
As we have already stated, the respondent has alleged in the present case that the Registrar, Co operative Societies has approved the termination of the contract of Managing Agency with the plaintiff and the Registrar was the chairman of the defen dant Society.
We are accordingly of the opinion that the High Court properly exercised its discretion under section 34 of the Indian in not granting a stay of the proceedings in the suit.
It is well established that where the discretion vested in the Court under section 34 of the Indian has been exercised by the lower court the appellate court should be slow to interfere with the exercise of that discretion.
In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it may have come to a contrary conclusion.
If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court 's exercise of discretion.
As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the, appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the appellate court 223 to interfere with the trial court 's exercise of discretion.
This principle is well established; but, as has been observed by Viscount Simon, L. C., in Charles Osenton & Co. vs Johnston(1): "The law as to the reversal by a court of appeal of an order made by a Judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case".
For these reasons we hold that the appellant has made out no case for our interference with the order of the High Court refusing stay of the proceedings in the suit under section 34 of the Indian .
The appeal accordingly fails and is dismissed with costs.
Appeal dismissed.
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The appellant society carried on business as public carriers on the Kanpur Delhi route.
By an agreement in 1954 they appointed the respondents as their Managing Agents for a period of 3 years.
But much before the expiry of that period they terminated the agreement.
Disputes arising between the parties were under the agreement, to be decided by arbitration as provided in the Co operative Societies Act II of 1912.
According to the relevant provisions of the said Act disputes were to be decided by the Registrar of Co operative Societies or by an arbitrator or arbitrators appointed by him.
The respondents however filed a suit against the Society asking for a declaration that the termination of the agreement by the society was illegal and for a mandatory injunction restraining the society from terminating the agreement.
The Society thereupon filed an application under section 34 of the Indian Arbitration Act praying for a stay of the aforesaid suit on the ground that the respondents had agreed to arbitration as provided in the Co operative Societies Act.
The trial Court stayed the suit but the appellate Court set aside the trial Court 's order and dismissed the application under section 34.
The High Court upheld the appellate Court 's order whereupon, by special leave, the society appealed to this Court.
HELD:(i) The High Court rightly refused to stay the suit.
It rightly observed that it would be a difficult task for the arbitrator to investigate as to which of the rules made under the Co operative Societies Act are consistent with and which of those rules are not consistent with the provisions of the Indian Arbitration Act.
The suit, moreover, was filed as far back as 1954 and its stay would not be in the interests of its speedy disposal.
[219 G 220 B] (ii)It is, of course, the normal duty of the court to hold the parties to the contract and to make them present their disputes to the forum of their choice, but the strict principle of sanctity of contract is subject to the discretion of the Court under section 34 of the Indian Arbitration Act.
A party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or there is sufficient reason to suspect that he will act unfairly or that he has been guilty of unreasonable conduct.
[222 D] In the present case the respondent had alleged that the Registrar Co operative Societies had approved the termination of the contract of Managing Agency with the plaintiff and the Registrar was the Chairman of the Defendant Society.
In the circumstances the High Court Trust be held to have Properly exercised its discretion under section 34 of the Indian Arbitration Act in not granting a stay of the proceedings in the suit.
[222 E].
216 Bristol Corporation vs John Aird & Co. , referred to.
(iii)If it appears to the, appellate Court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the Appellate Court to interfere with the trial court 's exercise of discretion, [222 H] Charlies Osenton & Co. vs Johnston, , referred to.
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Appeal No. 43 of 1952.
Appeal by special leave granted by the Supreme Court of India on 11th May, 1951, from the Judgment and Order dated 11th December, 1950, of the Hyderabad High Court in Criminal Appeal No 598/6 of 1950.
B.J. M. Mackenna (A. A. Peerbhoy and J. B. Dadachanji, with him) for the appellant.
V.Rajaram Iyer (R. Ganapathy Iyer, with him) for the respondent ' 1953.
October 5.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal by special leave from the judgment of the High Court 'of Judicature of Hyderabad upholding the conviction of the appellant by the Special Judge, Warangal, appointed under Regulation X of 1359 F., under sections 243, 248, 368, 282and 124 of the Hyderabad Penal Code (corresponding to sections 302, 307, 436, 342 and 148, Indian Penal Code) and the respective sentences passed under these sections against him.
The case for the prosecution which has been sub stantially accepted by the Special Judge and by the majority of the High Court is that the appellant was in the year 1947 the Subedar of Warangal within the State of Hyderabad, that on the 9th December, 1947, he proceeded to the village of Gurtur situate within his jurisdiction at about 10 a.m. along with a number of police officials and a posse of police force ostensibly to raid the village in order to arrest certain bad characters, that when a party of villagers, 60 or 70 in number, came out to meet him in order to make representations, he ordered the policemen to open fire on the unarmed and inoffensive villagers, as a result of which tailor Venkayya and Yelthuri Rama died of bullet wounds on the spot, Yelthuri Eradu and Pilli Malladu 477 received bullet wounds and died subsequently, five others received bullet wounds but they recovered, that the appellant gave match boxes and directed the policemen to go into the village and set fire to the houses as a result of which 191 houses were burnt down; that about 70 of the villagers were tied up under the orders of the appellant and taken to Varadhanapeth and were kept under wrongful confinement for some time and thereafter some were released and others were taken to Warangal jail and lodged there; that these acts were done by the appellant without legal authority or legal justification and that he and the two absconding accused were therefore guilty of the offences of murder, attempt to murder, arson,etc.
The prosecution produced 21 witnesses in support of their case, while the accused examined a solitary witness in defence.
The firing by the police, the death of the persons concerned, the arrest of some of the villagers and the burning down of the village houses on the date and the time in question are facts which were not disputed.
But what was alleged by the defence was that the appellant did not give the order to fire, that the villagers were violent and attempted to attack the officials and the police by force and therefore whatever was done was done in self defence.
It was said that the raiders were arrested in due course of law and that the destruction of their houses by fire was committed by the villagers themselves, and that the appellant had gone to the village only to arrest congress mischief mongers and to maintain and enforce law and order.
The Special Judge on the materials before him came to the conclusion that the accused was guilty of the offences with which he stood charged.
On appeal to the High Court of Hyderabad, a bench of two Judges (Sripatrao and Siadat Ali Khan JJ.) delivered differing judgments, Sripatrao J. taking the view that the appeal should be dismissed and the other learned Judge being of the opinion that the appeal ought to be allow he accused acquitted.
The case was then to a third Judge (Manohar Prasad J.) who by 478 a judgment dated 11th December, 1950, agreed with the opinion of Sripatrao J. and dismissed the appeal.
The present appeal has been preferred against the judgment of the majority of the High Court by our leave.
This appeal was in the first instance heard by the Constitution Bencb(1) and at that stage the hearing was confined to certain constitutional points which had been raised by the appellant attacking the legality of the entire trial which resulted in his conviction on the ground that the procedure for trial laid down in Regulation X of 1359 F. became void after the 26th January, 1950, by reason of its conflict with the equal protection clause embodied in article 14 of the Constitution.
The constitutional points raised by the appellant failed and the application preferred by him under article 32 of the Constitution was rejected, and the case was directed to be posted in the usual course for being heard on its merits and it is now before us.
To appreciate the contentions raised on behalf of the appellant, it is necessary to give a short narrative of the incident and the events following thereupon which led to the prosecution of the appellant.
In the first information report lodged against the appellant on the 29th January, 1949, it was said that the following persons accompanied the Subedar that morning: 1.
Moulvi Ghulam Afzal Biabani, Deputy Commissioner, District Police, Warangal.
Abdul Lateef Khan, Circle Inspector of Police, Warangal (absconding accused).
Military Assistant.
Naseem Ahmed, Sub Inspector, Vardhanapeth.
Head Constables of Police, Vardhanapeth.
Abdul Waheed Girdavar.
Abdul Aleem Sahib, Vakil of Hanamkonda.
8. 70 military men, 10 policemen and 1 1 razakers.
It appears that another person Abdul Wahid, Assistant D.S.P also went with this party.
He submi (1) See ; , 479 a diary of the happenings at Gurtur on the same day.
It was briefly stated therein that the people 'rebelled, that they had to open fire and that 70 persons were arrested.
Abdul Lateef Khan, the absconding accused and who was the Circle Inspector of Police, also submitted a diary the same day of the happenings of the 9th, December.
According to him, a crowd of 5,000, pursued the two persons who had been sent to the village and fired at the policemen, threw stones by the slings by which Kankiah the jamedar was injured, that one bullet fell in front of the Nayeb Nazim, that the unlawful assembly shouting slogans against the Government tried to surround the policemen; that the police tried to make them understand but they did not listen, that the crowd was armed with guns, spears, lathis, axes, sickles and slings, and that seeing the delicate circumstances the above mentioned high officers ordered the police to open fire in self defence.
Turab Ali, Sub Inspector of Police, and Station House Officer, Vardhanapeth, on this information recorded the first information report under section 155 of the Hyderabad Penal Code on 9th December, 1947, against Narsivan Reddy, Congress leader of Mangp Banda, and several others under sections 124, 248, 272 and 82 of the Hyderabad Penal Code.
In this report the facts stated by Abdul Lateef, Circle Inspector, were reiterated.
Turab Ali also prepared a panchnama on the same date, the panches being Khaja Ahmed Wali Hyderi revenue inspector, residing at Vardhanapeth and Md. Abdul Wahid, special Girdavar of the same place.
The narrative of events given in the report of Abdul Lateef was recited in the panchnama.
Annexed to this panchnama was a list of the articles and weapons recovered from the individuals arrested on the 9th December, 1947.
The list mentions a number of lathis, spears, sickles, churas, a muzzle loader and some axes.
On the 11th December the appellant sent his report of the incident at Gurtur to Government and in this demi official letter substantially the account given by Abdul Lateef, Circle Inspector, was repeated and the justification for the firing was fully set out.
Whether 480 Moulvi Afzal Biabani, Deputy Commissioner of Police, Warangal, also submitted a report giving his version of the incident to Government or to the InspectorGeneral of Police is a debatable point.
The Government replied to the D. O. letter on 21st January, 1948, and called for a report from the Subedar as to how much collective fine was to be imposed on the villages mentioned in the D. O. letter.
He was also asked to submit a resolution for the appointment of penal police soon so that sanction might be taken according to the procedure.
On 13 March, 1948, a challan was presented against 70 persons arrested on the 9th December, 1947, by the police for offences under sections 124, 248 etc.
in the Court of the Special District Judge of Hyderabad.
The accused were remanded to the Central Jail, Warangal, and it was ordered that if there were any material objects in the case the police should bring them at the next hearing, viz., 31st March, 1948.
On that date the special magistrate committed to the court of session 22 persons to be tried under sections 124, 293 and 248 of the Hyderabad Penal Code.
The rest of the persons arrested were discharged.
The Special Judge fixed the case for hearing on 18th May, 1948.
On that date or some subsequent date in May the police put in an application withdrawing the case.
The court accordingly acquitted all the accused and the proceedings initiated on the first information report of Abdul Lateef, Circle Inspector, thus terminated.
On what grounds the case against these accused persons was withdrawn by the police is a matter which has been left unexplained on the record.
Between the date of the withdrawal of this case and the police action in Hyderabad taken by the Government of India in September, 1948, whether any investigation was made as to the incidents at Gurtur by the Government is not known, but it appears that soon after the police action was over, in November, 1948, a statement was recorded of one Ranganathaswami who is a prosecution witness in the present case by one B. J. Dora Raj, Deputy Collector on 5th November, 1948, in which Ranga natahswami said as follows: 481 "On 9th December, 1947, at about 10 30 a.m. Habeeb Mohammad the Subedar, Biabani the D.S.P., Naseem the Sub Inspector, Abdul Wahid, Special Girdavar and about 70 persons, State Police, Razakars and Abdul Aleem, Vakil, had come to the village Gurtur, taluqa Mahaboobad, dist.
Warangal.
Policemen burnt nearly 200 houses by the order of the D.S.P. It caused damage to the extent of Rs. 1 lakh.
Policemen fired the tailor Ramulu, two dheds, on the order of Biabani, the D.S.P. I do not know the names of the dheds.
Five or six persons were injured.
They were injured by the bullets.
I do not know their names.
At that time there I was doing the work of teaching.
They arrested 70 persons saying that they are Congressmen and carried them forcibly to the Warangal jail .
They snatched gold ornaments of 8 tolas valuing Rs. 400 from the women of Apana Raju and Narsivan Raju.
I incurred loss of Rs. 600 as the house in which I was staying was burnt.
The school peon incurred loss of Rs. 300 as his house was also burnt.
When these above events were happening Subedar was present.
They left the 70 persons who were put into the jail, after taking Rs. 600 bribe.
I myself have seen the above events.
I have read the statement.
It is correct." The statement bears an endorsement of the Deputy Collector to the effect that it was taken before him, and was read over and admitted to be correct.
It also appears that the Assistant Civil Administrator examined 76 villagers on the 28th November, 1948, and their statement is to the following effect : "On 9 12 47 at 9 30 a.m. the Subedar of Warangal, the Deputy Commissioner of Police, Biabani (who has a kanti on his neck), Military Assistant, Circle Inspector of Warangal, Sub Inspector of Police of Vardhanapeth, Head Constable of Police of Vardhanapeth, Girdavar, in the company of military police and 40 persons came to our village.
Came from Okal and stayed out of the city on the west side.
Nearly 100 or 150 persons of the Village went to them.
They fired the guns by which Olsuri Eriah, Olsuri Ramiah 482 and Kota Konda Venkiah died.
Batula Veriah, Basta Pali Maliah, Olsuri Veriah Yeliah, Ladaf Madar Dever Konda Lingiah and Beara Konda Peda Balraju were injured by the bullets.
After this they entered into the village and after taking round in the bazar they got into the houses and looted.
They looted money and clothes.
Then they surrounded the village and gathering the village people took them out of the village.
Made them lie down with face downwards and tied their hands, and kept them in the same condition from 10 a.m. to 3 p.m.
At 3 p.m. the Subedar gave match boxes to his men and told them to burn the houses.
On this they burnt the houses.
The Subedar made us stand and said 'see the Lanka Dahan of your village. ' The Deputy Commissioner also said the same thing.
After this they beat us and took us to Mailaram.
From there they carried us in a car to the police station, Vardhanapeth. .
The whole household utensils of the houses were looted, due to which the damage amounted to one lakh.
It was also learnt that they outraged the modesty of 4 women.
They felt ashamed to state their names before the public.
The women are ashamed to expose the names of the persons concerned.
The names of these women are with the State Congress.
" On the basis of these two statements the Inspector of C.I.D. District Police, one Md. Ibrahim Ghori, wrote to the Sub Inspector of Police of Nalikadur, dist.
Warangal, to issue the first information report for offences committed under sections 248, 312, 331 and 368 of the Hyderabad Penal Code against the Subedar and it was directed that the two sheets of original statements of the complainants should be sent to the court with the first information report and that he would himself investigate the case.
On receipt of this letter the Sub Inspector of Police recorded the first information report for the offences mentioned above on 29th January, 1949, in terms of the above letter.
Though this first information report was recorded on 29th January, 1949, the investigation of the case against the appellant did not start till the 8th August, 49.
What happened in this interval and why the 483 investigation was delayed by a period of over seven months is again, a matter on which no explanation has been furnished on the record and the 'learned Advocate General who appeared On behalf of the State before us was unable to explain the cause, of this delay in the investigation of the crimes alleged to have been committed by the appellant.
On 28th August, 1949, there was an order in terms of section 3 of the Special Tribunal Regulation V of 1358F., which was in force at that time directing the appellant to be tried by Special Tribunal (A).
The Military Governor gave sanction for the prosecution of the appellant on 20th September, 1949.
On 13th December, 1949, a new Regulation, Regulation X of 1359 F., was passed by the Hyderabad Government which ended the Special Tribunals created under the previous regulation and upon such termination, provided for the appointment, powers and procedure of the Special Judge.
On 5th January, 1950, the case of the appellant was made over to Dr. Laxman Rao, Special Judge, who was appointed under the above regulation under an order of the Civil Administrator, Warangal, to whom power under section 5 of the Regulation was delegated and on the same day the Special Judge took cognisance of the offences with the result already indicated.
Mr. McKenna, who argued the appeal on behalf of the Subedar, contended that his client was considerably prejudiced by certain grave irregularities and illegalities committed in the course of the trial by the Special Judge and that there had been a grievous disregard of the proper forms of legal process and violation of principles of criminal jurisprudence in such a fashion as amounted to a denial of justice and that injustice of a serious and substantial character has occurred.
The first ground of attack in this respect was that a number of material witnesses, including Moulvi Afzal Biabani, Deputy Commissioner of Police, who accompanied the Subedar and witnessed the occurrence and who could give a narrative of the events of the 9th December, 1947, were not produced by the prosecution 64 484 though some of them were alive and available, that these witnesses were essential for unfolding the narrative on which the prosecution was based and should have been called by the prosecution, no matter whether in the result the effect of their testimony would have been for or against the case for the prosecution.
The facts relating to Biabani are these: Admittedly he was a member of the party that visited village Gurtur on the fateful morning of the 9th December, 1947.
There can be no doubt that he was a witness of this occurrence and could give a narrative of the incidents that happened there on that day.
In the statement of Ranganathaswami cited above which accompanied the first information report against the appellant it was asserted that the firing took place under the orders of Biabani and the houses were burnt by his order.
In the challan that was prepared on the first information report lodged under the directions contained in the letter of Md. Ibrahim Ghori, Inspector of C.I.D., District Police, against the appellant and the two absconding accused it was alleged that the accused merely on the pretext that the village Gurtur was the headquarters of the communists raided the village with the aid of the armed police force, that the villagers appeared before the accused, but accused I (the appellant) in view of the general policy of the Ittehad ul Muslimeen that the Hindus might be killed and be forced to run away from Hyderabad and to achieve this object opened fire on them, that as a result of the firing two villagers were killed on ' the spot, two of them died in the hospital, five others badly injured, that when the villagers took to their heels the appellant distributed match boxes amongst the police Constables and ordered them to go into the village habitation, loot and burn the houses and molest the villagers.
In this challan the whole burden for the crimes committed on 9th December was thrown on Habeeb Mohammad in spite of the fact that in the documents accompanying the first information report this burden had been thrown on Biabani, the Deputy Commissioner of Police, 485 P.W. 21, the investigating officer, was questioned on this point and he deposed that in the course of the in vestigation the offence was only proved against the appellant and the two absconding accused and that it was not proved that Ghulam Afzal Biabani, Deputy Inspector Genaral of District Police, or Nasim Ahmad, Sub Inspector of Police, or Jamedar of Police, Vardhanapeth, Abdul Wahib, Revenue Inspector, or Abdul Alim, pleader, or the military police had committed any crimes or aided or abetted and for this reason their names were not mentioned therein.
The prose cution in these circumstances in the list of prosecution witnesses mentioned the name of Biabani as P.W. 2, but for some unexplained reason it did not produce him as a witness during the trial.
No explanation has ,been given by the prosecution for withholding this material witness from the court who was the most responsible officer next to the Subedar present at the time of the occurrence and who was at the time of the trial holding an important office under Government and who presumably would have given the court an accurate and true version of what took place.
On 24th March,.
1950, the appellant made an application to the Special Judge alleging, inter alia, that though a number of police officers and other officials were present at the scene of occurrence including Ghulam Afzal Biabani, Kankiah, Abdul Wahid, Girdawar who was then confined in Warangal jail, Naseem Ahmad, Sub Inspector of Police, Vardhanapeth, Khaja Moinuddin, Police Jamedar, Abdul Ghaffar Khan, Reserve District Police Inspector, Turab Ali, Sub Ins pector, Vardbanapeth, and Shaik Chand, Police Inspector, they were neither arrested nor any action taken against any of them, that the investigating officer Ibrahim Ghori and Sub Inspector of Nallikudur police station were not produced in court, that though Kankiah Jamedar was presented to give evidence, Ghulam Afzal Biabani, ex Deputy District Police Commissioner, was not produced.
It was alleged in this application that when this objection was raised on behalf of the accused, the Government Pleader said that 486 they could not produce him, and if the honourable court so desired, it may summon him.
It was further alleged therein that the conduct of the.
prosecution showed that they were endeavouring to incriminate the accused who was not guilty and on the other hand were trying to shield the police constables and officers, and that the Government Pleader had refused to produce the best evidence that could be produced in, the case.
It was stated that in those circumstances it would be in conformity with justice that the court should inquire into the facts and summon the persons mentioned above under section 507 of the Code of Criminal Procedure and record their statements in ' order to find out the real facts.
It was said further that Ghulam Afzal Biabani, ex Deputy District Police Commissioner, who was then in service in the Police Training School, had sent a report with regard to the ' incident to the Inspector General of Police and to the Secretary to Government, Home Department.
On this application the learned Judge recorded the following order: "The application of the accused is not worth con sideration because neither the complainant nor the accused can persuade the court in this way.
This right can be exercised only to settle a defect in the evidence.
Otherwise it is not to be exercised at all.
The right should be exercised only to rectify the defects of any of the parties.
The accused has full right to adduce defence witnesses.
Even after producing the defence evidence, if anything is omitted, the 'court by itself, will settle it.
This application is filed beforehand.
" Order was, however, made to summon the report, if any, made by Ghulam Afzal Biabani.
In his judgment convicting the appellant, regarding Biabani the learned Judge made the following observations: " I regret to learn from Kesera Singh, investigating officer,that such a man is in service, i.e., in the capacity of Principal of Police Training School. 'Will he impart to the would be subordinate officers the same lesson of protection of life and property of royts.
487 And in this case the said Biabani is not challenged only because he is a police officer.
This should not be construed in this sense that as the police left Biabani scot free because they favoured him, so also the court should leave Habeeb Mohamed.
A strange logic that " you left one, therefore I leave the other ' will continue.
" It is difficult to support such observations made behind the back of a person.
Such observations could only be made after giving an opportunity to Biabani to explain his conduct.
Before the High Court Mr. Walford who argued the case stressed the point that the police ought to have produced Ghulam Afzal Biabani to prove the fact that it was the appellant who ordered firing and in the alternative, the court should have summoned him as a court witness.
This argument was disposed of by reference to the decision of their Lordships of the Privy Council in Adel Mohammad vs Attorney General of Palestine(1), wherein it was observed that there was no obligation on the prosecution to tender witnesses whose names were upon the information but who were not called to give evidence by the prosecution, for cross examination by the defence, and that the prosecutor has a discretion as to what witnesses should be called for the prosecution and the court will not interfere with the exercise of that discretion unless it can be shown that the prosecutor has been influenced by some oblique motive.
It was held that in view of these observations it could not be said that the prosecution committed any mistake in not producing Afzal Biabani or that it had been influenced by some oblique motive.
It was further held that no occasion arose for interfering with the discretion exercised by the Special Judge under section 507, Hyderabad Criminal Procedure Code, and that the evidence of this witness could not be regarded as essential for the just decision of the case.
The dissenting Judge, Siadat Ali Khan J., took the view that Biabani was the second top ranking officer at the occurrence and as his report was not forthcoming, (1) A.I.R. 1945 P.C. 42.
488 there was a lacuna in the record and that it was the duty of the court to call him as a witness.
In the judgment of the third Judge, Manohar Prasad J., it is stated that Mr. Murtuza Khan who appeared for the accused did in course of his arguments concede that from the documents filed it appeared that the order of fire was given by the appellant.
Mr. Murtuza Khan who is a retired Judge of the Hyderabad High Court has filed an affidavit contesting the correctness of this observation.
On the question therefore whether the order to fire was given by the appellant we have the solitary testimony of P.W. 10, Kankiah, the police Jamedar, contrary to the statements contained in the document accompanying the first information report; and even in his deposition it is said that the police officer took instructions from Biabani before carrying out the orders of the appellant.
In this situation it seems to us that Biabani who was a top ranking police officer present at the scene was a material witness in the case and it was the bounden duty of the prosecution to examine him, particularly when no allegation was made that if produced, he would not speak the truth; and, in any case, the court would have been well advised to exercise its discretionary powers to examine that witness.
The witness was at the time of the trial in charge of the Police Training School and was certainly available.
In our opinion, not only does an adverse inference arise against the prosecution case from his non production as a witness in view of illustration (g) to section 114 of the Indian Evidence Act, but the circumstance of his being withheld from the court casts a serious reflection on the fairness of the trial.
It seems to us that the appellant was considerably prejudiced in his defence by reason of this omission on the part of the prosecution and on the part of the court.
The reasons given by the learned Judge for refusing to summon Biabani do not show that the, Judge seriously applied his mind either to the Provisions of the section or to the effects of omitting to examine such an important 'Witness.
The terms in which the order of the Special Judge is couched exhibit lack of judicial balance in a matter which required 489 serious consideration.
The reliance placed on the decision of their Lordships of the Privy Council in Adel Mohammad vs Attorney General of Palestine(1) is again misplaced.
That decision has no bearing on the question that arises in the present case.
The case came from Palestine and the decision was given under the provisions of the Palestine Criminal Code Ordinance, 1936.
The contention there raised was that the accused had a right to have the witnesses whose names were upon the information, but were not called to give evidence for the prosecution, tendered by the Crown for cross examination by the defence.
The learned Chief Justice of Palestine ruled that there was no obligation on the prosecution to call them.
The court of criminal appeal held that the strict position in law was that it was not necessary legally for the prosecution to put forward these witnesses.
They, however, pointed out that in their opinion the better practice was that the witnesses should be so tendered at the close of the case for the prosecution so that the defence may cross examine them if they so wish.
Their Lordships observed that there was no obligation on the part of the prosecution to tender those witnesses.
They further observed that it was doubtful whether the rule of practice as expressed by the court of criminal appeal sufficiently recognised that the prosecutor had a discretion as to what witnesses should be called for the prosecution, and the court would not interfere with the exercise of that discretion, unless, perhaps, it could be shown that the prosecutor was influenced by some oblique motive.
No such suggestion was made in that case.
The point considered by their Lordships of the Privy Council there *as somewhat different from the point raised in the present case, but it is difficult to hold on this record that there was no oblique motive of the prosecution in the present case for not producing Biabani as a witness.
The object clearly was to shield him, who possibly might be a co accused in the case, and also to shield the other police officers and men who formed the raiding party.
In our opinion, the true rule (1) A.I.R. 1945 P.C. 42. 490 applicable in this country on the question whether it is the duty of the prosecution to produce material witnesses has been laid down by the Privy Council in the case of Stephen Senivaratne vs The King (1), and it is in these terms : "It is said that the state of things above described arose because of a supposed obligation on the prosecution to call every available witness on the principle laid down in such a case as Ram Ranjan Boy vs Emperor (2), to the effect that all available eye witnesses should be called by the prosecution even though, as in the case cited, their names were on the list of defence witnesses.
Their Lordships do not desire to lay down any rules to fetter discretion on a matter such as this which is so dependent on the particular circumstances of each case.
Still less do they desire to discourage the utmost candour and fairness on the part of those conducting prosecutions; but at the same time they cannot, speaking generally, approve of an idea that a prosecution must call witnesses irrespective of consi derations of number and of reliability, or that a pro secution ought to discharge the functions both of prosecution and defence.
If it does so confusion is very apt to result, and never is it more likely to result than if the prosecution calls witnesses and then proceeds almost automatically to discredit them by cross examination.
Witnesses essential to the unfolding of the narrative on which the prosecution is based, must, of course, be called by the prosecution, whether in the, result the effect of their testimony.is for or against the case for the prosecu tion.
" In a long series of decisions the view taken in India was, as was expressed by Jenkins C.J. in Ram Banjan Boy vs Emperor(2), that the purpose of a criminal trial is not to support at all costs a theory but to investigate the offence and to determine the guilt or innocence of the accused and the duty of a public prosecutor is to represent not the police but the Crown, and this duty should be discharged fairly and fearlessly with a full sense of (1) A.I.R. 1936 P.C. 289.
(2) I.L.R. 491 the responsibility attaching to his position and that he should in a capital case place before the court the testi mony of all the available eye witnesses, though brought to the court by the defence and though they give different accounts, and that the rule is not a technical one, but founded on common sense and humanity.
This view so widely expressed was not fully accepted by their Lordships of the Privy Council in Stephen Senaviratne vs The King(1), that came from Ceylon, but at the same time their Lordships affirmed the proposition that it was the duty of the prosecution to examine all material witnesses who could give an account of the narrative of the events on which the prosecution is essentially based and that the question depended on the circumstances of each case.
In our opinion, the appellant was considerably prejudiced by the omission on the part of the prosecution to examine Biabani and the other officers in the circumstances of this case and his conviction merely based on the testimony of the police jamedar, in the absence of Biabani and other witnesses admittedly present on the scene, cannot be said to have been arrived at after a fair trial, particularly when no satisfactory explanation has been given or even attempted for this omission.
Another grave irregularity vitiating the trial and on which Mr. McKenna laid great emphasis concerns the refusal of the Special Judge to summon six defence witnesses whom the appellant wished to call.
The facts relating to this matter are these: On the 24th March, 1950, the appellant filed a list of defence witnesses containing the following names: 1.
Moulvi Syed Hussain Sahib Zaidi, Ex District Superintendent of Police, Warangal, who was then special officer, Bahawalpur State, Pakistan.
Moulvi Abdul Hamid Khan, Ex Secretary, Revenue Department, at present Minister for Sarf e Khas Mubarak.
Nawab Deen Yar Jung Bahadur, Ex Inspector.
General of Police, Districts and City.
(1) A.I.R. 1936 P.C. 289.
65 492 4.
Moulvi Abdul Rahim, Ex Railway Minister.
Rai Raj Mohan Lal, Ex Law Minister.
Moulvi Zahir Ahmed, Ex Secretary to Government, Home Department, at present residing at London.
The first witness was called to prove that the inhabit ants of Gurtur committed destructive activities and threw stones on the police and that the police fired in self defence by the order of the Deputy Police Commissioner of the District.
It was said that he would also reveal many other facts.
Regarding the second witness, it was said that he would depose as to what happened to the D. O. letter sent by the accused and he would also reveal other facts.
Regarding the third witness, it was said that he would confirm the report of Ghulam Afzal Biabani the Deputy Commissioner of Police and would reveal other facts about Gutur incidents.
About the fourth and fifth witnesses, it was said that they would depose about the accused 's efficiency and his behaviour towards ryots and they would also reveal other facts.
On 14th April, 1950, an application was made by the pleader for the accused that instead of sending for Syed Hussain Zaidi, Superintendent of Police, residing at Pakistan, Abdur Rasheed Khan Sahib, former Assistant Superintendent of Police, Warangal district, may be sent for.
The learned Judge on this made the following order: "This request is improper.
The application of the accused dated 24th March, 1950, about the list of the defence witnesses may be referred.
In it the first name is of Zaidi, the Superintendent of Police.
It is written in it by the accused himself that Mr. Zaidi will say whatever he has heard from the other policemen.
Now I cannot understand when it is written so in the list, how can Abdur Rasheed be called for instead of Zaidi, and what evidence he will give.
So the application to call for Abdur Rasheed Khan Sahib is disallowed.
" Regarding witness No. 2, Abdul Hameed Khan, the learned Judge made the following order 493 "It is stated that he will speak about the efficiency of the accused and also about his behaviour towards his subjects.
Efficiency and behaviour is neither a point at issue in this case, nor a relevant fact, '(section 216, Criminal Procedure Code, and section 110, sections 3 and 4 of the Evidence Act may be referred).
It is also written below it that he will state what action was taken on the D.O. letter of the accused.
No such paper is produced to show as to what has happened to the proceedings, for which Abdul Hameed Khan can be summoned to prove.
Besides this the statement of the accused is in regard to something and witness Abdul Hameed Khan is being summoned for some other thing.
" Regarding the third witness the Judge said as follows: "Nawab Deen Yar Jung Bahadur, former Inspector General of Police, is called for to certify the report of Ghulam Afzal Biabani, Deputy Director of Police.
The report of Ghulam Afzal Biabani was called for from the office of the Inspector General of Police, Home Secretary, and from the office of the Civil Administrator, Warangal.
But from all these offices, we have received replies stating that there is no report of Ghulam Afzal Biabani.
In the light of these replies it is unnecessary to summon Deen Yar Jung Bahadur.
When there is no report, what can Regarding witnesses 4 and 5, the Judge observed as follows: "These witnesses are called for to state about the efficiency and behaviour of the accused.
It is not a point at issue nor a relevant fact.
" Regarding witness 6, the Judge thought that there was no procedure to summon a witness residing in London.
Finally it was observed that "by seeing the list of witnesses and the defence statement of the accused which are many pages, it appears that these applications are, given only to prolong the 'case unjustifiably and to disturb the justice.
These are not worthy be allowed.
So the said application dated 494 24th March, 1950, is disallowed.
" Section 257, Criminal Procedure Code, which corresponds to section 216 of the Hyderabad Criminal Procedure Code is in these terms : " If the accused, after he has entered upon ' his defence, applies to the Magistrate to issue any process for compelling the attendance of any witness for the purpose of examination or cross examination, or the production of any document or other thing, the Magistrate shall issue such process unless he considers that such application should be refused on the ground that it is made for the purpose of vexation or delay or for defeating the ends of justice.
Such ground shall be recorded by him in writing.
" We have not been able to appreciate the view of the learned Judge that the application to summon defence witnesses who were available in Hyderabad was of a vexatious character and its object was to delay or defeat the ends of justice.
There was controversy in the case between the prosecution and the defence about the motive of the accused which was stated by the prosecution to be that in pursuance of the policy of the Ittehad ul Muslimeen, and with the common object of destroying the Hindus and turning them out of Hyderabad the appellant went to this village to achieve that object with the help of the police.
The accused was entitled to disprove the allegation and prove his Version that the village was in a state of rebellion, that the people who came out in a crowd did not come with peaceful motives but they were aggressive and were armed with weapons that he was not inimical to the Hindus, that his behaviour towards them had always been good and his state of mind was not inimical to them and the idea of exterminating them was far from his mind.
Under the provisions of section 53 of the Evidence Act evidence as to the character of an accused is always relevant in a criminal case.
So is the evidence as to the state of his mind.
Evidence as to disturbed condition prevailing at Gurtur and of the destructive activities of its inhabitants was also a relevant fact.
Whatever may be said about the other 495 witnesses, three of the witnesses named in that list were certainly material witnesses for the purpose of the defence.
In criminal proceedings a man 's character is often a matter of importance in explaining his conduct and in judging his innocence or criminality.
Many acts of an accused person would be suspicious or free from all suspicion when we come to know the character of the person by whom they are done.
Even on the question of punishment an accused is allowed to prove general good character.
When the allegation against the appellant was that he was acting in pursuance of the policy of the Ittehad ul Muslimeen that his state of mind was to exterminate the Hindus, he was entitled to lead evidence to show that he did not possess that state of mind ; but that on the other hand, his behaviour towards the Hindus throughout his official career had been very good and he could not possibly think of exterminating them.
But even if the Judge was right in thinking that the evidence of character in this particular case would not have affected materially the result, the evidence of other witnesses who would have deposed as to whether Biabani had submitted a report, and what version he had given, or of those who were able to depose as to the condition of things at Gurtur where the incident took place, or who were in a position to depose from reports already submitted to the Home Department and the Inspector General of Police about the behaviour of the villagers of Gurtur, would have very materially assisted the defence if those witnesses were able to speak in favour of the appellant 's contention.
In our opinion the trial before the Special Judge was vitiated by his failure in summoning the defence witnesses who were available at Hyderabad and who might have materially helped to prove the defence version.
The first witness or his substitute may well have been able to depose as to what happened to, the arms that were alleged to have been captured from the villagers on the 9th December, 1947, and regarding which a panchnama was prepared and as 'to whether they existed in fact or not.
That would have thrown a flood of light on the character of the 496 mob that was fired upon and it may well have transpired from that evidence that the firing was ordered at the instance of Biabani and not at the instance of the accused as alleged in the first instance by Ranganathaswamy.
In the result we are constrained to hold that the accused has been denied the fullest opportunity to defend himself.
Another point that was stressed by the learned counsel for the appellant is that the police investigation into the offences with which the appellant has been charged, after the first information report has been lodged in January, 1949, has been not only of a perfunctory nature but that there has been an unexplained delay of more than six months in making it and this has considerably prejudiced the defence.
It was suggested that during this period most likely the police was cooking evidence against the accused without making any entries in the case diaries of statements made by the villagers.
On this question it is necessary to set out a part of the statement of P.W. 21, the investigating officer, on which reliance was placed to support this contention.
In cross examination the witness said as follows: "I went for investigation in the month of Mehir 1358 F. (August, 1949) Union officers did not investigate prior to my investigation; not even any ' Collector undertook any investigation Mohd. Ibrahim Ghori, Inspector, C.I.D., informed Sub Inspector of Nallikadur through a D. O. dated the 29th Isfandar, 1358 F., to issue an information report.
I have no knowledge which officer ordered Mohd. Ibrahim Ghori to investigate and who signed on it.
Superintendent of C.I.D. Police whose name I do not, remember now gave order to Mohd. Ibrahim Ghori to investigate the facts.
Now the case diary is not with me The names of Mohd. Ibrahim and Achal Singh are not mentioned in the witnesses lists of A & B Charges under sections 312 and 331 are mentioned in the report, but during my investigation these offences were not proved The Superintendent of C.I.D. Police gave me order to 497 investigate but I do not remember the date of that order now.
I prepared panchnamas on 8th Mehar, 1358 F. probably I reached Gurtur one or two days earlier.
I finished circumstantial investigation with in eight days.
Afterwards proceedings for permission were continued.
At last on 28th August, 1949, the Civil Administrator gave order to file a challan. . .
In the course of my investigation, it was proved that accused Habeeb Mohammad, Abdul Latif Khan and Abdul Wahid had committed crimes.
It was not proved during the course of my investigation that Ghulam Afzal Biabani, Deputy I. G. of District Police, Assistant of Force, Nasim Ahmad Saheb, Sub Inspector of Police, Vardhanapeth, Jamedar of Police, Vardhanapeth, Abdul Wahid, Revenue Inspector, Abdul Alim Saheb, pleader, Hanamkonda, 70 military men and police and Razakars bad committed crimes or aided and abetted.
Therefore their names were not mentioned in the challan.
The crimes against them are not proved means that they are not identified ; the witnesses are not acquainted with them; so they are not prosecuted.
Though in the information report 70 military men were mentioned I found in the course of my investigation 70 policemen only.
I could not make out the identity of these policemen but I came to know that they belonged to Warangal district police force.
I do not know how many of them were Hindus and how many were Muslims.
But the names of Kankiah, police jamedar (head constable) and Abdul Latif Khan, Circle Inspector, were evident from the diary ; therefore it is produced as evidence.
On enquiry, Kankiah said to me that he could not identify them now and that he could not recollect the number of policemen who went along with him (Kankiah) to Vardhanapeth.
I could not see the register at Superintendent 's office to ascertain who went there because it was destroyed during the police action.
When I asked the line inspector in this connection he replied that he could not even say whether the register was destroyed and that he could not remember the names now.
As I could not gather any information from them, I did not refer their names in the case diary .
I had not 498 even mentioned about line inspector in the case diary because I considered it unnecessary.
From other source also, I could not make out the identity of these 70 men.
Ghulam Afzal Biabani, Deputy Inspector General of Police, is alive and in service and I have heard that he is now the Principal of the Police Training School.
I cannot tell who was Assistant of Force.
I do not know the whereabouts of Nasim Ahmad as well as about his post.
I did not make enquiries about Police Jamedar of Vardhanapeth who was mentioned in the information report, in regard to his identity and whether he is alive or dead because I could not find out his name from my witnesses.
Further I do not know who was Shaik Chand.
But I came to know from Kankiah that Shaik Chand was present on the scene of occurrence.
Now I do not know about the whereabouts of Shaik Chand or about his job.
None of the other witnesses recognised Shaik Chand and that I had not paraded him before the witnesses because I do not know his whereabouts.
Though Jamedar Kankiah deposed that Abdul Ghaffar, Police Inspector, was present on the scene of occurrence the other witnesses were not acquainted with him.
Whether Abdul Majid, Revenue Inspector, was on the place of occurrence or not, I could not make out and further whether he is alive or dead, too, I could not make out.
Except Ghulam Afzal Biabani, I did not examine any of the other men, i.e., Assistant of Force, Nasim Ahmed, Police Jamedar of Vardbanapeth, Abdul Wahid, Revenue Inspector and others.
I remember that after circum stantial investigation at Gurtur, I went to Hyderabad and enquired the facts to Ghulam Afzal Biabani orally; I did not take any statement from him.
Whatever I enquired from him I entered in the case diary.
I do not know what Ghulam Afzal Biabani reported to the high authority and whether he had reported it or not reported at all.
I did not question him about it.
I do not remember the name of the police patel of Gurtur village.
I did not take his statement and he did not give any report in regard to this occurrence.
Guns were not recovered because the 499 incident occurred one year ago and persons were not identified.
" It is apparent from this statement that the investigation conducted by P.W. 21 was of a very perfunctory character.
Apart from P.W. 10 Kankiah, none of the policemen or other I officers or panches present at the scene of occurrence were examined and even their whereabouts were not investigated.
This is all due to the circumstance that though the depositions of the villagers were recorded in November, 1948, against the conduct of the appellant and though the first information report against him was lodged in January, 1949, for some reason of which no plausible or satisfactory explanation has been suggested, the matter was not investigated and relevant evidence as to this incident, whether for or against the appellant, was not recorded for a period of over six months.
It is not unreasonable to presume that during this period of seven or eight months that evidence became either unavailable or the villagers after this delay in investigation were not able to satisfactorily identify any of the persons who were present on the occasion.
It seems to us that there is force in the contention that a good deal of material evidence was lost and considerable material that might have been helpful to the case of the defence or which would have fully established the part played by the accused, was in the meantime lost.
In this situation the learned counsel in the courts below as well as in this court laid emphasis on the point that the case diaries were not brought into court till ,after the close of the case and they were withheld to avoid any controversy of this nature and this omission had also resulted in a trial which was perfunctory and, prejudicial to the accused.
During the examination of the investigating officer the question was put to him whether he had the case diaries.
The cross examining counsel wanted to elicit from him certain materials about the conduct of the investigation after he had refreshed his memory from those diaries, but P.W. 21 deposed that he had not the diaries with him and the matter was closed at 66 500 that stage.
On 12th April, 1950, an application was made to the court asking for copies of statements of P.Ws.
recorded by the police.
This application was obviously a belated one as the accused had no right to get the copies after the statements of those witnesses had been recorded by the Judge.
The diaries were brought into court on 18th April, 1950.
The learned Special Judge in his judgment on this point said as follows: "I have sent for the case diary relating to Superin tendent of C.I.D. in confidential on the prayer of the accused.
I have seen it intently.
Statements therein are almost the same as are deposed in the court.
The statements of witnesses would not become unreliable even in view of the entries made in the case diary.
" Section 162, Criminal Procedure Code, which concerns police diaries and the use that can be made of them, is in these terms: " No statement made by any person to a police officer in the course of an investigation under this Chapter shall, if reduced to writing, be signed by the person making it; nor shall any such statement or any record thereof, whether in a police diary or otherwise, or any part of such statement or record, be used for any purpose (save as hereinafter provided) at any inquiry or trial in respect of any offence under investigation at the time when such statement was made : Provided that, when any witness is called for the prosecution in such inquiry or trial 'Whose statement has been reduced into writing as aforesaid, the Court shall on the request of the accused refer to such writing and direct that the accused be furnished with a copy thereof, in order that any part of such statement, if duly proved, may be used to contradict such witness in the manner provided by section 145 of the .
When any part of such statement is so used, any part thereof may also be used in the re examination of such witness, but for the purpose only of explaining any matter referred to in his cross examination.
" 501 Section 172 provides that any criminal court may send for the police diaries of a case under inquiry or trial in such court and may use such diaries, not as evidence in the case but to aid if in such inquiry or trial.
It seems to us that the learned Judge was in error in making use of the police diaries at all in his judgment and in seeking confirmation of his opinion on the question of appreciation of evidence from statements contained in those diaries.
The only proper use he could make of these diaries was the one allowed by section 172, Criminal Procedure Code, i.e., during the trial he could get assistance from them by suggesting means of further elucidating points which needed clearing up and which might be material for the purpose of doing justice between the State and the accused.
This he did not do because the diaries were not before him.
It was pointed out in Rex vs Mannu(1) by a full court that a special diary may be used by the court to assist in an inquiry or trial by suggesting means of further elucidating points which need clearing up and which are material for the purpose of doing justice between the Crown and the accused but not as containing entries which can by themselves be taken to be evidence of any date, fact or statement therein contained.
The police officer who made the diary may be furnished with it but not any other witness.
The Judge made improper use of the diary by referring to it in his judgment and by saying that he intently perused it and the statements of witnesses taken in court were not inconsistent with those that were made by the witnesses before the police officer.
It is difficult to say to what extent the perusal of the case diaries at that stage influenced the mind of the judge in the decision of the case.
It may well be that that perusal strengthened the view of the judge on the evidence against the appellant and operated to his prejudice.
If there was any case in which it was necessary to derive assistance from the case diary during the trial it was this case and the investigating officer who appeared in the witness box instead of giving unsatisfactory answers to 2I.L.R. 19 All,390.
502 the questions put to him might well have given accurate answers by refreshing his memory from those diaries and cleared up the lacunae that appear in the prosecution case.
It was next contended that a number of documents that the accused wanted for his defence were not produced by the prosecution and were intentionally withheld.
Reference in this connection may be made to an application submitted by the accused to the court on the 20th April, 1950.
It reads thus : "As many documents were called for in defence of the accused, it was replied from the police or from the Home Department that the documents in question were either destroyed in the course of the police action, or as they are confidential, could not be sent.
You are requested to review the excuses put forth by the police or other departments.
In Warangal proper neither any firing took place nor any offices were burnt.
I and Taluqdar Sahib lived in the headquarters for many months after the police action.
Taluqdar Sahib lived for four months after the police action, and I lived there for nearly one month after the police action.
Each and every document of my office and Taluqdar 's office are safe and which can be ascertained by the Civil Administrator, Warangal, himself.
This is my last prayer to you to send immediately today for summary of intelligence of second, third and fourth weeks of the month of Bahman, 1357 F., from the office of the Peshi of Mr. Obal Reddy, the District Superintendent of Police, Warangal.
These weekly reviews are confidential which are prepared at the C.I.D. branch of the office of the Inspector General of Police, and despatched to the districts.
The District Superintendents of Police used to send these reviews to the Deputy Commissioner of Police, Subedars and Taluqdars.
The Gurtur incident was mentioned in them.
If they are not available from the office of the District Superintendent of Police, Warangal,, they may be called for from the office of the Inspector General of Police, C.I.D., and they may be held in the record.
" 503 On this application the court recorded the following order: "The way in which the accused Habeeb Mohamed remarked on the higher office that documents are either not received or that they are destroyed is not the proper way of remarking.
Investigation against officers cannot be conducted.
Besides this, in this file all other things are decided and the accused was given sufficient time.
Filing of an application on every hearing is not to be tolerated.
" The appellant 's counsel, produced before us a list of the documents which were asked for, some of which were brought into court and regarding some the report was that they were destroyed or were not available.
We cannot accede to the contention of the learned counsel that the court was called upon to make investigation into the question whether the replies from different officers as to what documents were destroyed or were not available were correct or not.
It was open to the counsel for the accused, whenever any such report came, to challenge the statement and at that stage the court might have been in a position to ask the prosecution to support their replies by affidavits or otherwise.
It, however, does appear somewhat curious that important documents which were required by the defence to establish the appellant 's version of the incident are stated to have been destroyed or not available.
Such bald assertions do not create much confidence in the mind of the court and it does not appear that there was any occasion during police action for the officer responsible for it to destroy records made by police officers and submitted to the Inspector General of Police or to the Home Secretary.
The appellant to a certain extent was justified in such circumstances to ask the court to raise the inference that if these documents were produced they would not have supported the prosecution story.
The learned Advocate General appearing for the State contended that assuming that the failure of the prosecution to examine Biabani has caused, serious 504 prejudice to the accused or that the denial of opportunity to him to examine certain witnesses in defence has also caused him serious prejudice, this court may direct the High Court to summon the witnesses and record their statement and transmit them to this court and that the appeal may be decided after that evidence has been taken.
In our opinion, this course would not be proper in the peculiar circumstances of the present case.
It is not possible without setting aside the conviction of the appellant to reopen the case and allow the prosecution to examine a material witness or witnesses that ought to have been produced and allow the defence also to lead defence evidence.
A conviction arrived at without affording opportunity to the defence to lead whatever relevant evidence it wanted to pro , duce cannot be sustained.
The only course open to us in this situation is to set aside the conviction.
The next question for consideration is whether in the result we should order a retrial of the appellant.
After a careful consideration of the matter we have reached the conclusion that this course will not be conducive to the ends of justice.
The appellant was in some kind of detention even before he was arrested.
Since January, 1949, up to this date he has either been in detention or undergoing rigorous imprisonment and sirce the last three years he has been a condemned prisoner.
The events regarding which evidence will have to be taken afresh took place on the 9th December, 1947, and after the lapse of six years it will be unfair and contrary to settled practice to order a fresh trial.
In our opinion, as in substance there has been no fair and proper trial in this case, we are constrained to allow this appeal, set aside the conviction of the appellant under the different sections of the Hyderabad Penal Code and direct that he be set at liberty forthwith .
It may well be pointed out that if there had been mere mistakes on the part of the court below of a technical character which had not occasioned any failure of justice or if the question was purely one of this court taking a different view of the evidence given in the case, there would have been no interference by us under the provisions of article 136 of the Constitution.
Such questions 505 are as a general rule treated as being for the final decision of the courts below.
In these circumstances it is unnecessary to examine the merits of the case on which both the learned counsel addressed us at some length.
, Before concluding, however, it maybe mentioned that Mr. McKenna apart from the points above mentioned raised a few other points of a technical character but on those points we did not call upon the learned Advocate General in reply.
It was contended that the court did not examine the accused under section 256, Criminal Procedure Code, after further crossexamination of the witnesses.
In our opinion, this omission was not material as nothing further appeared from the cross examination which the court could ask the accused to explain.
The accused had given a full statement on all the matters which required explanation in the case.
Then it was argued that under the Hyderabad law at least two witnesses are necessary in a murder trial for a conviction in such a case.
In this case more than two witnesses were produced who directly or indirectly implicated the appellant with the commission of the murder.
The section of the Code referred to does not lay down that there should be two eye witnesses of the occurrence before a conviction can be reached as regards the offence.
Further it was argued that the ' Special Judge had no jurisdiction because H. E. H. the Nizam had not given his assent to the law as contained in Ordinance X of 1359 F.
In our opinion, there is no substance in this contention because the Nizam under a fireman bad delegated all his powers of administration including power of legislation to the Military Governor and that being so, no further reference to the Nizam was necessary and the Military Governor was entitled to issue the Ordinance in question.
Lastly it was argued that the sanction for the prosecution of the appellant under the provisions of section 207 of the Hyderabad Code of Criminal Procedure (corresponding to section 197 of the Criminal Procedure Code) was given after the Judge had taken cognizance of the case.
We see no force in this point as well.
Before the trial started 506 the court was fully seized of the case and by then the sanction had been given.
Appeal allowed.
Conviction set aside.
|
Though the prosecution is not bound to call all available witnesses irrespective of considerations of number or reliability, witnesses essential to the unfolding of the narrative on which the prosecution is based must be called by the prosecution, whether in the result the effect of their testimony is for or against the case for the prosecution.
Where the case against the accused, a Subedar, was that he gave orders to the police to fire and the Deputy Commissioner of Police who had accompanied the accused and had witnessed the occurrence was not examined by the prosecution: Held, that the failure to examine him not only led to an adverse inference against the prosecution case but also cast serious reflection on the fairness of the trial.
Adel Mohammad vs Attorney General of Palestine (A.I.R.1946 P.C. 42) distinguished.
Stephen Senivaratne vs The King (A.I.R. 1936 P.C. 289) relied on.
Ram Banjan Roy vs Emperor (I. referred to.
Police diaries of a case under inquiry or trial can be made use of by a criminal court only for aiding it in such inquiry or trial.
The court would be acting improperly if it uses them in its judgment or seeks confirmation of its opinion on the question of appreciation of evidence from statements contained in those diaries.
Though the Supreme Court would not interfere under article 136 of the Constitution if there were mere mistakes on the part of the court below of a technical character which had not occasioned any failure of justice or the question was purely one of the court taking a different view of the evidence given in the case, it would interfere if in substance there has not been Is fair and proper trial.
Where material eye witnesses were not examined, to disprove the prosecution case as to the motive of the accused, the court, without calling for the police diaries during the trial, stated in the 63 476 judgment that the statements made by the witnesses before the police were the same as those made by them in the court: Held, that there was in substance no fair and proper trial and the conviction should be set aside.
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182.txt
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ivil Appeal No. 1617 of 1968.
Appeal by special leave from the judgment and decree dated March 19, 1968 of the Allahabad High Court in Second ' Appeal No. 2296 of 1961.
1. P. Goyal and A. G. Ratnaparkhi, for the appellant.
C.B.Agarwala and R. Mahalingier, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
The question of law that arises for decision in this appeal by special leave is not free from difficulty.
That question is whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under sub section
3 of section 3 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 (to be hereinafter referred to as the Act) becomes unenforceable if the State Government acting under section 7(F) of that Act revokes the permission granted by the Commissioner after the decree is passed ? The appellant was a tenant of the respondent in respect of a shop in Balugani in Agra.
On January 2, 1959, the respondent applied to the District Magistrate under section 3(1) of the Act for permission to institute a suit against the appellant for evicting him from the shop in question.
That application was rejected by the District Magistrate as per his order of July 9, 1959.
The respondent took up the matter in revision to the Commissioner under sub section 2 of section 3.
The Commissioner reversed the order of the District Magistrate and granted the permission asked for on October 16, 1959.
As against that order the appellant moved the State Government under section 7(F) on November 17, 1959.
On January 299 1, 1960, the respondent served on the appellant a notice under section 106 of the Transfer of Property Act.
The appellant replied to that notice on January 6, 1960.
In that reply he informed the respondent that he had already moved the State Government to revoke the permission granted by the Commissioner.
On February 13, 1960 the respondent instituted suit No. 115 of 1960 in the Court of Munsiff, Agra seeking the eviction of the appellant from the suit premises.
The appellant filed his written statement in that case on May 7, 1960.
Therein again he took the plea that the permission granted by the Commissioner is not final as he had moved the Government to revoke the same.
The suit was decreed by the learned Munsiff on November 2, 1960.
The appellant went up in appeal as against that order to the Civil Judge, Agra.
On January 27, 1961, the State Government revoked the permission granted by the Commissioner during the pendency of the appeal.
Relying on this order the Civil Judge of Agra allowed the appeal of the appellant on February 9, 1961.
As against that decision the respondent went up in second appeal to the High Court.
The High Court allowed the second appeal on 19th March 1968 following the Full Bench decision of the Court in Bashi Ram vs Mantri Lal(1).
This appeal is directed against that decision.
The Act was intended as a temporary measure as could be gathered from its title as well as the preamble.
It is deemed to have come into force on the 1st day of October 1946 though it was passed in 1947.
Under the Act as originally stood, the decision of the District Magistrate under section 3 was neither appealable nor revisable.
As per the amendments effected in 1952 a Limited power of revision was conferred on the Commissioner.
By the Amending Act 17 of 1954, the power conferred on the Commissioner was enlarged and section 7(F) was incorporated in the Act which says that: "the State Government may call for the records of any case granting or refusing to grant permission for the filing of a suit for eviction referred to in section 3 . . and make such order as appears to it necessary for the ends of justice.
" The only sections in the Act material for the purpose of this appeal are sections 3 and 7(F).
Section 3 reads thus.
: "Restrictions on evictions.
Subject to any order passed under sub section ( 3 ), no suit shall: without the permission of the District Magistrate, be filed in any civil court against a tenant for his eviction from any accommodation, except on one or more of the following grounds: (1) (1965) 1 A11.
300 (a) 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 notice of demand; (b) the at the tenant has wilfully caused or permitted to be caused substantial damage to the accommodation; (c) that the tenant has, without the permission in writing of the landlord, made or permitted to be made any such construction as, in the opinion the court, has materially altered the accommodation or is likely substantially to diminish its value; (d) that the tenant has created a nuisance or has done any act which is inconsistent with the purpose for which he was admitted to the tenancy of the accommodation, or which is likely to affect adversely and substantially the landlord 's interest therein; (e) that the tenant has on or after the 1st day of October, 1946, sub let the whole or any portion of the accommodation without the permission of the landlord; (f) that the tenant has renounced his character as such or denied the title of the landlord and the latter has not waived his right or condoned the conduct of the tenant; (g) that the tenant was allowed to occupy the accommodation as a part of his contract of employment under the landlord and his employment has been determined.
Explanation.
For the purposes of sub section (e) lodging a person in a hotel or a lodging house shall not be deemed to be sub letting.
(2) Where any application h:as been made to the District Magistrate/or permission to sue a tenant for eviction from any accommodation and the District Magistrate grants or refuses the permission, the party aggrieved by his order may within 30 days from the date on which the order is communicated to him, apply to the Commissioner to revise the order.
(3) The Commissioner shall hear the application made under sub section (2), as far as may be, 301 within six weeks from the date of making it, and he may, if he is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate or as to the regularity of proceedings held before him, alter or revise his order, or make such other order as may be just and proper.
(4) The order of the Commissioner under subsection (3) shall, subject to any order passed. ' by the State Government under section 7 (F) be We have earlier quoted the relevant portion of section 7 (F).
Conflicting opinions were expressed by different Benches of the Allahabad High Court as to the scope of section 3, till the decision of the Full Bench in Bashi Ram 's case(x).
The Full Bench held that a decree obtained in a suit for eviction instituted after obtaining the requisite permission will not become unenforceable even if the State Government revoked, after the decree is passed, the permission granted, in exercise of its powers under section 7(F).
Majority of the Judges in that case further held that once a suit is instituted after obtaining the permission of the District Magistrate, any further order made either by the Commissioner or the State Government cannot affect the course of that suit or the decree passed therein.
Dwivedi J. the other Judge did not express any opinion on that question but even according to him in the appeal filed against the decree, the appellate court cannot receive in evidence the order made by the State Government which means that the decree cannot be reversed on the ground that the State Government had revoked the permission granted.
The correctness of the Full Bench decision is challenged by the appellant in this appeal.
In support of his interpretation of sections 3 and 7(F) he placed reliance on the decision of a Division Bench of the High Court of Allahabad in Dr. S.L. Khoparji vs State Government(a).
He also sought support from the decision of a Single Judge of that Court in Basant Lal Sah vs Bhagwan Prasad Sah(3).
It is not necessary to refer to the various decisions of the Allahabad High Court on this question.
Suffice it to say that in that Court there was serious cleavage of opinion on the question that we are considering in this appeal till the decision of the Full Bench in Bashi Ram 's case(x).
We were given to understand that Dhavan, j. had doubted the correctness of the decision of the Full Bench and had requested the Chief Justice to constitute a larger Bench to consider the correctness of the decision in Bashi Ram 's case(1) but in view of the pendency of this appeal, the constitution of a larger bench was not considered necessary.
(1) (1965) 1 All.
(3) A.I.R. 1964 All p. 210.
(2) 302 The contention of Mr. Goyal, the learned Counsel for the appellant was that the Act generally speaking, ' has restricted the right of the landlord to evict his tenant, to one or other of the grounds mentioned in cls.
(a) to.
(g) of section 3(1 ); but in order to meet any exceptional case, it is provided in section 3 (1 ) that a suit for eviction may be instituted on any ground other than those mentioned in cls.
(a) to (g) if the permission of the District Magistrate is obtained; the order made by the District Magistrate is revisable both by the Commissioner as well as the State Government; the only order that is final is that made by the State Government.
If a landlord chooses to institute a suit on the basis of the permission granted by the District Magistrate or the Commissioner without waiting for the decision of the State Government he takes the risk; if the State Government revokes the permission granted by the District Magistrate or the Commissioner then the suit must be deemed to have been instituted without permission and consequently not maintainable.
Mr. Goyal urged that if the decision in Bashi Ram 's case(1) is accepted as correct then so far as the tenant is concerned, generally speaking, he cannot invoke the powers of the State Government under section 7(F) because immediately after the decision of the Commissioner, if the same is in his favour, the landlord is likely to institute a suit for eviction and thus nullify the power of the State Government under section 7(F).
He urged that as section 7(F) empowers the State Government to revise the order made by the subordinate authorities whether the same is in favour of the landlord or the tenant we should not place an interpretation on section 3 which would affect the power of the State Government to do justice to the tenants for whose benefit the Act has been enacted.
On the other hand it was urged by Mr. C.B. Aggarwal, learned Counsel for the respondent that the landlord has a right to sue for the eviction of his tenant under the provision of the Transfer of Property Act subject to the restrictions stipulated therein.
That is a statutory right.
The provisions contained in the Act to the extent they encroach upon the rights of the landlord either specifically or by necessary implication further control the rights of the landlord.
In other respects the landlord 's rights under the Transfer of Property Act remain unaffected.
According to him the only restriction placed on the landlord in the matter of instituting a suit for eviction on grounds other than those mentioned in cls.
(a) to (g) of section 3(1) is to obtain the prior permission of the District Magistrate subject to the order made under sub section
(3) of section 3 by the Commissioner; once a suit is validly instituted in accordance with those provisions, no order of the State Government can either interfere with the course of that suit or invalidate the decree obtained therein.
He urged that if the position is as (1) 1965) 1 Ali.
545 303 contended by the.
learned Counsel for the appellant, curious results are likely to follow.
Section 7 (F) does not fix any period within which the State Government must act.
It can exercise its power under that provision at any time it pleases may be after 10 years or 20 years; the power conferred on the State Government is extremely wide as observed by this Court in Shri Bhagwan and anr.
vs Ram Chand and anr.(1).
Therefore it can revoke the permission granted after the decree for eviction is confirmed by the High Court or even the Supreme Court and thus make a mockery of the judicial process; this could not have been the intention of the legislature.
According to Mr. Aggarwal from the very scheme of the Act and from the very nature of the power conferred on the State Government, it cannot be exercised after a suit is instituted after complying with the requirements of subs.
(1 ) of section 3.
His further contention was that on a proper construction of sub section
( 1 ) of section 3, it would be seen that the suit instituted after obtaining the required permission being a validly instituted suit, its progress cannot be interrupted; the permission required under section 3 (1 ) is the permission of the District Magistrate subject to any order under section 3(3) by the Commissioner; in other words the permission given by the District Magistrate is not final till affirmed by the Commissioner; till then it remains tentative; once the Commissioner affirms the same or grants the permission asked for it becomes final and thus amounts to a valid permission to sue; hence a suit filed on the basis of that permission is a validly instituted suit unless the permission granted was revoke by the State Government before the institution of the suit.
Proceeding further he stated that it is true that the order of the Commissioner though final yet it is subject to any order that may be passed by the State Government; but section 3 (1 ), the provision dealing with the permission to file a suit for eviction does not refer to the order under section 7(F); it only speaks of the permission granted by the District Magistrate subject to the order of the Commissioner and not further subject to any orders made by the State Government.
In this connection he invited our attention to the fact that as against the order passed by the District Magistrate under subs.
( 1 ) of section 3, a revision petition can be filed before the Commissioner within 30 days of that order and not thereafter.
The Commissioner has not even the power to condone the delay in filing the revision petition.
Further under subs.
(3) of section 3, the Commissioner is required to hear the application made under sub section
(2) of section 3, as far as may be, within six week from the date of making it.
All these provisions indicate that the legislature was of the opinion that the proceedings under section 3 should be carded_on expeditiously and the decision of the Commissioner should be considered as final.
According to Mr. Aggarwal the question of granting or refusing to grant the permission under s, 3 are primarily to be (1) [1965] 3 S.C.R.218, 304 dealt with only by the District Magistrate and the Commissioner.
They are the only tribunals in the hierarchy of the tribunals constituted for that purpose.
The power given to the Government under section 7(F) is merely a supervisory power.
That is why no limitation is imposed on the exercise of that power either in the matter of time within which it should be exercised or the circumstances under which it can be exercised.
Such a power according to him is a reserve power and therefore has to be exercised before the court 's jurisdiction is invoked, He particularly laid emphasis on the fact that sub section
(1) of section 3, the compliance of which is necessary before validly instituting the suit does not at all refer to an order under section 7(F).
After examining the provisions of this Act, we are constrained to observe that the drafting of this Act leaves considerable room for improvement despite the fact that it was amended twice over.
Though it was intended to be a temporary measure when it was originally enacted it has now reminded in the statute book for over 20 years and there is no knowing how long the same will continue to be in force.
Therefore it is but appropriate that the provisions of this Act should be clear and unambiguous.
From sub section
(1 ) of section 3 it is not possible to find out the contents of the powers of the District Magistrate.
No guide lines are laid down therein to regulate the exercise of the powers of the District Magistrate.
It is not possible to find out from that provision under what circumstances the District Magistrate can grant the permission asked for and under what circumstances he can refuse the same.
It is likely that different District Magistrates are exercising that power in different ways.
One consideration may appeal to one District Magistrate and a totally different consideration may influence another District Magistrate.
It would have been appropriate if the legislature had defined the scope of the powers of the District Magistrate or at least laid down certain guide lines for regulating his discretion.
Sub section
(3 ) of section 3 says that if the Commissioner is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate, he may alter or reverse the order of the District Magistrate or make such other order as may be just and proper.
It is not possible to find out on what basis the Commissioner can determine the correctness, legality or propriety of the order made by the District Magistrate.
As seen earlier, no restrictions are placed on the powers of the District Magistrate in granting or refusing to grant the permission asked for under section 3 (1 ).
Therefore the only thing the Commissioner can do is to exercise his discretion in preference to the discretion exercised by the District Magistrate.
Now coming to the power conferred on the State Government under section 7 (F), it would be seen that it is a power of wide amplitude.
It can be exercised by it in any way it pleases.
No restriction either as to the time 305 within which it can be exercised or as to the circumstances under which it can be exercised is placed on the State Government.
Under these circumstances the anomalies pointed out by Mr.Goyal as well as by Mr. Agarwal are inevitable.
Therefore in construing this Act, no useful purpose will be served by taking into consideration the hardship to the parties.
In whatever way we may construe sections 3 and 7(F) hardship to one party or the other is inevitable.
Neither Counsel suggested to us any interpretation which could steer clear of the anomalies pointed out at the bar.
Therefore we have to fall back on the grammatical construction of sub section
(1 ) of section 3 and leave out of consideration all other rules of construction for finding out the intention of the legislature.
Section 3(1) does not.
restrict the landlord 's right to evict his tenant on any of the grounds mentioned in cls.
(a ) to (g) of that sub section.
But if he wants to sue his tenant for eviction on any ground other than those mentioned in those clauses then he has to obtain the permission of the District Magistrate whose discretion is subject to any order passed under sub section
(3) of section 3 by the Commissioner.
These are the only restrictions placed on the power of a landlord to institute a suit for eviction of his tenant.
If a landlord files a suit for the eviction of his tenant without obtaining the permission of the District Magistrate that suit is not maintainable but if he files a suit after obtaining the permission of the District Magistrate and if the Commissioner revokes the permission granted by the District Magistrate in a properly instituted application under section 3(2) then the suit instituted by him will be considered as having been filed without the permission of the District Magistrate because section 3 (1 ) in specific terms says that the permission given by the District Magistrate is subject to any order passed under sub section
In other words the permission given by the District Magistrate does not acquire any finality until either the period fixed for filing an application under sub section (2) of section 3 expires and no application under that section was filed within that time or if an application had been filed within that time, the same had been disposed of by the Commissioner.
The permission to file a suit for eviction assumes finality under section 3 (1 ) once the Commissioner decides the revision petition pending before him.
In fact sub section
(4) of section 3 says that the order of the Commissioner is final.
It is true that that order despite the fact that it is final is subject to any order passed by the State Government under section 7(F).
There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F).
Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit.
Section 14 provides : 306 "no decree for the eviction of a tenant from any accommodation passed before the date of commencement of this Act shall, in so far as it relates to the eviction of such tenant be executed against him 'as long as this Act remains in force except on any of the grounds mentioned in section 3: Provided that the tenant agrees to pay to the landlord "reasonable annual rent" or the rent payable by him before the passing of the decree whichever is higher ." This provision applies only to decrees passed before the date of the commencement of the Act.
A decree of a Court in a suit validly instituted is binding on the parties to.
the same.
It is true that the finality or the force of a decree can be taken away by a statute, but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is showy that a provision of law has specifically or by necessary implication made that decree unenforceable.
No such provision was brought to our notice.
On an examination o/the relevant provisions of the Act our conclusion is that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate there is no effective permission left and the suit instituted by the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate.
To this extent we are in agreement with the decision of Upadhyaya, J. in Munshi Lal and anr.
vs Shambhu Nath Ram Kishan(1).
From this it follows that the Full Bench decision in Bashi Ram 's case(2) to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, is incorrect.
But we agree with the Full Bench that a suit validly instituted after obtaining a permission as required by section 3 (1 ) does not cease to be maintainable even if the State Government revokes after the institution of the suit, the permission granted.
If the State Government revokes the permission granted before the institution of the suit then there would be no valid permission to sue.
In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validly instituted.
For the reasons mentioned above, this appeal fails and the same is dismissed.
But in the circumstances of the case, we make no order as to costs.
R.K.P.S. Appeal dismissed.
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The appellant was a tenant of the respondent in respect of a shop in Agra, Uttar Pradesh.
The respondent applied to the District Magistrate under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 for permission to institute a suit against the appellant for evicting him from the shop.
The application was rejected by the District Magistrate, but the Commissioner, by order under section 3(3 ), granted the permission.
The appellant thereupon moved the State Government under section, 7(F) of the Act, but it was only after the respondent had flied a suit and ,obtained a decree that the State Government passed an order revoking the permission granted by the Commissioner.
The first Appellate Court, in view of the order under 7(F) act aside the decree of the trial Court.
However in second appeal the High Court, relying upon a Full Bench decision of that Court in Bashi Ram vs Mantri Lal (1965) 1 All 545, decided in favour of the respondent.
In appeal before this Court by.
special leave, the question for consideration was whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under section 3(3) of the Act becomes unenforceable if the State Government acting under section 7(F) of the Act revokes the permission granted by the Commissioner after the decree is passed.
HELD: The order of the District Magistrate is by section 3(1) specifically made subject to the order of the Commissioner in revision under section 3(3 ), but the Commissioner 's order according to section 3 (4 ) is final though subject to the order of the State Government under section 7(F).
There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F).
[305 G H] Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit.
The finality or the force of a decree can be taken away by a statute, .but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is shown that a provision of law has specifically or by necessary implication made that decree unenforceable.
[305 H 306 C D] On an examination of the relevant provisions of the Act the conclusion must be that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate, there is no effective permission left and the suit instituted by.
the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate.
To this extent the decision in Munshi Lal and ant.
Shambhu Nath Ramkishan, was correct.
[305 D F] Sup.
C1/69 2 298 It follows that the Full Bench decision in Bashi Ram 's case to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, was incorrect.
[306 F] Bashi Ram 's case was however correctly decided in so far as it held that a suit validly instituted after obtaining a permission as required by section 3(1) does not cease to be maintainable even if the State Government revokes, after the institution of the suit, the permission granted.
if the State Government revokes the permission granted before the institution of the suit, then there would be no valid permission to sue.
In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validity instituted.
[306 G] Bashi Ram vs Mantri Lal, (1965) 1, All. 545 and Munshi Lal and ant.
vs Shambhu Nath Ram Kishan, (1958) A.L.J., p. 584; considered.
Dr. S.L. Khoparji vs State Government, (1958) A.LJ., p. 724; Basant Lal Sah vs Bhagwan Prasad Sah, A.I.R. 1964 All.
p. 210 and Shri Bhagwan and ant.
vs Ram Chand and anr.
; , ; referred
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Appeal No. 761 of 1957.
Appeal by special leave from the judgment and order dated February 24, 1955, of the former Bombay High Court in I.T.R. 48/X of 1954.
Hardayal Hardy and D. Gupta, for the appellant.
N. A. Palkhivala and I. N. Shroff, for the respondent.
November 17.
The Judgment of the Court was delivered by SHAH, J.
The Income Tax Appellate Tribunal, Bombay Bench "A", referred under section 66(1) of the Indian Income Tax Act, 1922 hereinafter referred to as the Act the following question: "Whether the sum of Rs. 15,608 should have been included in the assessee Company 's "profit" for the purpose of determining whether the payment of a larger dividend than that declared by it would be unreasonable ?" The High Court answered the question in the negative.
Against the order of the High Court, with special leave under article 136 of the Constitution, this appeal is preferred.
M/s. Bipinchandra Maganlal & Co., Ltd. hereinafter referred to as the Company is registered under the Indian Companies Act, The Company is one in 495 which the public are not substantially interested within the meaning of section 23A Explanation of the Act.
Its paid up capital at the material time was Rs. 20,800 made up as follows: 20 shares of Rs. 50 each fully paid up and 1980 shares of Rs. 50 each, Rs. 10 being paid up per share.
In December 1945, the Company purchased certain machinery for Rs. 89,000 and sold it sometime in March, 1947, for the price for which it was originally purchased.
In the books of account of the Company, the written down value of the machinery in the year of account 1946 47 (April 1, 1946 to March 31, 1947) was Rs. 73,392.
The trading profits of the Company as disclosed by its books of account for the year 194647 were Rs. 33,245.
At the General Meeting held on October 21, 1947.
the Company declared a dividend of Rs. 12,000 for the year of account.
In assessing tax for the year of assessment 1947 48, the Income Tax Officer computed the assessable income of the Company for the year of account 1946 47 at Rs. 48,761 after adding back to the profit of Rs. 33,245 returned by the Company, Rs. 15,608 realised in excess of the written down value of the machinery sold in March, 1947.
The Income Tax Officer passed an order under section 23A of the Act that Rs. 15,429 (being the undistributed portion of the assessable income of the Company as reduced by taxes payable) shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the General Meeting, and the proportionate share of each shareholder shall be included in his total income.
Appeals preferred against his order to the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal proved unsuccessful, but the Appellate Tribunal at the instance of the Company referred the question set out hereinbefore to the High Court at Bombay under a. 66(1) of the Act.
Section 23A(1) of the Act as it stood at the relevant time (in so far as it is material) was as follows: "Where the Income Tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company upto the end 496 of the sixth month after its accounts for that previous year are laid before the company in general meeting are less than 60% of the assessable income of the company of that previous year, as reduced by the amount of income tax and super tax payable by the company in respect thereof, he shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made, the payment of a dividend or a larger dividend than that declared would be unreasonable, make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the share holders as at the date of the general meeting aforesaid. . .
Clearly, by section 23A, the Income Tax Officer is required to pass an order directing that the undistributed portion of the assessable income of any company (in which the public are not substantially interested) shall be deemed to have been distributed as dividends amongst the shareholders if he is satisfied that (i) the company has not distributed 60% of its assessable income of the previous year reduced by the Income tax and super tax payable, (ii) unless payment of a dividend, or a larger dividend than that declared, having regard to (a) losses incurred by the company in the earlier years or (b) the smallness of the profits made in the previous year, be unreasonable.
The total assessable income of the Company for the year of account was Rs. 48,761 and the tax payable thereon was Rs. 21,332: 60% of Rs. 27,249 (assessable income reduced by the income tax and super tax due) exceeded the dividend declared by Rs. 4,458.
The first condition to the exercise of jurisdiction by the Income Tax Officer under section 23A was therefore indisputably fulfilled.
But the Income Tax Officer had 497 still to be satisfied whether having regard to the smallness of the profit (there is no evidence in this case that loss was incurred by the Company in earlier years), it would be unreasonable to distribute dividend larger than the dividend actually declared.
The Income Tax Officer did not expressly consider this question: he rested his decision on the rejection of the contention raised by the Company that the difference between the price of the machinery realised by sale and the written down value in the year of account could not be taken into account in passing an order under section 23A.
He, it seems, assumed that if that difference be taken into account, distribution of larger dividend was not unreasonable, and the Tribunal proceeded upon the footing that the assumption was correctly made.
Counsel for the Revenue submits in support of the appeal that the expression " smallness of profit " means no more than smallness of the assessable income, and that in any event, in the computation of profits, the amount realised by sale of the machinery in the year of account in excess of its written down value was liable to be included in considering whether the condition relating to "smallness of profit" was fulfilled.
At the material time, section 2(6C) of the Act defined "income" as inclusive amongst others of any sum deemed to be profits under the second proviso to cl.
(vii) of sub section
(2) of section 10.
By section 10, in the computation of profits or gains of an assessee under the head "Profits and gains of business, profession or vocation" carried on by him, the amount by which the written down value of any building, machinery or plant which has been sold, discarded or demolished.
or destroyed exceeds the amount for which the building, machinery or plant is actually sold or its scrap value is to be allowed as a deduction.
This allowance is however subject to an exception prescribed by the second proviso to el.
(vii) sub section
(2) of section 10 that where the amount for which any building, machinery or plant is sold exceeds the written down value, so much of the 63 498 excess as does not exceed the difference between the original cost and the written down value shall be deemed to be profit of the previous year in which the sale took place.
In computing the profits and gains of the Company under section 10 of the Act, for the purpose of assessing the taxable income, the difference between the written down value of the machinery in the year of account and the price at which it was sold (the price not being in excess of the original cost) was to be deemed to be profit in the year of account, and being such profit, it was liable to be included in the assessable income in the year of assessment.
But this is the result of a fiction introduced by the Act.
What in truth is a capital return is by a fiction regarded for the purposes of the Act as income.
Because this difference between the price realized and the written.
down value is made chargeable to income tax, its character is not altered, and it is not converted into the assessee 's business profits.
It does not reach the assessee as his profits: it reaches him as part of the capital invested by him, the fiction created by section 10(2)(vii) second proviso notwithstanding.
The reason for introducing this fiction appears to be this.
Where in the previous years, by the depreciation allowance, the taxable income is reduced for those years and ultimately the asset fetches on sale an amount exceeding the written down value, i.e., the original cost less depreciation allowance, the Revenue is justified in taking back what it had allowed in recoupment against wear and tear, because in fact the depreciation did not result.
But the reason of the rule does not alter the real character of the receipt.
Again, it is the accumulated depreciation over a number of years which is regarded as income of the year in which the asset is sold.
The difference between the written down value of an asset and the price realized by sale thereof though not profit earned in the conduct of the business of the assessee is nationally regarded as profit in the year in which the asset is sold, for the purpose of taking back what had been allowed in the earlier years.
A company normally distributes dividends out of its business profits and not out of its assessable income.
499 There is no definable relation between the assessable income and the profits of a business concern in a commercial sense.
Computation of income for purposes of assessment of income tax is based on a variety of artificial rules and takes into account several fictional receipts, deductions and allowances.
In considering whether a larger distribution of dividend would be unreasonable, the source from which the dividend is to be distributed and not the assessable income has to be taken into account.
The Legislature has not provided in section 23A that in considering whether an order directing that the undistributed profits shall be deemed to be distributed, the smallness of the assessable income shall be taken into account.
The test whether it would be unreasonable to distribute a larger dividend has to be adjudged in the light of the profit of the year in question.
Even though the assessable income of a company may be large, the commercial profits may be so small that compelling distribution of the difference between the balance of the assessable income reduced by the taxes payable and the amount distributed as dividend would require the company to fall back either upon its reserves or upon its capital which in law it cannot do.
For instance, in the case of companies receiving income from property, even though tax is levied under section 9 of the Act on the bona fide annual value of the property, the actual receipts may be considerably less than the annual value and if the test of reasonableness is the extent of the assessable income and not the commercial profit, there may frequently arise cases in which companies may have to sell off their income producing assets.
The Legislature has deliberately used the expression "smallness of profit" and not "smallness of assessable income" and there is nothing in the context in which the expression "smallness of profit" occurs which justifies equation of the expression "profit" with "assessable income".
Smallness of the profit in section 23A has to be adjudged in the light of commercial principles and not in the light of total receipts, actual or fictional.
This view appears to have been taken by the High Courts in India without any dissentient 500 opinion, see Sir Kasturchand Ltd. vs Commissioner of Income Tax, Bombay City (1), Ezra Proprietary Estates Ltd. vs Commissioner of Income Tax, West Bengal (2) and Commissioner of income Tax, Bombay City vs F. L. Smith & Co., (Bombay) Ltd. (3).
By the fiction in section 10(2)(vii) second proviso, read with section 2(6C), what is really not income is, for the purpose of computation of assessable income, made taxable income: but on that account, it does not become commercial profit, and if it is not commercial profit, it is not liable to be taken into account in assessing whether in view of the smallness of profits a larger dividend would be unreasonable.
In our judgment, the High Court was right in holding that the amount of Rs. 15,608 was not liable to be taken into account in considering whether having regard to the smallness of the profit made by the Company, it would be unreasonable to declare a larger dividend.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
(1) (1940) XVII I.T.R. 493.
(2) (1950) XVIII I.T.R. 762.
(3) (1959) XXXV I.T.R. 183.
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The respondent company purchased certain machinery for Rs. 89,000 and sold it for the same value, but in the books of account the written down value of the machinery was shown in the year of account as Rs. 73,392.
The Income Tax Officer in computing the assessable income of the company added the difference, i.e. Rs. 15,608, between the actual value and the written down value to the profit of the company.
The Income Tax Officer also passed an order under section 23A of the Income Tax Act, and directed that the undistributed portion of the assessable income, shall be deemed to have been distributed amongst the shareholders as dividend.
Appeals against the order of the Income tax Officer proved unsuccessful and the Appellate Tribunal referred the following question to the High Court under section 66(1): "Whether the sum of Rs. 15,608 should have been included in the assessee company 's "profit" for the purpose of deter mining whether the payment of a larger dividend than that declared by it would be unreasonable.
" The High Court answered the question in the negative.
On appeal by special leave, Held, that the view taken by the High Court was correct.
494 By the fiction in section 10(2)(Vii) second proviso, read with s.2(6C), what is really not income is, for the purpose of computation of assessable income, made taxable income: but on that account, it does not become commercial profit, and if it is not commercial profit, it is not liable to be taken into account in assessing whether in view of the smallness of profits a larger dividend would be unreasonable.
"Smallness of profit" should not be equated with "smallness of assessable income" but should be determined in accordance with commercial principles.
Sir Kasturchand Ltd. vs Commissioner of Income tax, Bombay City, (1949) XVII I.T.R. 493, Ezra Proprietary Estates Ltd. vs Commissioner of Income tax, West Bengal, (1950) XVIII I.T.R. 762 and Commissioner of Income tax Bombay City vs F. L. Smith & Co. (Bombay) Ltd., (1959) XXXV I.T.R. 183, referred to.
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996.txt
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135 of 1950.
Application under article 32 of the Constitution for a writ in the nature of a writ of certiorari and prohibition.
Dr. Tek Chand (Hardayal Hardy and Jindra Lal, with him) for the petitioner.
M.C. Setalvad, Attorney.
General for India, (section M. Sikri, with him) for the respondent.
january 12.
This is said to be a test case, for, on its decision, we are told, depend the rights of numerous other persons whose interests are similar to those of the petitioner.
There is no serious controversy as to the facts material for the purposes of this application.
They are shortly as follows: On May 5, 1948, the then Rulers of eight Punjab States including.
Patiala and Nabha with the concurrence and guarantee of the Government of India entered into a covenant agreeing to unite and integrate their territories in one State with a common executive, legislature and judiciary by the name of Patiala and East Punjab States Union, hereinaf ter compendiously referred to as the Pepsu.
By article III (6) of the covenant the then Ruler of Patiala became the first President or Raj Pramukh of the Council of Rulers and he is to hold the office during his lifetime.
Article VI of the covenant is as follows : "(1) The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event not later than the 20th of August, 1948, make over the administration of his State to the Raj Pramukh, and thereupon, (a) all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Govern ment of the Covenanting State shall vest in 130 the Union and shall thereafter be exercisable only as pro vided by this Covenant or by the Constitution to be framed thereunder; (b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the Union, and (d) the military forces, if any, of the Covenanting State shall become the military forces of the Union.
" Article X provides for the formation of a Constituent Assembly to frame a constitution of a unitary type for the Union within the framework of the Covenant and the Constitu tion of India.
This Constituent Assembly was also to func tion as the interim Legislalature of the Union until an elected legislature came into being.
The proviso to clause (2) of that Article runs as follows : "Provided that until a Constitution framed by the Con stituent Assembly comes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinances for the peace and good government of the Union or any part thereof, and any Ordi nance so made shall, for the space of not more than six months from its promulgation have the like force of law as an Act passed by the Constituent Assembly;but any such Ordinance may be controlled or superseded by any such Act.
" This Union was inaugurated on July 15, 1948, and the Raj Pramukh thereafter took over the administration of the different Covenanting States.
The Administration of Nabha State was taken over by the Raj Pramukh on August 20, 1948.
On the same day the Raj Pramukh, in exercise of the powers vested in him, promulgated an Ordinance (No. 1 of 2005) called the Patiala and East Punjab States Union (Administra tion) 131 Ordinance, 2005.
The following provisions of this Ordi nance are relevant for our purpose: "1.
(2) It shall extend to the territories included in the Covenanting States on and from the date on which the administration of any of the said State or States has been or is made over to the Raj Pramukh.
* * 3.
As soon as the administration of any Covenanting State has been taken over by the Raj Pramukh as aforesaid, all laws, Ordinances, Acts, Rules, Regulations, Notifica tions, Hidayats and Firrnans i Shahi having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the Courts or offices of any such Covenanting State shall, notwithstanding anything contained in this Ordinance or any other Ordinance, be disposed of in accordance with the laws governing such proceedings in force for the time being m any such Covenanting State.
" Section 6 provides for the adaptation of the laws etc.
enforced under section 3 and, amongst other things, any reference in these laws etc.
to the Patiala State and the like was to be construed as a reference to the State of the Union.
A notification (No.35 dated 27 5 05/11 9 1948) was issued over the signature of the Revenue Secretary notifying that the Patiala Income tax Act of 2001 and the Rules there under had come into force in the various Covenanting States from August 20, 1948, thereby repealing the law or laws in force in that behalf in those States before that date, except as to pending proceedings.
It may be mentioned here that prior to that date there was no law in the Nabha State imposing income tax on the subjects of that State.
On November 14, 1948, the Commissioner of Income tax issued a Notification (No. 4, dated 132 29 7 2005) intimating that persons belonging to the Cove nanting States of Nabha and Nalagarh would be assessed to income tax under the Patiala Income Tax Act, 2001.
It was mentioned that persons of those States whose income reached the taxable limit ' 'should henceforward keep regular and proper accounts for purposes of audit by the Income Tax Department" on February 2, 1949, Ordinance 1 of 2005 was repealed and replaced by Ordinance No. XVI of 2005 promul gated by the Raj Pramukh and called the Patiala and East Punjab States Union General Provisions (Administration) Ordinance, 2006.
Section 3 (1) runs as follows: "3.
(1) As from the appointed day, all laws and rules, regulations, bye laws and notifications made thereunder, and all other provisions having the force of law, in Patiala State on the said day shall apply mutatis mutandis to the territories of the Union and all laws in force in the other Covenanting States immediately before that day shall cease to have effect; Provided that all suits, appeals, revisions applica tions, reviews, executions and other proceedings, or any of them, whether Civil or Criminal or Revenue, pending in the Courts and before authorities of any Covenanting States shall, notwithstanding anything contained in this Ordinance, be disposed of in accordance with the laws governing such proceedings in force in any such Covenanting State immedi ately before the appointed day.
" By section 2 (a) the "appointed day" was defined as meaning the 5th day of Bhadon, 2005, corresponding to August 20, 1948.
There was a section providing for adaptation similar to section 6 of the Ordinance 1 of 2005.
There was another Ordinance to which reference has to be made, namely, Ordinance No. 1 of 2006 called the Finance Ordinance promul gated on April 13, 1949, which came into force on that very date.
Section 5 of that Ordinance introduced several amend ments to the Patiala Income Tax Act, 2001.
It recast 133 sections 3 and 34 of that Act and introduced a new section as section 23B. Section 6 of that Ordinance runs thus: "6.
For the assessment year beginning on the 1st day of Baisakh, 2006, that is to say, in respect of the accounting the income, profits and gains of the previous year ending on the last day of Chet, 2005, (a) income tax shall be charged at the rates specified in Part I of the Second Schedule to this Ordinance, and (b) rates of super tax shall, for the purposes of sec tion 55 of the Patiala Income Tax Act, 2001, be specified in Part II of the Second Schedule to this Ordinance.
" It is in this setting that the facts leading to the present petition have to be considered.
The petitioner is a resident of Ateli in the district of Mohindargarh now in Pepsu but which formerly formed part of the Nabha State.
The petitioner has been carrying on his business at Ateli for a number of years under the ' name and style of Raghunath Rai Ram Parshad.
He never paid any income tax as no such tax was imposed by any law in the Nabha State.
On October '20, 1949, the petitioner was served with a notice under sections 22(2) and 88 of the Patiala Income Tax Act, 2001, requiring him to submit a return for the Income Tax year 2006 (13 4 1949 to 12 4 1950) disclosing his income during the previous year (13 4 1948 to 12 4 1949).
The petitioner, on December 4, 1949, filed his return for the year 2006 and on February 14, 1950, he was assessed to income tax.
On May 23, 1950, the petitioner received a notice under section 34 calling upon him to file his return for the year ending the last day of Chet 2005, i.e., for the year 13 4 1948 to 12 4 1949.
In this return he had to specify his income of the previous year, namely, 2004 (i.e., 13 4 1947 to 12 4 1948).
It ap pears that the petitioner along with other assessees of Ateli and Kanina submitted a petition before the Income Tax Officer on July 9, 1950, asking him not to 134 proceed with the assessment for the year 2005 but on July 13, 1950, the Income Tax Officer assessed him to the best of his judgment under section 34(4) read with section 22(4) of the Income Tax Act.
The petitioner along with other asses sees similarly situated moved the Income Tax Commissioner and the Central Board of Revenue, New Delhi, but without any success.
No formal appeal under the Patiala Income Tax Act appears to have been filed by the petitioner against assess ments for either of the two years 2005 and 2006.
On August 10, 1950, the petitioner filed his present petition before this Court under article 32 of the Constitution praying that a writ in the nature of a writ of certiorari be issued for quashing the assessments of the petitioner 's income accrued in the years 2004 and 2005 and other ancillary reliefs.
During the pendency of this petition the income tax authori ties have issued a notice under section 46 intimating that penalty will be imposed if the tax was not paid up.
The contention of the petitioner in the first place is that he has been denied the fundamental right of equality before the law and the equal protection of the laws guaran teed to him by article 14 of the Constitution.
His griev ances are formulated in paragraphs 10 and 11 of his peti tion.
It is said that while the people of Kapurthala which is included in Pepsu have been asked to pay income tax for the period prior to August 20, 1948, at the old rate fixed by the Kapurthala Income Tax Act which was lower than the rate fixed by the Patiala Income Tax Act, 2001, the people of Nabha who had not to pay any income tax prior to August 20, 1948, at all have been made liable to pay at the higher Patiala rate and that such discrimination offends against the provisions of article 14.
This charge is refuted by paragraph 10 of the affidavit of Sardar Gurbax Singh, the Additional Director of Inspection (income Tax), New Delhi, who was formerly the Commissioner of Income Tax, Punjab and Pepsu, which has been filed in opposition to the present petition.
It is there stated that for the assessment year 2005, in Kapurthala the assessees whose cases were pending on 135 August 20, 1948, were assessed under the Kapurthala Income Tax Act at rates fixed thereunder but that for the assess ment year 2006 the provisions of the Patiala Income Tax Act and the rates prescribed thereunder were uniformly applied in all areas of the Pepsu, including Kapurthala This alle gation which is not denied in the affidavit filed by the petitioner in reply must be taken as correct.
The assess ment of Kapurthala assessees for the year 2005 at the old Kapurthala rate was obviously made under the proviso to section 3 of Ordinance No. 1 of 2005, which was reproduced in the proviso to section 3(1)of the Ordinance No. XVI of 2006 and both of which required all pending proceedings to be completed according to the law applicable to those pro ceedings when they were initiated.
No case of assessment was pending as against any Nabha assessee on August 20, 1948, for there was no Income Tax Act in Nabha prior to that date and, therefore, there could be no occasion for completing any pending proceedings against any of such assessees.
In the premises, there can be no grievance by them on the score of discrimination.
The discrimination, if any, was not brought about by the two Ordinances, but by the circumstance that there was no Income Tax Act in Nabha and consequently there was no case of assessment pending against any Nabha assessees.
In any case the provision that pending proceed ings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceedings commenced is a reasonable law rounded upon a reasonable classification of the assessees which is permis sible under the equal protection clause and to which no exception can be taken.
In our opinion the grievance of the alleged infringement of fundamental right under Article 14 is not well founded at all.
Dr. Tek Chand appearing in support of the petition next contends that the administration of Nabha State having been taken over by the Raj Pramukh only on August 20, 1948, and the Patiala law including the Patiala Income Tax Act, 2001, having been brought 136 into operation on and from August 20, 1948, the assessment of the tax on the petitioner 's income which accrued prior to August 20, 1948, was wholly illegal and not authorised by the said Ordinances and the State by insisting on collecting the tax so illegally assessed was threatening to invade the petitioner 's fundamental right to property guaranteed by article 31(1) of the Constitution.
Article 31(1) runs as follows: "(1) No person shall be deprived of his property save by authority of law.
" It will be noticed that clause (1) reproduces subsection (1) of section 299 of the Government of India Act, 1935, without the words "in British India.
" Reference has 'next to be made to article 265 which is in Part XII, Chapter I, dealing with "Finance." That article provides that no tax shall be levied or collected except by authority of law.
There 'was no similar provision in the corresponding chapter of the Government of India Act, 1935.
If collection of taxes amounts to deprivation of property within the meaning of article 31(1), then there was no point in making a sepa rate provision again as has been made in article 265.
It, therefore, follows that clause (1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, for otherwise article 265 becomes wholly redundant.
In the United States of America the power of taxation is regarded as distinct from the exercise of police power or eminent domain.
Our Constitution evidently has also treated taxation as distinct from compulsory acquisition of property and has made inde pendent provision giving protection against taxation save by authority of law.
When Dr. Tek Chand was asked if that was not the correct position, he did ,not advance any cogent or convincing answer to refute the conclusion put to him.
In our opinion, the protection against imposition and collec tion of taxes save by authority of law directly comes from article 265, and is not secured by clause (1) of article 31.
Article 265, 137 not being in Chapter IIi of the Constitution, its protection is not a fundamental right which can be enforced by an application to this court under article 32.
It is not our purpose to say that the right secured by article 265 may not be enforced.
It may certainly be enforced by adopting proper proceedings.
All that we wish to state is that this application in so far as it purports to be rounded on arti cle 32 read with article 31(1) to this Court is misconceived and must fail.
The whole of Dr. Tek Chand 's argument was rounded on the basis that protection against imposition and collection of taxes save by authority of law was guaranteed by article 31(1) and his endeavour was to establish that the Pepsu Ordinances could not, in law, and did not, on a correct interpretation of them, impose any income tax retrospective ly; that the Income Tax Officer on an erroneous view of the law had wrongly assessed the tax on income accrued prior to August 20, 1948, and that consequently the petitioner was being threatened with deprivation of property otherwise than by authority of law.
In the view we have taken, namely, that the protection against imposition or collection of taxes save by authority of law is secured by article 265 and not by article 31(1), the questions urged by Dr. Tek Chand do not really arise and it is not necessary to express any opinion on them on this application.
Those questions can only arise in appropriate proceedings and not on an applica tion under article 32.
In our judgment this application fails on the simple ground that no fundamental right of the petitioner has been infringed either under article 14 or under article 31(1) and we accordingly dismiss the petition with costs.
Petition dismissed.
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Section 3 (1) of the Patiala and East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2005) which came into force on February 2, 1949, and re enacted section 3 of an earlier Ordinance which was in force from August 20, 1948, provided that as from the appointed day (i.e., August 20, 1948) all laws in force in the Patiala State shall apply muutatis mutandis to 17 128 the territories of the said Union, provided that all pro ceedings pending before courts and other authorities of any of the Covenanting States shall be disposed of in accordance with the laws governing such proeeedings in force in such Covenanting State immediately before August 20, 1948.
In one of the Covenanting States, viz., Kapurthala, there was a law of income tax in force on the said date, the rate of tax payable under which was lower than that payable under the Patiala Income tax Act, and in another Covenanting State, Nabha, there was no law of income tax at all.
For the ac counting year ending April 12, 1948, assessees of Kapurthala State were assessed at the lower rates fixed by the Kapur thala Income tax Act, in accordance with the proviso in section 3 of the Ordinance relating to pending proceedings, and the assessees of Nabha were assessed at the higher rates fixed by the Patiala Act as there was no income tax law in Nabha on August 20, 1948, and no income tax proceedings were therefore pending in Nabha.
The petitioner who was an asses see residing in Nabha and who was assessed under the Patiala Act applied under article 32 of the Constitution for a writ in the nature of a writ of certiorari quashing the assessment on the ground (i) that he had been denied the fundamental right of equality before the law and equal protection of the laws guaranteed by article 14 of the Constitution inasmuch as he was assessed at a higher rate than that at which asses sees of Kapurthala were assessed, (ii) that, as the Ordi nance bringing the Patiala Income tax Act into force in Nabha was enacted only on August 20, 1948, it cannot operate retrospectively and authorise the levy of tax on income which had accrued in the year ending April 12, 1948, and therefore he was threatened with infringement of the funda mental right guaranteed by article 31 (1) of the Constitution that no one shall be deprived of his property save under authority of law: Held, (i) that the discrimination, if any, between the assessees of Kapurthala and Nabha was not brought about by the Ordinance but by the circumstance that there was no income tax law in Nabha and consequently there was no case of assessment pending against any Nabha assessees; and in any case the provision that pending proceedings should be concluded according to the applicable at the time when the right is or liabilities accrued and the proceedings com menced, was a reasonable law rounded upon reasonable classi fication of the assessees which is permissible under the equal protection clause; (ii) that, as there is a special provision in article 965 of the Constitution that no tax shall be levied or collected except by authority of law, cl.
(1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, and inasmuch as the right conferred by article 265 not a right conferred by Part III of the Constitution, it could not be enforced under article 129
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: Criminal Appeal No. 80 of 1988.
From the Judgment and Order dated 20.11.1986 of the Gujarat High Court in Spl.
A. No. 886 of 1986.
T.U. Mehta and M.N. Shroff for the Appellant.
V.A. Bobde, Mrs. H. Wahi and Mrs. Kamini Jaiswal for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
The order of detention of the respondent No. 2, 906 Mahendra V. Shah, passed under the , was challenged by his nephew, respondent No. 1, before the Gujarat High Court under Article 226 of the Constitution.
By the impugned judgment the detention order was quashed.
The State of Gujarat has impugned the High Court 's decision by the present Special Appeal Application.
Special leave is granted.
The detention order was passed on the 20th of October, 1984, but could not be served on the detenu earlier than 4.7.1986 as he was absconding.
The grounds of detention served on him as mentioned in Annexure B state that information was received by the Customs staff of Ahmedabad on 26.9.1984 that a notorious smuggler, Juwansinh Jadeja, had shifted his smuggling activites to the coast of Chorwad in Saurashtra, and was working on behalf of two citizens of Pakistan.
Information about Jadeja 's main associates was also received.
The authorities were informed that the gang was likely to land about 180 packages of contraband goods within a couple of days and vigilance activities were therefore stepped up.
The officers further learnt that the modus operandi of the smugglers ' gang would be to remove the goods to trucks and to cover them with cargo of vegetables and grains and then to drive away.
An Ambassador car bearing registered No. MRH 6595 which was earlier in the service of the respondent detenu a resident of Bombay was spotted in the late night of 28.9.1984 and they suspected it to be on the road in that connection.
They proceeded in the same direction and found a truck loaded with bags of vegetables.
The truck was intercepted but the driver ran away.
The Ambassador car was also passing by, but on being signalled to stop, it took a sharp turn and got away.
The officers unsuccessfully chased it for some time.
The suspicion of the officers was thus confirmed and they searched the truck and discovered the contraband goods.
Two other vehicles, a Jeep and another car also arrived and were stopped by the officers and several persons travelling therein including Jadeja were taken to the Excise Office for interrogation.
Incriminating documents were recovered, inter alia, indicating that several other trucks were also involved.
All available Customs and police officers thereafter became active and two other trucks were seized.
They also found the Ambassador car MRH 6595 abandoned.
The goods found in the first truck were all of foreign origin and were valued at over Rs.68 lakhs.
Similar contraband goods were discovered in the other trucks also.
Later a fourth truck was also intercepted.
The arrested persons 907 gave vital clues about the clandestine business of smuggling and named respondent Mahendra V. Shah as being directly involved in the business.
It was inter alia stated that Mahendra V. Shah had gone to the coast where the goods were received.
The grounds have mentioned the various activities of the detenu including the fact that he was travelling in the Ambassador car MRH 6595.
We do not consider it necessary to mention here all the details of his activities.
As stated earlier, although the order of detention was made in October 1984, it could not be served on the detenu before July 1986 as he was absconding.
On his arrest the writ application was filed by his nephew the respondent No. 1.
The other persons involved in the affair were also detained.
These co conspirators made an application for bail on 2.10.1984 and on the next day, that is, on 3.10.1984, they filed an application before the Chief Judicial Magistrate, Junagadh retracting some of their earlier statements.
One of the points urged on behalf of the detenu was that the retraction by the aforesaid other persons (co conspirators) was not placed before the detaining authority and was, therefore, not considered by him.
The High Court held that this point by itself vitiated the detention order.
The other grounds urged were not considered on merits.
It has been contended on behalf of the State that the second application dated 3.10.1984 whereby the other accused persons retracted their earlier statements was also placed before the detaining authority and he had applied his mind thereto.
It was pointed out that the said document was mentioned in the grounds Annexure B, served on the detenu although it was not accurately described as a petition containing the retraction.
The mis description was in the following words: "While arriving at the above satisfaction the Detaining Authority has taken into consideration the bail applications dated 2.10.1984 and 3.10.1984 filed jointly by Jayantilal Damji Thakker and nine others before the Chief Judicial Magistrate, Junagadh. " In paragraph 6 of the State 's counter affidavit this fact was pointedly mentioned and it was stated that the mistake in the description was of drafting, and the detaining authority had considered the same while passing the order of their detention and that there was no substance in 908 the point taken on behalf of the detenu.
The stand of the State that the petition dated 3.10.1984 was considered by the detaining authority appears to be right.
The original file dealing with the detenu 's case was produced in Court for our perusal, and we found that the Home Minister, State of Gujarat, while passing the order for detention made a detailed note running in several paragraphs and in paragraph 2 he pointedly mentioned both the bail application dated 2.10.1984 and the petition dated 3.10.1984.
The notes also show that he (detaining authority) correctly appreciated the nature and purport of the 3rd October document but was of the view that not much credence could be in the circumstances given to it.
The first point urged on behalf of the respondent must, therefore, be rejected.
The error in the description of the document in the grounds cannot in the situation be said to have vitiated the order.
Mr. Bobde, the learned counsel for the respondent, contended that the plea of the State should be rejected in absence of an affidavit by the detaining authority.
Although it is not an essential requirement of law, the learned counsel proceeded, but the Court in every detention case must insist on such an affidavit to be filed.
It is true that in a case where a point as mentioned above arises the detaining authority should personally affirm on oath the stand taken on his behalf, but it cannot be suggested as an inflexible rule applicable to all detention cases irrespective of the circumstances.
In the present case a further affidavit by Sri Pavitra Narayan Roy Chaudhary, Deputy Secretary, Home Department (Special) of the State of Gujarat was filed stating that the Home Minister Sri Prabodh Raval who was authorised under the Rules of Business framed under Article 166 of the Constitution to pass orders on behalf of the Government in detention matters had ceased to be a Minister before the filing of the affidavit in the High Court, and he was, therefore, not available.
Sri M.T. Parmar, the then Deputy Secretary, Home Department was fully conversant with the case and had filed his affidavit.
The original file was produced before us to dispel any suspicion about the detaining authority having considered the document dated 3.10.1984 and having felt satisfied that it was a proper case for detention of the respondent.
In this background we do not attach much importance to the fact that the affidavit was not filed by the detaining authority personally.
The next point urged by Mr. Bobde was that it was necessary to have mentioned in the grounds (Annexure B) served on the detenu the fact that the detaining authority was of the view that "not much 909 credence could be given to the" statements in the petition dated 3.10.1984.
The state of the mind of the detaining authority while holding that much credence could not be given to the document should be treated to be a ground essential to be served on the detenu.
Reliance was placed on the observations in P.C. Mehta vs Commissioner and Secretary, Government of Kerala and others, [1985] (Supp.) SCC 144.
The contention is that factual inference is included in the expression "grounds" and has to be expressly and specifically stated.
We are afraid, the assumption on which the argument is founded is not correct.
So far as the inference drawn by the detaining authority from the materials on the records and his subjective satisfaction in this regard are concerned, they are expressly stated in the grounds and there cannot be any grievance on that score.
The objection of the respondent, properly analysed, comes to this, that the reason why the detaining authority is not impressed by a particular piece of evidence or on the other hand the reason why he prefers to rely on any other evidence should be detailed in the grounds.
Mr. Bobde urged that if the respondent had known that the detaining authority did not attach much credence to the statements in the petition dated 3.10.1984 he would have attempted to impress upon the relevant authorities to take a contrary view.
We do not find any merit in this contention and hold that it is not necessary to mention in the grounds the reaction of the detaining authority in relation to every piece of evidence separately.
Besides, the recital in Annexure B that the detaining authority formed his opinion after consideration of the aforesaid document by itself clearly implied that he was not impressed by the statement therein.
The detenu cannot, therefore, be heard to say that he was prejudiced in any manner.
As mentioned above, the points pressed on behalf of the respondents before us have been rejected.
Mr. Bobde has contended that several other questions also arise in this case which have not been dealt with by the High Court.
He appears to be right.
The impugned judgment states that several other questions were also raised which were not necessary to be considered as the writ application was succeeding on the first point.
Now in view of our finding mentioned above, it becomes necessary to decide the other questions also.
In the circumstances, we think that the case should go back to the High Court for further hearing.
Accordingly, the impugned judgment is set aside, and the matter is remanded for further hearing and disposal of the case in accordance with law.
N.V.K. Appeal allowed.
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% The second respondent in the appeal was detained under subsection (1) of section 3 of the .
The grounds of detention Annexure 'B ' served on the detenu stated that information was received by the custom staff that a notorious smuggler and his gang was likely to land packages of contraband goods on the Saurashtra Coast and that the modus operandi of the smugglers ' gang would be to remove the goods to trucks, cover them with cargo of vegetables and grain, and then to drive away.
Vigilance was stepped up by the authorities.
A Truck, an Ambassador Car in the service of the respondent detenu, and a jeep were stopped by the Officers and several persons travelling therein were detained and interrogated.
Incriminating documents were recovered indicating involvment of other vehicles.
Goods of foreign origin valued at over Rs.68 lakhs were also recovered.
The arrested persons gave vital clues about the clandestine business of smuggling that was being carried on and named the 2nd respondent detenu as being directly involved in the business.
The co conspirators made an application for bail on 2.10.1984 and on the following day i.e. 3.10.1984 they filed an application before the Chief Judicial Magistrate retracting some of their earlier statements.
Though the detention order was passed on October 20, 1984, it could not be served on the detenu earlier than July 4, 1986 as he was absconding.
On his arrest the first respondent his nephew, challenged the detention order in the High Court on several grounds, but the High 904 Court allowed the writ petition and quashed the order of detention only on one ground viz. non application of mind by the detaining authority to a vital document i.e. the second application dated 3.10.1984 whereby the other accused persons retracted their earlier statements, and held that this had vitiated the subjective satisfaction of the detaining authority.
In the appeal to this Court it was contended on behalf of the State appellant that the second application dated 3.10.1984 was also placed before the detaining authority and that he had applied his mind thereto.
The document was mentioned in the grounds Annexure 'B ', served on the detenu although it was not actually described as a petition containing the retraction.
The original file dealing with the detenu 's case was also produced for the Court 's perusal.
The appeal was contested on behalf of the respondents by stating that the plea of the State that the second application dated 3.10.1984 had been considered by the detaining authority should be rejected in the absence of an affidavit by the detaining authority, and that it was necessary to have mentioned in the grounds Annexure 'B ', served on the detenu that the detaining authority was of the view "that not much credence could be given to the statements made in the petition dated 3.10.1984".
Allowing the Appeal, ^ HELD: 1.
It is true that in a given case the detaining authority should personally affirm on oath the stand taken on its behalf, but this cannot be suggested as an inflexible rule applicable to all detention cases irrespective of the circumstances.
[908D E] In the instant case, a further affidavit by the Deputy Secretary, Home Department of the State of Gujarat was filed stating that the Home Minister who was authorised under the Rules of Business to pass orders on behalf of the Government in detention matters, had ceased to be a Minister before the filing of the affidavit in the High Court, and he was, therefore not available.
The then Deputy Secretary, Home Department who was fully conversant with the case had to file the affidavit.
[908E F] 2.
The original file dealing with the detenu 's case produced in Court shows that the Home Minister, State of Gujarat, while passing the order for detention made a detailed note running in several para 905 graphs and in paragraph 2 he pointedly mentioned both the bail application dated 2.10.1984 and the petition dated 3.10.1984.
The notes also show that the detaining authority correctly appreciated the nature and purport of the 3rd October document but was of the view that not much credence could in the circumstances be given to it.
[908B C] 3.
So far as the inference drawn by the detaining authority from the materials on the records and his subjective satisfaction were concerned, they are expressly stated in the grounds and there cannot be any grievance on that score.
[909B C] 4.
It is not necessary to mention in the ground of detention the reaction of the detaining authority in relation to every piece of evidence separately.
[909D E] In the instant case, the recital in Annexure 'B ' that the detaining authority formed his opinion after consideration of the document dated 3.10.1984 by itself clearly implied that he was not impressed by the statement therein.
[909E] 5.
Several other questions were raised in the writ petition which were not considered by the High Court, and since the order of the High Court by which it allowed the writ petition has been set aside, it becomes necessary to decide the other questions.
The matter is remanded for further hearing and disposal to the High Court.
[909G] P.C. Mehta vs Commissioner and Secretary, Govt.
of Kerala and others, [1985] Supp SCC 144, referred to.
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Special Leave Petition (Civil) No. 8001 of 1986 From the Judgment and order dated 8.7.1986 of the Allahabad High Court in W.P. No. 9664 of 1986.
U.R. Lalit and T. Sridharan for the Petitioner.
The Judgment of the Court was delivered by MISRA, J.
The short question which arises for consideration in this case is whether a suit is maintainable in a civil court for an injunction restraining the Hearing Authority appointed under section 68 D of the (hereinafter referred to as 'the Act ') from proceedings with the hearing of matters under that provision and from approving a scheme published under section 68 C of the Act either with or without any modification.
The petitioner is the holder of a permit issued under Chapter IV of the Act to ply a stage carriage on Bulandshahr Siana Garh Bugrasi Brijghat Bhasians Shambhaoli Babugarh Jadol Jahangirabad route in the State of Uttar Pradesh.
The State Transport Undertaking of the State of Uttar Pradesh published a scheme dated March 7, 1975 in the U.P. Gazette dated April 5, 1975 under section 68 C of the Act pro posing to operate its stage carriages to the exclusion of all private operators on the route referred to above.
The petitioner filed his objections to the said scheme along with several others.
After a number of adjournments the Hearing Authority empowered under section 68 of the Act was able to conclude the proceedings by April 26, 1979 and it is alleged that the Authority in the course of the hearing ob served that it would finalise and approve the scheme by 21.5.1979.
Before the Hearing Authority could give its approval to the scheme under section 68 D of Act, the petitioner filed original Suit No. 145 of 1979 on the file of the Civil Judge, Bulandshahr for a declaration that the above scheme published under section 68 C of the Act was illegal, void and ultra vires and for an injunction restraining the defendants in the suit from finalising and approving the scheme and acting upon it after it was published.
The State Transport Undertaking, i.e., the Uttar Pradesh State Road Transport Corporation, the State of Uttar Pradesh and the Regional Transport Authority, Meerut were impleaded as the defendents in the suit.
The defendants contested the suit.
L one of the pleas raised in their written statement was that the suit was 543 not maintainable in a civil court for the reliefs prayed for by the petitioner.
During the pendency of the suit the petitioner filed an application before the Civil Court for staying the hearing of the suit till the disposal of a special leave petition before this Court since the question relating to the maintainability of suits of similar nature was involved in the said special leave petition.
The learned Civil Judge declined to grant the request of the petitioner and fixed the suit for arguments on November 8, 1985.
Aggrieved by the order of the Civil Judge, the petitioner filed a revision petition before the Additional District Judge, Bulandshahr.
That revision petition was dismissed.
Against the order of Additional District Judge, the petitioner filed a writ petition.
On the file of the High Court of Allahabad.
That petition was also dismissed.
This special leave petition is filed against the order of the High Court of Allahabad.
We have heard the learned counsel for the petitioner in this case on the question of maintainability of the suit out of which this petition arises.
The question for consideration in this case is, as mentioned above, whether a suit is maintainable in a civil court for an injunction restraining the Hearing Authority under section 68 L) of the Act from proceeding with the hearing and approving the scheme either with or without modification.
The contention of the respondents before the trial court was that the suit was not maintainable for the reliefs prayed for by the petitioner since the jurisdiction of the civil courts in such matters was impliedly barred.
Chapter IVA of the Act was introduced into the Act by Act 100 of 1956.
Section 68 D of the Act provides that the provisions of the Chapter IVA and the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in Chapter IV of the Act or any other law for the time being in force or in any instrument having effect by virtue of any such law.
Chapter IVA contains certain special provisions relating to the State Transport Undertakings.
A 'State Transport Undertaking ' is defined by section 68 A(b) of the Act as any Undertaking providing road transport J service where such undertaking is carried on by (i) the Central Government or a State Government; (ii) any Road Transport Corporation, established under section 3 of the ; and (iii) any municipality or any corporation or company owned or controlled by the Central Government or one or more State 544 Governments, or by the Central Government and one or more State Governments.
Chapter IVA of the Act provides for the preparation and approval of a scheme enabling the State Transport Undertaking to operate road transport services to the exclusion complete or partial of other persons.
The procedure laid down for the preparation of the scheme is contained in sections 68 C and 68 D of the Act.
Section 68 C of the Act provides that where any State Transport Undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly co ordinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion, complete or partial, of other persons or other vise, the State Transport Undertaking may prepare a scheme giving particulars of the nature of the service proposed to be rendered, the area or route proposed to be covered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the official Gazettee and also in such manner as the State Government may direct.
Section 68 D of the Act provides that on the publication of any scheme in the official Gazette any person already providing transport facilities by any means along or near the area or route proposed to be covered by the scheme, any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government and any local authority or police authority within whose jurisdiction any part of the area or route proposed to be covered by the scheme lies, may within thirty days from the date of its publication in the official Gazette file objections to it before the State Government.
The State Government may, after considering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State Transport Undertaking to be heard in the matter if they so desire, approve or modify the scheme.
The scheme as approved or modified as stated above shall then be published in the official Gazette by the State Government and the same shall thereupon become final and shall be called the approved scheme and the area or route to which it relates shall be called the notified area or notified route.
Under section 68 I of the Act the State Government is authorised to make rules for the purpose of carrying into effect the provisions of this Chapter.
The rules which are promulgated provide for the details relating to the manner in which objections or representations can be filed under section 68 D(i) and the procedure to be followed at the hearing of persons who have filed such objections 545 and/or representations and the representatives of the State Transport Undertaking.
The rules also provide for the particulars to be incorporated in the scheme published under section 68 C of the Act.
From the above provisions it is clear that on the publication of the scheme under section 68 C of the Act any person who is aggrieved by the proposed introduction of the scheme is entitled to file his representations and objections and to appear before the Hearing Authority under section 68 D of the Act and make his submissions in support of his objections or representations.
Sub section (ii) of section 68 D of the Act authorises the Hearing Authority to approve the scheme either with or without modification.
By necessary implication it can also reject a scheme if it feels that it is not necessary to introduce the scheme.
When the scheme is approved or modified under section 68 D of the Act, such approved or modified scheme is required to be published in the official Gazette and on such publication it becomes final.
It is thus seen that Parliament has created a special machinery by the provisions contained in Chapter IVA of the Act for bringing jnto force an approved or modified scheme which would have the effect of excluding completely or partially other persons from operating motor service vehicles on any route or in any area.
After the scheme become final, as provided in sub section (iii) of section 68 D of Act, the transport authorities concerned can issue permits only in accordance with the scheme and the other provisions contained in Chapter IVA of the Act .
This Court in H. C. Narayanappa and Ors.
vs The State of Mysore and Ors., ; at page 753 has observed that the scheme approved or modified and published under section 68 D of the Act may properly be regarded as 'law ', within the meaning of Article 19(6) of the Constitution, made by the State excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed by Article 19(1)(g) of the Constitution.
Section 9 of the Code of Civil Procedure, 1908 provides that the courts (subject to the provisions contained therein) have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred.
It is no doubt true that there is no express provision in the Act taking away the jurisdiction of the civil courts to try a suit in which the validity of the proceedings under Chapter IVA of the Act is called in question.
But we are of opinion that the jurisdiction of the civil courts is impliedly barred from entertaining suits of the present nature.
The jurisdiction of the State Government (the Hearing Authority under section 68 D of the Act) is exclusive in character and it is not open to a civil court to issue an order of injunction restraining the Hearing Authority from proceeding 546 with the hearing of the case and exercising its statutory functions.
Whenever statute uses the expression that a decision of an authority shall be final, the jurisdiction of a civil court to go into the correctness or otherwise of the decision is taken away.
We have gone through the plaint presented in this case.
It is not disputed that the scheme had been duly published under section 68 C of the Act by an authority which had the power to publish it and that the authority which was hearing the case under section 68 D of the Act had the power to do so.
All the contentions urged in the plaint relate to the merits of the scheme and the desirability of bringing the scheme into force.
All such objections relating to the merits of a scheme or the desirability of bringing such scheme can be raised by an aggrieved person before the Hearing Authority under section 68 D of the Act and it is for the Hearing Authority to consider such objections and representations and to pass appropriate orders thereon.
Where the Statute gives finality to the orders of a special tribunal the civil courts jurisdiction must be held to be excluded insofar as the merits to the case is concerned.
If jurisdiction is so excluded, the civil courts have jurisdiction only to examine whether the provisions of the Statute have not been complied with or the tribunal had or had not acted in conformity with the fundamental principles of judicial procedure.
In cases of the present nature where invariably reliance is placed by the private operators on Article 19(1)(g) of the Constitution, a writ petition lies before the High Court.
In such cases a suit is hardly the remedy which can be availed by them.
If suits of this nature are allowed to be entertained, the very object of the several provisions of Chapter IVA of the Act can be frustrated by interested parties by resorting to a civil court with the sole object of delaying the implementation of a scheme.
Such attempts should be curbed at the earliest opportunity.
The learned Civil Judge was right in declining to stay the further proceedings in the suit.
This is a suit which should have been rejected at the threshold under order 7 rule 11 of the Code of Civil Procedure on the ground that it did not disclose a cause of action.
We, therefore, do not find any ground to interfere with the orders of the High Court, the District Judge and the Civil Judge.
The Civil Judge is directed to dispose of the suit in the light of the observa tions made in this order.
The petition fails and is dismissed.
P.S.S Petition dismissed.
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Section 68 C, occurring in Chapter IVA of the provides for publication of the scheme where any State Transport Undertaking is of opinion that it is necessary in the public interest that road transport services in relation to any area or route be run and operated by such undertaking.
Section 68 D(l) provides for filing of objections to the scheme before the State Government, section 68 D(2) for approval or modification of the scheme by the State Government after giving a hearing to objectors, while s.68 D(3) states that the approved or modified scheme when published shall become final.
Before the Hearing Authority could give its approval, the petitioner in the Special Leave Petition, a stage carriage permit holder, who had earlier filed objections to the scheme published under section 68 C, filed a civil suit for declaration that the said scheme was illegal, void and ultra vires and for an injunction.
It was contended by the defendants respondents that the suit was not maintainable since the jurisdiction of the Civil Courts in such matters was impliedly barred.
During the pendency of that suit the petitioner filed an application before the Civil Court for staying the hearing of the suit till the disposal of a special leave petition before the Supreme Court in which question relating to the maintainability of suits of similar nature was involved.
The Court declined to grant the request and fixed the suit for arguments.
The revision to the District Judge and the writ petition to the High Court preferred by the petitioner were dismissed.
In the special leave petition to the Court on the question: Whether a suit is maintainable in a Civil Court for an injunction restraining the Hearing Authority under section 68 D of the from pro 541 ceeding with the hearing and approving the scheme.
Dismissing the special leave petition, ^ HELD: The Civil Judge was right in declining to stay further proceedings in the suit.
This is a suit which should have been rejected at the threshold under order 7 rule 11 of the Code of Civil Procedure on the ground that it did not disclose a cause of action.
[546F G] The Jurisdiction conferred on the hearing authority under s.68D of the is exclusive in character and it is not open to a civil court to issue an order of injunction restraining the said authority from proceeding with the hearing of the case and exercising its statutory functions.
[545H; 546A] Whenever a statute uses the expression that a decision of an authority shall be final, the jurisdiction of a civil court to go into the correctness or otherwise of the decision is taken away.
The civil courts then have jurisdiction only to examine whether the provisions of the statute have not been complied with or the tribunal had or had not acted in conformity with the fundamental principles of judicial procedure.
Their jurisdiction is barred insofar as merits of the case is concerned.
[546B;D E] In the instant case the scheme had been duly published under s 68 C by an authority which had the power to publish it and the authority which was hearing the case under s.68 D had the power to do so.
All the contentions urged in the plaint related to the merits of the scheme and the desirability of bringing the scheme into force and these can be raised by an aggrieved person before the Hearing Authority under section 68 D of the Act.
It is for the Hearing Authority to consider the objections and to pass appropriate orders thereon.
[546B D] Parliament has created a special machinery by the provisions contained in Chapter IVA of the Act for bringing into force an approved or modified scheme which would have the effect of excluding completely or partially other persons from operating motor service vehicles on any route or in any area.
The very object of enacting that Chapter can be frustrated by interested parties by resorting to a civil court with the sole purpose of delaying the implementation of a scheme if suits as in the instant case are allowed to be entertained.
[545C D: 546E F] H.C. Narayanappa and Ors.
vs The State of Mysore & Ors., [19601 3 S.C.R. 742 referred to.
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5108.txt
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Appeal No. 2313 of 1966.
Appeal by special leave from the judgment and order dated October 13, 1966 of the Andhra Pradesh High Court in Writ Petition No. 853 of 1966.
M.C. Setalvad. D. Narasaraju, Anwar Ullah Pasha R. V. Pillai and M. M. Kashatriya, for the appellant.
Niren De, Addl.
Solicitor General, P. Ram Reddy, section Ramachandra Reddy and T. V.R. Tatachari, for the respondents.
The Judgment of the Court was delivered by Vaidyalingam, J.
This appeal, by special leave, granted by this Court, is directed against the order dated October, 13, 1966, passed by the Andhra Pradesh High Court, dismissing Writ Petition No 853 of 1966, filed by the appellant, under article 226 of the Constitution.
The appellant filed the said writ petition under the following circumstances.
The appellant was the Vice Chancellor of the Osmania University, having been appointed, as such, by order dated April 30.
1964, passed by the Governor of Andhra Pradesh, in 216 his capacity as Chancellor of the said University.
The appointment of the appellant, under the said order, as Vice Chancellor, there is no controversy, was for a term of five years from the date of taking charge; and the appointment itself was made under sub section
(1) of section 12 of the Osmania University Act, 1959 (Andhra Pradesh Act No. IX of 1959).
There is, again, no controversy that the appellant took charge as Vice Chancellor, in terms of the said order, on April 30, 1964 and, as such, he became entitled to hold office for the full period of five years, which will expire at the ,end of April 1969.
The Osmania University was established in 1918 and the ad ministration of the University was then governed by a Charter of His Exalted Highness, the Nizam of Hyderabad, promulgated in 1947.
With effect from November 1, 1956, the State of Hyderabad ceased to exist, and the Telengana region of that State became part of Andhra Pradesh.
In 1959, the Andhra Pradesh Legislature passed the Osmania University Act, 1959, earlier referred to.
That Act itself was one to amend and consolidate the law relating to the Osmania University.
It is only necessary to note at this stage, that under section 12(1) of the said Act, it was provided that the Vice Chancellor shall be appointed by the Chancellor from a panel of not less than three persons selected by a Committee, as constituted under sub section
(2); but, if the Chancellor does not approve any of the persons so selected, he may call for a fresh panel from the Committee.
Section 13, again, provided for the term of office, salary and allowances etc.
, of the Vice Chancellor.
Under sub section
(1), the term of office of the Vice Chancellor was fixed for a term of five years and there was also a further provision to the effect that he shall be eligible for reappointment.
By section 51 of the said Act, the Osmania University Revised Charter, of 1947 was repealed; but, nevertheless, it was provided that the person holding office immediately before the commencement of the Act as Vice Chancellor, was to be the Vice Chancellor on such ,commencement of the Act, and was to continue to hold the said office, in circumstances mentioned therein.
There is, again, no controversy that the appellant, who was already the Vice Chancellor of the Osmania University from 1957, was again appointed in 1959, as Vice Chancellor for a period of five years under this Act; and he was similarly appointed for a further term of five years, on April 30, 1964, as Vice Chancellor, as mentioned earlier.
During the middle of 1965, certain amendments were sought to be introduced in the Act by providing for removal of the Vice Chancellor, by the Chancellor, from office under certain circumstances.
There was also a proposal to reduce the term of office of the Vice Chancellor from 5 years to 3 years, from the date of his appointment, and for provisions being made 217 enabling the Government to give directions to the University relating to matters of policy to be followed by it.
The amendments sought to be introduced in the Act, appear to have come in for considerable criticism from several quarters, and these have been elaborately dealt with in the order, under attack.
According to the appellant, he was one of those who very strenuously opposed the proposed amendments on the ground that the autonomy of the University was sought to be interfered with by the Government.
According to the appellant, again, the various criticisms made by him and others, were taken note of by the Inter University Board, by the Education Minister of the Union and others.
It is the further case of the appellant that it was felt by the Government of Andhra Pradesh that he was responsible for the agitation that was being made, against the proposed amendments.
But, ultimately, the Andhra Pradesh Legislature passed the Osmania University (Amendment) Act, 1966 (Act 11 of 1966), amending the Osmania University Act of 1959 in certain particulars.
The said amendments are to the effect that the Vice Chancellor shall not be removed from office, except as provided for in section 12(2) of the amended Act.
The term of office was also fixed at 3 years under the amended section 13.
Another provision relating to the power of Government to give instructions to the University, was also introduced, as section 7A; but the appellant continued as Vice Chancellor.
The Osmania University Act, was again amended by the Osmania University (Second Amendment) Act, 1966 (Act XI of 1966).
Under this amendment, section 13A was enacted.
In brief, that section was to the effect that the person holding the office of the ViceChancellor, immediately before the commencement of the amending Act of 1966, was to hold office only until a new Vice Chancellor was appointed under sub section
(1) of section 12, and it also provided that such appointment shall be made within 90 days after such commencement.
There was a further provision that on the appointment of such new Vice Chancellor, and on his entering upon his office, the person holding the office of Vice Chancellor immediately before such appointment, shall cease to hold that office.
Section 7 A, which had been introduced by Act II of 1966, was deleted.
Section 33 A was enacted, making special provision as to the re constitution of the Senate, Syndicate, Academic Council and Finance Committee of the University.
The appellant filed Writ Petition No. 853 of 1966, in the High Court, praying for the issue of a writ or order declaring section 5 of the Osmania University (Second Amendment) Act.
1966, which introduced section 13A in the original Act, as unconstitutional and void.
In that writ petition, he challenged the validity of the new Section, section 13A on several grounds.
In brief, his plea was that by virtue 218 of his appointment as Vice Chancellor for 5 years on April 30, 1964, he had acquired a vested right to hold that office for the full term and that such a vested right could not be taken away, during the currency of the period, by any legislative enactment.
The legislature had no competence to enact the said provision inasmuch, as section 13A could not be treated as legislation in respect of University education.
The appellant had also pleaded that the provision virtually amounted to removal of the appellant from his office without giving him any opportunity to show cause against such removal.
According to the appellant, even assuming the Legislature was competent to enact the provision in question, nevertheless, section 13A is unconstitutional and void, inasmuch as it offends article 14 of the Constitution.
We do not think it necessary to advert, elaborately, to the various other grounds of attack levelled against the constitutional validity of the provision in question, which have, no doubt, been dealt with by the High Court, because, for the purpose of disposing of this appeal, in our opinion, it is enough to refer to the grounds of attack, taken by the appellant regarding the constitutionality of section 13A, based upon article 14 of the Constitution.
So far as this aspect is concerned, according to the appellant, section 9 of Act 11, of 1966 amended the Act of 1959 by incorporating new sub sections
(1) and (2) in section 12.
Under sub section
(1) of section 12, the ViceChancellor is to be appointed by the Chancellor.
Under sub section
(2), the Vice Chancellor shall not be removed from his office except by an order of the Chancellor passed on the ground of mis behaviour or incapacity; and it also provided for such an order being passed only after due enquiry by a person who Is or has been a Judge of a High Court or the Supreme Court, as may be appointed by the Chancellor, and the Vice Chancellor being given an opportunity of making his representation against the removal.
Therefore, in view of these provisions, the Vice Chancellor could not be removed by the Chancellor without any cause, without reason, without enquiry and without an opportunity being given to him to show cause against removal.
This provision applied to the appellant, who was in office, on the date of the passing of Act 11 of 1966, as well as Act XI of 1966.
Nevertheless, section 5 of Act XI of 1966 incorporated s.13A in the principal Act.
Under that section, not only has power been, conferred on the Chancellor, but also a duty imposed, so to say, on him, to remove the appellant, who was the Vice Chancellor, without any reason or justification or even giving an opportunity to him to show cause against such removal.
No enquiry, before ordering such removal, is contemplated under this section.
Further, while a Vice Chancellor, who is appointed after the passing of Act XI of 1966, cannot be removed from office, except in accordance with the provisions of sub section
(2) of section 12, the appellant, who was already in office, could be arbitrarily and 219 illegally removed under section 13A of the Act.
There is no provi sion, again, similar to section 13A, applicable to a Vice Chancellor, appointed after the coming into force of the amending Act.
Therefore, according to the appellant, the provisions contained in section 13A are clearly directed only against him, as he was the person holding office, prior to the amending Act, and therefore it is a clear case of hostile discrimination.
Further, according to the appellant, persons appointed as Vice Chancellors, constitute a group and must be considered as persons similarly situated and they must be treated alike; whereas, by virtue of section 13A, a differentiation is made between the appellant, who was a Vice Chancellor on the date of the commencement of the Amending Act and other persons who are to be appointed as Vice Chancellors thereafter.
This differentiation, according to the appellant, is again without any basis; nor has such a classification, any reasonable relation to the main object of the legislation.
The appellant also relied on section 33A, introduced by section 6 of Act XI of 1966 relating to the reconstitution of the Senate, Syndicate, Academic Council and the Finance Committee and pleaded that whereas those academic bodies or authorities were allowed to continue without any time limit and to function until they were reconstituted, regarding the Vice Chancellor alone, a period of 90 days had been fixed, under the Amending Act, within which the Chancellor was bound to appoint another Vice Chancellor.
This, again, is a clear proof of discrimination against the appellant.
The respondents controverted the stand taken on behalf of the appellant.
Apart from supporting the competency of the Legislature to enact the measure, in question, they urge that article 14 of the Constitution has no application at all.
According to the respondents, inasmuch as the term of office of the Vice Chancellor had been reduced to three years, as per Act 11 of 1966, it was thought fit by the Legislature to provide for the termination of the office of the Vice Chancellor, who was holding that post, at the commencement of Act XI of 1966, as also for the appointment of a new Vice Chancellor.
It was, under those circumstances, that section 13A was incorporated in the Act of 1959, by section 5 of Act, XI of 1966.
They also referred to similar provisions, which were incorporated in the two enactments relating to the two other Universities in the State, viz., the Andhra University and Sri Venkateswara University.
The respondents further pleaded that Act 11 of 1966 placed the Vice Chancellor, who was already appointed and who was functioning prior to that Act, in the first category, as a class apart, from the Vice Chancellors who were to be subsequently appointed and who were to function, after the passing of the said Amending Act, in the second category, both in the matter of the mode of appointment, as well as the term of appointment.
The Vice Chancellor 220 viz., the appellant, who was in office, on the date of the passing of Act XI of 1966, according to the respondents, therefore fell into a class all by himself and, as such, came under a third category; and the legislature thought fit to take into account the special features relating to him and, therefore, made separate provisions regarding the termination of his office.
Therefore, a suitable provision was made, by enacting section 13A, in respect of the existing Vice Chancellor, who was treated as a class, by himself.
The respondents also claimed that the Legislature was entitled to treat the Vice Chancellor, who was then in office, as a class by himself and make suitable provisions with regard to the termination of his office, and therefore a legislation made for that purpose, and on that basis, was constitutionally valid.
The charge of hostility towards the appellant, or any attempt to effect discrimination, was stoutly denied by the respondents.
The respondents, there fore, urged that the classification of the appellant, as a separate class, was proper and such a classification had a reasonable nexus, with the object of the amending legislation.
The respondents further pleaded that the curtailment of the term of office of an existing Vice Chancellor, by a statute, enacted by a competent Legislature, does not amount to 'removal ' of the Vice Chancellor for sufficient and proved cause.
The respondents also ` urged that academic bodies or authorities like the Senate, Syndicate and the Academic Council are not similarly situated like the Vice Chancellor, either in the matter of appointment or constitution, or in exercising functions under the statute; and therefore, the appellant, according to them, was not 'entitled to place any reliance.
on section 33A, introduced by section 7 of Act XI of 1966.
For all these reasons, they urged that article 14 of the Constitution was not violated by the Legislature in enacting section 13A.
Before we refer to the findings recorded by the learned Judges of 'the High Court, this will be a convenient stage to refer to the material provisions of the statutes, concerned.
We have already mentioned that the appellant was functioning as the Vice Chancellor of the Osmania University, even from 1957, i.e., even before the Osmania University Act, 1959, was passed.
We have also indicated that the administration of the University was then governed by a Charter promulgated in 1947.
The Osmania University Act, 1959 (Act IX of 1959), (hereinafter called the Act), was passed in 1959 and published in the State Gazette on February 2, 1959.
Section 3 of the Act provided that the University, established by the Revised Charter promulgated by H.E.H. the Nizam of Hyderabad, on December 8, 1947, and functioning at Hyderabad immediately before the commencement of the Act, be reconstituted and declared to be a University by the name of 'Osmania University '.
The said section also provided that the University would be a 221 residential, teaching and affiliating University consisting of a Chancellor, a Pro Chancellor, a Vice Chancellor, a Senate, a Syndicate and an Academic Council.
Section 12(1) provided for the appointment of the Vice Chancellor, by the Chancellor, from a panel of not less than three persons selected by a committee, as constituted under sub section
(2) thereof But, if the Chancellor did not approve any of the persons so selected, he could call for a fresh panel from the committee.
Sub section (2) provided for the constitution of the committee.
Section 13 provided for the term of office salary, allowances etc.
, of the Vice Chancellor.
Under sub section
(1), the Vice Chancellor was to hold office for a term of 5 years and he was eligible for reappointment.
There was a proviso to the effect that the ViceChancellor shall continue to hold office after the expiry of his term of appointment, for a period not exceeding six months, or until Ms successor is appointed and enters upon his office, whichever is earlier.
Sub section
(6) provided for the filling up of the vacancy, in the post of the Vice Chancellor, when it fell permanently vacant; and a Vice Chancellor so appointed as per sub sections
(1) and (2) of section 12, was to hold office for a full term of 5 years.
Section 51 (I) repealed the Osmania University Revised Charter, 1947; but sub section
(2) provided that notwithstanding such repeal, the person holding office immediately before the commencement of the Act, as Vice Chancellor, shall, on such commencement, be the Vice Chancellor of the University, and he was entitled to hold office until a Vice Chancellor is appointed in accordance with the Act.
It will be noticed, by the above reference to the material provisions of the Act, that there was no provision for removal of a ViceChancellor; and that the appointment of a Vice Chancellor was to be by the Chancellor, as provided for in section 12.
The term of office of the Vice Chancellor was 5 years and he was eligible for reappointment.
The appellant, who was already a Vice Chancellor, functioning under the Charter of 1947, was entitled to continue, and did continue, as the Vice Chancellor, by virtue of section 51 of the Act.
He was also, as already mentioned, originally appointed as ViceChancellor for a period of 5 years under the Act, in 1959.
The Act was amended in certain particulars by the Osmania University (Amendment) Act, 1966 (Act II of 1966) (hereinafter called the First Amendment Act).
The First Amendment Act received the assent of the Governor on January 29, 1966.
Section 6 of the First Amendment Act, introduced section 7A, which we set out 222 "7A. Instructions by the Government.
The Government may, after consultation with the University, give to the University, instructions relating to matters of major educational policy such as pattern of University education, medium of instruction and establishment of post graduate centres, to be followed by it.
(2) In the exercise of its powers and performance of its functions under this Act, the University shall comply with the instructions issued under sub section (1).
" Similarly, section 9 incorporated new sub sections
(1) and (2) in section 12 of the Act, as follows 12.
(1) The Vice Chancellor shall be appointed by the Chancellor.
(2) The Vice Chancellor shall not be removed from his office except by an order of the Chancellor passed on the ground of misbehaviour or incapacity and after due inquiry by such person who is or has been a Judge of a High Court or the Supreme Court as may be appointed by the Chancellor, in which the Vice Chancellor shall have an opportunity of making his representation against such removal.
" Section 10, while effecting certain other amendments to section 13.
the Act, incorporated a new sub section
(1), as follows : "13.
(1) Subject to the provisions of sub section (2) of section 12, the Vice Chancellor shall hold office for a term of three years from the date of his appointment and shall be eligible for re appointment to that office for another term of three years only; Provided that the Vice Chancellor shall continue to hold office after the expiry of his term of appointment for a period not exceeding six months or until his successor is appointed and enters upon his office, whichever is earlier.
" It was this Amendment Act, when it was in the Bill stage, that appears to have been severely criticised by various authorities on the ground that the autonomy of the University was sought to be interfered with by the Government.
In that connection, the appellant also appears to have made several statements criticising the provisions sought to be incorporated in the Act.
It is also on record that counter statements were made on behalf of the Government meeting these criticisms regarding the proposed amendments.
They have been dealt with by the High Court rather elaborately; but, we do not propose to go into those matters, for the purpose of this appeal.
223 By virtue of the amendments effected and referred to above, it will be seen that the term of office of the Vice Chancellor has been reduced from 5 years to 3 years.
The manner of appointment of the Vice Chancellor has also been changed and a provision is contained for removal of the Vice Chancellor from his office, but that can be done only in accordance with the provisions contained in section 12(2) of the Act.
Section 7A gives power to the Government to give instructions to the University relating to matters of major educational policy; and it is made obligatory on the University to comply with such instructions issued by the Government.
As we have already stated, the appellant was again appointed as Vice Chancellor for a period of 5 years on April 30, 1964; and he was continuing in office when the First Amendment Act was passed.
One of the claims that is made by the appellant, in these proceedings, is that he is entitled to the protection conferred by section 12(2) of the Act referred to above.
There does not appear to be any controversy that any appointment of a Vice Chancellor was made, after the passing of the First Amendment Act .
The Act was further amended by the Osmania University (Second Amendment) Act, 1966 (Act XI of 1966) (to be referred to as the Second Amendment Act).
It received the assent of the Governor on May 16, 1966.
Section 2 of the Second Amendment Act, omitted section 7A of the Act.
Section 5 of the Second Amendment Act, which introduced new section 13A in the Act, and which provision is the subject of attack in these proceedings, is as follows : "13A. Special provision as to the appointment of a new Vice Chancellor.
Notwithstanding anything in this Act, the person holding the office of the Vice Chancellor immediately before the commencement of the Osmania University (Second Amendment) Act, 1966, shall continue to hold that office only until a new Vice Chancellor is appointed by the Chancellor under sub section (1) of section 12 and enters upon his office; and such appointment shall be made within ninety days after such commencement.
On the appointment of such new Vice Chancellor, and on his entering upon his office, the person holding the office of the Vice Chancellor immediately before such appointment shall cease to hold that office." Again, section 6 of the Second Amendment Act., incorporated section 33A in the Act, which is as follows : "33A. Special provision as to the reconstitution of the Senate, Syndicate, .Academic Council and Finance Com mittee.
Notwithstanding anything in this Act, the members of the Senate, the Syndicate, the Academic Council and the Finance Committee constituted and functioning 224 before the commencement of the Osmania University (Amendment) Act, 1966, shall continue to be such members and function only until a new Senate, Syndicate, Academic Council or Finance Committee, as the case may be, is reconstituted under this Act.
On the reconstitution of such new Senate, Syndicate, Academic Council or Finance Committee, the members of the Senate other than the life members thereof, the members of the Syndicate, Academic Council or Finance Committee, as the case may be, holding office immediately before such reconstitution, shall cease to hold that office.
" Even according to the respondents, section 13A was incorporated for the purpose of terminating the services of the appellant as Vice Chancellor, so as to enable the Chancellor to make a fresh appointment of a Vice Chancellor.
We have referred to section 33A of the Act, because the appellant 's case was also to the effect that with regard to the Senate, Syndicate, Academic Council etc.
, there is no provision similar to section 13A of the Act, though they are also similarly situated like him.
The findings of the learned Judges of the.
High Court may now be briefly summarised : 1.
The Andhra Pradesh Legislature was competent to enact section 5 of the Second Amendment Act.
The said section does not contravene article 19(1)(f) of the Constitution.
The appellant was holding the office of the ViceChancellor when the Act came into force and continued under section 51(2) thereof as Vice Chancellor until the Chancellor passed an order, in 1959 appointing him once again under the Act.
Section 13(1), as introduced by the First Amendment Act, is not retrospective and the right of the appellant to continue as Vice Chancellor for the full term of 5 years stood unaffected and the new section 13(1) does not apply to him.
The new section 12(2), as introduced by the First Amendment Act, is not applicable to the appellant.
Sections 12(2) and 13A of the Act, do not cover the same field.
Section 12(2) provides for removal by way of punishment and its operation is on a different field from that of section 13A where the cessation of office is due to a curtailment of the term.
Section 12(2) applies only to the future Vice Chancellors and section 13A is solely applicable to the existing Vice Chancellor, the appellant.
225 .lm0
Regarding the attack on section 13A, on the basis of article 14 of the Constitution that there is an unreasonable discrimination, the learned Judges were of the view that the said section did not suffer from any such infirmity.
The learned Judges held that the impugned legislation had resulted in classifying Vice Chancellors under two categories, (a) the appellant, as the existing Vice Chancellor, falling under the first category; and (b) future Vice Chancellor, to be appointed under the Act, who falls under the second category.
According to the High Court, the object sought to be achieved by such classification, as could be seen from the objects and reasons of the Second Amendment Act, 1966, was to give effect to the reduced term of 3 years fixed under section 13(1) of the Act after the First Amendment.
The Hi gh Court further held that the classification adopted by section 13A, of putting the appellant, as the existing ViceChancellor, in a class by himself, is founded on an intelligible differentia, which distinguishes the appellant from future ViceChancellors, and that this differentia has a rational relation to the object sought to be achieved by the Second Amendment Act.
In this connection, the learned Judges also advert to the similar provisions enacted, at about the same time, in the Andhra University Act, 1925, and the Sri Venkateswara University Act, 1954.
The High Court is also of the view that the Legislature must have taken into account the fact that the appellant has already put in more than 6 years of service as Vice Chancellor, for treating him as a class by himself, as distinct from future Vice Chancellors, who are to be appointed and, as such, have not put in any service at all.
The learned Judges have, no doubt, adverted to the fact that the appellant has got an eventful record of efficient service, full of recognition and appreciation, but the appellant cannot plead those circumstances when a competent legislature has passed a valid legislative measure, under which he has to lose his office.
Ultimately, on these findings, the High Court came to the conclusion that section 5 of the Second Amendment Act, introducing section 13A in the Act, is not vitiated by any infirmity, as alleged by the appellant, and, finally, dismissed the appellant 's writ petition.
The appellant has again raised, no doubt, most of the contentions that were taken before the High Court.
But the main ground of attack that has been pressed before us, by learned counsel for the appellant, is the one based upon article 14 of the Constitution.
The findings recorded, and the views expressed, by the High Court are sought to be sustained by the learned Additional Solicitor General, appearing for the respondents.
But, we do not think it necessary to go into the larger controversy that has been raised by the appellant, before the High Court, in the view that we take, that the appellant must succeed in respect of the attack levelled against the impugned 226 provision, based upon article 14 of the Constitution.
As to whether the criticism, made by the appellant, about the proposals to amend the Act, was or was not responsible for the passing of the legislation in question, does not assume much of an importance; because, the simple question is whether the provision, section 13A, as it now stands n the Act, is violative, in any manner, of article 14 of the Constitution.
If the answer is 'yes ', it is needless to state that the provision will have to be struck down.
Therefore, we are confining our attention only to the provisions of the Act and we will refer to any other circumstance that is brought to our notice only for the limited purpose of considering the grounds of attack based upon article 14 of the Constitution.
According to Mr. Setalvad, the appellant is entitled to take advantage of the provisions of section 12(2) of the Act.
On the date of the passing of the First Amendment Act, the appellant was, admittedly, a Vice Chancellor and he had been continuing as such.
He cannot be removed from his office, except in accordance with the provisions of section 12(2) of the Act.
But, in view of section 13A of the Act, introduced by the Second Amendment Act, the appellant is forced out of his office, within 90 days of the passing of the Second Amend ment Act.
The creation of two classes of Vice Chancellors, viz., Of Vice Chancellors appointed under the Act and the Vice Chancellor who was in office at the commencement of the Second Amendment Act, is not on any rational basis.
Person is appointed as ViceChancellors, constitute a group, and the impugned provision makes a differentiation between the person who is a Vice Chancellor then and other persons who are to be appointed Vice Chancellors thereafter, for which differentiation, there is absolutely no basis.
Further, even if it can be stated that there is any basis for the said classification, nevertheless there should be a nexus or connection between the basis of the classification and the object of the legislation, which again, is lacking in this case.
Mr. Setalvad further urged that while the services of a ViceChancellor, appointed under the Act, could be terminated only in accordance with the provisions contained in section 12(2) of the Act, the appellant 's services could be terminated under section 13A, without adopting the procedure laid down in section 12(2) of the Act.
There was also no provision in the Act, Mr. Setalvad pointed out, making section 13(2) applicable to Vice Chancellors to be appointed in future.
Though the term of office for a Vice Chancellor has been fixed under the Act, even after the amendments, as three years, and that may apply to all the Vice Chancellors, so far as the appellant is concerned, his term has been reduced or restricted to 90 days under section 13A of the Act.
Mr. Setalvad again urges that even assuming that it is open to the Legislature, in an appropriate case, to make provisions applicable 227 to only one individual or a group of individuals, nevertheless, it is well established, by this Court, that the classification that is effected ,by the statute must be a classification founded on an intelligible differentia and that differentia must have a rational relation to the object sought to be achieved by the statute.
Applying these two tests, learned counsel urges, that the impugned legislation must be.
considered to be violative of article 14 of the Constitution.
The learned Additional Solicitor General has urged that the, term of office of the Vice Chancellor has been reduced to three; years by the First Amendment Act.
The Legislature, in order to give effect to this provision and to enable fresh appointments to be made under the Act, has enacted section 13A.
That section has, necessarily, to apply only to persons like the appellant who are holding.
office at the time when these provisions came into force.
Such a provision, in the nature of things, cannot apply to Vice Chancellors who are to be appointed in future under the Act.
Therefore it is wrong to state that all Vice Chancellors,.
irrespective of the manner ' or mode under which they are appointed, in present or in future, fall under the same category.
Further, the appellant has been a Vice Chancellor for nearly 7 years.
The legislature, the learned Solicitor points out, having regard to these circumstances, has chosen to treat the appellant, the Vice Chancellor holding office on the date of the Second Amendment Act, as a class by himself and has differentiated him from persons to be appointed ViceChancellor for the first time.
Such a classification, is reasonable and it has got a rational relation to the object sought to be achieved by the Second Amendment Act, viz., bringing about uniformity in the tenure of three years of office for all Vice Chancellors.
The learned Solicitor points out further that the appellant is not entitled to the benefit of section 12(2) of the Act.
The Legislature was competent to enact the Measure in question and the object of the Legislature was to give effect to the amendment provisions as early as.
possible.
He pointed out that similar provisions were also made in two other enactments at about the same time, viz., in the Andhra University Act, 1925, and the Sri Venkateswara University Act, 1954.
It may be that the Legislature could have adopted another method for replacing the present Vice Chancellor, but that is a matter of policy, which cannot be reviewed by the Courts, so long as the Legislature had the competence to enact the measure and the provisions, so enacted, do not suffer from any other legal infirmities.
We have given due consideration to the various contentions placed before us by Mr. Setalvad, learned counsel,for the appellant, and the learned Additional Solicitor General, on behalf of the respondents; but we are not inclined to agree with the contentions of the learned Additional Solicitor General.
228 The principles to be borne in mind, when a question arise under article 14 of the Constitution, have been laid down in several ,decisions, by this Court,on a number of occasions.
In Budhan Choudhry vs The State of Bihar(1), Das J., speaking for the Court said : "It is now well established that while article 14 forbids class 'legislation, it does not forbid reasonable classification for the purposes of legislation.
In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the, classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.
" Therefore, it will be seen that in order to accept a classification as permissible and not hit by article 14, the measure in question will have to pass the two tests laid down in the above decision.
The observations, extracted above, have been quoted by Das C. J., in .Ram
Krishna Dalmia vs Shri Justice section R. Tendolkar(2).
It is no doubt true, as pointed out by the learned Additional SolicitorGeneral, that a statute may direct its provisions against one individual person or thing, or against several individual persons or things.
But, before such a provision can be accepted as valid, the Court must be satisfied that there is a reasonable basis of classification which appears on the face of the statute itself, or is deducible from the surrounding circumstances or matters of common knowledge.
If no such reasonable basis of classification appears on the face of the statute, or is deducible from the surrounding circumstances, the law will have to be struck down as an instance of naked discrimination.
It should also be borne in mind that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon the party who attacks the same as unconstitutional, to ,Show that there is a clear transgression of the constitutional principles; but, as observed by Das C.J., in Ram Krishna Dalmia 's case(2), at p. 297, "while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried (1) ; ,1049.
(2) ; , 296. 229 to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.
" Having due regard to the principles referred to above, we now proceed to consider as to whether the appellant has been able to establish that section 5 of the Second Amendment Act, introducing s.13A in the Act, is discriminatory and, as such, violative of article 14 of the Constitution.
We have already stated that the appellant was appointed, under the Act, for a further term of 5 years, as Vice Chancellor, on April 30, 1964, and he was continuing in office, as such, at the time when the two Amending Acts were passed; and, normally,.
he, would be entitled to continue in that post for the full term, which will expire only at the end of April 1969.
The First Amendment Act provided, in section 12 of the Act, that the Vice Chancellor is to be appointed by the Chancellor; but section 12(2) specifically provided that the Vice Chancellor shall not be removed from his office excep t by an order of the Chancellor passed on the ground of misbehaviour or incapacity and, after due inquiry by such person who is, or has been, a Judge of a High Court or the Supreme Court, as may be appointed by the Chancellor.
It was also provided that the ViceChancellor was to have an opportunity of making his representation against such removal.
Prima facie; the provisions contained in sub section
(2) of section 12, must also apply to the appellant, who did continue in office even after the passing of the First Amendment Act.
No doubt the term of office of the Vice Chancellor was fixed at 3 years under section 13(1) of the Act.
But no provisions, were made in the First Amendment Act regarding the termination of the tenure of office of the Vice Chancellor who was then holding that post.
There can be no controversy that section 13A, introduced by section 5 of the Second Amendment Act, deals only with the appellant.
In fact, the stand taken on behalf of the respondents in the counteraffidavit filed before the High Court, was to the effect that the Legislature had chosen to treat the Vice Chancellor holding office at the time of the commencement of the Second Amendment Act, as a class by himself and with a view to enable the Chancellor to make fresh appointments, section 13A of the Act was enacted.
Therefore, it is clear that section 13A applies only to the appellant.
Though, no doubt, it has been stated, on behalf of the respondents,,,, that similar provisions were incorporated, at about the same time, in two other Acts, relating to two other Universities, viz., the Andhra University and the Sri Venkateswara University, and though this circumstance has also been taken into account by the learned Judges of the High Court, in our opinion, those provisions 230 have no bearing in considering the attack levelled by the appellant on section 13A of the Act.
This is a clear case where the statute itself directs its provisions by enacting section 13A, against one individual, viz., the appellant; and before it can be sustained as valid, this Court must be satisfied that there is a reasonable basis for grouping the appellant as a class by himself and that such reasonable basis must appear either in the statute itself or must be deducible from other surrounding circumstances According to learned counsel for the appellant, all Vice Chancellors of the Osmania University come under one group and can be classified only as one unit and there is absolutely no justification for grouping the appellant under one class and the Vice Chancellors to be appointed in future under a separate class.
In any event, it is also urged that the said classification has no relation or nexus to the object of the enactment.
Our attention has been drawn to the Statement of Objects and Reasons to the Second Amendment Bill, the material part of which is as follows "The term of office of the Vice Chancellor has been reduced to three years under section 13(1) of the Osmania University Act as amended by section 10 of the Osmania University (Amendment) Act, 1966.
Section 13 A, proposed to be inserted by clause 5 of the Bill, enjoins that notwithstanding anything in the Act, the person holding the office of the Vice Chancellor immediately before the commencement of the Osmania University (Second Amendment) Act, 1966 shall continue to hold that office only until a new Vice Chancellor is appointed by the Chancellor under section 12(1) as amended and enters upon his office, and such appointment shall be made within ninety days after such commencement.
" We are inclined to accept the contention of Mr. Setalvad, that there is no justification for the impugned legislation resulting in a classification of the Vice Chancellors into two categories, viz., the appellant as the then existing Vice Chancellor and the future Vice.
Chancellors to be appointed under the Act.
In our view, the Vice Chancellor, who is appointed under the Act, or the Vice Chancellor who was holding that post on the date ,of the commencement of the Second Amendment Act, form one single group or class.
Even assuming that the classification of these two types of persons as coming under two different groups can be made nevertheless, it is essential that such a classification must be founded on an intelligible differentia which distinguishes the appel 231 lant from the Vice Chancellor appointed under the Act.
We are not able to find any such intelligible differentia on the basis of which the classification can be justified.
It is also essential that the classification or differentia effected by the statute must have a rational relation to the object sought to be achieved by the statute.
We have gone through the Statement of Objects and Reasons of the Second Amendment Bill, which became law later, as well as the entire Act itself, as it now stands.
In the Statement of Objects and Reasons for the Second Amendment Bill, extracted above, it is seen that except stating a fact that the term of office of the Vice Chancellor has been reduced to 3 years under section 13(1) and that s.13A was intended to be enacted, no other policy his indicated which will justify the differentiation.
The term of office fixing the period of three years for the Vice Chancellor, has been already effected by the First Amendment Act and, therefore, the differential principle adopted for terminating the services of the appellant by enacting section 13A of the Act, cannot be considered to be justified.
In other words, the differentia adopted in section 13A and directed as against the appellant and the appellant alone not be considered to have a rational relation to the object sought to be achieved by the Second Amendment Act.
While a Vice Chancellor appointed under section 12 of the Act can be removed from office only by adopting the procedure under section 12(2), the services of the appellant, who was also a Vice.
Chancellor and similarly situated, is sought to be terminated by enacting section 13A of the Act.
We do not see any policy underlying the Act justifying this differential treatment accorded to the appellant.
The term of office of the Vice Chancellors has been no doubt reduced under the First Amendment Act and fixed for 3 years for all the Vice Chancellors.
But, so far as the appellant is concerned, by virtue of section 13A of the Act, he can continue to hold that office only until a new Vice Chancellor is appointed by the Chancellor, and that appointment is to be made within 90 days.
While all other Vice Chancellors, appointed under the Act, can continue to be in office for a period of three years, the appellant is literally forced out of his office on the expiry of 90 days from the date of commencement of the Second Amendment Act.
There is also no provision in the statute providing for the termination of the services of the ViceChancellors, who are appointed under the Act, in the manner provided under section 13A of the Act.
By section 13A, the appellant is even denied the benefits which may be available under the proviso to sub section
(1) of section 13 of the Act, which benefit is available to all other ViceChancellors.
The appointment of the appellant in 1959 and, again in 1964, under section 12(1) of the Act, as it stood prior to the two amendments, by the Chancellor, must have been, no doubt, from a panel of 232 names submitted by a committee constituted under section 12(2).
The appointment of a Vice Chancellor after the passing of the First Amendment Act, is to be made exclusively by the Chancellor under section 12(1), as the section now stands.
That is a circumstance, relied on by the respondent, for differentiating the appellant as an existing Vice Chancellor from a Vice Chancellor to be appointed under the Act, as amended.
Another circumstance relied on is that the appellant has been a Vice Chancellor for 7 years.
In our opinion, these are not such vital or crucial factors which will justify treating the appellant as a class by himself, because the powers and duties of a Vice Chancellor, either under 'the Act, prior to the amendment, or under the Act, after amendment, continue to be the same.
To conclude, the classification of the appellant, as a class by himself, is not founded on any intelligible differentia, which distinguishes him from other Vice Chancellors and it has no rational relation to the object of the statute, and so section 13A is hit by article 14.
The appellant has attacked section 13A, as discriminatory, relying upon a different provision, made under section 33A, in respect of the Senate, Syndicate, Academic Council and the Finance Committee.
We have, however, not considered the question as to whether the appellant can be treated as falling under the same class, as the other authorities mentioned in section 33A, as we have accepted the appellant 's contention, based upon article 14, on other grounds.
For the above reasons, we accept the contentions of the learned counsel for the appellant, and hold that section 5 of the Second Amendment Act (Act XI of 1966), introducing section 13A in the Act, is discriminatory and violative of article 14 of the Constitution and, as such, has to be struck down as unconstitutional.
The result is that the appeal is allowed, and the appellant will be entitled to his costs in the appeal, payable by the respondents, here and in the High Court.
R.K.P.S. Appeal allowed.
M19Sup.
C.I./66 2,500 18 7 67 GIPF.
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As a result of the Osmania University (Amendment) Act 11 of 1966, section 12(1) of the Osmania University Act, 1959,. was amended to provide for the appointment of the Vice Chancellor by the Chancellor alone; in section 12(2) a provision was introduced whereby he could only be removed from office by an order of the Chancellor passed on the ground of mis behaviour or incapacity after enquiry by a person who was or had been a Judge of a High Court or the Supreme Court and after the Vice Chancellor had been given an opportunity of making his representation against such removal Section 13(1) of the 1959 Act was also amended so as to reduce the term of office of the Vice Chancellor from 5 to 3 years.
The 1959 Act was again amended later in 1966 by the Osmania University (Second Amendment) Act XI of 1966.
Section 5 of this amending Act introduced a new section 13A into the 1959 Act whereby it was provided that the person then holding the office of Vice Chancellor could only hold that office until a new Vice Chancellor was appointed; and that such new appointment must be made within 90 days of the commencement of the Act whereupon the old Vice Chancellor would cease to hold office.
The appellant filed a writ petition claiming, inter alia, that section 5 of the second amending Act introducing the new section 13A was discriminatory as against him and therefore violative of article 14.
The High Court dismissed the petition.
In the appeal to the Supreme Court, it was contended on behalf of the respondents that as the term of office had been reduced to 3 years by the first amending Act, the legislature.
, in order to give effect to this provision and to enable fresh appointments to be made under the Act, had enacted section 13A which had, necessarily, to apply to a person like the appellant who was in office at the time when the provisions came into force.
Such provisions could not, in the nature of things, apply to Vice Chancellors who were to be appointed in future; the appellant was appointed from a panel submitted by a committee constituted under the unamended section 12(2) whereas future Vice Chancellors were to be appointed by the Chancellor alone; furthermore, the appellant had been the Vice Cancellor for 7 years.
Having regard to these circumstances the legislature had chosen to treat the appellant as a class by himself and had differentiated him from persons to be appointed Vice Chancellors in the 215 future; that such classification was reasonable and had a rational relation to the object sought to be achieved by the second amending Act i.e. bringing about uniformity in the tenure of 3 years.
of office fee all Vice Chancellor; that the appellant was not entitled to the benefit of section 12(2) and the legislature was competent to enact section 13A so as to give effect to the amended provisions as early as possible.
HELD: Section 5 of the second amending Act (XI of 1966) introducing s 13A into the 1959 Act was discriminatory and therefore violative of article 14.
[232 E] There was no intelligible differentia on the basis of which a classification of Vice Chancellors into two categories i.e. the appellant as the then existing Vice Chancellor and the future Vice Chancellors to be appointed under the Act,, could be justified.
The term of office of three years for the Vice Chancellor had already been fixed by the first amending Act Therefore the differential principal adopted for terminating the appellant 's service under section 13A in introduced by the second amending Act and directed as against the appellant alone could not be considered to have a rational relation to object sought to be achieved by the second amending Act.
Budhan Choudhary vs The State of Bihar,[1955] 1 S.C.R.1045, 1049; Ram Krishna Dalmia vs
Shri Justice S.R. Tendolkar ; , 296; referred to.
[231 B D] While a Vice Chancellor appointed under section 12 could be removed from office only by adopting the procedure under section 12(2), the services of the appellant, who was also a Vice Chancellor and similarly situated were sought to terminated by enacting section 13A of the Act.
There was no policy underelying the Act justifying this differential treatment.
There was also no justification for the distinction whereby the appellant would appointed under the Act would continue in office for three years [231E G]
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2170.txt
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N: Criminal Appeal No. 154 of 1972.
From the Judgment and Order dated 12 11 1971 of the Allahabad High Court in Criminal Revision No. 865 of 1970.
Shiv Pujan Singh for the Appellant.
D.P. Uniyal and M. V. Goswai for the Respondent.
The Judgment of the Court was delivered by CHINNAPPA REDDY J.
Jorma who was convicted by the learned Sessions Judge, Dehradun under Section 302 Indian Penal Code and 449 sentenced to suffer imprisonment for life, was directed by the High Court of Allahabad to be released on bail on furnishing bail to the satisfaction of the District Magistrate, Dehradun.
The District Magistrate (Judicial) Dehradun ordered Jorma to execute a personal bond in a sum of Rs. 5,000/ and to furnish two sureties in a sum of Rs. 10,000/ each.
Ram Lal the present appellant was one of the persons who executed a surety bond.
Another, Abdul Jabbar, also executed a surety bond.
By some oversight no personal bond was taken from Jorma nor was his signature taken on the reverse of the bonds executed by the two sureties as appeared to have been usually done.
Jorma jumped bail and the sureties were unable to produce him when required to do so.
The District Magistrate, Dehradun, therefore, forfeited the surety bonds and issued a warrant of attachment against the sureties under Section 514 of the Code of Criminal Procedure, 1898.
The appellant preferred an appeal to the High Court of Allahabad against the order of forfeiture.
Before the High Court it was submitted that the surety bond executed by the appellant could not be forfeite when no personal bond had been taken from the accused who had been released on bail.
The High Court over ruled the submission of the appellant and confirmed the order of forfeiture.
The appellant has filed this appeal on a certificate granted by the High Court under Article 134(1)(c) of the Constitution.
Shri Shiv Pujan Singh, learned Counsel for the appellant submitted that the question of forfeiting the surety bond for the failure of the accused to appear would arise only if the accused himself had executed a personal bond for his appearance.
He submitted that someone must be primarily bound before the surety could be bound and his bond forfeited.
He invited our attention to Section 499 of the Code of Criminal Procedure, 1898, and form No. 42 of the forms in Schedule V.
He relied on the decisions in Brahma Nand Misra vs Emperor, (1), and Sailash Chandra Chakraborty vs The State(2).
A reference was also to Bakaru Singh vs State of U.P. (3) On the other hand the learned Counsel for the State urged that the bond to be executed by the surety was independent of the bond to be executed by the accused and there was no impediment in the way of the forfeiture of the surety bond even in the absence of a personal bond executed by the accused.
He relied upon the decisions in Abdul Aziz & Anr.
vs Emperor(4), and Mewa Ram & Anr.
vs State (5).
450 Section 499(1) of the Code of Criminal Procedure Code 1898 was in the following terms: "Before any person is released on bail or released on his own bond, a bond for such sum of money as the police officer or Court, as the case may be, thinks sufficient shall be executed by such person, and, when he is released on bail, by one or more sufficient sureties conditioned that such persons shall attend at the time and place mentioned in the bond, and shall continue so to attend until otherwise directed by the police officer or Court, as the case may be".
Now, this provision contemplated the execution of a bond by the accused, and by the sureties.
The provision did not imply that a single bond was to be executed by the accused and the sureties, as it were, to be signed by the accused and counter signed by the sureties.
Form No. 42 of Schedule V, Code of Criminal Procedure, 1898, was as follows: "XLII bond and bail bond on a preliminary Inquiry before a Magistrate.
(See Sections 496 and 499) I, (name), of (place), being brought before the Magistrate of (as the case may be charged with the offence of, and required to give security for my attendance, in his Court and at the Court of Session, if required, do bind myself to attend at the Court of the said Magistrate on every day of the preliminary inquiry into the said charge, and, should the case be sent for trial by the Court of Session, to be, and appear, before the said Court when called upon to answer the charge against me; and, in case of my making default, herein, I bind myself to forfeit to Government the sum of rupees Dated this day of 19 (Signature) I hereby declare myself (or we jointly and severally declare ourselves and each of us) surety (or sureties) for the said (name) that he shall attend at the Court of on every day of the preliminary inquiry into the offence charged against him, and, should the case be sent for trial by the Court of Session, that he shall be, and appear, before the said Court to answer the charge against him, and, in case of his 451 making default therein, I bind myself (or we bind ourselves) to forfeit to Government the sum of rupees Dated this day of 19 (Signature)" The undertaking to be given by the accused as may be seen from form No. 42 of Schedule V was to attend the Court on every day of hearing and to appear before the Court whenever called upon.
The undertaking to be given by the surety was to secure the attendance of the accused on every day of hearing and his appearance before the Court whenever called upon.
The undertaking to be given by the surety was not that he would secure the attendance and appearance of the accused in accordance with the terms of the bond executed by the accused.
The undertaking of the surety to secure the attendance and presence of the accused was quite independent of the undertaking given by the accused to appear before the Court whenever called upon, even if both the undertakings happened to be executed in the same document for the sake of convenience.
Each undertaking being distinct could be separately enforced.
It is true that before a person is released on bail he must execute a personal bond and, where necessary, sureties must also execute bonds.
There can be no question of an accused being released on bail without his executing a personal bond.
But it does not follow therefrom that if a person is released by mistake without his executing a personal bond the sureties are absolved from securing his attendance and appearance before the Court.
The responsibility of the surety arises from the execution of the surety bond by him and is not contingent upon execution of a personal bond by the accused.
Nor is the liability to forfeiture of the bond executed by the surety contingent upon the execution and the liability to forfeiture of the personal bond executed by the accused.
The forfeiture of the personal bond of the accused is not a condition precedent to the forfeiture of the bonds executed by the sureties.
The Calcutta High Court in Sailash Chandra Chakraborty vs The State (supra) and single Judge of the Allahabad High Court in Brahma Nand Misra vs Emperor, (supra) proceeded on the assumption that the bond executed by the accused and the sureties was single and indivisible and if the accused did not join in the execution of the bond, the bonds executed by the sureties alone were invalid.
We do not find any warrant for this assumption in Section 499 of the Criminal Procedure Code of 1898.
We are afraid that there has been some confusion of thought by the importation of the ideas of 'debt ' and 'surety ' from the civil law.
As pointed out in Abdul Aziz & Anr.
vs Emperor(supra) under Section 499 Criminal Procedure Code, the surety did not guarantee the payment of any sum of money by the person accused 452 who was released on bail but guaranteed the attendance of that person and so the fact that the person released on bail himself did not sign the bond for his attendance did not make the bond executed by the surety an invalid one.
In Mewa Ram & Anr.
vs State (supra) the difference between a surety under the Code of Criminal Procedure and a surety under the Civil Law was pointed out and the view taken in Abdul Aziz & Anr.
vs Emperor (supra) was reiterated.
We agree with the view expressed in Abdul Aziz & Anr.
vs Emperor, and Mewa Ram & Anr.
vs State (supra).
In Bakaru Singh vs State of U.P., (supra) the question presently under consideration did not arise.
The question which was considered in that case was whether it was necessary that the personal bond of the accused should be executed on the other side of the bond executed by the surety on the same paper.
It was held that it was not necessary.
And, it was pointed out that the mere fact that form No. 42, Schedule V Criminal Procedure Code, printed the contents of the two bonds, one to be executed by the accused and the other by the surety together, did not mean that both the bonds should be on the same sheet of paper.
To the extent that it goes the decision helps the State and not the appellant.
For the reasons stated above, the appeal is dismissed.
N.V.K. Appeal dismissed.
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Dismissing the appeal, ^ HELD: Section 499(1) of the Cr.
P.C., which contemplated the execution of a bond by the accused and by the sureties, did not imply that a single bond was to be executed by both the accused and the sureties, signed by the accused and counter signed by the sureties.
An undertaking of the surety in Form 42, Schedule V to secure the attendance of the accused was quite independent of the undertaking given by the accused to appear before the court whenever called upon, even if both the undertakings of the surety and the accused happened to be executed in the same document for the sake of convenience.
Each under taking being distinct can be separately enforced.
[450 C, 451 B D] The fact that an accused would not be released on bail without his executing a personal bond does not mean that if a person is released by mistake without his executing a personal bond, the sureties are absolved from securing the attendance of the accused and his appearance before the court.
The sureties ' responsibility arises from the exeeution of the surety bond and is not contingent upon execution of a personal bond by the accused.
Nor is the liability to forfeiture of the bond executed by the surety contingent upon the execution and the liability to forfeiture of the personal bond executed by the accused.
The forfeiture of the personal bond of the accused is not a condition precedent to the forfeiture of the bonds executed by the sureties.
[451 E F] Abdul Aziz & Anr.
vs Emperor, AIR 1946 All. 116; Mewa Ram & Anr.
vs State, AIR 1953 All. 481; approved.
Bakaru Singh vs State of U.P., ; ; distinguished.
Brahma Nand Misra vs Emperor, AIR 1939 All. 682; Sailesh Chandra Chakraborty vs The State, AIR 1963 Cal.
309; over ruled.
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3991.txt
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N: Criminal Appeal No. 273 of 1979.
Appeal by Special Leave from the Judgment and Order dated 14 8 1978 of the Punjab and Haryana High Court in Crl.
A. No. 234/78 and Murder Reference No. 3/78.
H. K. Puri, Amicus Curiae for the Appellant.
R. section Sodhi and Hardev Singh for the Respondent.
The following Judgments were delivered: SARKARIA, J. While reserving my own opinion on the various question raised in this case including the one with regard to the scope, amplification and application of Section 354(3) of the Code of Criminal Procedure, 1973, I would, in agreement with my learned brother, direct that the records of this case be submitted to the Hon 'ble the Chief Justice, for constituting a larger Bench which would resolve the doubts, difficulties and inconsistencies pointed out by my learned brother in his order, particularly, in its last paragraph.
KAILASAM, J.
This special leave petition is filed by Bachan Singh son of Saudagar Singh from jail against the conviction and sentence imposed on him by the High Court of Punjab and Haryana.
This Court ordered notice to the State and heard the counsel for the petitioner and the State and granted special leave.
The appellant was tried by the Sessions Judge, Ferozepur, on three charges of causing the death of three persons Desa Singh the son and Durga Bai and Veeran Bai daughter of Hukam Singh and causing grievous injuries to Vidya Bai, another daughter of Hukam Singh, at about 12 midnight between the 4th and 5th July, 1977, in the courtyard of the house of Hukam Singh.
The learned Judge found the appellant guilty of the three charges under section 302, I.P.C. and sentenced him to death on each count.
He also found him guilty under section 326, I.P.C., for causing grievous hurt with a sharp cutting weapon to Vidya Bai and sentenced him to three years ' rigorous imprisonment and a fine of Rs. 500/ .
Against the convictions and sentences passed the appellant preferred Criminal Appeal No. 234 of 1978 to the High Court.
The appeal along with the Reference No. 3 of 1978 made by the trial Judge for confirmation of sentence of death were heard together by the High Court.
The High Court rejected the appeal and confirmed the convictions and sentences passed on the appellant.
The case for the prosecution briefly is that the appellant Bachan Singh was convicted under section 302 I.P.C. for the murder of his wife 1197 and sentenced to imprisonment for life.
After undergoing the term of imprisonment he was released.
After the release he lived with his cousin(?) Hukam Singh P. VV.
5 for about six months.
Hukam Singh 's wife and son objected to the appellant living in their house.
A few days prior to the occurrence Hukam Singh and his wife went to Nainital in connection with the marriage of their son Desa Singh.
On the night of the occurrence 4th July, 1977 Desa Singh son of Hukam Singh, Durga Bai, Veeran Bai and Vidya Bai the daughters of Hukam Singh were in the house.
After taking their meals the, three daughters slept in the inner courtyard, Durgabai in one cot and Veeran Bai and Vidya Bai in another cot near each other.
Desa Singh, the son of Hukam Singh, and the appellant slept in the outer courtyard on two separate cots near each other.
At about midnight Vidya Bai P.W. 2 was awakened by the alarm and saw the appellant inflicting Kulhari (axe) blow on the face of her sister Veeran Bai.
When Vidya Bai tried to get up the appellant gave Kulhari blow on her face and ear.
She was unable to speak and fell unconscious.
Diwan Singh P.W. 12 who was sleeping at a distance of 3/4 Karms from the cots of Desa Singh and the appellant also woke up on hearing a shriek.
He saw the appellant striking Desa Singh with a Kulhari.
He raised an alarm and Gulab Singh P.W. 3 who was sleeping at a distance of SO feet from the cot of Desa Singh woke up and saw the appellant hitting Desa Singh on the neck with a Kulhari.
On an alarm being raised by the witnesses the appellant threw the Kulhari in the courtyard and ran, away.
Gulab Singh and Diwan Singh P.Ws.
3 and 12 gave a chase to the appellant but could not apprehend him.
Soon after Kanshi Singh P.W. 4 and others arrived at the place of occurrence and heard from the witnesses the detail, of the occurrence.
A tractor was brought in which Durga Bai, Veeran Bai and Vidya were taken to the hospital at Fazilka.
The Doctor who examined the dead bodies and the injured person gave the necessary certificates.
He also sent information to the A.S.I. P.W. 13 who went to, the hospital and recorded the statement from P.W. 12 on the basis of which the F.I.R. was recorded at the police station at 4 20 a.m.
On 5th July, 1977.
The police officer conducted the inquest and preceded with his investigation.
The courts below found that the medical evidence fully corroborated the testimony of the injured eye witness P.W. 2 and two other eye witnesses P.Ws. 3 and 12 and found that the prosecution had established its case beyond reasonable doubt.
The trial court and the High Court on a consideration of the evidence found that P.W. 2 Vidya Bai the daughter of Hukam Singh 1198 who was sleeping along with her sisters in the house and suffered serious injuries, saw the attack by the appellant when she woke up.
There is evidence that it was a moonlit night and there was sufficient light by which the assailant would have been identified.
The trial court accepted the evidence of P.W. 2.
The High Court also found that the evidence of P.W. 2 is trustworthy.
Both the courts below also relied on the testimony of the other two eye witnesses P.Ws. 3 and 12.
P.W. 3 Gulab Singh was sleeping at a distance of 50 Karmas and got up after hearing the alarm and rushed to the scene.
P.W. 12 was sleeping at a distance of 15 feet of Desa Singh.
The trial court as well as the High Court accepted the testimony of the two eye witnesses S P.Ws. 3 and 12.
On a consideration of the evidence of the eye witnesses the High Court observed that the "evidence provided by the eye witnesses is of very high order in the case and was rightly accepted by the learned trial Judge.
" We have no hesitation in agreeing with the concurrent findings of the courts below and holding that the prosecution has proved beyond all reasonable doubt that the appellant caused the death of the three deceased Desa Singh, Durga Bai and Veeran Bai and grievous hurt to Vidya Bai P.W. 2.
Regarding the sentence, the High Court observed "The objection by Desa Singh, his mother and other family members was of a triffing nature on which the appellant acted in a very cruel manner.
The victims had no cause to suspect ' the intentions of the appellant and went to sleep.
Taking advantages of the situation, when the victims could not defend, the appellant killed three and seriously wounded the fourth.
It was by sheer luck that Vidya Bai survived.
The manner in which the appellant perpetrated these crimes by killing these persons in their sleep is heinous.
Under these circumstances, the case of the appellant for reduction of the sentence cannot be considered and in our view the sentence awarded by the learned trial Judge was the only appropriate sentence.
" The crime is diabolic and very cruel.
Hukam Singh, a cousin, accommodated the appellant in spite of the protests of his wife and son.
While enjoying the hospitality at the dead of night when nobody had any suspicion the appellant committed in the most dastardly manner the crime.
Desa Singh was sleeping in a cot by the side of the appellant.
The appellant at the dead of night while the others were sleeping unsuspectedly hacked three persons to death.
It is only providential that the third daughter Vidya Bai escaped.
The crime in our view is one of the foulest that could be imagined and we are in entire agreement with the courts below about their assessment of the gravity of the crime the only question for consideration is whether 1199 the facts found would be special reasons for awarding the death sentence as required under sec.
354(3) of the Code of Criminal Procedure 1973.
Section 302 I.P.C. and sub sec.
(3) of section 354 of the Cr.
P.G 1973 deal with the imposition of death sentence.
Section 302 I.P.C. provides: "Whoever commits murder shall be punished with death, or imprisonment for life, and shall also be liable to fine.
" Sub sec.
(3) of sec.
354 of the Code of Cr.
Procedure, 1973, enacts.
"When the conviction is for an offence punishable With death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the Judgment shall state the reasons for the sentence awarded, and, in the case of sentence of death, the special reasons for such sentence.
" Before the amendment of sec.
367(S) Cr.
P.C. by the Criminal Procedure Code (Amendment) Act, 1955 (Act XXVI of 1955) which came into force on 1st January, 1965, on a conviction for an offence punishable with death if the Court sentenced the accused to any punishment other than death, the reason why sentence of death was not passed had to be stated in the judgment.
Section 367(5) of the Code of Criminal Procedure before its amendment by Act 26 of 1955 provided that "if the accused is convicted of an offence punishable with death, and the Court sentences him to any punishment other than death, the Court shall, in its judgment state the reasons why sentence of death was not passed.
" This sub section was construed before the Amendment Act, Act 26 of 1955 as meaning that the extreme sentence is the normal sentence and the mitigated sentence is the exception.
In Dalip Singh vs State of Punjab,(1) it was held that in a case of murder, the death sentence should ordinarily be imposed unless the trying Judge for reasons which should normally be recorded considers it proper to award the lesser penalty.
In Vadivelu Thevar vs The State of Madras,(2) this Court expressed its view that the question of sentence has to be determined, not with reference to the volume or character of the evidence adduced by the prosecution in support of the prosecution case, but with reference to the fact whether there are any extenuating circumstances which can be said to mitigate (1) A.I.R.1953 S.C.364 (2) A.I.R.1957 S.C.6I4.
1200 the enormity of the crime.
If the Court is satisfied that there are such mitigating, circumstances, only then, it would be justified in imposing the lesser of the two sentences provided by law.
These two cases were rendered in relation to offences which were committed before the Criminal Procedure Code Amendment Act 26 of 1955 was enacted.
The law therefore prior to the amendment was that unless there are extenuating circumstances the punishment for murder should be death and not imprisonment for life.
By the Amendment Act 26 of 1955 a new sub section, sub section (5), was substituted for the former sub section (S) by Act 26 of 1955 which does not contain the provision making it incumbent for a Judge to record his reasons for imposing a lesser penalty.
After the amendment which omitted the provision requiring the recording of reasons for imposing the lesser penalty, the Court is not under a statutory duty to record the reasons.
Still as the Courts have to impose one of the two penalties, namely death or imprisonment for life, the Courts will have to exercise their judicial discretion in deciding which of the two penalties should be imposed.
The result is that after the amendment though the Court is not required to record the reasons for imposing the lesser penalty it was bound to exercise its discretion judicially.
To show that the discretion has been judicially exercised, reasons are given for imposing the particular sentence.
This makes it necessary for the court to give its reasons for imposing the particular sentence though by the Amending Act the court was not required to` give reasons for not imposing any punishment other than death.
The effect of the amendment has been stated by this Court in Raghubir Singh vs State of U.P.,( ') that after the amendment of section 367(S), Criminal Procedure Code, by Act 26 of 1955 the discretion of the court in deciding whether to impose the sentence of death or of imprisonment for life has become wider.
By the Code of Criminal Procedure, 1973 (Act 2 of 1974) subsection (3) to section 354 was introduced regarding the contents of the judgment relating to imposition of a sentence of death or imprisonment for life or imprisonment for a term of years.
Sub sec.
(3) which deals with the conviction for an offence punishable with death or in the alternative with imprisonment for life or for a term of years in sentencing a person on conviction for such an offence the judgment is required to state the reasons for the sentence awarded and in the case of sentence of death the special reasons for such sentence.
When the court in its discretion imposes either a sentence (1) [1972] 3 S.C.C.79 1201 of death or imprisonment for life or for imprisonment for a term of years, the Court is required to record reasons for imposing one or the other sentence which it can legally impose.
As the Court has a discretion to award a sentence of death or imprisonment for life or imprisonment for a term of years and as the discretion is very wide the law requires that reasons shall be stated for awarding one or other of the sentences.
In the case of an offence under sec.
132, I.P.C., the punishment provided for is death or imprisonment for life or imprisonment for 10 years and fine.
There are other offences like the one under section 131 I.P.C. which is punishable with imprisonment for life or imprisonment for 10 years and fine.
Sections 121(a), 122, 125, 128, 130, 131 IPC and other sections provide for the punishment of imprisonment for life or imprisonment for a term of years.
In such cases under section 354(3) the Court is required to state reasons why one or other of the sentences is imposed.
In the case of offences punishable with death the sub section requires that special reasons for imposing such sentence, should be given.
This requirement makes it clear that where the punishment provided for is death or imprisonment for life the sentence that should be imposed as of rule should be one cf imprisonment for life.
But if the offence is of such a grave nature that the court thinks the higher of the penalties, namely the death sentence, should be imposed special reasons should be given.
Thus while the legislature retained the imposition of death sentence it laid down that if the court awarded the death sentence it should Furnish special reasons.
In Chapter 27 which relates to 'Judgments ' there are other sections which require that reasons should be given for imposing or not imposing a particular sentence.
Sub section (4) to section 354 requires that when the conviction is for an offence punishable with imprisonment for a term of one year or more, but the Court imposes a sentence of imprisonment for a term of less than three months, it shall record its reasons for awarding such sentence.
Such reasons need not be recorded if the sentence is one of imprisonment till the rising of the court or unless the case was tried summarily under the provision of Cr.
P.C. Section 361 requires that when the court could have dealt with (a) an accused person under section 360 or under the provisions of the Probation of offenders Act, 1958, or (b) a youthful offender under the .
Or any other law for the time being in force for the treatment, training or rehabilitation of youthful offenders, but has not done so, it shall record in its judgment the special reasons for not having done so.
This section also requires special reasons to be given if the court has not dealt 1 with the accused under the provisions mentioned The object of requiring the reasons to be given regarding the sentence could be 1202 found in the Law Commission 's Report and the Report of the Joint Parliamentary Committee.
The Law Commission in Vol.
I, 35th Report on the Capital Punishment expressed that a considerable body of opinion is in favour of a provision requiring tile Court to state its reasons for imposing the punishment either of death or imprisonment for life.
The Commission was of the view that this would be a safeguard to ensure that the lower courts examine the case as elaborately from the point of view of sentence as from the point of view of guilt and that it would provide good material at the time when a recommendation for mercy is to be made by the court or a petition for mercy is considered and that it would increase the confidence of the people in courts by showing that the discretion is judicially exercised.
It would also facilitate the task of High Court in appeal or in proceedings for confirmation in respect of the sentence (where the sentence awarded is that of death), or in proceedings in revision for enhancement of the sentence (where the sentence awarded is one of imprisonment for life).
In its 41st Report on the Cr.
P.C. the Law Commission recommending the amendment also observed that there were certain offences for which the Penal Code prescribes the punishment as death or in the alternative life imprisonment or imprisonment for a term of years and therefore the amendment recommended should cover these cases also.
The Joint Committee of Parliament added that a sentence of death is the extreme penalty of law and it is but fair that when a court awards, that sentence in a case where the alternative sentence of imprisonment for life is also available, it should give special reasons in support of the sentence.
For giving effect to the recommendation of the Law Commission and the Joint Committee of Parliament sub section (3) to section 354 was amended in the present form.
The object the amendment therefore is to insist on the lower courts to examine the case as elaborately from the point of view of sentence as from the point cf view of guilt and state its reasons for imposing the sentence which would help the High Court in discharging its functions particularly in confirming a sentence of death or enhancing a sentence of imprisonment for life to death.
This object is further sought to be achieved by the introduction of sub section 2 to section 235 which provides an opportunity of hearing the accused on the question of sentence.
The provision requiring special reasons for awarding death sentence makes it also clear that the normal sentence when punishment of death or imprisonment for life could be awarded is only imprisonment for life and if the court imposes death sentence it should give special reasons.
1203 The development of law regarding the imposition of death sentence call be summarised as follows.
While before the Amending Act 26 of 1955 was introduced the normal sentence for an offence of murder was death and that the lesser sentence is the exception, after the introduction of sub section (5) to section 367 by Act 26 of 1955 it was not obligatory for the Court to state the reasons as to why the sentence of death was not passed.
By the amendment the discretion of the Court in deciding whether to impose a sentence of death or imprisonment for life became wider.
The court was bound to exercise its judicial discretion in awarding one or the other of the sentences.
By the introduction of section 354(3) the normal sentence is the lesser sentence of imprisonment for life and if the sentence of death is to be awarded special reasons will have to be recorded.
In other words, the court before imposing a sentence of death should be satisfied that the offence is of such a nature that the extreme penalty is called for.
The decisions rendered by this Court after the introduction of the amendment to S.354(3) by Act 2 of 1974 have reiterated this position.
In Balwant Singh vs State of Punjab(1) this Court summing up the position observed that under section 354(3) of the Cr. P.C., 1973, the Court is required to state the reasons for the sentence awarded and in the case of sentence of death special reasons are required to be stated.
It would thus be noticed that awarding of the sentence other than the sentence of death is the general rule now and only special reasons, that is to say, special facts and circumstances in a given case, will warrant the passing of the death sentence.
This view was reiterated by this Court in Ambaram vs The State of Madhya Pradesh.(2) In Sarveshwar Prasad Sharma vs State of Madhya Pradesh(3) it was observed that this Court has in several cases indicated guidelines in this problem area of life and death as a result of judicial verdict but none of these guidelines can be cut and dry nor exhaustive and each case will depend upon the totality of the facts and circumstances and other matters revealed.
The validity of imposition of death sentence was challenged in the ground that the sentence puts an end to all Fundamental Rights guaranteed by clauses (a) to (g) of sub clause (1) of article 19 of the Constitution and therefore the law with regard to capital sentence is unreasonable and not in the interest of the general public.
It was further contended that the discretion invested in the Judges to impose capital punishment is not based on any standard or policy required by the Legislature for imposing capital punishment in preference to (1) [1976]2 S.C.R. 684 (2) [1976]4 S.C.C. 298 (3) [1978]1 S.C.R. 560 1204 imprisonment for life.
Further it was submitted that the uncontrolled and unguided discretion in the Judges to impose capital punishment or imprisonment for life is hit by article 14 of the Constitution.
Lastly, it was contended that the provisions of the law do not provide a procedure for trial of factors and circumstances crucial for making the choice between the capital penalty and imprisonment for life and therefore article 21 is violated.
A Constitution Bench of this Court in Jagmohan Singh vs The State of U.P.( ') rejected all these contentions.
It was held that the deprivation of life is constitutionally permissible if that is done according to procedure established by law and that it cannot be held that capital sentence is per se unreasonable or not in the public interest.
It was further held that the impossibility of laying down standards is at the very core of the criminal law as administered in India which invests the Judges with a very wide discretion in the matter of fixing the degree of punishment.
That discretion in the matter cf sentence is liable to be corrected by superior Courts.
The exercise of judicial discretion on well recognised principles is, in the final: analysis, the safest possible safeguard for the accused.
The challenge under article 14 was also negatived on the ground that the facts and circumstances of a crime are widely different, and, since a decision of the court as regards punishment is dependent upon a consideration of all the facts and circumstances, there is hardly any ground for a challenge under article 14.
The Court also negatived the plea that the provisions of law do not provide a procedure for trial of factors which are crucial for making the choice between the capital penalty and imprisonment for life.
The Court rejected all the challenges against the award of death sentence on the ground of violation of the provisions of the Constitution.
It also upheld the investment of wide discretion in the matter of fixing the degree of punishment on the Judges as the exercise of judicial discretion on well recognised principles is the safest possible safeguard for the accused.
The Constitution Bench delivered its judgment on the 3rd October, 1972.
Subsequently amendment to the Code of Criminal Procedure, 1973, (Act 2 of 1974) came into force on 1st April, 1974.
The only change by the new Act is the introduction of section 367 (S) of the Criminal Procedure Code which provides that the judgement shall state the special reasons where a sentence of death is awarded for an offence punishable with death or in the alternative with imprisonment for life or imprisonment for a term of years.
The requirement that the courts should state the special reasons for awarding the death sentence would indicate that the normal sentence for an offence punishable either with death or with imprisonment for life is imprisonment for life and that if the court considered (1) ; 1205 that sentence of death is appropriate on the particular facts of the case It should give special reasons.
Apart from the emphasis that the normal sentence is imprisonment for life and that special reasons should be given for awarding the death sentence there is no further alteration in the law relating to awarding of the death penalty.
As already noticed the effect of the amendment was considered by this Court in , and ; (supra) and it was held that the awarding of sentence other than the sentence of death is the general rule now only special reasons, that is to say, special facts and circumstances in a given case will warrant the passing of the death sentence.
A recent decision of this Court Rajendra Prasad 's case in Cr.
Nos. 512, 511 and 513 of 1978 was delivered on 9th February, 1979.(1) The decision by the majority was delivered by Krishna Iyer J. held that "special reasons" necessary for imposing the death penalty must relate not to the crime as such but to the criminal.
It further held that death sentence can be awarded only in certain restricted categories The tests that are prescribed are to find out whether the murderer holds out a terrible and continuing threat to social security in the setting of a developing country and poses a grave peril to society 's survival.
The other circumstances which would justify imposition of death sentence are when an economic offender intentionally mixes poison in drugs, professionally or wilfully adulterates intoxicating substances injuriously, and knowingly or intentionally causes death for the sake of private profit or when a murderous band of armed dacoits intentionally derail a train and large number of people die in consequence or when the style of violence and systematic corruption and deliberately planned economic offences by corporate top echelons are often a terrible technology of knowingly causing death.
Likewise when a murderer is so hardened and so blood thirsty that within the prison and without, he makes no bones about killing others or carries on a prosperous business in cadavers, then he becomes a candidate for death sentence.
I have read through the judgment of the Court with utmost care.
The decision is in many respects contrary to the law laid down by the Constitution Bench of this Court in Jagmohan Singh 's case.
The Court has proceeded to make law as regards the conditions that are necessary for imposition of a sentence of death under section 302 I.P.C.
It has proceeded to canalisation of sentencing discretion and has embarked on evolving working rules on punishment bearing in mind the enlightened flexibility of social sensibility.
In doing so I feel the court has exceeded its powers conferred on it by law.
(1) ; 1206 To substantiate my statement, I proceed to give a few extracts from the judgment.
At the outset of the judgment it is stated that the precise issue before it was "the canalisation of the sentencing discretion in a competing situation. .Therefore this jurisprudential exploration, within the framework of section 302 I.P.C., has become necessitous, both because the awesome 'either/or ' of the Section spells out no specific indicators and law in this fatal area cannot afford to be conjectural". "The flame of life cannot flicker uncertain; and so section 302 I.P.C. must be invested with pragmatic concreteness that inhibits ad hominem responses of individual judges and is in penal conformance with constitutional norms and world conscience." "Within the dichotomous frame work of section 302 I.P.C., upheld in Jagmohan Singh, we have to evolve working rules of punishment bearing the markings of enlightened flexibility and societal sensibility.". . "Therefore, it is no heresay to imbibe and inject the social philosophy of the Constitution into the Penal Code to resolve the tension between the Past and the Present.". . "That is the essay we undertake here".
"But if legislative undertaking is not in sight judges who have to implement the code cannot fold up their professional hands but must make the provision viable by evolution of supplementary principles, even if it may appear to possess the flavour of law making". "This Court 's tryst with the Constitution obligates it to lay down general rules, not a complete directory, which will lend predictability to the law vis a vis the community and guide the judiciary in such a grim verdict as choice between life and death.". . "Therefore, until Parliament speaks, the court cannot be silent.". . "This Court must extricate, until Parliament legislates, the death sentence sector from judicial subjectivism and consequent uncertainty.". "Having stated the area and object of investigation we address ourselves to this grave penological issue purely as judges deciding a legal problem, putting aside vie vs, philosophical or criminological, one holds.
But law, in this area, cannot go it alone; and cross fertilisation from sociology, history, cultural anthropology and current national perils and developmental goals and, above all constitutional currents, cannot be eschewed.
" The above are few of the passages in the "prolix and diffuse" judgment as the learned Judge has chosen to call it.
The passages clearly indicate that the Court in the absence of legislative undertaking has embarked on law making as in its view the Judges cannot fold up their professional hands but must make the provision viable by evolution of supplementary principles, even if it may appear to possess the flavour of law making, and that until Parliament speaks the Court 1207 cannot be silent.
With utmost respect I feel that the courts have no such power to legislate and to frame rules to guide the infliction of death penalty.
The duty of the court so far as enacted law is concerned, is to interpret and construe the provisions of the enactment.
By interpretation or construction is meant the process by which the courts seek to ascertain the meaning of the legislature through the medium of the authoritative forms in which it is expressed.
The courts must take it absolutely for granted that the legislature has said what is meant alld meant what it has said.
Judges are not at liberty to add or to take FRS or modify the letter of the law simply because they have Cr reason to believe the true sentence legis is not completely or correctly expressed by it.
(Salmod on Jurisprudence, 11th Ed.
by Glanville Williams, p. 153).
The Constitution and the laws bind every court in India and that though the courts are free to interpret they are not free to overlook or disregard the Constitution and the laws.
As held in Young vs Bristol Aeroplane Co. Ltd.(l) the Court is not entitled to disregard the statutory provisions and to follow a decision of its own when that provision was not present in its mind.
It is equally beyond the functions of a Court to evolve working rules for imposition of death sentence bearing the markings of enlightened flexibility and social sensibility or to make law by cross fertilisation from sociology, history, cultural anthropology and current national perils and developmental goals and, above all, constitutional currents.
I am of the view that it is the function of the Parliament to frame laws consistent with the needs of the society.
If the grounds for award of a sentence of death has to be more specifically stated than that it is found in the Indian Penal Code and the Cr.
P.C., it is for the Parliament to do so.
Various legislative measures were introduced but were withdrawn from time to time.
At present there is a Bill before the Parliament.
It is for the Parliament to clarify the circumstances under which a sentence of death could be awarded.
It is for the court to administer the law as it stands.
In awarding sentence of death, the Court has to take into consideration the various aspects regarding the crime and the person that committed the crime and pass an appropriate sentence and if it is death sentence to give special reasons as required by the Cr.
If in deciding a case on particular facts a principle is stated it may be binding as a precedent.
If the Courts resort to rule making it will not be binding as precedent.
If the Courts are to embark on rule making the question arises whether [1] [1947] 1 K.B.718, 1208 the responsibility can be undertaken by a bench of 3 Judges with a majority of 2 to 1.
Is it permissible for another bench to proceed to make laws and prescribe an entirely different sets of rules ? There is no machinery by which the Court could ascertain the views of the various cross sections of the society which is a prerequisite before any law making is resorted to.
The Court has embarked on framing rules prescribing conditions for imposition of death sentence taking into account "cross fertilisation from sociology, history, cultural anthropology and current national perils and developmental goals, and above all, constitutional currents".
So far as constitutional currents are concerned the Constitution Bench has upheld the validity of awarding of the death sentence.
The Court has proceeded on the basis that the earlier decisions of this Court have taken into account only the crime and not the criminal.
The emphasis according to the judgment should be on the criminal and not on the crime.
The mode of sentencing as envisaged in the Penal Code and the Cr.
P.C. requires that every fact that is relevant to the determination of the sentence including the crime, the criminal and other environmental circumstances will have to be taken into account.
The view of the learned Judge that in awarding a sentence the criminal is more important than the crime is not warranted by the law as it stands today.
I will now refer to various points dealt with in the judgment which are contrary to the decision of the constitutional Bench.
Justice Krishna Iyer says: "The main focus of our judgment is on this poignant gap in 'human rights jurisprudence ' within the limits of the Penal Code, impregnated by the Constitution.
To put it pithily, a world order voicing the worth of the human person, a cultural legacy charged with compassion, an interpretative liberation from colonial callousness lo life and liberty, a concern for social justice as setting the sights of individual justice, interest with the inherited text of the Penal Code to yield the goals desiderated by the Preamble and Articles 14, 19 and 21.
" The challenge to the award of the death sentence as violative of Articles 19, 14 and 21 was repelled by the Constitution Bench by holding that the death sentence is a permissible punishment and that deprivation of life is constitutionally permissible if that is according to procedure established by law.
Regarding laying down standards in imposing the punishment the Court observed that the impossibility of laying down standards is at the very core of criminal law as administered in India which invests the Judges with a very wide diseretion in the matter of fixing the degree of punishment and that 1209 this discretion in the matter of sentence is liable to be corrected by superior Courts.
It was held that the exercise of judicial discretion on well recognised principles is in the final analysis, the safest possible safeguard for the accused.
Justice Krishna Iyer would comment on the observations of the Constitution Bench above quoted as follows: "The acceptance of the invulnerability of discretionary power does not end the` journey: it inaugurates the search for those `well recognised principles ' Palekar, J. speaks of in the Jagmohan case.
Incidental observations without concentration on the sentencing criteria are not the ratio of the decision.
Judgments are not Bible for every line to be venerated," with respect I am unable to agree with the characterization of Palekar J 's judgment as "incidental observations without concentration on the sentencing criteria".
At p. 559 of the Reports Palekar J. Observes: In India this onerous duty is cast upon Judges and for more than a century the judges are carrying out this duty under the Indian Penal Code.
The impossibility of laying down standards is at the very core of the criminal law as administered in India which invests the Judges with a very wide discretion in the matter of fixing the degree of punishment.
That discretion m the matter of sentence is, as already pointed out, liable to be corrected by superior courts.
Laying down of standards to the limited extent possible as was done in the Model Judicial Code would not serve the purpose.
" After disapproving laying down of standards the learned Judge proceeded "The exercise of judicial discretion on well recognised, principles is, in the final analysis, the safest possible safeguard for the accused." (Emphasis supplied) The learned Judge quoted with approval the view of this Court in Budhan Chowdhary vs State of Bihar(1) which is as follows: "The judicial decision must of necessity depend on the facts and circumstances of each particular case and what may superficially appear to be an unequal application of the law may not necessarily amount to a denial of equal protection unless there is shown to be present in it an element of intentional and purposeful discrimination.
Further, the discretion of judicial officers is not arbitrary and the law pro vides for revision by superior courts of orders passed by the subordinate courts.
In such circumstances, there is hardly any ground for apprehending any capricious discrimination by judicial tribunals.
" Palekar, J. continued "Crime as crime may appear to be superficially the same but the facts and circumstances of a crime are widely (1) ; 21 409SCI/79 1210 different and since a decision of the court as regards punishment is dependent upon a consideration of all the facts, and circumstances, there is hardly any ground for challenge under Article 14.
" At page 560 of the reports, Palekar, J, explains the procedure that is followed by the Courts which enables to bring into focus all the circumstances that are relevant to be taken into account in awarding the sentence.
On a reading of the judgment of the Constitution Bench I regard my inability to share the view of Krishna Iyer J. that Palekar J 's observations are incidental and without concentration.
It may be noted that the laying down of the standards which was deprecated is being attempted in this decision.
Krishna Iyer J. would state "It is constitutionally permissible to swing a criminal out of corporeal existence only if the security of State and society, public order and the interests of the general public compel that course as provided in article 19(2) to (6)".
This view again is inconsistent with the law laid down by the Constitution Bench which has held that deprivation of life is constitutionally permissible if that is done according to procedure established by law.
Krishna Iyer J. has observed that "no Code can rise higher than the Constitution and the Penal Code can survive only if it pays homage to the suprema lex.
The only correct approach is to read into section 302 I.P.C. and section 354(3) Cr.
P.C., the human rights and human trends in the Constitution.
So examined, the right to life and to fundamental freedoms is deprived when he is hanged to death, his dignity is defiled when his neck is noosed and strangled," the only change after the Constitution Bench delivered its judgment is the introduction of section 354(3) which requires special reasons to be given if the court is to award the death sentence.
If without the restriction of stating sufficient reasons death sentence could be constitutionally awarded under the I.P.C. and Cr.
P.C. as it stood before the amendment, it is difficult to perceive how by requiring special reasons to be given the amended section would be unconstitutional unless the "sentencing sector is made most restrictive and least vagarious".
Krishna lyer J. has held that "such extra ordinary grounds alone constitutionally qualify as 'special reasons ' as leave no option to the court but to execute the offender if State and society are to survive.
One stroke of murder hardly qualifies for this drastic requirement, however gruesome the killing or pathetic the situation, unless the inherent testimony oozing from that act is irresistible that the murderous appetite of the convict is too chronic arid deadly that ordered life in a given locality or society or in prison itself would be gone if this man were now or later to be at large.
If he is an irredeemable murderer, like a blood thirsty tiger, he has to quit his terrestrial tenancy.
" The Constitution Bench dealing with the 1211 award of death sentence observed.
"But some at least are diabolical in conception and cruel in execution.
In some others where the victim is a person of high standing in the country, society is liable to be rocked to its very foundation.
Such murders cannot be simply wished away by finding alibis in the social mal adjustment of the murderer.
Prevalence of such crimes speaks, in the opinion of many, for the inevitability of death penalty not only by way of deterrence but as a token of emphatic disapproval by the society.
" After referring to the Law Commission 's Report the Court observed: "A very responsible body has come to the conclusion after considering all the relevant factors.
On the conclusions thus offered to us, it will be difficult to hold that capital punishment as such is unreasonable or not required in the public interest.
" I find it difficult to reconcile the law stated by the Constitution Bench with the view expressed by Krishna Iyer J.
The judgment delivered by Krishna Iyer J. for the Court and the minority judgment of Justice A. P. Sen have dealt at considerable length with various aspects and desirability or otherwise of imposing a sentence of death.
Tile controversy over capital punishment is not new.
For several centuries the debate is going on.
I am conscious that it is a highly controversial subject on which much can be said on both sides.
Fortunately, for the Judges it is neither necessary nor desirable to subscribe to one of the two views.
All that the Judges are expected to do is to administer the law as it stands.
In fact, if I am strong believer of abolition of death sentence or supporter of 'life fol.
life ' and 'tooth for tooth ' doctrine I would have excused myself from deciding a case involving confirmation of death sentence.
Justice Krishna Iyer has not concealed his abhorrence at the infliction of death sentence.
He pleads that death sentence should be abolished.
He has expressed his view in unmistakable terms: "Every sombre dawn a human being is hanged by the legal process, the flag of human justice shall be hung half mast".
Again "The right to life and to fundamental freedoms is deprived when he is hanged to death, his dignity is defiled when his neck is noosed and strangled".
. "The Indian cultural current also counts and so does our spiritual chemistry, based on divinity in everyone, catalysed by the Budha Gandhi compassion". "This axiom is a vote against 'death ' and hope in 'life '.
" I have great respect for the views of the learned Judge.
He is strongly espousing a cause but I feel embarrassed when I am required to follow his views for I consider it is my solemn duty to administer the law of the land as it stands.
According to my conception my duty is to administer the law as it stands.
It is not for me lo say what the law should be.
If I am satisfied that the trial Judge and the 1212 High Court have given special reasons as required under the law it is my duty to confirm the sentence of death.
Vide observations of this Court in Ram Narain and ors.
vs State of U.P.(1) quoted with approval in Jagmohan 's case.
I do not feel it necessary to refer to the various points dealt With by Krishna Iyer J. in his long and learned 'essay '.
I have quoted in extenso from his judgment and also from the judgment of the Constitution Bench in order to show that the two views are irreconcilable and that I am bound to follow the law laid down by the Constitution Bench.
With respect I find myself in complete agreement with the views expressed by the Constitution Bench.
I am therefore unable to follow the decision of the Bench.
I have discussed the general principles laid down in Rajendra Prasad 's case regarding the circumstances that are necessary for the imposition of the death sentence.
Apart from being unable to agree with the guidelines prescribed, I am of the view that the general principles laid down are not the ratio decidendi of the case.
The courts are not bound to follow them.
Halsbury 's Laws of England (3rd Ed.
22 at p. 796) explains what ratio decidendi is.
The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent.
The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding.
Statements which are not necessary to the decision, which go beyond the occasion and lay down a rule that is unnecessary for the purpose in hand have no binding authority on another court, though they may have some merely persuasive efficacy.
Decisions upon matters of fact are not binding on any other court.
This Court has held that precedents which enunciate rules of law form the foundation of administration of justice under our system.
(Tribhuvandas vs Ratilal).(2) It has also been held in Amritsar Municipality vs Hazara Singh(3) that the decisions of even the highest court on questions of fact cannot be cited as precedents.
Lord Halsbury in Quinn vs Leathem(4) said that every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in (1) A. I. R. (2) ; Bom.
L. R. 73.
(3) A. 1.
R. (4) 1901 A.
at p. 506 1213 which such expressions arc to be found.
The learned Judge proceeds To observe ". a case is only an authority for what it actually decides.
I entirely deny that it can be quoted for a proposition that may seem to follow logically from it.
The courts are not bound by the observations in decisions beyond the point actually decided.
The courts can say "We cannot know that the House of Lords would carry this determination further than they have carried it".
(per Best C.J. in Fletcher vs Lord Sondes.(l) Applying the principles above quoted, I will now proceed to find out what are the points decided in the case and to what extent it will be binding on courts.
In Rajendra Prasad 's case the three appeals in which death sentences were imposed came up before the Court for consideration of the question whether the death sentence awarded should be confirmed or not.
After appreciation of the facts of the case the Court came to the unanimous conclusion that the concerned accused have been found guilty of the offence of murder and confirmed the conviction.
Regarding the imposition of the death sentence the majority was of the view that there were no sufficient reasons for imposing the extreme penalty while the minority differed from that conclusion.
The principle that can be derived in the case is that on the facts and circumstances established in the case there are not 'sufficient reasons ' for imposing the death sentence.
Only to this limited extent if at all is the decision binding on the courts.
It is common knowledge that the facts are rarely similar in two cases.
The root of the doctrine of precedent is that alike cases must be decided alike.
Only then it is possible to ensure that the court bound by a previous case decides the new case in the same way as the other court would have decided it.
It is all a question of probabilities, but the probability that a court will decide a new case in the same way as would the court which decided one of the cases cited becomes less and less as the differences between the facts of the two cases increase.
As every judgment will have to be read as applicable to the particular facts proved will refer to the facts found in Rajendra Prasad 's case.
The accused in Rajendra Prasad 's case a youngman after some years served in prison, was released on Gandhi Jayanti Day.
Some minor incident ignited his latent feud and he stabbed Ram Bharosey and his friend Mansukh several times and the latter succumbed.
He was sentenced to death by the Sessions Court which was confirmed by the High Court.
This Court applying the canons which it had laid down came to the conclusion that as nothing on record suggested that Rajendra Prasad was beyond redemption and the record does not (1) [1826] 3 Bing.
501 at p. 560 1214 hint that such an attempt was made inside the prison they did not see any special reason to hang him out of corporeal existence.
As pointed out earlier I am unable to subscribe to the canons laid down in the case.
The utmost to which this case can be considered as an authority is that if in similar circumstances when a person 's latent feud gets ignited and stabs two persons several times it would not furnish special reasons for inflicting the extreme penalty.
In the second case relating to Kunjukunju the accused cut to death the innocent wife and the immaculate kids in the secrecy of night.
The trial court as well as the High Court found it was a deliberate and cold blooded act performed with considerable brutality.
The majority expressed its opinion that if the crime alone was the criterion the sentence was proper but if the criminal was the target it was not proper.
The Cr.
P.C. requires the courts to take into account the circumstances in which the crime was committed, the particulars about the criminal and all relevant circumstances relating to the commission of the crime by the criminal.
The trial court is required to give reasons and they are to be scrutinised by the High Court on a reference to it for confirmation of the death sentence.
The High Court also has to satisfy itself that there arc special reasons for inflicting the extreme penalty.
The view of the majority that the test should be whether Janardanan is a social security risk, altogether beyond salvage by therapeutic life sentence is neither in accordance with the requirements of the Cr.
P.C. nor law laid down by this Court.
The decisions of this Court insist not only on a consideration of the criminal but also the nature of the crime and all other relevant circumstances.
As the view expressed in the case is not in conformity with the decisions of this court it cannot be followed as a precedent.
At the most the decision may be taken as authority that in similar circumstances the cutting to death of the innocent wife and the immaculate kids in the secrecy of the night may not amount to special reasons as required under the Cr.
In the third appeal the appellant flung the vessels over the division of which the wrangle arose, went inside the house, emerged armed, picked up all altercation eventuating the young man (whose age was around 18 or 20) stabbing to death three members of the other branch of the family.
He chased and killed, excited by the perverted sense of injustice at the partition.
The majority was of the view that it is illegal to award capital punishment without considering the correctional possibilities inside the prison.
The court was of the view that although the crime was attended with extraordinary cruelty, the accused being young and malleable are and their reasonable prospect of reformation and absence of any conclusive circumstance that the assailant is a habitual 1215 murderer or given to chronic violence these catena of circumstances bearing on the offender call for the lesser sentence.
Here again it is difficult to agree with the test applied for it is not in conformity with the decisions of this Court or the requirements of the law.
If at all it may be an authority only for the proposition that under identical circumstances the stabbing of three persons by a young man in an altercation when he was excited by a perverted sense of injustice would not be special reasons for awarding the extreme penalty.
In the case before us the facts are not identical with any of the cases in the appeals.
The appellant was released after undergoing a term of imprisonment for the murder of his wife.
After release he lived with his cousin Hukam Singh for about six months.
The wife and son objected.
On the night of the occurrence when he was sleeping with Desa Singh son of Hukam Singh in the outer courtyard and three daughters of Hukam Singh in the inner courtyard at about midnight the petitioner got up, inflicted fatal injuries on the son Desa Singh and the two daughters Durga Bai and Veeran Bai and caused grievous injuries to Vidya Bai while they were sleeping. 'the trial court as well as the High Court on a consideration of the entire facts regarding the crime and the criminal came to the conclusion that the appellant acted in a very cruel manner.
The victims had no cause to suspect the intentions of the petitioner and went to sleep.
Taking advantage of the situation, when the victims could not defend, the appellant killed three and seriously wounded the fourth.
The courts below rightly characterised the offence as heinous and in the circumstances of the case they were of the view that the only appropriate sentence is the extreme penalty.
I have no hesitation in agreeing with that conclusion.
The facts of the case may have some resemblance to Kunjukunju case in that the accused in that case cut his innocent wife and the kids under the secrecy of the night.
But the other circumstances namely his cold calculated and deliberate murder of innocent children of Hukam Singh who had given shelter to him when they were sleeping discloses that the crime is an extremely brutal and heinous one calling for imposition of death sentence I agree with the trial Court and the High Court and find 'special reasons ' required for imposition of death has been clearly made out.
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^ HELD: (Per Sarkaria, J.) The records of this case be submitted to the Hon 'ble Chief Justice for C constituting a larger Bench which would resolve the doubts, difficulties and inconsistencies pointed out by Kailasam J. in his order, particularly in its last paragraph.
(Per Kailasam, J.) 1.
Before the amendment of Section 367(5) of the Code of Criminal Procedure by the Criminal Procedure Code (Amendment) Act 1955 (Act 26 of 1955) was introduced, the normal sentence for an offence of murder was death and the lesser sentence was the exception.
After the introduction of the amendment it was not obligatory for the court to state the reasons as to why the sentence of death was not passed.
By the amendment the discretion of the court in deciding whether to impose a sentence of death or imprisonment for life became wider.
The court was bound to exercise its judicial discretion in awarding one or the other of the sentences.
By the introduction of Section 354(3) of the Code of Criminal Procedure 1973, the normal sentence is the lesser sentence of imprisonment for life and if the sentence of death is to be awarded, special reasons will have to be recorded.
In other words, the court, before imposing a sentence of death, should be satisfied that the offence is of such a nature that the extreme penalty is called for.
[1203A C] 2.
In a number of decisions, this court has reiterated the position that under section 354(3) of the 1973 Code, the court is required to state the reasons for the sentence awarded and in the case of sentence of death special reasons are required to be stated.
[1203D] Balwant Singh vs State of Punjab [1976] 2 S.C.R. 684; Ambaram vs The State of Madhya Pradesh ; and Sarveshwar Prasad Sharma vs Slate of Madhya Pradesh [1978] I S.C.R. 560 referred to.
In Jagmohan Singh vs State of U.P. ; in which the constitutional validity of imposition of death sentence was challenged, this Court held that the deprivation of life is constitutionally permissible if that is done according to the procedure established by law and that it cannot be held that capital sentence is per se unreasonable and not in the public interest.
It was also held that the Judges are invested with very wide discretion in the matter of fixing the degree of punishment and that discretion in the matter of sentence is liable 20 409SCI/79 1194 to be corrected by superior courts, that exercise of judicial discretion on well recognised principles is, in the final analysis, the safest possible safeguard for the accused.
[1204C D] 4.
Section 367(5) of the Criminal Procedure Code which came into force on April 1, 1974, after the judgment in Jagmohan Singh 's case, provides that the judgment shall state the special reasons where a sentence of death is award ed for an offence punishable with death or in the alternative with imprisonments life or imprisonment for a term of years.
The requirement that courts should state the special reasons for awarding the death sentence would indicate that the normal sentence for an offence punishable either with death or with imprisonment for life is imprisonment for life and that if the court considered that sentence of death is appropriate on the particular facts of the case it should give special reasons.
[1204 G H] 5.
But in Rajendra Prasad vs State of U.P. ; , the majority of a Division Bench of this Court held that "special reasons" necessary for imposing the death penalty must relate not to the crime as such but to the criminal.
The death sentence can be awarded only in certain restricted categories where a crime holds out a durable And continuing threat to social security in the setting of a developing country and poses a grave peril to society 's survival and when an economic offender intentionally mixes poison in drugs and knowingly and intentionally causes death for the sake of private profit and so on.
The decision is in many respects contrary to the law laid down by the Constitution Bench of this Court in Jagmohan Singh 's case.
The court in this case has proceeded to make law as regards the conditions that are necessary for imposition of a sentence of death under section 302 I.P.C. and to canalisation of sentencing discretion and has embarked on evolving working rules on punishment bearing in mind the enlightened flexibility of social sensibility.
In doing so the Court has exceeded its power conferred on it by law.
Courts have no power to legislate and to frame rules to guide the infliction of death penalty.
[1205C F] 6.
So far as the enacted law is concerned, the duty of the court is to interpret and construe the provisions of the enactment.
Courts must take it absolutely for granted that the Legislature has said what it meant and meant what it has said.
Judges are not at liberty to add or to take from or modify the letter of the law simply because they have reason to believe the true sentence legis is not completely or correctly expressed by it.
Though the courts are free to interpret, they are not free to overlook or disregard the constitution and the laws. [1207B D] 7.
It is for the court to administer the law as it stands.
In awarding sentence or death, the court has to take into consideration the various aspects regarding a crime and the reason for committing the crime and pass the appropriate sentence, and if it is death sentence, to give reasons as required by the Code of Criminal Procedure.
If in deciding a case on particular facts a principle is stated, it would be binding as a precedent.
If courts resort to rule making, it will not be binding as a precedent.
If the courts are to embark on rule making the question arises whether the responsibility can be undertaken by a bench of three Judges with majority of 2: 1.
There is no machinery by which the court could ascertain the views of the various cross sections of the society, which is a pre requisite before any law making is resorted to.
1195 Rajendra Prasad 's ease the court embarked on framing rules prescribing conditions for the imposition of death sentence.
The view of the majority that in awarding a sentence the criminal is more important than the crime is not warranted by the law as it stands today.
The general principles laid down in Rajendra Prasad 's case are not the ratio decidendi of the case.
The enunciation of the reasons or the principle on which a question before a court has been decided is alone binding as a precedent.
The concrete decision alone is binding between the parties to it but it is the abstract ratio decidendi ascertained on a consideration of the judgment in relation to the subject matter of the decision which alone bas the force of law and which, when it is clear what It was, is binding.
Statements which are not necessary to the decision, which go beyond the occasion and lay down a rule that is unnecessary for the purpose in hand have no binding authority on another court, though they may have merely persuasive efficacy.
Decisions upon matters of facts are not binding on any other court [1207G H; 1202D F] Tribhuvandas vs Ratilal ; = 70 Bom.
L. R. 73; Amritsar Municipality vs Hazara Singh A.I.R. ; and Quinn vs Leatham 1901 A.C. 495 at p. 506; referred to.
In Rajendra Prasad 's case the conclusion of the majority was that as nothing on record suggested that the accused was beyond redemption and since the record did not hint that such an attempt was made inside the prison there was no special reason to award death sentence.
The utmost to which this case can be considered as an authority is that if in similar circumstances when a person stabs two persons several times it would not furnish special reasons for inflicting the death penalty.
In the second case (Kunjukunju) the majority was of the view that the test should be whether the accused was a social security risk altogether beyond salvage by therapeutic life sentence was neither in accordance with the requirements of the Code of Criminal Procedure nor law laid down by the Constitution Bench.
Therefore, it cannot be followed as a precedent.
Similarly, in the third case (Dubey 's case) also the majority view that it would be illegal to award capital punishment without considering the correctional possibilities inside the prison and that the accused being young and of malleable age and other circumstances bearing on the offender called for the lesser sentence is not in conformity with the decisions of this Court or the requirements of the law.
[1213H; 1214A H] 9.
In the instant case the appellant was released after undergoing a term of imprisonment for the murder of his wife.
After release he lived with his cousin.
When his cousin 's son and wife objected to his stay with the family he inflicted a fatal injury on the son and two daughters of his cousin when they were asleep and caused grievous injury on another daughter The courts below came to the conclusion that the appellant acted in a very cruel manner.
They have rightly characterised the offence as heinous and held that the only appropriate sentence was the extreme penalty of death.
The trial court and the High Court were right in their conclusions.
[1215 C E] [Rajendra Prasad 's case cannot be treated as a binding precedent yet as it is a decision of a division bench of this Court.
The papers were directed to be placed before the Hon 'ble the Chief Justice for constituting a larger bench to decide the case.]
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4022.txt
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Appeal No. 813 of 1962.
Appeal from the judgment and decree dated July 13, 1960, of the Punjab High Court in L.P. Appeal No. 58 of 1958.
N.C. Chatterjee, V. section Sawhney, section section Khanduja and Ganpat Rai, for the appellant.
Naunit Lal, for the respondent No. 1(a).
The Judgment of the Court was delivered by Ayyangar, J.
The tenability of the appellant 's claim to possession of certain properties belonging to the Dera of Sanyasi Sadhus in Mauza Kharak Tahsil Hansi, District Hissar in Punjab is the subject matter of this appeal which is before us on a certificate of fitness granted by the High Court of Punjab.
The appellant claimed the properties as the successor of the last Mahant of the Dera Kishan Puri who died on February 15, 1951.
The fortunes of the litigation started by the appellant have greatly fluctuated.
His suit was decreed by the learned trial Judge, was dismissed by the first appellate Court, was again decreed by a learned Single Judge of the Punjab High Court on second appeal but this judgment has again been reversed on Letters Patent appeal and the suit directed to be dismissed.
On a certificate of fitness granted by the High Court the matter is now before us.
The last Mahant of this Dera Kishan Puri died on February 15, 1951.
Immediately on his death disputes seem to have arisen as regards the succession to the Dera.
Neki Puri the original respondent in this appeal (now deceased) claiming to be a Chela of the deceased Mahant appears to have entered into possession of the properties belonging to the Dera basing his title thereto on an appointment made to the office by the Bhekh and the people of the village.
The appellant nevertheless claiming to be in possession of the property as the successor of the deceased Kishan Puri by virtue of a title as the Gurbhai of the deceased, brought a suit for a declaration regarding his title and for an injunction restraining Neki Puri from interfering with his possession Neki Puri, as 235 stated earlier, claimed that he was in possession of the properties and asserted a title to such possession by being a Chela who had been appointed by the Bhekh.
An issue was raised in the suit as to whether it was the plaintiff or the defendant who was in possession of the properties and on a finding recorded that Neki Puri was in possession, the suit for a mere declaration and injunction was held to be not maintainable and was, therefore, dismissed.
Incidentally, however, evidence was recorded on an issue as to whether Neki Puri was a Chela of Kishan Puri the last Mahant and a finding was recorded on this question adverse to the claim of Neki Puri.
An appeal against this judgment was dismissed and 'hat decree has now become final.
The suit for declaration and injunction having been dismissed, Bralima Nand Puri the appellant brought the suit out of which ,his appeal arises, in the Civil Court at Hissar for a decree for possession of the properties movable and immovable belongingto the Dera.
The suit being on the basis of the plaintiff 's title, his was formulated thus : "5.
According to custom regarding succession of the Dera and the Riwaj i Am of Deras the plaintiff being Gurbhai was entitled to Gaddi, as he is the eldest Chela of Shanker Puri and the people of the village and the Bhekh appointed him as Mahant after performing all the ceremonies on the 17th day of the death of Shri Kishan Puri and made him occupy the Gaddi of dera of Kharak." An alternative basis for the title was also put forward in paragraph 8 in these terms : "8.
If for any reason it is held that after the death of Shri Kishan Puri, the plaintiff was not appointed as Mahant of the Dera, even then according to the custom regarding succession of the Dera and Riwaj i Am, the plaintiff is entitled to become Mahant of the Dera as he is the Gurbhai of Kishan Puri deceased.
It was held in the previous case that according to the Riwaj, in the absence of a Chela his (deceased Mahant 's) Gurbhai becomes Mahant of a Dera." in the Written Statement that was filed by Neki Puri two defences were raised : (1) that Neki Puri was a Chela and he had been appointed to succeed Kishan Puri by the Bhekh and other villagers.
In other words, he put forward a preferential title based on Chelaship followed by an appointment by the Bhekh and others.
,2) Alternatively, while admitting that Brahma Nand Puri was 236 a Gurbhai of the deceased Mahant, he denied that he had been appointed by the Bhekh and also urged that there was no custom by which a Gurbhai who had not been appointed by the Bhekh was entitled to succeed as Mahant merely by reason of his being a Gurbhai.
On these pleadings 4 principal questions (omitting certain others which are not relevant in the present context) arose for trial : (1) Was Neki Puri a Chela of the deceased Kishan Puri ?, (2) Was Neki Puri appointed by the Bhekh ? It was admitted by Brahma Nand Puri that a Chela had a right superior to a Gurbhai and therefore if these two issues were found in favour of Neki Puri the plaintiff 's suit had admittedly to fail.
, (3) Was the plaintiff appointed by the Bhekh ? No serious attempt was made to establish that the plaintiff had been appointed by the Bhekh and hence the 4th question that arose was whether there was a custom by which a Gurbhai could succeed to the Mahantship of this institution without an appointment by the Bhekh as pleaded in paragraph 8 of the plaint extracted earlier.
On these four matters the learned trial Judge recorded the following findings : (1) that Neki Puri had not been proved to be the Chela of the last Mahant.
, (2) No definite finding was recorded on the second point but the trial Judge was of the opinion that there was no proof that the Bhekh could appoint as Mahant a person who was not either a Chela or a Gurbhai or that they actually did so in the present case.
, (3) A definite finding was recorded that the plaintiff was not appointed by the Bhekh., (4) Without recording a finding on the custom set up by the plaintiff in para 8 of the plaint the learned trial Judge held that under the law in the Punjab in the absence of a Chela, a Gurbhai was entitled to succeed to the Gaddi apart from any question of appointment by the Bhekh and on this reasoning decreed the plaintiff 's suit.
The defendant went up in appeal to the Additional Sessions Judge.
The appellate Court reversed the finding of the trial Judge on the issue as to whether Neki Puri was a Chela of the deceased Mahant and held that he was.
A definite finding was also recorded on the basis of the evidence led by the defence that Neki Puri had been appointed to succeed the deceased Mahant by the Bhekh and the villagers.
As admittedly a Chela had a superior title to a Gurbhai in the matter of succession the learned District Judge allowed the appeal of the defendant Neki Puri and directed the dismissal of the suit.
The plaintiff took the matter to the High Court by way of second appeal.
The learned Single Judge who heard the appeal in his turn reversed the finding of the first appellate Court on the issue 237 regarding Neki Puri being a Chela of the deceased Kishan Puri.
He considered that the finding on this matter by the Additional Sessions Judge was vitiated by serious errors of law and misappreciation of facts.
Having thus put aside the claim of Neki Puri to succeed by holding that he was not a Chela, the learned Judge upheld the plaintiff 's claim on the ground that a Gurbhai was entitled to succeed to the Gaddi even if he had not been appointed by the Bhekh.
He, therefore, decreed the suit of the plaintiff.
, Neki Puri then in his turn took the matter before a Division Bench 'by a Letters Patent appeal.
The learned Judges concurred with the learned Single Judge on the issue as to whether Neki Puri was a Chela or not.
They agreed with him that the first appellate Court had committed serious errors in its reasoning in finding that Neki Puri had established the claim to be the Chela of Kishan Puri and affirmed the finding of the learned trial Judge in that regard.
Dealing next with the title of the plaintiff to the Gaddi, the learned Judges held that the custom set up in paragraph 8 of the plaint that Gurbhai could succeed without an appointment by the Bhekh had not been made out on the evidence and on this reasoning they allowed the appeal and directed the dismissal of the suit.
It is the correctness of this decision that is challenged before us by the appellant.
Two points were urged before us by Mr. Chatterjee learned Counsel for the appellant.
The first was that under the law applicable to Deras in the Punjab that is to say apart from any special custom, a Gurbhai was entitled to succeed to the Dera even without an appointment by the Bhekh or fraternity, (2) that even if that was not the law and a custom was required to sustain that plea, such a custom had been established by the evidence adduced by the appellant in the present case.
Pausing here, we might mention that Mr. Chatterjee referred us to the circumstance that during the pendency of the appeal in this Court Neki Puri had died and that certain others who, he stated, had even less claims to a Mahantship were in possession of the property and that seeing that the appellant was admittedly a Gurbhai it would be most inappropriate that his rights should be overlooked and a stranger permitted to squat on the property.
We consider this submission is devoid of force.
The plaintiff 's suit being one for ejectment he has to succeed or fail on the title that he establishes and if he cannot succeed on the strength of his title his suit must fail notwithstanding that the defendant in possession has no title to the property, assuming learned Counsel is right in 238 that submission.
As pointed out in Mukherjea 's Hindu Law of Religious and Charitable Trust, Second Edn., page 317 : "The party who lays claim to the office of the Mohunt on the strength of any such usage must establish it affirmatively by proper legal evidence.
The fact that the defendant is a trespasser would not entitle the plaintiff to succeed even though he be a disciple of the last Mohunt, unless he succeeds in proving the particular usage under which succession takes place in the particular institution.
" We, therefore, dismiss this aspect of the case from consideration.
Taking the first point urged by Mr. Chatterjee, we do not consider that learned Counsel is justified in his submission that under the law as obtains in the Punjab a Gurbhai is entitled to succeed without reference to an appointment by the Bhekh or the fraternity.
In Rattigan 's Digest of Customary Law the position as regards religious institutions in the Punjab is thus stated : "There is no general law applicable to religious institutions in this Province, and each institution must bedeemed to be regulated by its own custom and practice.
There are, however, certain broad propositions which judicial decisions have shown to have received very general recognition, and these propositions are embodied in the following paragraphs : 84.
The members of such institutions are governed exclusively by the customs and usages of the particular institution to which they belong.
The office of Mahant is usually elective and not hereditary.
But a Mahant may nominate a successor subject to confirmation by his fraternity.
" From paragraph 85 it would follow that the office of Mahant being usually elective and not hereditary, anyone who lays claims to the office on the basis of a hereditary title resting on Chelaship simplicitor or Gurbhaiship simplicitor must establish it.
(See also Jiwan Das vs Hira Das)1 Though, no doubt, the usage of one institution is no guide to that of another, it may be mentioned that in regard to the succession of the Mahantship of a Thakurdwara belonging to the Ram Kabir Sect of Hindu Bairagis in district Jullundur in the Punjab this Court held in Sital Das vs Sant Ram 2 (1) A.I. R. 1.
(2) A.I.R. 1954 S.C. 606.
239 that the usage required an appointment by the fraternity before a person could become a Mahant.
On the basis, therefore, of the passage in Rattigan 's Digest, which we have extracted, it appears to us that the first of the submissions made by Mr. Chatterjee cannot be upheld.
In fact, the tenor of para 5 of the plaint we have extracted earlier itself shows a consciousness on the part of the plaintiff himself that he considered that an appointment by the Bhekh was necessary to clothe him with the title to the Gaddi besides his status as a Gurbhai.
No doubt the plaintiff was a Gurbhai but he had not established that he had been appointed by the Bhekh or fraternity.
In the absence of such appointment under the law and apart from any special custom pertaining to this institution the appellant could claim no title to the Gaddi, by his being a Gurbhai.
This takes us to the second point urged by Mr. Chatterjee that on the evidence the plaintiff had made out the special custom pertaining to this institution that no appointment by the Bhekh was necessary before a Chela or Gurbhai could succeed to the Gaddi.
We have been taken through the entire evidence in the case.
In the first place, there are no documents or anything in writing in support of the custom and the matter depends entirely on the testimony of witnesses produced before the Court.
P.W. 4 who claimed to be a Bhekh of this Dera stated in chief examination : "According to the custom of our Bhekh if a Mahant died without leaving a Chela his Gurbhai became the successor.
If however there is Chela he is the successor.
" In cross examination be stated "The custom of succession stated by me above is written nowhere : it is followed by us." and then he continued : "In village Bata there is a Sanyasi Dera.
There also Prabhu Puri Chela was not found to be a good man and Sunder Puri Gurbhai of the last Mahant was installed.
In Guna there is a Sanyasi Dera.
Lachhman Gir Sanyasi died without leaving a Chela.
His Gurbbai Phag Gir succeeded him to the Gaddi.
" It would be seen that there was nothing specific in his evidence about the absence of an appointment by the Bhekh in those instances which is the special custom which the plaintiff sought to prove by this evidence.
P.W. II is another witness to whose 240 evidence reference was made.
He stated in his chief exami nation : " According to the custom of the Bhekh if a Mahant leaves no Chela, his Gurbhai succeeds to the Gaddi.
" In cross examination he stated : "The custom of succession which I have deposed to above is at par with the General Hindu Customary Law .
There might be many instances.
But I cannot recall to my mind any such instance now.
" P.W. 13 belongs to a different Dera but he claimed that the Dera at Kharak was similar to his institution and stated in his chief examination : "Amongst us if a Sadhu does not leave a Chela, the Gaddi goes to his Gurbhai.
There is an instance in the Gurdwara of Kosli near my Dera of a Gurbhai succeeding a Mahant in the absence of a Chela.
There is another such instance ofDera at Nangri in Rajasthan.
" The evidence ofP.W. 16 was similar: "My Guru succeeded to the Gaddi as Gurbhai of the last Mahant.
" Evidence of P.Ws. 17 and 18 was identical with that of the witnesses who preceded them : "According to custom of the Bhekh if a Mahant dies without leaving a Chela his Gurbhai succeeds.
" It would be seen from this evidence : (1) that it is lacking in particulars as regards the instances, and (2) there is nothing stated as to whether even in the instances referred to, there was no recognition, appointment or confirmation by the Bhekh which according to Rattigan is part of the customary law of the Punjab as the source of title for the Mahantship.
We are, therefore, not prepared to hold that the appellant has established the custom which he put forward in paragraph 8 of his plaint in derogation of the ordinary law viz., that without an appointment by the Bhekh or fraternity a Chela or, in his absence, a Gurbhai succeeds to the headship of a Dera.
The plaintiff 's suit was, therefore, in our opinion, properly dismissed.
Mr. Naunit Lal, learned counsel for the respondent urged that the learned Single Judge was in error in reversing the finding of the first appellate Court that Neki Puri had proved that he was a Chela of Kishan Puri the deceased Mahant.
It might be noticed 241 that the Division Bench had concurred in the views expressed by the learned Single Judge as regards the defects in the judgment of the first appellate Court on its findings on this issue.
Learned Counsel submitted that the learned Single Judge fell into serious errors in interfering with a finding of fact.
Though we are satisfied that certain portions of the judgment of the learned Single Judge had suffered from errors, we do not purpose to examine this question as the same is wholly unnecessary for the disposal of this appeal.
It is only in the event of our accepting the submissions of Mr. Chatterjee that the correctness of the reversal of the finding on the Chelaship of Neki Puri would have become material.
In the view that we have expressed as regards the appellant 's title to the Gaddi we do not consider it necessary or proper to discuss what, in fact, is merely an academic question.
The result is, the appeal fails and is dismissed with costs.
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Upon the death of the last Mahant of a Dera of Sanyasi Sadhus in Punjab, the respondent, claiming to be the Chela of the deceased and therefore having a preferential title, entered into possession of certain properties basing his title thereto on an appointment made to the office by the Bhekh and the people of the village.
The appellant also claimed the same properties as the successor of the deceased Mahant and brought a suit for a decree for possession of the properties belonging to the Dera, he claimed title on the basis that as Gurbhal of the last Mahant, he was entitled to the Gadi and that he, and not the respondent, had been appointed to it by the people of the village and the Bhekh; he further claimed in the alternative, that even if it was found that he was not so appointed, according to the custom regarding succession of the Dera and Rewaj i am of Deras, he was in any event entitled to become Mahant as he was the Gurbhai of the deceased Mahant.
The trial court found that the respondent was not the Chela of the deceased Mahant and that there was no evidence that be was appointed Mahant, on the other hand the appellant was also held not to have been appointed.
However, without recording a finding on the custom set up by the appellant, the trial court held that under the law in Punjab, in the absence of a Chela, a Gurbhai was entitled to succeed to the Gadi apart from any question of appointment by the Bhekh, and on this reasoning, decreed the appellant 's suit.
The respondent 's first appeal to the Additional Sessions Judge was allowed but a Single Bench of the High Court reversed that decision.
Thereafter, in the respondent 's Letters Patent Appeal, although the Division Bench concurred with the single Bench on the other issues, the appeal was allowed on the ground that the custom set up in the plaint that a Gurbhai could succeed without an appointment of the Bhekh had not been made out.
HELD : (i) There is no general law applicable to religious institutions in the Punjab and each institution must be deemed to be regulated by its own custom and practice.
Therefore, the appellant could not succeed as Mahant without reference to an appointment by the Bhekh or the fraternity unless he could establish a custom which entitled him to succeed by virtue of being a Gurbhai.
[238 D E; 239 C] Rattigans ' Digest of Customary law: Jiwan Das vs Hira Das, A.I.R. 1937 Lah.
311 and Sital Das vs Sant Ram, A.I.R. 1954 S.C. 606, referred to.
On the basis of the evidence before the trial court the appellant had not established the custom put forward by him.
[240 G] Sup./65 16 234 (ii)The appellant 's suit being one of ejectment he had to succeed or fail on the title that he established; if he could not succeed on the strength of his title, his suit must fail notwithstanding that the defendant in possession had no title to the property.
[236 HI Mukherjea 's Hindu Law of Religious and Charitable Trust, 2nd Edition,p.
317, referred.
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Appeal No. 558 of 1963.
216 Appeal by special leave from the judgment and order dated January 19, 1961 of the Mysore High Court in Civil Petition No. 654 of 1960.
section G. Patwardhan and K. R. Chaudhury, for the appellant.
A. G. Ratnaparkhi, for respondent No. 1.
The Judgment of the Court was delivered by Bachawat, J.
The appellant is the landlord and respondent No. 1 is the tenant of section Nos. 180 and 182 of village Dhanyal, taluk Bijapur.
Respondent No. 1 defaulted in payment of rent for the years 1951 52, 1953 54 and 1954 55.
On December 8, 1956, the appellant served on respondent No. I three months ' notice in writing under section 14(1)(b) of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bombay Act No. 57 of 1948) hereinafter referred to as the Tenancy Act, terminating the tenancy on the ground of default in payment of rent.
On June 24, 1957, the appellant filed an application under section 29(2) read with section 14(1) of the Tenancy Act for possession of the land.
The Tahsildar, Bijapur allowed the application, and directed possession of the land to be delivered to the appellant.
This order was affirmed on appeal by the Assistant Commissioner, Bijapur.
On revision, the Mysore Revenue Appellate Tribunal set aside the order of the first two tribunals and dismissed the application.
A petition by the appellant under article 227 of the Constitution was summarily rejected by the Mysore High Court.
The appellant now appeals to this Court by special leave.
The Tribunals below concurrently found that respondent No. I defaulted in payment of the rent for the years 1951 52, 1953 54 and 1954 55, the last default took place on May 20, 1955 and the tenancy was properly terminated by the appellant.
The first two Tribunals also held that the application was filed within the time, allowed by law.
The Revenue Appellate Tribunal, however, held that the application being filed more than two years after May 20, 1955 is barred by limitation.
The sole question before us is whether the application was filed within the two years ' period of limitation prescribed by section 29(2) of the Tenancy Act.
The appellant contends that the application was filed within the prescribed period of limitation because (1) the right of the appellant to obtain possession of the land is deemed to have accrued to him on the termination of the tenancy by the notice given on December 8, 1956, (2) in any event, in computing the two years ' period of limitation, the period of the three months ' notice should be excluded in view of section 15(2) read with section 29(2) of the Indian Limitation Act, 1908.
We are of the opinion that the first contention of the appellant 217 should be accepted.
In view of this conclusion, we do not think it necessary to express any opinion on the second contention advanced on behalf of the appellant.
Sections 14(1) and 29(2) of the Tenancy Act, as they stood at.
the relevant time, are as follows : "14.
(1) Notwithstanding any law, agreement or usage, or the decree or order of a court, the tenancy of any land shall not be terminated (a) unless the tenant (i) has failed to pay the rent for any revenue years.
before the 31st day of March thereof; (ii) has done any act which is destructive or permanently injurious to the land; (iii) has sub divided, sub let or assigned the land in , contravention of section 27; (iv) has failed to cultivate it personally; or (v) has used such land for a purpose other than agriculture or allied pursuits; and (b) unless the landlord has given three months ' notice in writing informing the tenant of his decision to terminate the tenancy and the ground for such termination, and, within that period the tenant has failed to remedy the breach for which the tenancy is liable to be terminated.
" 29(2) No landlord shall obtain possession of any land, or dwelling house held by a tenant except under an order of the Mamlatdar.
For obtaining such order he shall make an application in the prescribed form and within a period of two years from the date on which the right to obtain possession of the land or dwelling house, as the case may be, is deemed to. have accrued to him.
" At first sight, it may appear that the Act gives no indication of the time when the right to obtain possession of the land or dwelling house is deemed to have accrued to the landlord as contemplated by section 29(2).
But on a close scrutiny of the Act we are satisfied ' that this right must be deemed to have accrued to him on the date of the termination of the tenancy.
It is to be noticed that limitation for the application under section 29 (2) commences to run from the date when the right to obtain 218 possession of the land or dwelling house is deemed to have accrued to the landlord. 'Now, the legislature could not have intended that,, limitation would commence to run before the right to apply accrues.
It is reasonable to think that the right to apply also accrues to the ,landlord on the date when limitation for the application begins to run.
But the right to apply under section 29(2) read with section 14(1) accrues to the landlord when the tenancy is terminated by the notice under section 14 (1 ) (b).
In Raja Ram Mahadev Paranjype vs Aba Maruti Mali(1), this Court observed : "The statute having provided for the termination of the tenancy would by necessary implication create a right in the landlord to recover possession.
The statute recognises this right by providing by section 29(2) for its enforcement by an application to the Mamlatdar.
" It would follow that limitation for the application under section 29(2) read with section 14(1) begins to run from the date when the tenancy is terminated, by the notice under section 14(1)(b).
Consequently, the date of the termination of the tenancy is also the date when the right to obtain possession is deemed to have accrued to the landlord.
But it is argued that on the date of the termination of the tenancy, the right to obtain possession of the land actually accrues 'to the landlord, and, therefore, the legislature could not have intended that on that date this right is deemed to accrue to him.
This ,argument must be rejected.
In spite of the termination of the tenancy, the landlord has no right to obtain possession of the land without an order of the Mamlatdar under section 29(2).
Between the date of the termination of the tenancy and the date of the order for possession under section 29(2), the tenant continues to be in lawful possession of the land and is liable to pay rent and not mesne profits, see Ramchandra Avant vs Janardan(2).
Thus, on the termination of the tenancy, the right to obtain possession of the land, though in reality not accrued to the landlord, is, by a legal fiction, deemed to have accrued to him so that he may immediately apply under section 29(2) for an order for possession.
This conclusion is reinforced if we look at the history of the legislation.
The Tenancy Act, as originally passed in 1948, did not provide for a special period of limitation for the application to the Mamlatdar under section 29.
But it was thought that section 72 of the Tenancy Act attracted the period of limitation prescribed (1) [1961] 1 Supp.
S.C.R.730,747.
(2) 637, 641.
219 by sub sections
(3) and (4) of section 5 of the Mamlatdars ' Courts Act, 1906 (Bombay Act No. 2 of 1906), which are as follows : "5(3).
No suit shall be entertained by a Mamlatdar 's Court unless it is 'brought within six months from the date on which the cause of action arose.
5 (4).
The cause of action shall be deemed to have arisen on the date on which the impediment to the natural flow of surface water or the dispossession, deprivation or determination, of tenancy or other right occurred, or on which the impediment, disturbance or obstruction, or the attempted impediment or disturbance or obstruction, first commenced." The Bombay Revenue Tribunal, therefore, ruled that an application under section 29(2) must be made within six months from the date when the cause of action accrues, see A. section Desai 's Bombay Tenancy and Agricultural Lands Act, Second Edn., pp. 137 38, 287 88; and in view of section 5(4) of the Mamlatdars ' Courts Act, 1906, this cause of action was deemed to accrue on the determination of the tenancy.
The six months ' period of limitation led to hardship, and the legislature decided to extend the period of limitation and enacted the Bombay Tenancy and Agricultural Lands (Third Amendment) Act, 1951 (Bombay Act No. 45 of 1951), which amended section 29 by providing for two years ' period of limitation and also section 72 by inserting the words "save as provided in section 29".
Thus, the Amending Act extended the period of limitation from six months to two years, but both before and after the Amending Act, the date of the termination of the tenancy is the starting point of limita tion; formerly because the right to apply was then deemed to accrue to the landlord and now because the right to obtain possession is then deemed to have accrued to him.
The Tenancy Act was amended from time to time.
The requirement of a notice for terminating the tenancy under section 14(1) was introduced by Bombay Act No. 33 of 1952, and is repeated in the new section 14 substituted for the original section by Bombay Act No. 13 of 1956.
Before the tenancy can be terminated under the new section 14(1), two conditions must be fulfilled.
Firstly, the tenant must be guilty of one of the breaches mentioned in section 14(1)(a).
Secondly, ' the landlord must give three months ' notice in writing under section 14(1)(b) and within that period the tenant must have failed to remedy the breach.
The tenancy is not terminated unless both these conditions are fulfilled.
Neither failure to pay rent nor sub letting nor any C.I./66 15 220 other breach is sufficient.
The breach must be followed by the requisite notice terminating the tenancy.
It is on the termination of the tenancy and not earlier that the right to obtain possession of the land is deemed to accrue to the landlord and limitation for the application under section 29(2) read with section 14(1) begins to run.
In Chimanbai Rama vs Ganpat Jagannath(1), a Full Bench of the Bombay High Court held that the period of limitation under section 29(2) for applying to the Mamlatdar for possession of the land on the ground that the tenant had sub let it, began from the date of sub letting, and that though the right to obtain possession actually accrues to the landlord on the date when he terminates the tenancy, under section 29(2) it is fictionally deemed to accrue as from an antecedent point of time, viz., the date of the sub letting.
With respect, we are unable to agree with this judgment.
On the termination of the tenancy by the notice under section 14 (1) (b) and before the order for possession under section 29(2), the landlord has no right to obtain possession of the land; nevertheless, this right is then deemed to accrue to him, so that he may apply immediately for an order for possession under section 29(2).
The sub letting alone does not give him ' this right to apply under section 29(2).
He may, if he likes, ignore the breach.
But where the breach is followed by a notice terminating the tenancy he acquires the right to apply under section 29(2).
It is difficult to impute to the legislature the intention that limitation would begin to run against the landlord immediately on the sub letting, though he is not aware of the breach and takes no steps for terminating the tenancy in consequence of the breach.
In our opinion, limitation, for the application under section 29(2) begins to run from the date of the termination of the tenancy and not from the date of the sub letting or the date of default in payment of rent.
In the instant case, three months ' notice in writing under section 14(1)(b) terminating the tenancy was given on December 8, 1956.
The application under section 29(2) read with section 14(1) being filed on June 24, 1957 within two years of the termination of the tenancy is not barred by limitation.
In the result, the appeal is allowed with costs, the order of the Mysore Revenue Appellate Tribunal, Belgaum Branch dated July 27, 1960 is set aside and the orders passed by the Tahsildar, Bijapur and the Assistant Commissioner, Bijapur are restored.
Appeal allowed.
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On 8th December 1956, the appellant served on the respondent three months ' notice in writing under section 14(1) (b) of the Bombay Tenancy and Agricultural Lands Act, 1948, terminating the tenancy on the ground of default in payment of rent.
On 24th June 1957 the appellant filed an application under section 29(2) for possession.
The Tahsildar allowed he application and the order was confirmed on appeal.
But in revision, the Revenue Tribunal set aside the order on the ground, that the application was barred by limitation, because, it was filed more than two years, after 20th May 1955, which was the date of default.
A petition ay the appellant under article 227, was rejected by the High Court.
In the appeal to the Supreme Court, on the question whether the application was filed within the two yea& period of limitation prescribed by section 29 (2).
HELD : Limitation for the application began to run from the date of the termination of the tenancy and not from the antecedent date of default in payment of rent and so, the application, filed within two years of the termination of the tenancy was not barred by limitation.
220 G] The legislature could not have intended that limitation would commence to run before the right to apply under section 29(2) accrues.
The right to apply accrues to the landlord when the tenancy is terminated by notice under section 14(1)(b).
But in spite of the termination of the tenancy the landlord has no right to obtain possession without an order under section 29(2).
On the termination of the tenancy, the right to obtain possession, though in reality not accrued to the landlord, is, by a legal fiction, deemed to have accrued to him.
Consequently, the date of termination of the tenancy is also the date when the right to obtain possession is deemed to have accrued to the landlord.
Since the limitation for, the application under section 29(2) commences to run from the date when the right to obtain possession is deemed to have accrued to the landlord, it would follow that limitation begins to run from the date when the tenancy is terminated by the notice under section 14(1) (b).
[218 A B, C D, F G] The history of the legislation also shows that both before and after the Amendment Act, 1951 which provided the two years ' period of limitation the date of the termination of the tenancy is the starting point of limitation.
[218 H] Ramachandra Anant vs Janardan, approved.
Chimanbai Rama vs Ganpat Jagannath, I.L.R. [1958] Dom. 917 (F.B.) overruled.
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vil Appeal No. 16 13 of 1990.
From the Judgment and Order dated 1.4.
1987 of Patna High Court in Civil Writ Jurisdiction Case No. 4097 of 1985.
196 R.K. Garg, Praveen Swarup and Pramod Swarup for the Appellants.
M.K. Ramamurthi, L.R. Singh, B.B. Singh, D.P. Mukherjee and M.P. Jha for the Respondents.
The Judgment of the Court was delivered by RAY, J.
Arguments heard.
Special Leave granted.
This appeal on Special Leave is directed against the Judgment and Order dated April 1, 1987 passed by the High Court, Patna m C.W.J.C. No. 4097/1985 allowing the writ petition in part.
The subject matter of the writ petition is the gradation list dated 9.1.
1986 of the Inspectors of Excise by which the Government of Bihar has finally fixed the inter se seniority of the petitioners (respondents in this Appeal) who were promoted vis a vis the respondents Nos. 3 and 4 (appellants in this appeal) who are promoted to posts of Inspectors of Excise in 5% quota for promotion from the posts of Upper Division Assistants of Excise Department in the said Civil Writ Petition.
The matrix of this case in short is that the appellants Nos. 1 and 2 who were respondents 3 and 4 of the writ peti tion were promoted to the posts of Excise Inspectors from among the Upper Division Assistants of the Excise Department against the vacancies of the year 1974 75 and they joined as Inspectors of Excise on May 7, 1976.
The respondent Nos. 3 and 4 who were Sub Inspectors of Excise were promoted on 24.4.74 in the vacancy of the year 1974 75 by the Commis sioner of Excise, Bihar.
In the gradation list prepared by the Government on January 9, 1986 the appellants were shown as seniors to the respondents even though the respondents were promoted from selected Sub Inspectors of Excise and they joined the posts of Excise Inspectors earlier than the date when the appellants were promoted as Excise Inspectors.
This has been challenged by the respondents on the ground that there is an apparent error committed by the State in showing the respondents juniors to the appellants in the gradation list.
The gradation list was challenged mainly on two grounds namely: (1) the State Government has no jurisdiction to determine the seniority of Excise Inspectors and the only competent authority for determining the same was the Excise Commis sioner who has neither determined the seniority nor prepared the gradation list.
197 (2) The respondents (petitioners of the writ petition) have continuously officiated for years together in the vacancy of direct recruits and merely because the respondents were appointed against the vacancy of direct recruits they could not be pushed down for determining the seniority and shown junior to the contesting appellants.
The writ petition was allowed by the High Court holding that the respondents were not appointed in the 5% quota set apart for being filed up by promotion from the posts of Upper Division Assistants in the Excise Department inasmuch as this quota was notified by the Government on March 31, 1975 even though the Government passed order providing 5% of the total vacancies to be filled by the promotion from among the selected Upper Divi sion Assistants and selected Head Clerks.
It has, therefore, been contended that the petitioners Nos. 3 and 4 (respond ents Nos. 3 and 4 in this appeal) cannot be shown as juniors to the appellants.
Moreover it has been alternatively urged that these respondents having been promoted to the posts of Inspectors of Excise in the quota of direct recruitment for several years, they could not be pushed down and the appel lants who joined on promotion to the posts of Inspectors of Excise subsequently cannot be shown as senior to the re spondents Nos. 3 and 4 in the said gradation list.
The High Court, Patna after hearing the parties held that the re spondents Nos. 3 and 4 who were appointed in the vacancies of the promotees of the year 1974 75 and who joined as Inspectors on 24.4.1974 cannot be made juniors to appellants Nos. 1 and 2 who were promoted and joined two years later on 7.5.
The High Court allowed the writ petition in part by quashing the gradation list (Annexure 15) and directed the Government to draw up a fresh gradation list in the light of observations made therein.
It is against this judgment and order passed in C.W.J.C. No. 4097/85, the instant appeal on special leave has been filed by the appellants.
The only question that falls for consideration in this appeal is whether the appellants who claim to be promoted to the posts of Inspectors of Excise in the 5% quota set apart for promotion to the posts of Inspector of Excise from among the Upper Division Assistants of the Excise Department against the vacancies of the year 1974 75 had been promoted in this quota.
In order to decide this question, it is relevant to refer to certain provisions of the Bihar Excise Act, 1915 as well as Rules 1 & 4 of the Inspectors of Excise Recruitment Rules, 1936.
198 Section 2(7) of the Bihar Excise Act, 1915 (hereinafter referred to as Act) defines Excise Commissioner "as the Officer appointed under Section 7 sub section 2 clause (a) of the said Act".
Section 7 Sub Section (2)(a) provides that the State Government may appoint an officer who shall sub ject to such control as the State Government may direct, have the control of the administration of the Excise Depart ment and the collection of the excise revenue.
Section 7(2)(a) further provides that the State Government may delegate to the Board, the Commissioner of a Division or the Excise Commissioner all or any of the powers conferred upon the State Government by or under this Act except the powers conferred by Section 89 to make Rules.
Section 7(2)(f) provides that the State Government may withdraw from any officer or person all or any of the powers of duties con ferred or imposed upon him by or under this Act.
By Notifi cation No. 417 dated January 15. 1919, in exercise of the powers conferred under the Act, the Lt. Governor in Council was pleased to make clause (ii) of the Notification order to the effect that there shall be an Excise Commissioner who shall subject to the control of the Board will have through out the province of Bihar the control of the administration of the Excise Department and the collection of excise reve nue.
It has also been provided in clause (iv) of the Notifi cation that the power to appoint by promotion Inspector of Excise was delegated to the Excise Commissioner by the Government.
Thus, it is clear and apparent that the Excise Commis sioner has been delegated the powers by the State Government to appoint by promotion from selected Sub Inspectors of Excise, but no here it has been mentioned in any of those provisions that the Excise Commissioner has been vested with the power of determining the seniority of the Inspectors of Excise.
Therefore, the submission that the seniority list or the gradation list prepared by the State Government is unauthorised being beyond the powers of the State Government is unsustainable and the gradation list that has been pre pared on January 9, 1986 by the State Government is legal and valid as upheld by the High Court.
It is necessary to refer to the recruitment rules to determine seniority.
Rule 1 of Excise Recruitment Rules, 1936 reads as follows: "1.
Inspectors of Excise and Salt shall be appointed: (i) by direct recruitment by the Board of Revenue,or, 199 (ii) by promotion of selected Sub Inspectors by the Commissioner of Excise and salt.
Not more than 25 per cent of the vacancies shall ordinarily be filled by direct recruitment; but with the approval of the Board of Revenue on the recommendation of the Commissioner of Excise this proportion may on any occa sion, be increased to 50 per cent".
Later on by Notification No. 1451 dated 2.3.
1945 published in the Bihar Gazette on March 7, 1945, the expression "not more than" in the last paragraph of Rule 1 has been delet ed.
Subsequently by Government Notification S.O. 411, dated 31st March, 1975 published in the Bihar Gazette, Extra ordinary Issue on that day, after clause (2) or rule 1 clause (3) has been added and it reads as follows: "by promotion from among selected confirmed Upper Division Assistants of the Excise Commissioner 's office and selected confirmed Head Clerks of the District Excise Offices".
By the said notification the following has been added at the end of rule 1 "Atleast 5 per cent of the total vacancies shall be filled by promotion from among the selected Upper Division Assistants and selected Head Clerks." Thus on a perusal of the said rule as amended clearly it indicates that 25% of the total vacancies for the post of Inspectors of Excise shall be filled by direct recruitment, 70% shall be filled by promotion from among the selected Sub Inspectors and 5% shall be filled by promotion from among the confirmed Upper Division Assistants of the Excise Commissioner 's Office and confirmed Head Clerks of the District Excise Offices.
The 25% quota of direct recruits can be relaxed and increased to 50 per cent.
It is signifi cant to note in this connection that no provision has been made in the said rules for relaxation of the quota of promo tees.
The necessary question arises if the promotion from Sub Inspectors of Excise to the post of Inspectors of Excise have been made in excess of the quota of the promotees in the vacancy of direct recruits and later on direct recruit ment has been made the promotees can in such circumstances be treated to be juniors to the direct recruits or not.
This question was under consideration before this Court in the case of V.B. Badami vs State of Mysore, A.I.R. 1980 SC 1561.
In this case The Mysore Administrative Service 200 (Recruitment) Rules, 1957 classified class 1 posts into two categories: senior scale posts and the junior scale posts.
Two thirds of the junior class I posts were filled by promo tion from Class II officers and the balance one third by direct recruitment by the Public Service Commission.
By the Mysore Recruitment of Gazetted Probationers Rules, 1959, the quota for direct recruitment to the Mysore Administrative Service was increased from one third to two thirds for a period of five years as a consequence of which the quota for promotees had been reduced to one third, Rule 17(b) of the 1957 Recruitment Rules empowered the Government to fill up posts temporarily by promotion against vacancies for direct recruits but such promotees were liable to be reverted after the appointment of direct recruits.
In January 1972, a Gradation List was published in which the direct recruits (respondents) were shown as senior to the appellants.
The appellants challenged the seniority of the respondents in writ petitions on the ground mainly that the respondents were recruited only to the 20 temporary posts created and that the appellants and 51 others were appointed to 59 permanent vacancies.
The appeal was dis missed by this Court and it has been observed as follows: "The principles generally followed in working out the quota rule are, (i) Where rules prescribe quota between direct recruits and promotees confirmation or substantive appoint ment can only be in respect of clear vacancies in the perma nent strength of the cadre; (ii) confirmed persons are senior to those who are officiating; (iii) as between per sons appointed in officiating capacity, seniority is to be counted on the length of continuous service; (iv) direct recruitment is possible only by competitive examination which is the prescribed procedure under the rules.
In promo tional vacancies, the promotion is either by selection or on the principle of Seniority cum merit.
A promotion could be made in respect of a temporary post or for a specified period, but direct recruitment has generally to be made only in respect of a clear permanent vacancy, either existing or anticipated to arise at or about the period of probation is expected to be completed; (v) if promotions are made to vacancies in excess of the promotional quota, the promotions may not be totally illegal but would be irregular.
The promotees can not claim any right to hold promotional posts unless the vacancies fall within their quota.
If the promo tees occupy any vacancies which are within the 201 quota of direct recruits, when the direct recruitment takes place, the direct recruits will occupy the vacancies within their quota.
Promotees who are occupying the vacancies within the quota of direct recruits will either be reverted or they will be absorbed in the vacancies within their quota in the facts and circumstances of the case; and (vi) as long as the quota rule remains, neither promotees can be allotted to any of the substantive vacancies of the quota of direct recruits nor direct recruits can be allotted to promotional vacancies; and (vii) quotas which are fixed are unalterable according to exigencies of the situation.
They can only be altered by fresh determination of quotas under the relevant rules.
One group either on the ground that the quotas are not filled up or that because there had been a number in excess of the quota the same should be absorbed depriving the other group of quota.
" It thus emanates from the said Judgment of this Court that when promotion has been made in excess of the quota the promotees who have been promoted in the quota of direct recruits will be pushed down and will be absorbed in the quota of promotees of subsequent years and the direct re cruits made within their quota would be deemed to be senior to those promotees recruited in excess of their quota.
In the case of A. Janardhana vs Union of India & Ors., ; the question of determination of seniority between the direct recruits to the post of Assistant Execu tive Engineer (AEE) and the promotees from the post of Assistant Engineer fell for consideration.
The Military Engineer Services Class I (Recruitment, Promotion and Sen iority) Rules (1949 Rules for Short) were brought into operation on or from 1.4.
Under Rule 3 and 4 of 1949 Rules the recruitment to MES Class I was to be made from two sources, namely, by competitive examination in accordance with Part II of the Rules and by promotion in accordance with Part III of the Rules.
Rule 4 prescribed a quota of 9:1 between direct recruits and promotees.
During the years 1962, 1963 and 1964 particularly and until the year 1969, the Class I Service Rules were not statutory in character.
The Union Government relaxed the Rules both in regard to recruitment by interview and in regard to the quotas fixed by the Rules for direct recruitment and recruitment by promotion to Class I Service.
The 1949 Rules and the subse quent amendments thereto acquired statutory flavour in character by incorporation only in 1969 and till then they were mere administrative instructions.
202 It was due to emergency situation in .the market of recruitment of engineers between 1959 and 1969 and the dire need of urgently recruiting engineers which led the Govern ment to make recruitment m relaxation of quota rule by foregoing the competitive examination and promoting subordi nate ranks to Class i Service.
Appellant and similarly situated persons were thus promoted to meet the dire need of service in relaxation of the quota rule.
It has been observed by this Court that when recruitment is from two independent sources, subject to prescribed quota, but the power is conferred on the Government to make recruitment in relaxation of the rules any recruitment made contrary to quota rule would not be invalid unless it is shown that the power of relaxation was exercised mala fide.
It was also observed that the recruitment made to meet the exigencies of service by relaxing the quota rule the promo tion in excess of quota would be valid.
It had further been observed that once the quota rule was fully relaxed between 1959 and 1969 to suit the requirements of service and the recruitment made in relaxation of the quota rule and the minimum qualification rule for direct recruits was held to be valid, no effect could be given to the seniority rule enunciated in Para 3(iii) of Appendix V of the 1949 Rules, which was wholly interlinked with the quota rule and could not exist apart from it on its own strength.
This was im pliedly accepted by the Union Government and was implicit in the seniority lists prepared in 1963 and 1967 68 in respect of AEE, because both those seniority lists were drawn up in accordance with the rule of seniority provided in Army Instruction No. 241 of 1950.
It has been further held that there was no justification for redrawing the seniority list affecting persons recruited or promoted prior to 1969 when the rules acquired statutory character.
Therefore, the 1974 seniority list was liable to be quashed and the two 1963 and 1967 seniority lists must hold the field.
In Shri O.P. Singla and another vs Union of India & Ors., ; the question of inter se seniority between promotees and direct recruits came up for consideration before this Court.
Delhi Higher Judicial Service was consti tuted on May 15.
It was governed by the Delhi Higher Judicial Service Rules, 1970.
Rule 7 provides that the recruitment to the service will be made from two sources i.e. by promotion on the basis of selection from members of the Delhi Judicial Service, who have completed not less than ten years of service in the Delhi Judicial Service and by direct Recruitment from the Bar 203 provided that not more than 1/3rd of the substantive posts in the service shall be held by direct recruits.
The senior ity of direct recruits vis a vis promotees shall be deter mined in the order of rotation of vacancies between the direct recruit and promotees based on the quota of vacancies reserved for both categories.
Rule 7 provided that the first available vacancy will be filled by a direct recruit and the next two vacancies by promotees and so on.
It has been observed that persons who are appointed or promoted on an ad hoe basis or for fortuitous reasons or by way of a stop gap arrangement cannot rank for purposes of seniority with those who are appointed to their posts in strict conformity with the rules of recruitment, whether such latter class of posts are permanent or temporary.
It has also been observed that persons belonging to the Delhi Judicial Service who are appointed to temporary posts of Additional District and Sessions Judges on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement, constitute a class which is separate and dis tinct from those who are appointed to posts in the Service in strict conformity with the rules of recruitment.
In view of this, the former class or promotees cannot be included in the list of seniority of officers belonging to the Service.
It has, therefore, been held that those who are appoint ed to the post of Additional District and Sessions Judges on ad hoc basis for fortuitous reasons cannot be taken into consideration in determining the seniority of the members of the Service.
In the case of G.S. Lamba & Ors.
vs Union of India & Ors.
, ; the question of inter se seniority between direct recruits and promotees cropped up for consid eration before this Court.
The Indian Foreign Service Branch 'B ' was constituted in 1956.
The statutory rules Indian Foreign Service Branch 'B~ (Recruitment, Cadre, Seniority and Promotion) Rules, 1964 were enforced on or from May 6, 1964.
It provided for recruitment from three sources: (1) direct recruitment on the result of a competitive exami nation held by the Union Public Service Commission (2) substantive appointment of persons included in the selective list promoted on the basis of a limited competi tive examination held by the Union Public Service Commission and 204 (3) Promotion on the basis of seniority By a notification dated February 12, 1975, Rule 13 was amended to provide that recruitment to the three different sources of integrated Grades II and III to be: (1) 1/6th of the substantive vacancies to be filled in by direct recruitment (2) 331/3 % of the remaining 5/6 of the vacancies to be filled on the basis of results of the limited competitive examination and (3) the remaining vacancies to be filled in by promotion on the basis of seniority.
The petitioners were selected by the Union Public Serv ice Commission on the basis of the merit obtained at the examination of Assistants conducted for the purpose for appointment to the post and allocated to the Ministry of External Affairs.
After the initial constitution of the service of 1956, they were offered an option whether they would like to join the I.F.S. Branch 'B ' in grade IV.
They opted and were inducted into the service.
Later they were promoted between 1976 and 1979 from Grade IV to the inte grated Grades II and III.
The Government of India published a seniority list of the integrated Grades II and III as on June 25, 1979 and before objections taken by the petitioners to the seniority list were dealt with, another seniority list was published on June 30, 1983.
This list was assailed by the petitioners on the ground that it is discriminatory and is consequently violative of Article 14 and 16 of the Constitution.
This Court upheld their contention and quashed the seniority list.
The Union Government was directed to prepare a fresh seniority list.
In the instant case direct recruitment had not been presumably made in excess of the quota and the promotees were appointed to substantive vacan cies in the service and they had been holding the posts for over 6 to 8 years.
In the seniority list that was prepared the direct recruits who were promoted much later to the promotees in excess of their quota were shown senior to the promotees, it has been held that once the promotees were promoted regularly and they have been officiating for a number of years the continuous officiation confers on them an advantage of being senior to the later recruits under Rule 21(4).
It has been further observed that if there has been an enormous departure from the quota fixed by exercis ing the powers to relax, the quota rule was not adhered to, the rota rule for inter se seniority as prescribed in 205 Rule 25(i) and (ii) cannot be given effect.
In the absence of any other valid principle of seniority it has been held that continuous officiation in the cadre, grade or service will provide a valid principle of seniority.
It has been held that where the direct recruitment had not been made according to the quota for years and promo tions have been made in excess of the quota and the promo tees were appointed in the vacancies of the direct recruits and work for a number of years, the quota rule cannot be given effect to and the promotees cannot be shown as junior to the direct recruits in the seniority list.
Continuous officiation in the cadre, grade or service will provide a valid principle of seniority.
Seniority List was, therefore, quashed and set aside.
In the case of Narendra Chadha vs Union of India, ; there was a quota rule for filling up the vacancies from two sources by direct recruitment as well as by promotion.
The direct recruitment was not made for number of years and the posts of direct recruits were filed up by promotion.
The promotees were allowed to function in the promoted posts for 15 to 20 years.
Thereafter direct re cruitment was made.
There was a rule which empowers the Government to relax the quota.
It was held that whenever a person is appointed in a post without following the rules prescribed for that appointment to the post, he should not be treated as a person regularly appointed to that post.
Such a person may be reverted from that post but in a case where persons have been allowed to function in higher posts for 15 to 20 years without due deliberation it would be unjust to hold that they had no claim to such posts and could be reverted unceremoniously or treated as persons not belonging to the service at all particularly where govern ment is endowed with the power to relax the rules to avoid injustice.
It has been held by this Court that continuous officiation of the promotees could be justified on the basis of the rule 16 on the presumption that the Government had relaxed the rules and appointed the promotees to the posts in question to meet the administrative requirements.
In the instant case undoubtedly, the Government made an order on 20.3.1974 for reservation of 5% of the posts for recruitment by promotion from among selected confirmed Upper Division Assistants of the Commissioner 's Office and the selected confirmed Head Clerks of the District Excise Of fices.
Pursuant to that order, the Government later on published a Notification S.O. 411 in the Bihar Gazette on March 31, 1975 stating therein about the quota of 5% of total vacancies reserved for the promotion of the selected Upper Division 206 Assistants to the post of Inspectors of Excise.
It has been urged by the learned counsel appearing on behalf of the respondents that the respondent Nos. 3 and 4 being promoted and appointed as Inspectors of Excise from the 75% quota for promotion from selected SubInspectors of Excise in April, 1974 they cannot be shown as junior to the appellants, in the seniority list inasmuch as the appellants were appointed on 7.5.1976.
It has been further submitted in this connec tion that the appointment of the appellants on promotion from the 5% quota of the vacancies available in 1974 cannot be made.
It has also been submitted that the Notification referring to the 5% quota for promotion of Upper Division Assistants cannot be deemed to be a quota in respect of vacancies for the year 1974 75.
As such quota cannot be enforced unless and until the reservation of 5% quota of vacancies is published in the official gazette for informa tion of the public.
In support of this submission the deci sion in Harla vs State of Rajasthan, ; was cited at the Bar.
In this case on 11.12.
1923 the counsel passed a resolution which purported to enact a law called The Jaipur Opium Act and the only question was whether the mere passing of the resolution without promulgation or publication in the Gazette or by other means to make the Act known to the public was sufficient to make it a law and enforce the same.
There was an amendment of Section 1 of the Jaipur Opium Act to the effect that it shall came into force from 1.9.1924.
The Act was never published in the Gazette.
It was held that the Jaipur Laws Act 1923 which required the whole of the Act to be published instead of publication of only one section, will not validate the same.
In the instant case, the Government made an order reserving 5% of the total vacancies in a year for being filled in by promotion from the selected Upper Division Assistants and Notification to that effect was published in the Gazette in March, 1975.
This Notification related to the vacancies for the year 1974 75 i.e. the year ends on March 31, 1975.
It is perti nent to refer to the specific averments made by Excise Commissioners, Government of Bihar, on behalf of the re spondent Nos. 1 and 2 The State of Bihar and Commissioner cum Secretary, Excise and Prohibition, Government of Bihar.
It has been stated in paragraph 3 of the Counter Affidavit: "That the promotion of the petitioners were caused in the Quota of 5% which was given to the petitioner by a Notifica tion dated 31.3.
1975 which is annexed in the petition as Annexure A but due to the noting given in the File, firstly by the Member of Board of Revenue on 20.3.
1974 and the 207 same has caused promotion to the petitioner which should not have been done unless there is a notification in effect to the noting given by the State Government.
" Noting given by the Board is reproduced herein below: quota in the cadre of Excise Inspector is given from the cadre of confirmed Upper Division Clerks, Excise Commissioner 's office and confirmed Head Clerks of District offices.
" It has been further stated that in the year 1976 the Secre tary of the Commission, Excise Department gave a note whose English translation is given below: "As stated at page 22 of the notesheet that the pay scale of Upper Division Assistants is more than the Head Clerks and therefore they will rank senior on that basis.
So first of all the question of promoting Sarvasri Awadh Prasad Singh and Ram Vriksh Pd.
Singh 's against the vacancy at Roster 67 and 68 has to be considered.
The question of promotion of Sarvasri Vidyadhar Ghatwari and Devendra Narain Pd. would be considered against future vacancies and therefore it is proposed to keep their names in the waiting list Sd/ Ravikishore Narain 26.4.
1976" It has been further stated in paragraph 5 of the said affi davit that the Excise Commissioner accordingly passed an order in the year 1976, which is dated 5.5. 1976, promoting the petitioner in accordance with the quota.
The English translation of the same is as follows: " So far the question of promotion of Assistants/Head Clerks is concerned the rule has been framed in 1974 and for the first time promotion is being given on this account.
I have carefully gone through the above rules and from perusal of the file it would appear that only 5% of the total vacan cies shall be filled in by the promotion.
In the rule, the word 2% at least" has come perhaps inadvertantly in at least 5%.".
There is no such mention in the file.
On this basis, as has been mentioned in the note of the Secretary only two posts have to be filled up from the quota of 208 Assistants.
So far as the persons by whom the filling up of the vacancies are concerned, I agree with the note of the Secretary marked 'Kh ' in the notesheet i.e. at present Awadh Prasad Singh and Ram Brikh Pd.
Singh should be promoted.
The name of Vidyadhar Pd.
and Devendra Narayan Pd. should be kept in the waiting list.
" It has been further stated that the Notification giving 5% quota which is annexed in the petition as Annexure A from the grade of Assistant/Head Clerks came into picture only on 31.3.1975 on the basis of order made by Government in March, 1974.
However, the petitioners were promoted on the vacan cies caused in the year 1974 75, because the decision was taken in the year 1974 itself and accordingly the Department carried out the same and accordingly a Gradation List was prepared.
A counter affidavit has also been filed on behalf of the respondent Nos. 6 & 7, that is, promotees, Inspectors of Excise.
It has been stated in paragraph 6 that the rules of recruitment of Inspectors of Excise were modified by Notifi cation No. 411 dated 31.3.
There was no provision in the Excise Act and Rules for appointment of Inspectors of Excise from among selected Assistants of Commissioner 's office and Head Clerks of the District Excise offices prior to this Notification.
This Notification for the first time required the Department of Excise to fill at least 5% of the total vacancies by promotion from among the confirmed Upper Division Assistants and selected Head Clerks.
The respond ents were promoted as Inspectors of Excise from Sub Inspec tors of Excise vide Order 2091 dated 24.4.1974 in their own quota and joined the promotional posts on 1.5.
It has also been stated that the appellants were appointed Inspec tors of Excise in the year 1976 and joined on 7.5.
Apparently there was no quota for appointment of Inspectors of Excise from among Assistants and Head Clerks in the year 1974 and the averments made by the respondent State or appellants to this effect is mala fide, ridiculous and false.
The appellants being appointed in the year 1976 by virtue of the Notification which came into existence on 31.3.
1975 cannot claim this vacancy of 1974 and hence seniority allotted to them by the respondent State was in flagrant, violation of law laid down by the Supreme Court and hence the High Court rightly allowed the C.W.J.C. No. 4097/85 against the appellants herein.
In the supplementary rejoinder affidavit on behalf of the appellants it has been stated in paragraph 4 that the State of Bihar has 209 proved the appellants, right to promotion on a vacancy that occurred in 1974 by the following clear admissions made by the State of Bihar in its counter affidavit.
"So far the question of promotion of Assistants or Head Clerks is concerned, the rule has been framed in 1974 and for the first time promotion is being given on this account." "However, the petitioners were promoted on the vacancies caused in the year 1974 75, because the decision was taken in the year 1974 itself and accordingly the Department carried out the same." It has also been stated in paragraph 5 of the said Rejoin der: "That the Government who was clearly conscious of the rights created by the decision to amend the Rules taken in 1974 and in accordance with the decision a Notification was issued later in March 1975.
But the ministerial failure to make the Notification conformed to the decisions taken in 1974 is no more than a clerical error and the Government therefore rightly promoted the petitioner within their quota against the vacancies occurred in 1974 by its Order.
" 1t has been further stated in paragraph 10 of the said rejoinder: "That there is a provision of seniority of Excise Inspector in Rule 6 of Recruitment Rules vide notification No. 54 dated 3.1.1936 for Excise Inspector.
It is clearly stated that the seniority of all Inspectors on confirmation will be determined in accordance with Government Order No. 6509/A dated 12.12.1934 which is still in force.
Besides there are also Government instructions with regard to seniority such as letter No. 15784 dated 26.8.1972.
The High Court ought to have considered the Rules of seniority when the case related to the seniority of Excise Inspector.
" In paragraph 11 it has been further averred: "That in view of the clear admission of the Government the petitioners are entitled to the benefit of promotion with effect from as against the vacancies of 1974 as fixed by the Government and the High Court order is liable to be set aside and the appeal may be allowed.
" 210 It thus appears from a perusal of the Affidavit in counter sworn by the Commissioner of Excise on behalf of the State of Bihar, the respondent Nos.
I and 2, that the order creating 5% of the vacancies for promotion from the posts of confirmed Upper Division Assistants and selected Head Clerks have been made by the Notification dated 31.3.
1975, though according to the noting given in the File by the Member, Board of Revenue on 20.3.
1974 on the basis of the Govern ment Order the petitioners (appellants of this appeal) were promoted in the vacancies of the year 1974 75 by order of the Excise Commissioner dated 5.5.1976.
Therefore, the argument on behalf of the respondents in this appeal that the appellants were promoted against the 5% quota in respect of the vacancies of the year 1975 76 is not sustainable.
The appellants having been appointed in the quota of 5% out of the vacancies of 1974 75 are entitled to be shown as senior in the gradation list prepared by the Government on 9.1.
We have already mentioned hereinbefore that the re spondent Nos. 3 and 4 were promoted from the selected Sub Inspectors Excise, that is, in the 5% quota reserved for promotion from the Upper Division Assistants of the Excise Department.
In accordance with the decisions rendered by this Court in the case of V.R. Badami vs State of Mysore, (supra) the respondent Nos. 3 and 5 who were promoted to officiate in the 5% quota of Upper Division Assistants and confirmed Head Clerks are to be pushed down as soon as the appellants have been recruited in the said quota to the posts of Inspectors of Excise in 1976 inasmuch as the promo tion though not illegal is irregular and the promotees are to be accommodated in the vacancies of subsequent years in their quota.
1t is only in the case of Narendra Chandha vs Union of India, (supra) exception was made by this Court to the aforesaid decision on the ground that the quota was broken down or not adhered to as there was no recruitment from the quota of direct recruits for a period of 15 to 20 years and the promotees were allowed to officiate in the quota of direct recruits for a long period of 15 to 20 years, in such circumstances, it was held that in view of Rule 16 empowering the Government to relax the quota rules, the promotees officiating in the vacancies of direct re cruits were presumable permitted to do so in relaxation of the quota as such the seniority will be determined from the date of their continuous officiating in the said posts.
Similar view has been expressed in G.S. Lamba 's case (supra).
In the instant case there was no rule for relaxa tion of the quota nor the respondent Nos. 3 and 4 who were promoted from selected Excise Sub Inspectors to the Inspec tors of Excise in the 5% quota of Upper Division Assistants in 1974 officiated till 7.5.1976 when the appellants joined as Inspectors of Excise from their 5% quota.
It cannot be said in such circumstances 211 that the quota has not been filled up for a long period nor can it be said that the respondents 3 and 4 who were promot ed in excess of their quota have worked as Inspectors of Excise for long time and as such the respondents Nos. 3 and 4 cannot claim to be seniors to the appellants.
Moreover, it is evident from the affidavit of the Commissioner of Excise on behalf of the State of Bihar that the 5% quota of vacan cies were brought into being by the Board of Revenue of March 20, 1974 though there was delay in notifying the same in the Gazette till 31.3.
Nevertheless, it has been subsequently averred that the appellants were promoted from the said 5% quota of vacancies of the year 1974 75.
In these circumstances on a conspectus of the decisions referred to hereinbefore as well as of the Government Order reserving 5% quota of vacancies on 20.3.
1974 and subsequent Notification of the same on 31.3.
1975 the only conclusion that follows is that the appellants being promoted as In spectors of Excise from the 5% quota of vacancies of the year 1974 75, they were rightly shown as seniors in the gradation list prepared by the Government on 9.1.
The findings of the High Court to the effect that the appellants were not promoted in the 5% quota of vacancies for the year 1974 75 is wholly wrong.
Accordingly, the gradation list prepared by the Government on 9.1.
1986 showing the appel lants as seniors to the respondents are quite legal and valid and so the same is upheld.
We, therefore, set aside the judgment and order passed by the High Court in C.W.J.C. No. 4097/ 85.
In the facts and circumstances of the case, there will be no order as to costs.
S.B. Petition allowed.
|
The subject matter of the Writ Petition is the gradation list dated 9.1.1986 of the Inspectors of Excise by which the Government of Bihar has finally fixed the inter se seniority of the Petitioners who were promoted vis a vis the appel lants in the present appeal who were promoted to posts of Inspectors of Excise in 5% quota reserved for promotion from the posts of Upper Division Assistants of Excise Department.
In the gradation list the appellants who joined as Inspectors of Excise on 7.5.76 were shown as senior to the Excise Inspector who were promoted from Sub Inspectors on 24.4.74 in the vacancies of direct recruits.
The gradation list was challenged in the High Court by the Respondents on two grounds i.e., (1) the State Govern ment has no jurisdiction to determine the seniority or gradation list of the Excise Inspectors, the competent authority is the Excise Commissioner (2) The Respondents in the present appeal have been continuously officiated for years together in the vacancies of direct recruits and thus could not be pushed down for determining the seniority and shown as juniors to the contesting appellants.
The High Court allowed the Writ Petition in part.
It was held that 5% quota to be filled up by promotion from Upper Division Assistants of Excise Department was notified only on 31st March 1975, whereas the appellants have been promot ed in the 5% quota of vacancies of the year 1974 75.
Hence they have not been promoted in the 5% quota.
The Respondents in the present appeal were promoted as Excise Inspectors on 24.4.74 in the quota of direct recruits and thus they could not be shown as juniors to those who were promoted and joined on 7.5.76 from 5% quota of the 1974 75 year vacan cies.
The High Court quashed the 194 gradation list and directed the State Government to draw up a fresh list in the light of the observations made.
Further it held that State Government is the competent authority to determine inter se seniority because where in any provisions of Bihar Excise Act 1915 government has vested the Excise Commissioner with the power of determining the seniority of the Excise Inspectors.
Hence the gradation list prepared by the State Government is legal and valid.
The appellants filed Special Leave petition in this Court against the High Court Judgment and Order.
Allowing the Special Leave Petition, this Court, HELD: The appellants claimed to be promoted to the posts of Inspectors in the 5% quota set apart for promotion from the Upper Division Assistants against the vacancies of the year 1974 75.
Since under Bihar Excise Act 1915 vide notifi cation No. 417 of 15.1.1919 clause (iv) the Excise Commis sioner was given only the powers to appoint Excise Inspec tors by promotions but not to determine inter se seniority etc.
Hence vide Excise Recruitment Rules 1936, Rule No. I vide notification No. 411 dated 31.3.75, after clause (2) clause (3) was added making provision for promotion from selected confirmed Upper Division Assistants and Head Clerks of the District Excise Office and also added at the end of the Rule 1 that at least 5% of the total vacancies shall be filled up by promotion from among the above notified staff.
In this rule the provision for relaxation of direct recruit ment quota was made but there was no relaxation of the quota of promotees.
[197G; 198C; 199E] The State Government made this decision and order on 20.3.74 regarding reservation of 5% of the total vacancies to be filled by promotion for the year 1974 75 but the notification to that effect was published on 31.3.75.
The promotion could not have been given unless the decision was confirmed by notification.
It was only after the notifica tion of 31.3.75, that the Upper Division Assistants were promoted as Excise Inspectors for the first time out of the 5% quota created in the vacancies of 1974 75, in the year 1976.
[205G H; 206B] The Government has rightly promoted the appellants within their quota in the vacancies occurred in 1974 by its orders.
[211D] When there is no relaxation in the quota vacancies as between the direct recruitment and promotees, the determina tion of inter se 195 seniority shall be determined in the order of rotation of vacancies reserved for both categories, the direct recruits made within their quota would always deemed to be senior to those promotees recruited inexcess of their quota.
[210H; 21 1A] V.B. Badami vs State of Mysore, AIR 1980 SC 1561; A. Janardhana vs Union of India & Ors., ; and O. Singla & Anr.
vs Union of India & Ors.
, ; , relied on.
It is only when the quota rule was not adhered to or followed for a long time and the promotees are allowed to officiate in the quota of direct recruits for a period of 15 to 20 years, in such circumstances Government is empowered to relax the quota rule and the promotees will have seniori ty from the date of the continuous officiations in the cadre, grade or service.
[210F] Narendra Chadha vs Union of India, ; and G.S. Lamba & Ors.
vs Union of India & Ors.
, ; Quotas are fixed under the relevant rules of recruit ments and can be altered only by fresh determination of quotas under the relevant rules of recruitments.
[201 C] In the instant case, there was no rule for relaxation of the quota.
The respondent Nos. 3 & 4 who were promoted from selected Excise Sub Inspectors to the Inspectors of Excise in 1974, officiated till 7.5.
1976 when the appellants joined as Inspectors of Excise from their 5% quota.
It cannot be said in such circumstances that the quota was not filled up for a long period nor can it be said that the respondents 3 & 4 who were promoted in excess of their quota have worked as inspectors of Excise for long time and as such the respondents 3 & 4 cannot claim to be seniors to the appellants.
[210G H; 211A] The appellants being promoted as Inspectors of Excise from the 5% quota of vacancies of the year 1974 75, were rightly shown as seniors.
in the gradation list prepared by the Government on 9.1.1986 which is legal and valid.
[21 1D]
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6406.txt
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Appeal No. 937 of 1965.
Appeal from the judgment and order dated September 13.
1963 of the Punjab High Court in Civil Writ No. 841 of 1962 and Civil Appeal No. 938 of 1965.
Appeal from the order dated September 13, 1963 of the Punjab High Court in Civil Writ No. 526 of 1963 and Civil Appeal No. 1195 of 1967.
Appeal from the order dated August 6, 1964 of the Punjab High Court in Letters Patent Appeal No. 136 of 1964.
D. R. Prem, R. N. Sachthey and section P. Nayar, for the appellants (in C.A. No. 937 of 1965).
R. N. Sachthey, and section P. Nayar, for the appellants (in C.A. s Nos. 938 of 1965 and 1195 of 1967).
section V. Gupte, Bhawani Lal and B. P. Jha, for respondent Nos. 1 to 3 (in C.A. No. 937 of 1965).
R. V. Pillai, for the respondent (in C.A. No. 938 of 1965).
H. L. Mittal and Naunit Lal, for the respondents (in C.A. No. 1195 of 1967).
657 Civil Appeal No. 937 of 1965 The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by certificate, from the judgment of the Punjab High Court dated September 13, 1963 in Civil Writ No. 841 of 1962.
Nanak Chand owned agricultural lands in Bahawalpur Statenow forming part of West Pakistan.
He also owned some property at Kot Kapura, Tehsil Faridkot, District Bhatinda now located in India.
Nanak Chand had in normal course of business come to Bhatinda where he died in June, 1947 leaving behind three sons, Om Parkash, Sat Narain and Ram Parshotam who are the respondents in this appeal.
As a result of the partition of India the land originally owned by Nanak Chand and after his.
death by his sons in Bahawalpur State had to be abandoned.
After the partition of India the three respondents migrated to India and filed separate claims in accordance with law and obtained allotment of certain area in village Kot Kapura, district Bhatinda in lieu of the land abandoned by them in Pakistan.
The Revenue Authorities allotted an area measuring 206.8 1/2 standard acres in village Kot Kapura, District Bhatinda.
After the allotment was made one Rur Singh filed a complaint before the Managing Officer that these respondents had received double allotments in villager Kot Kapura.
The complaint was examined by Shri Shankar Das Katyal, Managing Officer who held that Shri Rur Singh failed to substantiate the allegation of double allotment.
But the Managing Officer came to the conclusion that Nanak Chand although he had died long before the partition of the country must be treated as a displaced land holder for the purpose of allotment of land.
The reason given was that his name continued to be shown in the Jamabandi as the owner of the abandoned land in Pakistan.
In consequence of this finding a large portion of the land allotted to, the three respondents was cancelled by the Managing Officer by his order dated September 18, 1961.
The three respondents pre ferred an appeal before the Assistant Settlement Commissioner and a revision petition before the Chief Settlement Commissioner Punjab but the appeal and the revision petition were both dismissed.
In dismissing the revision petition the Chief Settlement Commissioner relied, upon paragraph 17 of Tarlok Singh 's Land Resettlement Manual, 1952 Edition, page 180 which was to the following effect : "Even where a displaced land holder in whose name the land stands in the records received from West Punjab has died, the allotment is made in the name of the deceased.
In the fard taqsim, 'therefore, the entry will be in the name of the deceased land holder.
Possession is ordinarily given to the heirs but there must be regular 658 mutation proceedings before the entry in column 3 of the fard taqsim is altered in favour of the heirs.
" It was held by the Chief Settlement Commissioner that this paragraph related to all persons who continued to be shown as owners in the revenue records irrespective of the fact whether they had died before or after migration.
In other words, the Chief Settlement Commissioner took the view that the land could only be allotted in the name of Nanak Chand even assuming that he had died in June, 1947.
Against the order of the Chief Settlement Commissioner the respondents filed a Writ Petition (Civil Writ No. 841 of 1961) before the Punjab High Court.
The Writ Petition was allowed by the High Court by its order dated September 13, 1963 and the orders of the Chief Settlement Commissioner ,dated June 8, 1962, of the Assistant Settlement Commissioner dated December 26, 1961 and of the Managing Officer dated September 18, 1961 were all quashed by the grant of a writ in the nature of certiorari.
It is necessary at this stage to set out the provisions of the relevant statutes.
Section 2(b) of the East Punjab Evacuees ' (Administration of Property) Act, 1947 (East Punjab Act No. XIV of 1947) defines an "evacuee" as meaning "a person ordinarily resident in or owning property or carrying on business within the territories comprised in the Province of East Punjab, who on account of civil disturbances, or the fear of such disturbances, or the partition of the country : (i) leaves or has since the first day of March 1947, left the said territories for a place outside India, or (ii) cannot personally occupy or supervise hi,; property or business.
" Section 4 of that Act provided that "All evacuee property situated within the Province shall vest in the Custodian for the purposes of this Act and shall continue to be so vested until the Provincial Government by notification otherwise directs." In pursuance of the powers conferred by the rules made by the State Government under cls.
(f) and (ff) of section 22(2) of the East Punjab Evacuees, (Administration of Property) Act, 1947, the Custodian issued a notification No. 4892/S on July 8, 1949 regarding the conditions on which he was prepared to grant allotment of land vested in him under the provisions of the said Act to displaced persons.
Para 2(e) of this notification states " "Displaced person" means a land holder in the territories now comprised in the province of West Punjab or a person of Punjabi extraction who holds land in the Provinces of North Western Frontier Province, Sind or Baluchistan or any State adjacent to any of the aforesaid Provinces and acceding to the Dominion of Pakistan, and who has since the 1st day of March , 1947, abandoned or been made to abandon his land in the 659 said territories on account of civil disturbances, or the fear of such disturbances, or the partition of the country.
" Section 2(d) of the East Punjab Refugees (Registration of Land, Claims) Act.
1948 (East Punjab Act No. XII of 1948) states "2.
Interpretation.
In this Act unless there is anything repugnant in the subject or context, (d) 'refugee ' means a landholder in the territories now comprised in the Province of West Punjab, or who or whose ancestor migrated as a colonist from the Punjab since 1901 to the Provinces of North West Frontier Province, Sind or Baluchistan or to any State adjacent to any of the aforesaid Provinces and acceding to the Dominion of Pakistan, and who has since the 1 st day of March, 1947, abandoned or been made to abandon his land in the said territories on account of civil disturbances, or the fear of such disturbances, or the partition of the country;" Section 2(c) defines a "landholder" to mean "an owner of land.
or a tenant having a right of occupancy under the Punjab Tenancy Act, 1887 (XVI of 1887) or a tenant as defined in section 3 of the Colonization of Government Lands Act, 1912 (Punjab Act V of 1912) and such other holder or grantee of land as may be specified by the Provincial Government;".
Section 2(c) of the East Punjab Displaced Persons (Land Resettlement) Act,1949 (East Punjab Act No. XXXVI of 1949) defines a "displaced person" as follows : " 'displaced person ' means a land holder in the territories now comprised in the Province of West Punjab or a person of Punjabi extraction who holds land in the Provinces of North West Frontier Province, Sind or Baluchistan or any State adjacent to any of the aforesaid Provinces and acceding to the Dominion of Pakistan, and who has since the 1st day of March 1947, abandoned or been made to abandon his land in the said territories on account of civil disturbances, or the fear of such disturbances, or the partition of the country".
Section 2(b) of this Act defines an "allottee" as follows " allottee ' means a displaced person to whom land is allotted by the Custodian under the conditions published with East Punjab Government notification No. 4892/S, dated the 8th July, 1949, and includes his heirs,.
legal representatives and sub lessees".
660 The main question to be considered in this appeal is whether Nanak Chand was a 'displaced person ' as defined in para 2 (e) of the notification dated July 8, 1949 ,or a "refugee" as defined under section 2(d) of Act No. XII of 1948 and whether he was entitled for allotment of land.
It is manifest that the expression "displaced person" or the word "refugee" has been used in the relevant enactments with reference to a person who has migrated to India as a result of disturbances or fear of disturbances or the partition of the country.
Therefore if a person had died before the disturbances took place or he had never migrated to India as a result of the disturbances and he died before such migration, he could not come within the meaning of the expression "displaced person" or the word "refugee" under the relevant statutory enactments.
It is manifest in the present case that Nanak Chand died in June, 1947 long before the partition of the country and he did not abandon or was not made to abandon his land in Bahawalpur on account of the civil disturbances or the fear of such disturbances or the partition of the country.
It was, however, contended by Mr. D. R. Prem on behalf of the appellants that even though Nanak Chand never became a refugee or a displaced land holder, the allotment had to be made in his name because he was shown in the revenue records received from West Punjab as the owner of the land and there had been no mutation of the names of the respondents in the revenue records.
Reference was made in this connection to paragraph 17 of Tarlok Singh 's Land Resettlement Manual which has already been quoted.
It was contended by Mr. Prem that the instructions contained in this paragraph would apply even though Nanak Chand had never become a refugee or a displaced land holder and the allotment has to be made in his name by the revenue authorities because his name still stands in the revenue records received from West Punjab.
, We are unable to accept this argument as correct.
It is not disputed that paragraph 17 of Tarlok Singh 's Manual has no statutory authority but it merely embodies executive or administrative instructions for general guidance.
If there is a conflict between the provisions contained in this paragraph and the statutory enactments already referred to it is manifest that the statutory provisions must take precedence and must prevail over the directions contained in para 17 of Tarlok Singh 's Manual.
In this context it is essential to emphasise that under our constitutional system the authority to make the law is vested in the Parliament and the State Legislatures and other law making bodies and whatever legislative power the executive administration possesses must be derived directly from the delegation of the legislature and exercised validly only within the limits prescribed.
The notion of inherent or autonomous law making power in the executive administration is a notion that must be emphatically reject 661 ed.
As observed by Jackson, J. in a recent American case Youngstown Sheet & Tube Co. vs Sawyer(1) "With all its defects delays and inconveniences men have discovered no technique for long preserving free government except that the Executive be under the law, and that the law be made by parliamentary deliberations.
" In our constitutional system, the central and most characteristic feature is the concept of the rule of law which means, in the present context, the authority of the law courts to test all administrative action by the standard of legality.
The administrative or executive action that does not meet the standard will be set aside if the aggrieved person brings the appropriate action in the competent court.
The rule of law rejects the con ception of the Dual State (2 ) in which governmental action is placed in a privileged position of immunity from control by law.
Such a notion is foreign to our basic constitutional concept.
In our opinion, however, it is possible to give a restricted interpretation to paragraph 17 of Tarlok Singh 's Manual so as to make it consistent with the requirements of the statutory enactments.
The intention of para 17 is that it is applicable only to such persons who are land holders at the time of their becoming displaced persons or refugees and who died afterwards before allotment could be made in their favour.
In other words, the paragraph applies to a displaced land holder who dies after having become a "displaced person" within the meaning of the relevant statutory enactments referred to above.
The paragraph does not apply to a case of, a person who was not a displaced land holder at the time of his death.
In the present case it is admitted that Nanak Chand never became a displaced land holder.
On the other hand, Nanak Chand died before he became a displaced land holder and therefore para 17 of Tarlok Singh 's Manual has no application to the facts of the present case.
For these reasons we hold that this appeal has no merit and it must be dismissed with costs.
Civil Appeals Nos.
938 of 1965 & 1195 of 1967 The question arising in these two appeals is identical with the question of law in Civil Appeal No. 937 of 1965.
For the reasons given in that judgment we hold that the decision of the High Court challenged in these appeals is correct and these appeals must be dismissed with costs.
R.K.P.S. Appeals dismissed.
(1) ; , 655.
(2) This term is derived from Fraenkel, The Dual State (1941).
|
N owned agricultural lands in Bahawalpur State now forming part of Pakistan and also owned some property in Punjab in India.
He died in June 1947 while on a visit to India in the normal course of business, leaving behind three sons, the respondents in the appeal.
On the partition of India, the land in Pakistan originally owned by N and after his death by his sons, had to be abandoned.
After migrating to India, the three respondents filed separate claims as displaced persons and were allotted an area of land in Punjab.
Thereafter a complaint was filed before the Managing Officer that these respondents had received double allotments.
The Managing Officer, held this allegation was not substantiated but came to the conclusion that N, although he had died before the partition, must be treated as a displaced land holder for the purpose of allotment of land as his name continued to be shown in the Jamabandi as the owner of the abandoned land in Pakistan.
In consequence of this finding a large portion of the land allotted to the three respondents was cancelled by an order of the Managing Officer dated September 18, 1961.
Appeals made by the respondents to the Assistant Settlement Commissioner as well as revision petitions before the Chief Settlement Commissioner Punjab, were dismissed.
In dismissing the revision petitions, the Chief Settlement Commissioner relied on para.
17 of "Tarlok Singh 's Land Resettlement Manual" 1952 edition Page 180, to the effect that "Even where a displaced land holder in whose name the land stands in the records received from West Punjab has died, the allotment is made in the name of the deceased".
He therefore upheld the view 4 at the land could only be allotted in the name of N.
The respondents then filed a writ petition against the orders of the Chief Settlement Commissioner which was allowed.
On appeal to this Court, HELD:Dismissing the appeal, The definition of a "displaced person" in para 2(e) of the Notification of July 8, 1949, issued by the Custodian in accordance with provisions of the East Punjab Evacuees (Administration of Property) Act 1947, and the Rules made thereunder, or of a "Refugee" in Section 2(d) of the East Punjab Refugees (Registration of Land Claims) Act 12 of 656 1948, show that these expressions have been used in the relevant enactments with reference to a person who has migrated to India as a result of disturbances or fear of disturbances or the partition of the country.
Therefore if a person had died before the disturbances took place or he had never migrated to India as a result of the disturbances and he died before such migration, he could not come within the meaning of the expression "displaced person" or the word "refugee" under the relevant statutory enactments.
N died in June, 1947, long before the partition of the country and he did not abandon or was not made to abandon his land in Bahawalpur on account of the civil disturbances or the fear of such disturbances or the partition of the country.
[660 A D] There was no force in the contention that even though N never became a refugee or a displaced land holder, the allotment had to be made in his name because he was shown in the revenue records received from West Punjab as the owner of the land and there had been no mutation of the names of the respondents in the revenue records.
The rule in para 17 of "Tarlok Singh 's Manual" consistently with the statutory enactments, would be applicable only to such persons who were land holders 'it the time of their becoming displaced persons or refugees and who died afterwards before allotment could be made in their favour.
It does not apply to a person like N who was not a displaced land holder at the time of his death.
[661 D F]
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2386.txt
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Appeals Nos.
1043 1044 of 1963.
Appeals by special leave from the judgment and decree dated April 8, 1963 of the Bombay High Court in Appeals Nos. 10 and 11 of 1962.
S.T. Desai, V. N. Thakar, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the appellant (in both the appeals).
G.S. Pathak, 0.
P. Malhotra and 1.
N. Shroff, for respon dent No. 1 (in both the appeals).
V.J. Merchant, for respondents Nos. 2 and 4 to 7 (in C.A. No. 1043/1963).
April 24, 1964.
The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.
These appeals, by special leave, arise in the following circumstances: section N. Asnani owned Chevrolet Car bearing registered No. AA 4431.
He insured it with the New Asiatic Insurance Co. Ltd., hereinafter referred to as the company, under a policy dated November 26, 1957.
Asnani permitted Pessumal Dhanamal Aswani, hereinafter called Pessumal, to drive that car.
When Pessumal was driving the car with Daooji Radhamohan Meherotra and Murli Dholandas in the car, the car met with an accident as a result of which Meherotra died and Murli received injuries.
Pessumal himself owned a Pontiac car which had been insured with the Indian Trade & General Insurance Co. Ltd., under policy No. Bombay P.C. 42733 2, dated November 18, 1957.
The heirs of Meherotra instituted suit no.70 of 1959 against Pessumal for the recovery of Rs. 2,50,000/ by way of damages with interest.
Murli instituted suit No. 71 of 1959 against Pessumal to recover Rs. 1,50,000/ by way of damages.
Notices under section 96(2) of the (Act IV of 1939), hereinafter called the Act, were issued to the New Asiatic Insurance Co, Ltd. The notice was given to the company as the defendant 's liability to third parties had been.
insured with it under its policy No. MV/4564.
The company then took out Chamber Summons and it was contended that notice under section 96(2) of the Act was bad in law and should be set aside and that the company was not liable to satisfy any 869 judgment which might be passed in the suit against the defendant.
Alternatively, it was prayed that the company be added as a party defendant to the suit and/or be authorised to defend the suit in the name of the defendant.
Tarkunde J., held the notice issued to the company in the suits under section 96(2) of , the Act, to be bad in law and, accordingly, set them aside.
The plaintiffs then filed Letters Patent Appeals which were allowed and the Chamber Summonses were dismissed.
It was directed that the trial Judge would hear the alternative prayers in the Chamber Summonses and make the necessary orders, It is against this order in each of the appeals that the company has preferred these appeals, after obtaining special leave.
To appreciate the contentions of the parties in these ap peals, reference may be made to certain provisions in the two policies.
The various provisions in the two policies are identical in matters affecting the question for determination before us.
We, therefore, set out the relevant provisions from the policy issued by the company and would refer to differences, if any, at the proper place.
The policy is described as 'Private Car (Comprehensive Policy) '.
The policy issued by the other company does not so describe it, but it is also a Comprehensive Policy as the premium charged is on that basis.
The policy insures, under Section I against loss or damage, under Section II against liability to third parties and under Section III against liability for medical expenses.
Thereafter, follow the general exceptions and conditions.
Para 1 of Section II indemnifies the insured, i.e. Asnani who effected the policy, in the event of accident caused by or arising out of the use of the motor car, against all sums which he may become legally liable to pay in respect of death or of bodily injury to any person.
Paras 3 and 4, generally known as 'Other drivers ' 'Extension Clause ' and 'Other Vehicles Extension Clause ' respectively, are material and are set out in full: "3.
In terms of and subject to the limitations of the indemnity which is granted by this section to the Insured the Company will indemnify any driver who is driving the Motor Car on the Insured 's order or with his permission provided that such Driver: (a)is not entitled to indemnity under any other policy.
(b)shall as though he were the Insured observe, fulfil and be subject to the terms, exceptions and conditions of the policy in so far as they can apply.
870 4.
In terms of and subject to the limitations of the indemnity which is granted by this Section in connection with the Motor Car the Company will indemnity which is granted by this Section in conPrivate Motor Car (but not a Motor Cycle) not belonging to him and not hired to him under a Hire Purchase Agreement".
Under the heading 'Avoidance of certain terms and right of recovery ', the policy states: "Nothing in this Policy or any endorsement hereon shall affect the right of any person indemnified by this Policy or any other person to recover an amount under or by virtue of the provisions of the , section 96.
But the Insured shall repay to the Company all sums paid by the Company which the Company would not have been liable to pay but for the said provisions.
" Condition 6 reads: "6.
If at the time any claim arises under this Policy there is any other existing insurance covering the same loss damage or liability the Company shall not be liable to pay or contribute more than its rateable proportion of any loss damage compensation costs or expense.
Provided always that nothing in this Condition shall impose on the Company any liability from which but for this Condition it would have been relieved under proviso (a) of Section II 3 of this Policy".
The Schedule to the policy mentions the limitations as to use and under heading 'Driver ' notes (a)Any person: (b)The insured may also drive a motor car not belonging to him and not hired to him under a Hire Purchase Agreement.
Provided that the person driving holds a licence to drive the Motor Car or has held and is not disqualified for holding or obtaining such a licence".
At the end of the Schedule is an important notice which reads: "The insured is not indemnified if the Vehicle is used or driven otherwise than in accordance with this Schedule.
Any payment made by the Company by reason of wider terms appearing in the Certificate in order to comply with is recoverable from the Insured.
See the clause headed 'Avoidance of certain terms and right of recovery '." 871 The contention for the appellant is that in view of para 4 of Pessumal 's policy issued by the other company, Pessumal was indemnified against any liability incurred by him whilst personally driving a private motor car not belonging to him and not hired to him under a Hire Purchase Agreement, and that, therefore, lie was not included among the persons indemnified in para 3 of the policy it had issued to Asnani on account of proviso (a) to para 3 which reads: "provided that such driver is not entitled to indemnity under any other policy".
This contention is met by the respondent on the ground that this proviso is not a limitation on the class of persons indemnified under para 3, that class being the drivers driving the Chevrolet car insured under the policy, but merely amounted to a condition affecting the liability of the company vis a vis the driver who was entitled to indemnity under any other policy.
The question thus reduces itself to the determination of whether Pessumal comes within the persons indemnified in para 3 of the policy issued by the company.
We may now set out the relevant provisions of the Act which have a bearing on the contention between the parties.
Chapter VIII of the Act provides for insurance of motor vehicles against third party risks.
Section 93 defines the expressions 'authorised insured ', 'certificate of insurance ' and reciprocating country '.
The relevant portions of the various sections are: "94.
No person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter.
Explanation A person driving a motor vehicle merely as a paid employee, while there is in force in relation to the use of the vehicle no such policy as is required by this subsection, shall not be deemed to act in contravention of the sub section unless he knows or has reason to believe that there is no such policy in force.
(2) Sub section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise.
(3) The appropriate Government may.
by order, exempt from the operation of sub section (1) any 872 vehicle owned by any of the following authorities.
namely: Provided that no such order shall be made in relation to any such authority unless a fund has been established and is maintained by that authority in accordance with the rules made in that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties.
(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which (a) is issued by a person who is an authorised insurer or by a co operative society allowed under section 108 to transact the business of an insurer, and (b) insures the person or classes of person specified in the policy to the extent specified in sub section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place: (4) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases, (5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person.
If, after a certificate of insurance has been issued under subsection (4) of section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability 873 as is required to be covered by a policy under clause (b) of sub section (1) of section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be" entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely (3)Where a certificate of insurance has been issued under sub section (4) of section 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of subsection (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub section (1) of section 95, be of no effect : Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub section shall be recoverable by the insurer from that person.
(4) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under 874 the policy in respect of that liability, the insure shall be entitled to recover the excess from that person (6)No insurer to whom the notice referred to in subsection (2) or sub section (2A) has been given shall be entitled to avoid his liability to any person en titled to the benefit of any such judgment as is referred to in sub section (1) or sub section (2A) otherwise than in the manner provided for in sub section (2), or in the corresponding law of the State of Jammu and Kashmir or of the reciprocating country, as the case may be".
Chapter VIII of the Act, it appears from the heading, makes provision for insurance of the vehicle against third party risks, that is to say, its provisions ensure that third parties who suffer on account of the user of the motor vehicle would be also to get damages for injuries suffered and that their ability to get the damages will not be dependent on the financial condition of the driver of the vehicle whose user led to the causing of the injuries.
The provisions have to be construed in such a manner as to ensure this object of the enactment.
Section 94 prohibits, as a matter of necessity, for insu rance against third party risk, the use of a motor vehicle by any person unless there exists a policy of insurance in relation to the use of the vehicle by that particular person and the policy of insurance complies with the requirements of Chapter VIII.
The policy must therefore provide insurance against any liability to third party incurred by that person when using that vehicle.
The policy should therefore be with respect to that particular vehicle.
It may, however, mention the person specifically or generally by specifying the class to which that person may belong, as it may not be possible to name specifically all the persons who may have to use the vehicle with the permission of the person owning the vehicle and effecting the policy of insurance.
The policy of insurance contemplated by section 94 therefore must be a policy by which a particular car is insured.
Section 95 lays down the requirements which are to be complied with by the policy of insurance issued in relation to the use of a particular vehicle.
They are: (1) the policy must specify the person or classes of person who are insured with respect to their liability to third parties; (2) the policy must specify the extent of liability which must extend to the extent specified in sub section (2); and (3) the liability which be incurred by the specified person or classes of person in respect of death or bodily injury to any person caused by or arising out of the use of the vehicle insured in a public place.
875 Sub section (4) of section 95 requires the issue of a certificate of insurance, in the prescribed form, to the person who effects the, policy.
The form of the certificate prescribed by the Motor Vehicles Third Party Insurance Rules, 1946, requires the specification of persons or classes of persons entitled to drive. ' The authorised insurer is also to certify in the certificate that the policy to which the certificate relates, as well as the certificate of insurance, are issued in accordance with the provisions of Chapter VIII of the Act.
Sub section (5) of section 95 makes the insurer liable to in demnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person.
If the policy covers the insured for his liability to third parties, the insurer is bound to indemnify the person or classes of person specified in the policy The same is the effect of sub section
(1) of section 96 which provides that the insurer is bound to pay to the person entitled to the benefit of a decree he obtains in respect of any liability covered by the terms of the policy against any person insured by the policy irrespective of the fact whether the insurer was entitled to avoid or cancel or might have avoided or cancelled the policy.
This means that once the insurer has issued a certificate of insurance in accordance with sub section
(4) of section 95 he has to satisfy any decree which a person receiving injuries from the use of the vehicle insured obtains against any person insured by the policy.
He is however liable to satisfy the decree only when he has been served with a notice under sub section
(2) of section 96 about the proceedings in which the judgment was delivered.
It is for this reason that a notice under sub section
(2) of section 96 was issued to the company and it is on account of the consequential liability in case the plaintiffs ' claim is decreed against Pessumal that the appellant challenged the correctness of the allegation that Pessumal was a person insured under the policy issued by it in respect of the Chevrolet car.
It follows from a consideration of these various provisions of the Act and this is not really disputed for the appellant that if under the terms of the policy Pessumal can be said to be the Person insured under para 3, the company would be liable to satisfy the decree if any passed against Pessumal.
The whole question then is whether Pesumal comes within the terms of para 3 of Section II of the policy.
Under this paragraph, the company indemnifies any person who is driving the motor car on the insured 's order or with his permission.
Pessumal was driving the car with the permission of Asnani who had effected the Policy and there fore the company undertook to indemnify Pessum 'al in accor dance with this provision of para 3.
The appellant, however.
876 contends that this provision should not be read as defining by itself the class of persons insured under it, in view of the further classification of this class of drivers by proviso (a).
It is contended that only such drivers were indemnified as were not entitled to indemnity under any other policy and thus drivers who were entitled to indemnity under any other policy were taken out of the general class of drivers driving the car on the insured 's order or with his permission.
We do not agree with this contention.
The proviso is not really a classification of drivers but is a restriction on the right of the driver to recover any dam ages be had to pay, from the company.
The driver who can ,get indemnity from any other company under any other policy is, under this contractual term, not to get indemnity from the company.
The proviso thus, affects the question of indemnity between a particular driver and the company and has nothing to do with the liability which the driver has incurred to the third party for the injuries caused to it and against which liability was provided by section 94 of the Act and was affected by the policy issued by the company.
The company, by agreeing with the person who affects the policy, to insure him against liability to third parties, takes upon itself the entire liability of the person effecting the insurance.
It is open to the insurer not to extend this idemnity to the insured to other persons but if it extends it to other persons, it cannot restrict it vis a vis the right of the third party entitled to damages, to recover them from the insured, a right which is not disputed.
A proviso meant to exempt certain persons from the general classification Will have to be related to considerations affecting it and is not to be related to such classified persons right to indemnity from any other insurer.
In this connection reference may be made to proviso (b) which cannot in any case be a proviso relating to the classification of persons to be indemnified.
It provides that tie person indemnified under para 3 will observe, fulfil and be subject to the terms, exceptions and conditions of the policy in so far as they can apply to him.
We are further of opinion that clause (4) of Section II of Pessumal 's policy with the other company does not make that policy to be a policy within the meaning of section 94 of the Act in relation to the Chevrolet car by whose user Pessumal incurred liabilities sought to be established in the two suits.
The paragraph indemnifies the insured, i.e., Pessumal, whilst personally driving any private motor car.
It does not indemnify him against the liability incurred when driving any particular car and therefore, in view of what we have said earlier, Pessumal 's policy cannot be a policy of insurance in relation to the Chevro.
let car as required by section 94 of the Act.
Such a policy and any indemnity under it cannot be used for sub classifying drivers specified in the policy 'of the company.
877 The Act contemplates the possibility of the policy of in surance undertaking liability to third parties providing such a contract between the insurer and the insured, that is, the person who effected the policy, as would make the company entitled to recover the whole or part of the amount it has paid to the third party from the insured.
The insurer thus acts as security for the third party with respect to its realising damages for the ' injuries suffered.
but vis a vis the insured, the company does not undertake that liability or undertakes it to a limited extent.
It is in view of such a possibility that various conditions are laid down in the policy.
Such conditions, however, are effective only between the insured and the company, and have to be ignored when considering the liability of the company to third parties.
This is mentioned prominently in the policy itself and is mentioned under the heading 'Avoidance of certain terms and rights of recovery ', as well as in the form of 'An Important Notice ' in the Schedule to the policy.
The avoidance clause says that nothing in the policy or any endorsement thereon shall affect the right of any person indemnified by the policy or any other person to recover an amount under or by virtue of the provisions of the Act.
It also provides that the insured will repay to the company all sums paid by it which the company would not have been liable to pay but for the said provisions of the Act.
The 'Important Notice ' mentions that any payment made by the company by reason of wider .terms appearing in the certificate in order to comply with the Act is recoverable from the insured, and refers to the avoidance clause.
Thus the contract between the insured and the company may not provide for all the liabilities which the company has to undertake vis a vis the third parties, in view of the provi sions of the Act.
We are of opinion that once the company had undertaken liability to third parties incurred by the per sons specified in the policy, the third parties ' right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy.
Considering this aspect of the terms of the policy, it is reasonable to conclude that proviso (a) of para 3 of Section II is a mere condition affecting the rights of the insured who effected the policy and the persons to whom the cover of the policy was extended by the company, and does not come in the way of third parties ' claim against the company on account of its claim against a person specified in para 3 as one to whom cover of the policy was extended.
It has been contended for the appellant that it was not incumbent on the owner of a car to take out a policy of in surance indemnifying himself or any person permitted to drive the car and that if he does not insure the car and uses it he runs the risk of prosecution under section 125 of the Act.
This is 878 true, but has no relevant effect on the question for decision before us.
Asnani did insure his car with respect to liability against third persons.
We have to see whether the company, on account of undertaking that liability can be said to have insured Pessumal on account of his driving the car with the permission of Asnani.
The same may be said about the other contention for the appellant that there is nothing in the Act which makes it compulsory for an insurer to insist that the owner of the car takes out a policy in the widest terms possible covering any person who drives the car with his permission.
The company did agree under the policy to indemnify drivers who drove the car with the insured 's permission.
The question is whether that undertaking covers Pessumal.
Lastly, we may mention that the question about tie proper stage at which the question raised by the company in the Chamber notice is to be decided, came up for consideration at the hearing.
We however do not propose to express any opinion on that point in this case.
We are of opinion that the High Court rightly held that the company had insured Pessumal in view of para 3 of Section II of the policy and that it comes within the expression 'insurer ' in section 96 of the Act.
We therefore dismiss the appeals with costs of hearing one set.
Appeals dismissed.
|
A had insured his car with the appellant under a comprehen sive policy.
A permitted B, (who had insured his own car with another company) to drive his car and while B was driving the car it met with an accident.
As a result of the accident died and D sustained serious injuries.
Both C and D were in the car.
The heirs of C and D filed suits for damages.
Notices under section 96(2) of the were issued to the appellant who thereupon took out a Chamber Summons contending that the notice was bad in law.
Alternatively it was contended that the appellant be permitted to defend the suit in the name of the defendant.
The Court held that the notices were bad.
The plaintiffs filed Letters Patent appeals with success and the Chamber Summons were dismissed and the trial Judge was directed to hear the alternative prayer.
Against this Order the present appeal was filed with special leave.
The contention of the appellant was that in view of para graph 4 of B 's own policy issued by the other company which indemnified B against any liability incurred by him whilst personally driving a private car not belonging to him or hired by him.
under a Hire Purchase agreement, B was not included among persons indemnified in para.
3 of A 's policy which the appellant had issued on account of proviso (a) to the said para.
The respondent contended that this proviso is not a limitation on the class of persons indemnified under para.
3 that class being the drivers driving A 's car insured under the policy but merely amounted to a condition affecting the liability of the company vis a vis the driver who was entitled to be indemnified under any other policy.
Held: (i) From a consideration of sections 93, 94, 95 and 96 of the it follows that if under the terms of the policy B can be said to be the person insured under Para. 3 ,of the policy, the company would be liable to satisfy the decree if any passed against B. (ii)The appellant by agreeing with the person who effects the policy, to insure him against liability to third parties, takes upon itself the entire liability of the person effecting the insurance.
It is open to the insurer not to extend the indemnity to the insured to other persons but if it extends it to other persons, it cannot restrict it vis a, vis the right of the third party ,entitled to damages to recover them from the insured, a right which is not disputed.
A proviso meant to exempt certain persons from the general classification will have to be related to considerations affecting it and is not to be related to such ,classified person 's right to indemnity from any other insurer.
(iii)The cl.
(4) of section II of B 's policy with the other company does not make that policy to be a policy within the meaning of L/P(D))1SCI 28(a) 368 s.94 of the Act in relation to A 's car by whose user B incurred liabilities sought to be established in the two suits.
Such a policy and any indemnity under it cannot be used for sub classifying drivers specified in the policy issued to A by the appellant.
(iv)The High Court was correct in holding that the ap pellant had insured B in view of para.
3 of section II of that policy and that it comes within the expression insurer in section 96 of the Act.
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1816.txt
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Appeal No. 1648 of 1966.
Appeal from the judgment and decree dated July 9, 1964 of the Andhra Pradesh High Court in Writ Appeal No. 116 of 1963.
D. Narsaraju, A. Subba Rao and A.V.V. Nair, for the appellants.
P. Ram Reddy and .A. V. Rangam, for the respondents.
The Judgment of the Court was delivered by Grover J.
This is an appeal by certificate from a judgment of the Andhra Pradesh High Court given in a petition filed under article 226 of the Constitution by the appellants.
The facts may be stated.
The previous Maharajah of the impartible estate of Pithapuram in East Godavari District granted a lease on June 22, 1887 in favour of his third wife late Rani Subbayyamma Bahadur in respect of lands in various villages covering an area of acres 2669.65 cents.
The Rani executed a will on November 8, 1914 bequeathing all her property including the lease hold rights to the first appellant and on her death he succeeded to her estate.
On December 10, 1956 the first appellant transferred his lease hold rights in acres 2519.63 cents to the second 'appellant and reserved to himself the rights in and over the remaining area of acres 150.52 cents.
The third appellant an assignee from the second appellant.
L3 Sup.
CI/70) 4.
540 On the enactment of the Madras Estates (Abolition & Conversion into Ryotwari) Act, (Act XXVI of 1948), hereinafter called ' the Act, the title of which was changed to the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948, XXVI of 1948, the Pithapuram Estate was notified and abolished with effect from September 7, 1949.
The lands in question were taken over by the Government under the provisions of the Act and the Manager who had been ,appointed ordered that the rent should be collected direct from the tenants in possession of the lease hold lands under section 55(1) of the Act from the fasli year 1357 onwards on the reduced rates notified under the Madras Estates Land (Reduction of Rent) Act later called Andhra Pradesh (Andhra Area) Estates Land (Reduction of Rent) Act, Act XXX of 1947.
The first appellant filed a petition before the Estates Abolition Tribunal Vizianagram for payment of the proportionate share of compensation out of compensation payable for the estate of Pithapuram.
That petition was opposed by the Government and the principal land holder, according to whom, the claim of the first appellant was governed by section 20 of the Act.
This objection was upheld by the Tribunal.
On January 8, 1959 the High Court confirmed the order of the Tribunal in appeal holding that the first appellant 's rights were covered by section 20 of the Act.
In March 1960 the appellants filed a petition under article 226 of the Constitution praying for Various reliefs.
On September 9, 1960 the Government decided that as the lease was covered by section 20 of the Act the Board of Revenue be asked to terminate the same and to pay all the ,amounts collected as also the compensation payable under section 20 to the appellants.
On September 17, 1960 the Board of Revenue issued a notice to the appellants calling upon them to show cause as to why the lease hold rights in respect of acres 2669.65 cents should not be terminated.
The appellants sent a reply on October 17, 1960 representing that they had ,no objection to the termination of the lease provided the Government paid compensation to the appellants together with all the ,amounts so far collected by the Government from the lease hold lands without deducting any collection charges together with interest accruing thereon till the date of the payment.
On November 17, 1960 the Board formally terminated the lease and informed the appellants that compensation and all the amounts collected from the lease hold lands would be paid to them after deducting fist at 4 annas per acre and cesses etc.
but that no interest would be paid on the amounts collected by the Government and further that the Government was also entitled to deduct the collection charges.
On January 25, 1961 the Board made an order directing that the appellants should be ' paid a sum of Rs. 24,949.20 which was stated to be the net of collection made by the Government on the lease hold lands after deducting the cist at 4 annas per acre, cesses 'at 50% of the total 541 cesses payable and collection charges at 10% of the gross revenue collected.
The Board further observed that the actual extent of the lease hold lands came only to acres 2277.82 cents after the survey of which the portion transferred by the first appellant to the second appellant came to acres 2025.91 cents.
The amounts sanctioned by the Board represented the amounts collected on account of an area of acres 2025.91 cents.
The appellants raised objections to the extent of the land as also the amount of collections determined by the Board.
On October 23, 1961 the Board determined that a sum of Rs. 44,351.80 should be paid to the second appellant towards compensation payable under section 20 of the Act.
The payment, however, which was made was not for that amount and 'a sum of Rs. 4,000/ was deducted on the plea that some excess collection had been made by the lessee prior to the notified date.
Ultimately the second appellant was paid out of these amounts a sum of Rs. 1,499.16.
It was held that with regard to the extent of acres 150.52 cents on which the first appellant claimed compensation this area belonged to the Government and was not part of the estate.
The appellants raised various objections but without success.
A learned single judge of the High Court, who heard the writ petition, held that the proper course for the 'appellants to follow for the determination of the extent of the land was by way of a suit and that such a suit was not barred by section 20(2) of the Act.
It was held that there could have been no settlement under section 22 of the Act for Fasli 1369 ' and therefore the settlement rate in respect of that year should not be taken into consideration for computing the rate of compensation.
The deduction of 50% of cesses from the gross annual income was upheld.
No direction was given regarding payment of interest on the arrears of rent which had been withheld from 1950 to 1961.
It was held that the deduction of 10% towards incidental charges out of gross income instead o,f the net income was an error apparent on the face of the record and the order of the Board had to be revised accordingly.
The excess collections which had been made by the appellants from their tenants were to be deducted from the amount of rent due to the appellants and not from the compensation payable to them.
To a limited extent, therefore, the order of the Board was set aside and the case was remitted to it for disposal.
The appellants preferred an appeal to the High Court which was dismissed.
The first contention that has been raised on behalf of the 'appellants has a two fold aspect; first is that once there is notification of an estate under section 3 of the Act and the Government took possession of the lease hold lands the lessee ceased to have any rights relating thereto.
He was reduced to the position of a land 542 holder and whatever rights were preserved to him subsisted under section 20 of the Act.
The Government, from the notified date, became entitled to collect the rent as reduced under Act XXX of 1947.
But that was only till the ryotwari settlement was made and thereafter it was the settled rent which was payable.
Therefore for the period 1959 60 intervening between the ryotwari settlement and the termination of the lease the appellants were entitled to the rent at the rate at which it had been settled and not at the rate at which the reduced rent was payable under Act XXX of 1947.
According to the learned counsel for the appellants this would make a difference of about Rs. 2,200/ to which the appellants should have been found entitled apart from the other amounts which have been determined to be payable by way of rents which have been collected by the Government.
This ,contention does not appear to have been raised in this form either before the learned single judge or before the division bench of the High Court nor has it been clearly stated in the statement of case of the appellants.
It can be disposed of on the short ground that since it had not been raised before the High Court it is not open to the appellants to agitate it for the first time before this Court.
At any rate, there seems to be little force in the submission which has been made.
It cannot be disputed that the appellants were entitled to the amount collected by the Government under Act XXX of 1947 because even after the notification of the estate under section 3 of the Act the provisions of that Act including section 3 (4) relating to reduction of rents and the collection of the arrears of rent and the obligation to pay the same to the land holder continued to remain applicable.
Under section 16 every person whether land holder or a ryot who became entitled to ryotwari patta was liable to pay to the Government such assessment as might be lawfully imposed on the land.
That assessment had to be made by way of a ryotwari settlement under section 22.
Till the settlement was made the rent payable under Act XXX of 1947 was to constitute the land revenue payable to the Government from the notified date under section 23 of the Act.
But the assessment 'as settled under section 22 was a matter between the Government and the ryot and if, by virtue of the settlement, the Government was entitled to more amount than the rent which was payable under Act XXX of 1947 the appellants had no justification or right for claiming the excess amount.
The right of the lessee as land holder till terminated under section 20 of the Act was only to receive the rents collected under section 3(4) of Act XXX of 1947.
The other aspect with relates to the rate at which the compensation for termination of the lease hold rights payable to the 'appellants should have been computed was undoubtedly raised before the High Court.
What was urged and has now been reiterated is that as soon as a ryotwari settlement was brought into 543 force the provisions of Act XXX of 1947 ceased to be applicable owing to the provisions of section 23 of the Act.
Therefore for the purpose of compensation it was the settlement rate which should have been taken into account and not the rent payable under Act XXX of 1947.
Sub section (2) of section 20 provides that the person whose right has been terminated by the Government under the third proviso to sub section
(1 ) of the said section shall be entitled to compensation from the Government which shall be determined by the Board of Revenue in such manner as may be prescribed having regard to the value of the right and the unexpired portion of the period for which the right was created.
Rules have been framed in exercise o,f the power conferred by section 67 read with section 20(2) of the Act.
These rules are in the following terms: Rule 1. "The person, whose right has been terminated by the Government under the third proviso to sub section
(1) of section 20 of the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948, shall be entitled to compensation from the Government, which shall (i) in the case of 'a perpetual right, be equal to twenty times the net annual income derived by such person by virtue of such right; and (ii) in the case of a fight which was created for a specified number of years, be limited either to twenty times the net annual income derived by such person by virtue of such fight or the net annual income multiplied by the number of years of the unexpired portion of the period of such right, whichever is less.
Rule 2.
For purposes of rule 1, the net annual income of a person shall be the average net income during the three fasli years preceding the fasli year in which such right is terminated . . " The argument on behalf of the appellants is that the rates of rent prevailing in Fasli years 1367 and 1368 were the rents fixed under Act XXX of 1947 and the rate prevailing in Fasli year 1369 was the one settled under section 22 of the Act.
Therefore the average net income should have been computed with reference to the net reduced rate prevailing in Fasli years 1367 and 1368 and the settlement rate fixed in Fasli year 1369.
The view of the High Court was that till the determination of the lease under the third proviso to section 20(1 ) of the Act the rights which the appel 544 lants had acquired under the patta were preserved and if the Government had not undertaken to make these collections the tenants would have paid the land holder only the rents as reduced by Act XXX of 1947.
The ,fact that the Government had made the collections did not confer higher rights upon the appellants.
After referring to the provisions in section 23 that the land revenue payable to the Government with effect from the notified date shall, until the ryotwari settlement effected in pursuance of section 22 had been brought into force in the estate, be calculated in the manner set out in the section the question was examined by the High Court whether the rent that could be collected from the lease hold land would fall within the connotation of the land revenue payable to the Government.
Its considered opinion was that the rent payable to the land holder fell outside the range of section 22.
Therefore only the rent as fixed under Act XXX of 1947 in the three preceding years could be taken into account.
It must be remembered that the settlement rates represent what is payable to the Government as revenue in respect of the land granted on patta by the Government in the ryotwari settlement.
They do.
not represent what is due to persons like the appellants from their tenants.
We consider that it is not possible to equate the rents payable by the tenants to the appellants with the land revenue payable to the Government.
No exception could thus be taken to the manner and the measure of computing compensation.
The next contention raised is that in determining the compensation payable to the appellants it is the unexpired portion of the period for which lease was created that should have formed the basis and not the period provided by rule 1 (ii).
The unexpired portion of the lease, in the present case, was nearly 26 years.
It is submitted that rule 1 (ii) itself is contrary to the intendment of section 20(2) of the Act.
In this connection it is noteworthy that section 20(2) of the Act simply says that the rules must be framed having regard to the value of the right and the unexpired portion of the period for which the right was created.
That did not, in any way, fetter the power of the rule making authority to frame rule 1 (ii) in the manner in which it has been done.
Even where the lease creates a perpetual right the compensation payable has to be equal to 20 times the net annual income.
Where it is created for a specified number of years it has to be limited either to 20 times the net annual income or the net income multiplied by the number of years of unexpired portion of the period of lease "whichever is less".
If the unexpired portion is 26 years, as in the present case, the compensation could not be more than what it would be in the case of a perpetual lease.
Section 20(2)does not say that the amount of compensation must be arrived at only by multiplying the net income by the number of years of the un 545 expired portion of the lease.
As observed by the High Court it only envisages that this should be taken into account along with the value of the right.
We find no repugnancy between rule 1 (ii) and section 20(2) of the Act.
The next question on which a good deal of stress has been laid relates to the deduction made on account of the cesses.
It has been submitted that owing to section 3 (b) of the Act the estate vested in the Government and after such vesting there would be no land holder and therefore there was none to whom cesses were to be paid.
So the lessees even if originally liable to pay the cess ceased to be so Iiable after the vesting of the estate in the Government by virtue of section 3(f) which provides that the relationship of a land holder and a ryot shall, as between them, be extinguished.
It is pointed out that by virtue of the provisions of section 16 (1 ) of the Act the land holder or the ryot who became entitled to the 'ryotwari patta would be liable to pay to the Government such assessment as might be lawfully imposed on the land and these cesses were collected from the ryots by the Government.
Therefore the appellants were under no liability to pay the cess after the notified date.
Now in the patta dated June 22, 1887, there was a provision that the lessees would pay the local cess and other cesses payable by the ryots in accordance with the rules framed by the Government previously and to be framed in the future.
The High Court was right in saying that cess could not be excluded from the calculation of the net income because it had to be paid by the lessees along with the rent reserved under the lease.
This is substantiated by the definition of "rent" in section 3 (ii) of the Madras Estates Land Act which under section 2( 1 ) of the Act becomes incorporated in it.
The High Court referred also to numerous sections in the Act for the purpose of which rent includes any local tax, cess etc.
and it was observed that the word "rent" was of a comprehensive nature and there was no warrant for restricting its content.
Under rule 2 it was the average net income which had to be taken into consideration.
If the word "rent" is to be taken in a comprehensive sense as including taxes and cesses then the net income could only be arrived 'at by taking into account the cesses payable by the lessee.
In our judgment cesses had to be deducted from the annual gross income in arriving at the net annual income which could form the basis of compensation.
Lastly it has been contended that the appellants are entitled to interest on the amounts of unpaid rents in the hands of the Government for the period 1950 to 1961 as under section 55 of the Act after the notified date the land holder is not entitled to collect any rent which accrued due to him from any ryot before and is outstanding on that date.
It is the manager appointed under section 6 546 who alone would be entitled to collect the said 'amounts together with interest.
The amounts were collected but no payment was made to the appellants.
On the language of section 55 as well as under the general principles of law, it is submitted, the appellants should have been held to be entitled to the payment of interest on the amounts withheld by the Government.
Section 55 (1 ) clearly provides that it is the duty of the manager appointed under section 6 to collect not only the rent but also any interest payable thereon together with any cost which might have been decreed and he has to pay the same to the land holder.
It would appear that on the analogy of this provision an obligation existed on the part of the Government to pay interest to the land holders in case the amounts collected were not paid as and when collected.
In National Insurance Co. Ltd., Calcutta vs Life Insurance Corporation of India(1), the appellant carried on life insurance business in addition to other insurance business.
On the passing of the , which was intended to nationalise all life insurance business, "its controlled business" stood vested in the Life Insurance Corporation of India from the appointed date but the company was entitled to compensation.
The Life Insurance Tribunal to whom the dispute between the company and the Life Insurance Corporation had been referred awarded certain amount 'as compensation out of which a set off was to be allowed on a sum which was specified.
It was held that the company was entitled to interest on the balance at 4% per annum.
Reference was made in this case to a number of English and Indian decisions in which the rule has been laid down that though under the statute there is no provision for payment of interest it should, nevertheless, be awarded, the principle being that if the owner of an immovable property loses possession of it he is entitled to claim interest in place of the right to retain possession.
It may be mentioned that even under the Interest Act, 1839 the power to award interest on equitable grounds was expressly saved by the proviso to section 1.
In our opinion, and this position has not been seriously controverted on behalf of the respondents, the appellants should have been held entitled to interest at the rate of 6% per annum.
In the result the appeal is allowed only to the extent that it is declared that the appellants should have been paid interest at the rate of 6% per annum on the amount of rents collected by the manager on behalf of the Government and the final figure of compensation should have been determined after taking into account the amount of interest which accrued due to such of the appellants as were entitled to it.
In view of the entire circumstances there will be no order as to costs.
V.P.S. Appeal dismissed but interest allowed.
(1) [1963] Supp. 2 S.C.R. 971.
|
The appellants were the transferees of lease hold rights granted by the proprietor of an impartible estate in respect of lands in the estate.
The estate was notified and abolished in 1948 under the Andhra Pradesh (Andhra Area) Estates (Abolition and Conversion into Ryotwari) Act, 1948.
The Manager who was appointed collected the rent as reduced under the Madras Estates Land (Reduction of Rent) Act.
direct from the tenants in possession of the lease hold lands from the fasli year 1357, but did not pay it over to the appellants.
Ryotwari settlement was introduced in the lands in 1959 (fasli 1369), and in 1960 (fasli 1370), the lease, which was covered by section 20 of the Abolition Act, was terminated, the unexpired portion of the lease period being 26 years.
The appellants were paid in 1961: (1) certain sums towards the amount collected as rent till the termination of the lease, and (2) compensation.
No interest was paid on the rent collected by the Manager.
On the question regarding the correctness of the basis of the calculations made by the respondent, HELD: (1) The respondent was right in holding that the appellants were entitled only to the rents collected, under section 3(4) of the Rent Reduction Act, and not to the assessment made by way of ryotwari settlement under section 22 of the Abolition Act.
That assessment was a matter between the Government and the tenant and if, by virtue of it, the Government was entitled to more amount as land revenue than the rent payable under the Rent Reduction Act, the appellants had no right to such excess amount.
[542 F H] (2) (a) Under section 20(2) of the Abolition Act rules for determining compensation had to be framed having regard to the value of the right and the unexpired portion of the period for which the right was created.
Rule 1 (ii) framed under the section, provides that in the case of a right which was created for a specified number of years, the compensation shall be limited either to twenty times.
the net annual income or the net annual income multiplied by the unexpired portion of the period of such right, whichever is less; and, under r. 2, net annual income is the average net income during 3 lash years preceding the lash year in which the right was terminated.
Since the rule is framed having regard to the unexpired period, there is no repugnancy between the section and the rule.
[543 B G; 544 E H; 545 A] 539 (b) The settlement rates under the ryotwari settlement represent what is payable to the Government as revenue and do not represent what is due as rent to the appellants from their tenants.
Therefore, the respondent was right in determining the net annual income under r. 1 (ii) by taking into account only the rent as fixed under the Rent Reduction Act in the three preceding fasli years 1367 1369 and not the settlement rate for the fasli year 1369.
[544 D E] (c) The definition of rent in the Madras Estates Land Act, 1908, incorporated into the Abolition Act, and the sections of the Abolition Act show that 'rent ' includes any local tax, eess etc.
The original patta granted by the proprietor of the impartible estate provided that the lessees should pay the cesses.
Hence, the net income could only be arrived at by taking into account the eesses payable by the lessee.
Therefore, the respondent was justified in deducting from the annual gross income the cesses, for arriving at the net annual income which is the basis of compensation.
[54 5 E G] (3) On general principles of equity as well as under the Interest Act, 1839, the appellants were entitled to interest on the amount of rents collected by the Manager on behalf of the Government and not paid to the appellants, even though, under the statute, there is no provision for payment of interest.
[546 E G] National Insurance Co. Ltd. Calcutta vs
L. I. C. India, [1963] Supp.
2 S.C.R. 971, followed.
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2749.txt
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Civil Appeal No. 216 of 1953.
On appeal from the judgment and decree dated the 8th March, 1951 of the Mysore High Court in Regular Appeal No. 123 of 1947 48 arising out of the decree dated the 23rd June 1947 of the Court of District Judge, Bangalore in Original Suit No. 84 of 1945 46.
K. section Krishnaswami Iyengar and M. section K. Sastri for the appellants.
R. Ganapathy Iyer and K. R. Krishnaswamy for the respondent No. 1. 1956.
April 26.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This appeal arises out of a suit instituted by one Krishna Rao, since deceased, and now represented by his son and heir, the respondent herein, for a declaration of his title to certain building sites situate in Bangalore in the State of Mysore, and for consequential reliefs.
These properties belonged to one Munuswami, who died leaving him surviving his third wife Chellammal.
, three sons by his predeceased wives, Keshavananda, 454 Madhavananda and Brabmananda, and three minor daughters, Shankaramma, Srikantamma and Devamma.
On 1 9 1918 the three brothers executed a usufructuary mortgage for Rs. 16,000 in favour of one Abdul Huq over a bungalow and vacant sites in cluding the properties concerned in this litigation.
A period of three years was fixed for redemption.
There was a lease back of the properties by the mortgagee to the mortgagors on 3 9 1918, and it was also for a period of three years.
On 6 9 1918 the three brothers effected a partition under a deed, Exhibit K, which provided inter alia that they were to pay each a sum of Rs. 8 per mensem to their step mother, Chellammal, for her maintenance, and that their step sisters should be under their protection.
On 6 6 1919 Chellammal presented a plaint in forma pauperis claiming maintenance and praying that it might be charged on the properties specified in the plaint.
That was Miscellaneous Case No. 377 of 1918 19.
At the same time, she also presented as the next friend of her minor daughters, Srikantamma and Devamma, two plaints in forma pauperis, Miscellaneous Cases Nos. 378 and 379 of 1918 19 claiming maintenance and marriage expenses for them, and praying that the amounts decreed might be charged on the schedule mentioned properties.
The properties which are involved in this suit are included in item 8 in schedule A annexed to all the three plaints.
On 17 6 1920 permission to sue in forma pauperis was granted in all the three cases, and they were registered as Suits Nos. 98 to 100 of 1919 20.
We are concerned in this appeal with only one of them, the suit of Devamma which was Miscellaneous Case No. 379 of 1918 19, subsequently registered as Suit No. 100 of 1919 20.
The suits were contested, and decreed after trial on 12 12 1921.
The decree in 0.
section No. 100 of 1919 20 directed the defendants each to pay to the plaintiff a sum of Rs.6 per mensem for maintenance until her marriage and Rs. 1,500 for marriage expenses, and the payment of the amount was made a first charge on the properties.
In execution of this decree, the 455 properties with which we are now concerned, were sold on 2 8 1928 and purchased by Devamma, the decree holder.
A sale certificate was issued to her on 21 11 1930 (Exhibit J 5).
Proceedings were also taken in execution of the decrees obtained by Chellammal and Srikantamma and of one Appalaraju, and all the properties comprised in the mortgage were sold and purchased by third parties.
It must be mentioned that all the three brothers were adjudicated insolvents on their own application, Brahmananda by an order dated 23 3 1923 in Insolvency Case No. 7 of 1921 22 and Keshavananda and Madhavananda by an order dated 19 2 1926 in Insolvency Case No. 4 of 1925 26.
It also appears from the evidence of D.W. 5 that at about this time all of them left the place.
While these proceedings were going on, Abdul Huq, the mortgagee, filed on 16 8 1921, O.S. No. 27 of 192122 against Keshavananda and his two brothers for recovery of arrears of rent due by them under the lease deed, and obtained a decree on 21 10 1921 but was unable to realise anything in execution thereof, and the execution petition was finally dismissed on 22 1 1926.
He then filed a second suit against the mortgagors, O.S. No. 86 of 1931 32, for arrears of rent for a period subsequent to that covered by the decree in O.S. No. 27 of 1921 22 and for possession of the properties on the basis of the lease dated 3 9 1918, and obtained a decree on 22 3 1932 but was unable to get possession, as the properties were in the occupation of third parties under claims of right.
Abdul Huq died on 20 3 1933, and thereafter, his legal representatives filed on 30 8 1933 O.S. No. 8 of 1933 34 to enforce their rights under the mortgage deed dated 1 9 1918.
Among the defendants who were impleaded in this suit were the mortgagors Keshavananda and Madhavananda, Gururaja, son of Brabmananda who bad died, the Official Receiver and the purchasers of the mortgaged properties in execution of the maintenance decrees and the decree of Appalaraju.
Devamma was the third defendant in this action.
The plaint alleged that the mortgagors had failed to 456 pay rent as provided in the lease deed dated 3 9 1918, and had suffered collusive decrees to be passed against them in the maintenance suits and other actions, and that properties had been sold fraudulently in execution of those decrees.
On the basis of these allegations, the plaintiffs prayed for a decree for possession as against the purchasers including Devamma, and for a sum of Rs. 5,000 as damages.
In the alternative, they prayed for a decree for sale of the mort gaged properties for the amount due under the mortgage.
The suit was contested, and issues raised as to whether the sales were collusive, and whether the plaintiffs were entitled to possession and damages, and alternatively, as to what amounts were payable under the mortgage and to what reliefs the plaintiffs were entitled.
At the trial, the plaintiffs abandoned the relief as to possession and damages, and it accordingly became unnecessary to go into the question as to the collusive character of the maintenance decrees and the execution sales.
On 26 9 1935 a decree was passed determining the amount payable to the plaintiffs on redemption, providing for payment thereof on or before 26th January 1936, and in default, directing the sale of the properties.
In execution of this decree, the properties were sold in court auction sometime in 1936, and purchased by one Chapman, and possession was taken by him through court on 18 2 1937.
On 25 1 1938, Saldhana, who was the agent of Chapman, and became his executor on his death, sold the building sites now in dispute and forming part of the properties purchased in court auction, to Krishna Rao, the plaintiff in the present action.
When Krishna Rao attempted to take possession of the sites, he was obstructed by one Garudachar, claiming title under a sale deed dated 1 12 1932 executed by one Lokiah, the husband of Srikantamma, sister of Devamma, and be accordingly filed O.S. No. 92 of 1938 39 in the court of the Subordinate Judge, Bangalore for establishing his title to the suit properties, and for an injunction restraining Garudachar from interfering with his possession.
The 457 suit was decreed on 23 7 1940, and the matter having been taken in appeal to the High Court by Garudachar, the parties entered into a compromise, and a decree, Exhibit E 1, was passed in terms thereof on 18 9 1942.
Under this decree.
, the title of the plaintiff to the suit properties was recognised.
After obtaining this decree, Krishna Rao started building on the sites, when he met with fresh obstruction, this time from the appellants who set up that they were in possession under a claim of title.
Under the partition deed entered into by the mortgagors on 6 9 1918 (Exhibit K), Keshavananda was allotted two plots, Nos. 3 and 4 to the west of East Lal Bagh Road in the plan, Exhibit G. These are the very plots, which form the subject matter of the present suit.
On 30 1 1920 Keshavananda con veyed these properties to Dr. Nanjunda Rao under a deed of sale, Exhibit VI.
There was on the same date a sale by Brahmananda of plots Nos. 1 and 2 to Dr. Nanjunda Rao, but those properties are not involved in this litigation.
On the death of Dr. Nanjunda Rao, his sons partitioned the properties, and in the division the suit properties fell to the share of one Raghunatha Rao, and on his death in 1938) his estate devolved on his widow, Nagubai, who is the first appellant.
On 28 5 1939 she executed a trust deed settling a moiety of these properties on the Anjaneyaswami Temple at Karaikal, and the trustees of that institution are the other appellants in this appeal.
In view of their obstruction, Krishna Rao instituted the suit out of which the present appeal arises, for a declaration of his title to the sites in question, and for an injunction restraining the defen dants from interfering with his possession, or in the alternative, for a decree in ejectment if they were held to be in possession.
The claim made in the plaint is a simple one.
It is that the title of Chapman as purchaser in execution of the decree passed on the mortgage dated 1 9 1918 prevailed against all titles created subsequent to that date, and that accordingly Dr. Nanjunda Rao and his successors acquired under the sale deed dated 30 1 1920 no title which could be 458 set up as against that of the plaintiff.
The defendants contested the suit on the ground, firstly, that as they were not impleaded as parties in the suit on the mortgage, O.S. No. 8 of 1933 34, their right of redemption remained unaffected by the decree passed therein or the sale in execution thereof; and secondly, that the suit was barred by limitation, because the plaintiff was not in possession within 12 years of the suit, and also because the defendants had acquired title to the suit properties by adverse possession for over 20 years.
The District Judge of Bangalore, who tried the suit, held that the title of Dr. Nanjunda Rao to the suit properties under the sale deed dated 30 1 1920 was, under section 52 of the Transfer of Property Act, subject to the result of the maintenance suit of Devamma (O.S. No. 100 of 1919 20), and was in consequence extinguished by the purchase by her in execution of the charge decree in that suit.
On the ques tion of limitation, the learned Judge held that the plaintiff had established possession of the properties within 12 years of the suit, and that the defendants had failed to establish title by adverse possession.
In the result, he granted a decree in favour of the plaintiff for possession of the suit properties.
The defendants appealed to the High Court, Mysore and by their judgment dated 8 3 1951 the learned Judges agreed with the District.
Judge that by reason of section 52 of the Transfer of Property Act, the title of Dr. Nanjunda Rao based on the deed dated 30 1 1920 came to an end when Devamma purchased the proper ties in execution of her maintenance decree, and dismissed the appeal, but granted a certificate under article 133(1) of the Constitution, and that is how the appeal comes before us.
Notwithstanding the tangle of legal proceedings extending over 30 years, which forms the background of the present litigation, the single and sole question that arises for decision in this suit is whether the sale deed dated 30 1 1920 under which the appellants claim is subject to the result of the sale dated 2 8 1928 in execution of the decree in O.S. No.100 of 459 1919 20 by reason of the rule of lis pendens enacted in section 52 of the Transfer of Property Act.
If it is, it is not in dispute that it becomes avoided by the purchase by Devamma on 2 8 1928.
If it is not, it is equally indisputable that the appellants as purchasers of the equity of redemption from Keshavananda have a right to redeem the mortgage dated 1 9 1918, and not having been impleaded in O.S. No. 8 of 1933 34 are not bound either by the decree passed therein or by the sale in execution thereof.
On this question, as the plaint in O.S. No. 100 of 1919 20 praying for a charge was presented on 6 6 1919, the sale to Dr. Nanjunda Rao subsequent thereto on 30 1 1920 would prima facie fall within the mischief of section 52 of the Transfer of Property Act, and would be hit by the purchase by Devamma on 2 8 1928 in execution of the charge decree.
Sri K. section Krishnaswami Ayyangar, learned counsel for the appellants, did not press before us the contention urged by them in the courts below that when a plaint is presented in forma pauperis the lis commences only after it is admitted and registered as a suit, which was in this case on 17 6 1920, subsequent to the sale under Exhibit VI a contention directly opposed to the plain language of the Explanation to section 52.
And he also conceded and quite rightly, that when a suit is filed for maintenance and there is a prayer that it be charged on specified properties, it is a suit in which right to immovable property is directly in question, and the lis commences on the date of the plaint and not on the date of the decree, which creates the charge.
But he contends that the decision of the courts below that the sale deed dated 30 1 1920 is hit by section 52 is bad on the following three grounds: (1) The question of lis pendens was not raised in the pleadings, and is not open to the plaintiff.
(2 The suit for maintenance, O.S. No. 100 of 1919 20 and the sale in execution of the decree passed therein are all collusive, and section 52 has accordingly no application.
(3) The purchase by Devamma in execution of the decree in O.S. No. 160 of 1919 20 on 2 8 1928 is void and inoperative, as the Official Receiver in whom 60 460 the estate of Keshavananda had vested on 19 2 1926 was not a party to the sale proceedings.
The e contentions must now be considered.
We see no substance in the contention that the plea of lis pendens is not open to the plaintiff on the ground that it had not been raised in the pleadings.
It is true that neither the plaint nor the reply statement of tile plaintiff contains any averment that the sale is affected by the rule of lis pendens.
Nor is there any issue specifically directed to that question.
It is argued for the respondent that the allegations in para 4 of the plaint and in.
para 5 of the reply statement that Dr. Nanjunda Rao being a transferee subsequent to the mortgage could claim no right "inconsistent with or superstar to those of the mortgagee and the auction purchaser" are sufficiently wide to embrace this question, and reference was made to issue No. 3 which is general in character.
Even if the plaintiff meant by the above allegations to raise the plea of lis pendens, he has not expressed himself with sufficient clearness for the defendants to know his mind, and if the matter had rested there, there would be much to be said in favour of the appellant 's contention.
But it does not rest there.
The question of lis pendens was raised by the plaintiff at the very commencement of the trial on 8 3 1947 when he went into the witness box and filed in his examination in chief Exhibit J series, relating to the maintenance suits, the decrees passed therein and the proceedings in execution thereof, including the purchase by Devamma.
This evidence is relevant only with reference to the plea of lis pendens, and it is significant that no objection was raised by the defendants to its reception.
Nay, more.
On 13 3 1947 they cross examined the plaintiff on the collusive character of the proceedings in Exhibit J series, and filed documents in proof of it, The trial went on thereafter for nearly three months, the defendants adduced their evidence, and the bearing was concluded on 2 6 1947.
In the argument before the District Judge, far from objecting to the plea of lis pendens being permitted to be raised, the defendants argued 461 the question on its merits, and sought a decision on the evidence that the proceedings were collusive in character, with a view to avoid the operation of section 52 of the Transfer of Property Act.
We are satisfied that the defendants went to trial with full knowledge that the question of lis pendens was in issue, had ample opportunity to adduce their evidence thereon, and fully availed themselves of the same, and that, in the circumstances, the absence of a specific pleading on the question was a mere irregularity, which resulted in no prejudice to them.
It was argued for the appellants that as no plea of lis pendens was taken in the pleadings, the evidence bearing on that question could not be properly looked into, and that no decision could be given based on Exhibit J series that the sale dated 30 1 1920 was affected by lis; and reliance was placed on the observations of Lord Dunedin in Siddik Mahomed Shah vs Mt. Saran and others(1) that "no amount of evidence can be looked into upon a plea which was never put forward".
The true scope of this rule is that evidence let in on issues on which the parties actually went to trial should not be made the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they bad no opportunity of adducing evidence.
But that rule has no application to a case where parties go to trial with knowledge that a particular question is in issue,tbough no specific issue has been framed thereon, and adduce evidence relating thereto.
The rule applicable to this class of cases is that laid down in Rani Chandra Kunwar vs Chaudhri Narpat Singh: Rani Chandra Kunwar vs Rajah Makund Singh(2).
There, the defendants put forward at the time of trial a contention that the plaintiff had been given away in adoption, and was in consequence not entitled to inherit.
No such plea was taken in the written statement; nor was any issue framed thereon.
Before the Privy Council, the contention was raised on behalf of the plaintiff that in view of the pleadings, the question of adoption was not open to the defendants.
It was (1) A.I.R. 1930 P.C. 57.
(2) [1906 07] L.R. 34 I A. 27.
462 held by Lord Atkinson overruling this objection that as both the parties had gone to trial on the question of adoption, and as the plaintiff had not been taken by surprise, the plea as to adoption was open to the defendants, and indeed, the defendants succeeded on that very issue.
This objection must accordingly be overruled.
2.It is next contended that section 52 of the Transfer of Property Act does not operate to extinguish the title of Dr. Nanjunda Rao and his successors under the sale dated 30 1 1920, because the proceedings which resulted in the decree in 0.
section No. 100 of 1919 20 and the sale in execution thereof on 2 8 1928 were all collusive.
Whether they were so or not is essentially a question of fact, and both the courts below have concurred in answering it in the negative.
It is contended for the appellants that this finding is the result of an error into which the learned Judges of the High Court fell as to the incidence of burden of proof, and it should not therefore be accepted.
The argument is that Abdul Huq, his legal representatives and the plaintiff himself bad admitted again and again in judicial proceedings taken with reference to the suit properties that the decree and sale in 0.
section No. 100 of 1919 20 were collusive, and that, in consequence, even if the initial onus of establishing this fact was on the defendants, that was shifted on to the plaintiff on proof of the abovementioned admissions, and as there was no evidence worth the name on his side to explain them, he must fail.
We must now examine the several statements which are relied on by the appellants as admissions, ascertain what their true import is, and determine what weight should be attached to them.
On 27 6 1932 Abdul Huq moved the insolvency court for a direction to the Official Receiver to take possession of the mortgaged properties, which were stated to be in the occupation of one Lokiah.
This Lokiah, it has been already mentioned, is the husband of Srikantamma, the sister of Devamma, he having married her after the maintenance suits had been decreed and sometime 463 prior to the court auction in 1928.
In his petition, Abdul Huq alleged that Lokiah conducted proceedings in execution of the decree in O.S. No. 100 of 1919 20 in collusion with the insolvents and without notice to the Official Receiver, and purchased the properties in court auction on 2 8 1928 on behalf of the decree holder.
The decree itself was not attacked as collusive, and as for the sale dated 2 8 1928 it was distinctly alleged in para 3 of the petition that the purchase by Lokiah was for the benefit of Devamma.
The substance of the complaint of Abdul Huq was that the execution proceedings and the sales were fraudulent, and intended to defeat his rights to the rents and profits from the properties.
In other words, the ground of attack on the sale dated 2 8 1928 was not that it was unreal and collusive, but that it was real but fraudulent.
Now, there is a fundamental distinction between a proceeding which is collusive and one which is fraudulent.
"Collusion in judicial proceedings is a secret arrangement between two persons that the one should institute a suit against the other in order to obtain the decision of a judicial tribunal for some sinister purpose".
(Wharton 's Law Lexicon, 14th Edition, page 212).
In such a proceeding, the claim put forward is fictitious, the contest over it is unreal, and the decree passed therein is a mere mask having the similitude of a judicial determination and worn by the parties with the object of confounding third parties.
But when a proceeding is alleged to be fraudulent, what is meant is that the claim made therein is untrue, but that the claimant has managed to obtain the verdict of the court in his favour and against his opponent by practising fraud on the court.
Such a proceeding is started with a view to injure the opponent, and there can be no question of its having been initiated as the result of an understanding between the parties.
While in collusive proceedings the combat is a mere sham, in a fraudulent suit it is real and earnest.
The allegations in the petition of Abdul Huq set out above show that the suit itself was not attacked as collusive, but that the execution 464 proceedings were impeached as fraudulent.
It should be mentioned that on this petition the District Judge passed an order on 30 6 1932 directing the Official Receiver to take the necessary steps and report.
But nothing came out of this.
We next come to a petition filed after the death of Abdul Huq by his legal representatives asking for permission of the insolvency court to institute a suit on the mortgage dated 1 9 1918 impleading the Official Receiver as party.
The allegations made in the petition are on the same lines as those made by Abdul Huq in his petition dated 27 6 1932, and they do not carry the matter any further.
This petition was ordered, and on 30 8 1933 O.S. No. 3 of 1933 34 was instituted.
In this suit, as already stated, the plaintiffs sought to recover possession of the properties on foot of the usufructuary mortgage, and ancillary to that relief, they claimed damages from the defendants who were in possession, on the ground that the execution proceedings under which they got into possession were collusive and fraudulent.
Thus far, the allegations are a mere repetition of what bad been stated in the prior proceedings.
But the plaint in the suit went further, and stated for the first time that the proceedings in O.S. No. 100 of 1919 20 and the decree passed therein were collusive.
But these allegations were made only as the basis of the claim for damages for non payment of rent under the lease deed dated 3 9 1918 and non surrender of possession of the properties, and their true import is that the suit was fraudulent and intended to deprive the mortgagee of the rents and profits to which be was entitled.
At the trial, as already stated, the relief for possession and damages was given up, the question as to the collusive character of the sale was abandoned, and a decree for sale was passed.
These proceedings are open to the same comment as was made on the petition of Abdul Huq, and do not assist the defendants.
It remains to deal with a proceeding to which the present plaintiff was a party.
It will be remembered that after his purchase be was obstructed in his 465 possession by one Garudachar, and he had to file O.S. No. 92 of 1938 39 to establish his title against him.
In his plaint in that suit he stated, obviously adopting what Abdul Huq and his legal representatives had previously alleged, that the decree in O.S. No. 100 of 1919 20 and the execution sale on 2 8 1928 were collusive.
On behalf of the appellants, a contention is urged that as the plaintiff obtained a decree in O.S. No. 92 of 1938 39 on the strength of the above allegations, it is not open to him in these proceedings to go back on them, and plead the contrary.
That is a contention which will be presently considered.
But apart from that, the statements of the plaintiff in his plaint in O.S. No. 92 of 1938 39 considered purely as admissions, do not carry the matter beyond the point to which the statements made by Abdul Huq and his legal representatives in the prior proceedings take us.
The question then is, what is the effect to be given to these statements? An admission is not conclusive as to the truth of the matters stated therein.
It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made.
It can be shown to be erroneous or untrue, SO long as the person to whom it was made has not acted upon it to his detriment, when it might become conclusive by way of estoppel.
In the present case, there is no question of estoppel, as the title of Dr. Nanjunda Rao arose under a purchase which was long prior to the admissions made in 1932 and in the subsequent years.
It is argued for the appellants that these admissions at the least shifted the burden on to the plaintiff of proving that the proceedings were not collusive, and that as he gave no evidence worth the name that these statements were made under a mistake or for a purpose and were, in fact, not true, full effect must be given to them.
Reliance was placed on the well known observations of Baron Park in Slatterie vs Pooley(1) that "what a party himself admits to be true may reasonably be presumed to be so", and on the decision in Rani Chandra Kunwar vs Chaudhri (1) ; , 669; ; , 581.
466 Narpat Singh: Rani Chandra Kunwar vs Rajah Makund Singh(1), where this statement of the law was adopted.
No exception can be taken to this proposition.
But before it can be invoked, it must be shown that there is a clear and unambiguous statement by the opponent, such as will be conclusive unless explained.
It has been already pointed out that the tenor of the statements made by Abdul Huq, his legal representatives and the plaintiff was to suggest that the proceedings in 0.
section No. 100 of 1919 20 were fraudulent and not collusive in character.
Those statements would not, in our opinion, be sufficient, without more, to sustain a finding that the proceedings were collusive.
But assuming that they are sufficient to shift the burden on to the plaintiff of proving that the decree and sale in 0.
section No. 100 of 1919 20 were not collusive, the evidence adduced by him is, in our opinion, ample to discharge that burden.
He has filed Exhibit J series, which give a complete picture of the proceedings in 0.
section No. 100 of 1919 20.
Under the partition deed, Exhibit K,it will be remembered, the brothers agreed to pay a monthly maintenance of Rs. 8 each to their step mother, Chellammal.
This, however, was not charged on the family properties.
With reference to their step sisters, Srikantamma and Devamma, the provision was simply that the brothers should protect them.
It will also be remembered that under the partition Keshavananda and Brahmananda each got two vacant sites in full quit of their shares.
It appears from Exhibit J 10, paragraph 2, that the two brothers were contemplating the disposal of their plots, in which case the claim of Chellammal and the step sisters to maintenance would be defeated.
It became accordingly necessary for them to safeguard their rights, and for that purpose, to file suits for maintenance and claim a charge therefor on the family properties.
That the apprehensions of Chellammal were well founded is established by the fact that the two brothers entered into agreements for the sale of their vacant sites to Dr. Nanjunda Rao on 20 10 1919, and sale deeds were actually executed (1) [1906 07] L.R. 34 I.A. 27.
467 pursuant thereto on 30 1 1920.
There cannot be any doubt, therefore, that the suits were bona fide.
This conclusion is further reinforced when regard is had to the conduct of the litigation.
Two of the brothers contested the suit.
It underwent several adjournments, and was heard finally in December 1921.
At the trial, a number of witnesses were examined on either side, and the judgment, Exhibit J 6, shows that the contest centred round the quantum of maintenance payable to the plaintiffs, and it was keen, even bitter.
When at last the plaintiffs obtained decrees, they had no easy time of it in realising the fruits thereof.
The troubles of a creditor, it has been said, begin after he obtains a decree, and so it was with the plaintiffs.
Exhibit J 4 shows that Devamma had to file several applications for execution, before she could finally bring the properties to sale and in view of the heavy encumbrances to which they were subject, she had herself to purchase them on 2 8 1928.
The sale was confirmed on 21 11 1930, and the sale certificate, Exhibit J 5, was issued, and she got into possession.
To sum up, the claim on which the suit was laid was true and honest; it was hotly contested by the defendants, and prolonged proceedings in execution had to be taken for realising the fruits of the decree.
These are facts which are eloquent to show that the suit in O.S. No. 100 of 1919 20 and the sale on 2 8 1928 were not collusive.
The plaintiff also went into the box, and stated in cross examination that though when he filed 0. section No. 92 of 1938 39 he had thought that the proceedings were collusive, he now thought otherwise.
Counsel for the appellants strongly criticised this evidence, and contended that in the absence of facts as to why he chanced his mind, the statement of the plaintiff that he now thought otherwise was worthless.
But then, the plaintiff as also Abdul Huq and his legal representatives were utter strangers, and their statement about the collusive character of the proceedings, in O.S. No. 100 of 1919 20 could only be a matter of inference.
If on the materials then before him the plaintiff could have thought that those proceedings 468 were collusive, there is no reason why on the materials now before him he could not think otherwise.
It was open to the defendants to have further crossexamined him about the materials which led him to change his opinion, but they chose not to pursue the matter.
Both the courts below have, on a careful consideration of the record, come to the conclusion that the proceedings in O.S. No. 100 of 1919 20 were not collusive, and we do not see sufficient grounds for disturbing that finding, which must be affirmed.
We shall now deal with the contention of the appellants that in view of what happened in O.S. No. 92 of 1938 39 it is not open to the plaintiff to plead in these proceedings that the decree and sale in O.S. No. 100 of 1919 20 are not collusive.
It is argued that in his plaint in O.S. No. 92 of 1938 39 the plaintiff alleged that the proceedings in O.S, No. 100 of 1919 20 were collusive, adduced evidence in proof of these allegations, persuaded the court to give a finding to that effect, and obtained a decree on the basis of that finding, and he cannot therefore be permitted in this litigation to change his front and plead that the pro ceedings in O.S. No. 100 of 1919 20 are not collusive and succeed on it.
This bar arises, it is argued, on the principle that a person cannot both approbate and reprobate.
Now, the facts relating to the litigation in O.S. No. 92 of 1938 39 are that Garudachar set up title to the suit properties under a purchase dated 1 12 1932 from Lokiah, and it was the truth and validity of this sale that was really in question in that suit.
Lokiah purchased these and other properties in execution of the money decree of one Appalaraju, and therefore his title cannot prevail as against that of Devamma under the purchase under the charge decree on 2 8 1928.
In his plaint in O.S. No. 92 of 1938 39, the plaintiff attacked the purchases of both Devamma and of Lokiah as fraudulent and collusive.
But, in fact, as Garudachar did not claim any title under Devamma, there was no need to attack the purchase by her on 2 8 1928.
The suit was contested, 469 and in the judgment that was given, Exhibit E, the title of the plaintiff was upheld and a decree granted in his favour.
There was an appeal against the decree by Garudachar, R.A. No. 101 of 1940 41, and that was disposed of on a compromise by the parties, under which the title of the plaintiff to the suit properties was affirmed and Garudachar was granted some other vacant sites in satisfaction of his claim.
It is difficult to say on these facts that the allegation of the plaintiff that the proceedings in O.S. No. 100 of 1919 20 were collusive was either the foundation of his claim, or that he obtained any benefit under the decree on that basis.
Counsel for the appellants sought to rely on the findings in Exhibit E, as establishing that the proceedings in O.S. No. 100 of 191920 were collusive.
But as that judgment was not inter parties, the findings therein are inadmissible in this litigation, and, moreover, there having been an appeal against that judgment, the findings in Exhibit E lost their finality, and when the parties settled their claim by granting to Garudachar another property in substitution, they ceased to possess any force even inter parties.
But it is argued by Sri Krishnaswami Ayyangar that as the proceedings in 0.
section No. 92 of 1938 39 are relied on as barring the plea that the decree and sale in 0.
section No. 100 of 1919 20 are not collusive, not on the ground of resjudicata or estoppel but on the principle that a person cannot both approbate and reprobate, it is immaterial that the present appellants were not parties thereto, and the decision in Verschures Creameries Ltd. vs Hull and Netherlands Steamship Company Ltd.(1), and in particular, the observations of Scrutton, L.J., at page 611 were quoted in support of this position.
There, the facts were that an agent delivered goods to the customer contrary to the instructions of the principal, who thereafter filed a suit against the purchaser for price of goods and obtained a decree.
Not having obtained satisfaction, the principal next filed a suit against the agent for damages on the ground of negligence and (1) (1921] 2 K B. 608.
470 breach of duty.
It was held that such an action was barred.
The ground of the decision is that when on the same facts, a person has the right to claim one of two reliefs and with full knowledge he elects to claim one and obtains it, it is not open to him thereafter to go back on his election and claim the alternative relief.
The principle was thus stated by Bankes, L. J.: "Having elected to treat the delivery to him as an authorised delivery they cannot treat the same act as a misdelivery.
To do so would be to approbate and reprobate the same act".
The observations of Scrutton, L. J. on which the appellants rely are as follows: "A plaintiff is not permitted to 'approbate and reprobate '.
The phrase is apparently borrowed from the Scotch law, where it is used to express the principle embodied in our doctrine of election namely, that no party can accept and reject the same instrument: Ker vs Wauchope(1): Douglas Menzies vs Umphelby(2).
The doctrine of election is not however confined to instruments.
A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage.
That is to approbate and reprobate the transaction".
It is clear from the above observations that the maxim that a person cannot 'approbate and reprobate ' is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto.
The law is thus stated in Halsbury 's Laws of England, Volume XIII, page 454, para 512: "On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here.
Thus a party cannot, after taking advantage under an order (e.g. payment of costs), (1) , 21.
(2) , 232, 471 be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it".
The plaintiff obtained no advantage against the appellants by pleading in 0.
section No. 92 of 1938 39 that the proceedings in 0.
section No. 100 of 1919 20 were collusive; nor did they acting on those pleadings acquire rights to the suit properties.
Nor is there any question of election, because the only relief which the plaintiff claimed in 0.
section No. 92 of 1938 39 and which he now claims is that he is entitled to the suit properties.
Only, the ground on which that relief is claimed is different and, it is true, inconsistent.
But the principle of election does not forbid it, and there being no question of estoppel, the plea that the proceedings in 0.
section No. 100 of 1919 20 are not collusive is open to the plaintiff.
3.It was finally contended that the purchase by Devamma in execution of the decree in 0.
section No. 100 of 1919 20 was void and conferred no title on her, because the Official Receiver in whom the estate of Keshavananda, the mortgagor, had vested on his adjudication as insolvent on 19 2 1926 had not been made a party to those proceedings, and that, in conse quence, the title of Dr. Nanjunda Rao and his successors under the sale deed dated 30 1 1920 continued to subsist, notwithstanding the court auction sale on 2 8 1928.
The obvious answer to this contention is that the properties which were sold on 2 8 1928 did not vest in the Official Receiver on the making of the order of adjudication on 19 2 1926.
, as they had been transferred by the mortgagor, long prior to the presentation of Insolvency Case No. 4 of 1925 26 under the very sale deed dated 30 1 1920, which forms the root of the appellants ' title.
That sale was no doubt pendente lite, but the effect of section 52 is not to wipe it out altogether but to subordinate it to the rights based.
on the decree in the suit.
As between the 472 parties to the transaction, however, it was perfectly valid, and operated to vest the title of the transferor in the transferee.
Under section 28(2) of the Insolvency Act, what vests in the Official Receiver is only the property of the insolvent, and as the suit properties had ceased to be his properties by reason of the sale deed dated 30 1 1920, they did not vest in the Official Receiver, and the sale held on 2 8 1928 is not liable to be attacked on the ground that he bad not been impleaded as a party thereto.
But it is argued for the appellants that having regard to the words of section 52 that pendente lite "the property cannot be transferred", such a transfer must, when it falls within the mischief of that section, be deemed to be non est, that in consequence Keshavananda must, for purposes of lis pendens, be regarded as the owner of the properties, notwithstanding that he bad transferred them, and that the Official Receiver who succeeded to his rights had a right to be impleaded in the action.
This contention gives no effect to the words "so as to affect the rights of any other party thereto under any decree or order which may be made therein", which make it clear that the transfer is good except to the extent that it might conflict with rights decreed under the decree or order.
It is in this view that transfers pendente lite have been held to be valid and operative as between the parties thereto.
It will be inconsistent to bold that the sale deed dated 30 1 1920 is effective to convey the title to the properties to Dr. Nanjunda Rao, and that, at the same time, it was Keshava nanda who must be deemed to possess that title.
We are, therefore, unable to accede to the contention of the appellants that a transferor pendente lite must, for purposes of section 52, be treated as still retaining title to the properties.
But assuming that Keshavananda had still some interest in the properties left even after he had sold them on 30 1 1920 and that it would vest in the Official Receiver on the making of the order of adjudication on 19 2 1926, what is its effect on the title of Devamma as purchaser in court auction in execu 473 tion of her charge decree? It has been held by the Privy Council in Kala Chand Banerjee vs Jagannath Marwari(1) that when in execution of a mortgage decree properties are sold without notice to the Official Receiver in whom the equity of redemption had vested prior to the sale, such sale would not be binding on him.
But here, it is not the Official Receiver, who impeaches the sale as bad.
In fact, he was a party to O.S. No. 8 of 1933 34 and would be bound by the sale in execution of the decree therein, under which the plaintiff claims.
It is the purchaser pendente lite in the charge suit, O.S. No. 100 of 1919 20, that now attacks the sale held on 2 8 1928 as null and void.
Is he entitled to do so? Counsel for the respondent has invited our attention to the decision in Wood vs Surr(2).
There, the mortgagor filed a suit for redemption in 1838.
A preliminary decree for accounts was passed in 1843 and pursuant thereto, a final decree was made in 1848 declaring the amount payable, and time for payment was given till 1849.
The amount not having been paid, the mortgage became foreclosed.
During the pendency of these proceedings, the mortgagor was adjudicated bankrupt in 1844, but the Official Assignee, in whom the equity of redemption had vested, was not impleaded in the mortgage action.
In 1841, the mortgagor bad created a further mortgage in favour of one Mrs. Cuppage, and she was not made a party in the redemption suit.
After the foreclosure of the mortgage in 1849, one Mr. Wood claiming in the rights of Mrs. Cuppage instituted an action to redeem the mortgage.
The question was whether being transferee pendente lite he was bound by the foreclosure proceedings.
The contention on his behalf was that as the official assignee was not a party to those proceedings, there had been no proper foreclosure, and that the whole matter was at large.
In negativing this contention, Sir John Romilly, M. R. observed: "There can be no question but that the suit (Davis 's suit) was defective by reason of no notice having been taken of the insolvency.
The proceeding (1) [1927] L, R. 54 T.A. 190, (2) ; ; , 474 having gone on exactly as if no insolvency had taken place, the subsequent proceedings would, in my opinion, be wholly inoperative against the assigneein insolvency and if he thought fit to contest the validity of the decree of foreclosure against Davis, it could not be held to be binding on such assignee.
But that does not conclude the question, which really is, whether the plaintiff who, but for this, would in truth have been bound, can take advantage of this objection.
I am of opinion that although the suit was undoubtedly defective, by reason of this insolvency, the assignee alone could take advantage of this defect.
It is obvious that Davis himself could not take advantage of it, or if from any subsequent cause, or any subsequent circumstance, the insolvency or bankruptcy had been superseded or annulled, he could not have said that the foreclosure was not absolute against him".
These observations directly cover the point now in controversy, and they embody a principle adopted in the law of this country as to the effect of a sale in execution of a decree passed in a defectively constituted mortgage suit.
Such a sale, it has been held, does not affect the rights of redemption of persons interested in the equity of redemption, who have not been impleaded as parties to the action as they should have been under Order 34, Rule 1, Civil Procedure Code but that it is valid and effective as against parties to the action.
This rule has been affirmed even when the person in whom the equity of redemption had vested is the Official Receiver, and he had not been made a party to the proceedings resulting in sale.
Vide Inamullah Khan vs Shambhu Dayal(1) and Subbaiah vs Ramasami Goundan(2).
We should accordingly hold that even assuming that the equity of redemption in the suit properties vested in the Official Receiver on the adjudication of Keshavananda, his non joinder in the execution proceedings did not render the purchase by Devamma a nullity, and that under the sale she acquired a good and impeccable title, subject to any right which the Official Receiver (1) A.I.R. 1931 All.
(2) I.L.R. 475 might elect to exercise, and it is not open to attack by the transferee pendente lite under the deed dated 30 1 1920 and his representatives, the present appellants.
In the result, we agree with the courts below that the title of the appellants has been extinguished under section 52 of the Transfer of Property Act, by the court sale dated 2 8 1928.
It must be mentioned that the appellants also pleaded that the suit was barred by limitation under article 142 on the ground that the plaintiff and his predecessors had not been in possession within 12 years of the suit, and that further the defendant had acquired title by adverse possession commencing from 1920.
The learned District Judge, found on both the issues in favour of the plaintiff, and though the correctness of these findings was attacked in the grounds of appeal to the High Court, there is no discussion of the question in the judgment of the learned Judges, and we must take it that the point had been abandoned by the appellants.
We accordingly declined to hear them on this question.
We may add that the question of limitation cannot really arise on the facts of this case, inasmuch as the possession which is claimed to be adverse is stated to have commenced in 1920, and it is well settled that such possession cannot affect the right of a prior mortgagee to bring the properties to sale, and adverse possession against the purchaser under that sale cannot commence prior to the date of that sale, and the present suit was instituted on 8 1 1945 within 12 years of the sale, which took place in 1936.
The appeal fails, and is dismissed with costs.
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The appellants as defendants in a suit for declaration of title to certain building sites sought to resist the respondents ' claim, arising by purchase from a purchaser in a sale in execution of a mortgage decree passed on a mortgage deed of 1918, by a counter claim based on a purchase of the same lands made in 1920 by their pre decessor in interest from one of the mortgagors against whom was then pending a suit for maintenance and for declaration of a charge on the land in suit.
That suit was decreed in 1921 and the lands were purchased by the decreeholder in execution of her decree in 1928.
The mortgagor had been adjudged an insolvent in 1926 and the Official Receiver in whom his estate vested was not made a party to the execution proceeding.
Suit to enforce the mortgage deed of 1918 was brought in 1933 impleading the Official Receiver and the purchaser in execution of the maintenance and charge decree but not the appellants.
In execution of the decree passed in this suit, the lands in suit were sold to a third party in 1936 and in 1938 the respondent 's father purchased them.
The respondent did not specifically raise the question of lis pendens in his pleading nor was an issue framed on the point, but he raised the question at the very commencement 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 court to hold that the suit for maintenance and a charge and the connected proceedings evidenced by these documents were collusive in order to avoid the operation of section 52 of the Transfer of Property Act.
The District Judge held that the appellants ' title acquired by the purchase of 1920 was extinguished by the sale held in execution of the charge decree by the operation of section 52 of the Transfer of Property 59 452 Act and decreed the suit and his decision was affirmed by the High Court in appeal.
Hold, that the decisions of the courts below were correct and must be affirmed.
That in the facts and circumstances of the case the omission of the respondent to specifically raise the question of lis pendens in his pleading did not take the appellants by surprise and was a mere irregularity which resulted in no prejudice to them.
Rani Chandra Kunwar vs Chaudhri Narpat Singh ([1906] L.R. 34 I.A. 27), applied.
Siddik Mahomed Shah vs Mt. Saran and Others (A.I.R. , explained and held inapplicable.
That section 52 of the Transfer of Property Act did not prevent the vesting of title in a transferee in a sale pendente lite but only made it subject to the rights of other parties as decided in the suit and subsequent insolvency of the transferor could not, therefore, vest any title in the Official Receiver or make the title of the execution purchaser liable to attack on the ground that the Receiver was not made a party to the execution proceeding.
That even assuming that title could not wholly pass by a transfer pendento lite and some interest would still subsist in the transferor to vest in the Receiver, the lands in suit having been sold in execution of a charge decree, the sale would at the most be not binding on him and he could, if he so chose, move to set it aside; but the transferee pendente lite or his representative could not be allowed to make his non joinder a ground for attacking the sale.
Wood vs Surr ([1854) ; , applied.
Inamullah Khan vs Shambhu Dayal (A.I.R. 1931 All. 159), Subbaiah vs Ramasami Goundan (I.L.R. and Kala Chand Banerjee vs Jagannath Marwari ([1927] L.P. 54 I.A. 190), referred to.
That no question of limitation or adverse possession really arose in the case.
It was well settled that a claim of adverse possession could not affect the right of a prior mortgagee to bring the properties to sale and adverse possession against the purchaser under that sale could not commence prior to the date of sale.
Held further, that there was a fundamental distinction bet ween a collusive and a fraudulent proceeding in that while the former was the result of an understanding between the parties, both the claim and the contest being fictitious, and the purpose to confound third parties, in the latter the contest was real, though the claim was untrue, and the purpose to injure the defendant by a verdict of the court obtained by practising fraud in it; that an admission was a mere piece of evidence and could not be conclusive except by way of estoppel when it had been acted 453 upon to his detriment by the person to whom it was made, the weight to be attached to it depending on the circumstances of each case, and the onus of proving that it was not true could not shift to the maker of it unless it was so clear and unambiguous as to be conclusive in absence of any explanation from him.
Slatterie vs Pooley, ([1840] ; and Rani Chandra Kunwari vs Choudhri Narpat Singh ([1906] L.R. 34 I.A. 27), referred to.
That the maxim that 'a person could not approbate and repro bate ' had its origin in the doctrine of election and was confined to reliefs arising out of one and the same transaction and against the parties to it.
Where, however, there was no question of election, as the relief claimed was one and the same, although based on different and inconsistent grounds, the maxim had no application.
Verschures Creameries Ltd. vs Hull and Netherlands Steamship Company Ltd. ([1921] 2 K.B. 608), considered and distinguished.
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434.txt
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Appeal No. 214 of 1954.
Appeal under Article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 17th July 1953 of the, High Court of Rajasthan (Bapna and Ranawat JJ.) in Civil Writ Application No. 128 of 1953.
R. K. Rastogi and Ganpat Rai, for the appellant.
R. C. Prasad, for section L. Chhibber, for respondent No. 2. 1955.
March 22.
The Judgment of the Court was delivered by BOSE J.
The second respondent Bhurey Lal filed an election petition under section 100 of the Representation of the People Act against the appellant Sangram Singh and two others for setting aside Sangram Singh 's election.
The proceedings commenced at Kotah and after some hearings the Tribunal made an order on 11 12 1952 that the further sittings would be at Udaipur from the 16th to the 21st March, 1953.
It was discovered later that the 16th was a public holiday, so on 5 1 1953 the dates were changed to "from the 17th March onwards" and the parties were duly notified.
On the 17th the appellant did not appear nor did any of the three counsel whom he had engaged, so the Tribunal proceeded ex parte after waiting till 1 15 P.m.
The Tribunal examined Bhurey Lal and two witnesses on the 17th, five more witnesses on the 18th and on the 19th the case was adjourned till the 20th.
On the 20th one of the appellant 's three counsel, Mr, Bharat Raj, appeared but was not allowed to 5 take any part in the proceedings because the Tribunal said that it was proceeding ex parte at that stage.
Three more witnesses were then examined.
On the following day, the 21st, the appellant made an application asking that the ex parte proceedings be set aside and asking that he be allowed to cross examine those of Bhurey Lal 's witnesses whose evidence had already been recorded.
The Tribunal heard arguments and passed an order the same day rejecting the application on the ground that the appellant had "failed to satisfy ourselves that there was any just or unavoidable reason preventing the appearance of respondent No. 1 himself or of any of his three learned advocates between the 17th and the 19th of March, 1953", and it added "at all events, when para 10 of the affidavit makes it clear that Shri Bharatraj had already received instructions to appear on 17 3 1953 there was nothing to justify his non appearance on the 18th and 19th of March, 1953, if not, on the 17th as well".
The appellant thereupon filed a writ petition under article 226 of the Constitution in the High Court of Rajasthan and further proceedings before the Tribunal were stayed.
The High Court rejected the petition on 17 7 1953 on two grounds (1) "In the first place, the Tribunal was the authority to decide whether the reasons were sufficient or otherwise and the fact that the Tribunal came to the conclusion that the reasons set forth by counsel for the petitioner were insufficient cannot be challenged in a petition of this nature" and (2) "On the merits also, we feel no hesitation in holding that counsel for the petitioner were grossly negligent in not appearing on the date which had been fixed for hearing, more than two months previously".
Five months later, on 16 12 1953, the High Court granted a certificate under article 133(1) (C) of the Constitution for leave to appeal to this Court.
The only question before the High Court was whether the Tribunal was right in refusing to allow the appellant 's counsel to appear and take part in the proceedings on and after the 20th of March, 1953, and the first question that we have to decide is whether that is sufficient ground to give the High Court jurisdiction to entertain a writ petition under article 226 of the Constitution.
That, in our opinion, is no longer res integra.
The question was settled by a Bench of seven Judges of this Court in Hari Vishnu vs Ahmad Ishaque(1) in these terms: "Certiorari will also be issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an op portunity to the parties to be heard, or violates the principles of natural justice".
That is exactly the position here.
It was urged that that cannot be so in election matters because of section 105 of the Representation of the People Act of 1951 (Act XLIII of 1951), a section which was not considered in the earlier case.
It runs thus: "Every order of the Tribunal made under this Act shall be final and conclusive".
It was argued that neither the High Court nor the Supreme Court can itself transgress the law in trying to set right what it considers is an error of law on the part of the Court or Tribunal whose records are under consideration.
It was submitted that the legislature intended the decisions of these tribunals to be final on all matters, whether of fact or of law, accordingly, they cannot be said to commit an error of law when, acting within the ambit of their jurisdiction, they decide and lay down what the law is, for in that sphere their decisions are absolute, as absolute as the decisions of the Supreme Court in its own sphere.
Therefore, 'it was said, the only question that is left open for examination under article 226 in the case of an Election Tribunal is whether it acted within the scope of its jurisdiction.
(1) ; ,1121, 7 But this, also, is no longer open to question.
The point has been decided by three Constitution Benches of this Court.
In Hari Vishnu vs Ahmad Ishaque(1) the effect of section 105 of the Representation of the People Act was not considered, but the Court laid down in general terms that the jurisdiction under article 226 having been conferred by the Constitution, limitations cannot be placed on it except by the Constitution itself: see pages 238 and 242.
Section 105 was, however, considered in Durga Shankar Mehta vs Raghuraj Singh(1) and it was held that that section cannot cut down or affect the overriding powers of this Court under article 136.
The same rule was applied to article 226 in Rai Krushna Bose vs Binod Kanungo and others(1) and it was decided that section 105 cannot take away or whittle down the powers of the High Court under article 226.
Following those decisions we hold that the jurisdiction of the High Court under article 226 is not taken away or curtailed by section 105.
The jurisdiction which articles 226 and 136 confer entitles the High Courts and this Court to examine the decisions of all Tribunals to see whether they have acted illegally.
That jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally by enacting a statute that its illegal acts shall become legal the moment the tribunal chooses to say they are legal.
The legality of an act or conclusion is something that exists outside and apart from the decision of an in ferior tribunal.
It is a part of the law of the land which cannot be finally deter mined or altered by any tribunal of limited jurisdiction.
The High Courts and the Supreme Court alone can determine what the law of the land is vis a vis all other courts and tribunals and they alone can pronounce with authority and finality on what is legal and what is not.
All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under Articles 226 and 136.
Therefore, the jurisdiction of the High Courts under article 226 with that of the Supreme Court above them remains to its fullest extent despite section 105.
That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law.
The High Courts do not, and should not, act as Courts of appeal under article 226.
Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognised lines and not arbitrarily; and one of the limitations imposed by the Courts on, themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ensue.
They will not allow themselves to be turned into Courts of appeal or revision to set right mere errors of law which do not occasion injustice in a broad and general sense, for, though no legislature can impose limitations on these constitutional powers it is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about these special rights decided as speedily as may be.
Therefore, writ petitions should not be lightly entertained in this class of case.
We now turn to the decision of the Tribunal.
The procedure of these tribunals is governed by section 90 of the Act.
The portion of the section that is relevant here is sub section (2) which is in these terms: "Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the Tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 (Act V of 1908) to the trial of suits".
We must therefore direct our attention to that portion of the Civil Procedure Code that deals with the trial of suits.
Now a code of procedure must be regarded as such.
It is procedure, something designed to facilitate justice and further its ends: not a penal enactment for punishment and penalties; not a thing designed to trip people up.
Too technical a construction of sections that leaves no room for reasonable elasticity of inter 9 pretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.
Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.
Of course, there must be exceptions and where they are clearly defined they must be given effect to.
But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle.
The existence of such a principle has been doubted, and in any event was condemned as unworkable and impractical by O 'Sullivan, J. in Hariram vs Pribhdas(1).
He regarded it as an indeterminate term "liable to cause misconception" and his views were shared by Wanchoo, C. J. and Bapna, J. in Rajasthan: Sewa Ram vs Misrimal(1).
But that a law of natural justice exists in the sense that a party must be heard in a Court of law, or at any rate be afforded an opportunity to appear and defend himself, unless there is express provision to the contrary, is, we think, beyond dispute.
See the observations of the Privy Council in Balakrighna Udayar vs Vasudeva Ayyar(3), and especially in T. M. Barret vs African Products Ltd.(1) where Lord Buckmaaster said "Do forms or procedure should ever be permitted to exclude the presentation of a litigant 's defence".
Also Hari Vishnu 's case which we have just quoted.
In our opinion, Wallace, J. was right in VenkataSubbiah vs Lakshminarassimham(5) in holding that "One cardinal principle to be observed in trials by a Court obviously is that a party has a right to appear and plead his cause on all occasions when that cause comes on for hearing", and that "It follows that a party should not be deprived of that right and in fact the Court has no option to refuse that right, unless the Code of Civil Procedure deprives him of it".
Let us now examine that Code; and first, we will turn to the body of the Code.
Section 27 provides that "Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim".
Section 30 gives the Court power to "(b) issue summonses to persons whose attendance is required either to give evidence or to produce documents or such other objects as aforesaid".
Then come the penalties for default.
They are set out in section 32 but they are confined to cases in which a summons has been issued under section 30.
There is no penalty for a refusal or an omission to appear in response to a summons under section 27.
It is true certain consequences will follow if a defendant does not appear and, popularly speaking, those consequences may be regarded as the penalty for nonappearance, but they are not penalties in the true sense of the term.
They are not punishments which the Court is authorised to administer for disregard of its orders.
The antithesis that section 32 draws between section 27 and section 30 is that an omission to appear in response to a summons under section 27 carries no penalty in the strict sense, while disregard of a summons under section 30 may entail punishment.
The spirit of this distinction must be carried over to the First Schedule.
We deprecate the tendency of some Judges to think in terms of punishment and penalties properly so called when they should instead be thinking of compensation and the avoidance of injustice to both sides.
We turn next to the Rules in the First Schedule.
It is relevant to note that the Rules draw a distinction between the first hearing and subsequent hearings, 11 and that the first hearing can be either (a) for settlement of issues only., or (b) for final disposal of the suit.
First, there is Order V. rule 1: ". . . . . . a summons may be issued to the defendant to appear and answer the claim on a. day to be therein specified".
This summons must state whether the hearing is to be for settlement of issues only or for final hearing (rule 5).
If it is for final hearing, then (rule 8): "it shall also direct the defendant to produce, on the day fixed for his appearance, all witnesses upon whose evidence he intends to rely in support of his case".
Then comes Order VIII, rule 1 which expressly speaks of "the first hearing".
Order IX follows and is headed "Appearance of parties and consequence of non appearance".
Now the word "consequence" as opposed to the word "penalty" used in section 32 is significant.
It emphasises the antithesis to which we have already drawn attention.
So also in rule 12 the marginal note is "Consequence of non attendance" and the body of the rule states that the party who does not appear and cannot show sufficient cause "shall be subject to all the provisions of the foregoing rules applicable to plaintiffs and defendants, respectively, who do not appear".
The use of the word "penalty" is scrupulously avoided.
Our attention was drawn to rule 6(2) and it was argued that Order IX does contemplate the imposition of penalties.
But we do not read this portion of the rule in that light.
All that the plaintiff has to do here is to pay the costs occasioned by the postponement which in practice usually means the cost of a fresh summons and the diet money and so forth for such of the witnesses as are present; and these costs the plaintiff must pay irrespective of the result.
Rule I of Order IX starts by saying "On the day fixed in the summons for the defendant to appear and answer. . . . . . . . ." 12 and the rest of the rules in that Order are consequential on that.
This is emphasised by the use of the word "postponement" in rule 6 (1)(c), of "adjournment" in rule 7 and of "adjournment" in rule 1.
Therefore, we reach the position that Order IX, rule 6 (1) (a), which is the rule relied on, is confined to the first hearing of the suit and does not per se apply to subsequent hearings: see Sahibzada Zeinulabdin Khan vs Sahibzada Ahmed Raza Khan(1).
Now to analyse rule 6 and examine its bearing on the first hearing.
When the plaintiff appears and the defendant does not appear when the suit is called on for hearing, if it is proved that the summons was duly served "(a). . . . . . . . . the Court may proceed ex parte".
The whole question is, what do these words mean? Judicial opinion is sharply divided about this.
On the one side is the view propounded by Wallace, J. in Venkatasubbiah vs Lakshminarasimham(2) that ex parte merely means in the absence of the other party, and on the other side is the view of O 'Sullivan, J., in Hariram vs Pribhdas(3) that it means that the Court is at liberty to proceed without the defendant till the termination of the proceedings unless the defendant shows good cause for his non appearance.
The remaining decisions, and there are many of them, take one or the other of those two views.
In our opinion, Wallace, J. and the other Judges who adopt the same line of thought, are right.
As we have already observed, our laws of procedure are based on the principle that, as far as possible, no proceeding in a Court of law should be conducted to the detriment of a person in his absence.
There are of course exceptions, and this is one of them.
When the defendant has been served and has been afforded an opportunity of appearing, then, if he does not appear, the Court may proceed in his absence.
But, be it noted, the Court is not directed to make an exparte order.
Of course the fact that it is proceeding ex parte will be recorded in the minutes of its proceedings but that is merely a statement of the fact and is not an order made against the defendant in the sense of an ex parte decree or other ex parte order which the Court is authorised to make.
All that rule 6 (1) (a) does is to remove a bar and no more.
It merely authorises the Court to do that which it could not have done without this authority, namely to proceed in the absence of one of the parties.
The contrast in language between rules 7 and 13 emphasises this.
Now, as we have seen, the first hearing is either for the settlement of issues or for final hearing.
If it is only for the settlement of issues, then the Court cannot pass an ex parte decree on that date because of the proviso to Order XV, rule 3(1) which provides that that can only.
be done when "the parties or their pleaders are present and none of them objects".
On the other hand, if it is for final hearing, an ex parte decree can be passed, and if it is passed, then Order IX, rule 13 comes into play and before the decree is set aside the Court is required to make an order to set it aside.
Contrast this with rule 7 which does not require the setting aside of what is commonly, though erroneously, known as "the ex parte order".
No order is contemplated by the Code and therefore no order to set aside the order is contemplated either.
But a decree is a command or order of the Court and so can only be set aside by another order made and recorded with due formality.
Then comes rule 7 which provides that if at an adjourned hearing the defendant appears and shows good cause for his "previous non appearance", he can be heard in answer to the suit "as if he had appeared on the day fixed for his appearance".
This cannot be read to mean, as it has been by some learned Judges, that he cannot be allowed to appear at all if he does not show good cause.
All it means is that he cannot be relegated to the position he would have occupied if he had appeared, 14 We turn next to the adjourned hearing.
That is dealt with in Order XVII.
Rule I (1) empowers the Court to adjourn the hearing and whenever it does so it must fix a day "for the further hearing of the suit", except that once the hearing of the evidence has begun it must go on from day to day till all the witnesses in attendance have been examined unless the Court considers, for reasons to be recorded in writing, that a further adjournment is necessary.
Then follows rule 2 "Where., on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit".
Now rule 2 only applies when one or both of the parties do not appear on the day fixed far the adjourned hearing.
In that event, the Court is thrown back to Order IX with the additional power to make "such order as it thinks fit".
When it goes back to Order IX it finds that it is again empowered to proceed ex parte on the adjourned hearing in the same way as it did, or could have done, if one or other of the parties had not appeared at the first hearing, that is to say, the right to proceed ex parte is a right which accrues from day to day because at each adjourned hearing the Court is thrown back to Order IX, rule 6.
It is not a mortgaging of the future but only applies to the particular hearing at which a party was afforded the chance to appear and did not avail himself of it.
Therefore, if a party does appear on "the day to which the hearing of the suit is adjourned", he cannot be stopped from participating in the proceedings simply because he did not appear on the first or some other hearing.
But though he has the right to appear at an adjourned hearing, he has no right to set back the hands of the clock.
Order IX, rule 7 makes that clear.
Therefore, unless he can show good cause, he must accept all that has gone before and be content to proceed from the stage at which he comes in.
But what exactly does that import?
To determine that it will be neces 15 sary to hark back to the first hearing.
We have already seen that when a summons is issued to the defendant it must state whether the hearing is for the settlement of issues only or for the final disposal of the suit (Order V, rule 5).
In either event, Order VIII, rule I comes into play and if the defendant does not present a written statement of his defence, the Court can insist that he shall; and if, on being required to do so, he fails to comply "the Court may pronounce judgment against him, or make such order in relation to the suit as it thinks fit".
This invests the Court with the widest possible discretion and enables it to see that justice is done to both sides; and also to witnesses if they are present: a matter on which we shall dwell later.
We have seen that if the defendant does not appearat the first hearing, the Court can proceed exparte, which means that it can proceed without a written statement; and Order IX, rule 7 makes it clear that unless good cause is shown the defendant cannot be relegated to the position that he would have occupied if he had appeared.
That means that he cannot put in a written statement unless he is allowed to do so, and if the case is one in which the Court considers a written statement should have been put in, the consequences entailed by Order VIII, rule 10 must be suffered.
What those consequences should be in a given case is for the Court, in the exercise of its judicial discretion, to determine.
No hard and fast rule can be laid down.
ID some cases an order awarding costs to the plaintiff would meet the ends of justice: an adjournment can be granted or a written statement can be considered oil the spot and issues framed.
In other cases, the ends of justice may call for more drastic action.
Now when we speak of the ends of justice, we mean justice not only to the defendant and to the other side but also to witnesses and others who may be inconvenienced.
It is an unfortunate fact that the convenience of the witness is ordinarily lost sight of in this class of case and yet be is the one that deserves 16 the greatest consideration.
As a rule, he is not parti cularly interested in the dispute but he is vitally interested in his own affairs which he is compelled to abandon because a Court orders him to come to the assistance of one or other of the parties to a dispute.
His own business has to suffer.
He may have to leave his family and his affairs for days on end.
He is usually out of pocket.
Often he is a poor man living in an out of the way village and may have to trudge many weary miles on foot.
And when he gets there, there are no arrangements for him.
He is not given accommodation; and when he reaches the Court, in most places there is no room in which he can wait.
He has to loiter about in the verandahs or under the trees, shivering in the cold of winter and exposed to the heat of summer , wet and miserable in the rains: and then, after wasting hours and sometimes days for his turn, he is brusquely told that he must go back and come again another day.
Justice strongly demands that this unfortunate section of the general public compelled to discharge public duties, usually at loss and inconvenience to themselves, should not be ignored in the over all picture of what will best serve the ends of justice and it may well be a sound exercise of discretion in a given case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross examine them, still less to adduce his own evidence.
It all depends on the particular case.
But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford litigants a real opportunity of fighting out their cases fairly and squarely.
Costs will be adequate compen sation in many cases and in others the Court has almost unlimited discretion about the terms it can impose provided always the discretion is judicially exercised and is not arbitrary.
In the Code of 1859 there was a provision (section 119) which said that "No appeal shall lie from a judgment passed exparte against a defendant who has not appeared".
The Privy Council held in Sahibzada Zeinulabdin Khan vs Sahibzada Ahmed Raza Khan( ' ) that this only applied to a defendant who had not appeared at all at any stage, therefore, if once an appearance was entered, the right of appeal was not taken away.
of the grounds of their decision was that "The general rule is that an appeal lies to the High Court from a decision of a civil or subordinate Judge, and a defendant ought not to be deprived of the right of appeal, except by express words or necessary implication".
The general rule, founded on principles of natural justice, that proceedings in a Court of justice should not be conducted behind the back of a party in the absence of an express provision to that effect is no less compelling.
But that apart.
It would be anomalous to hold that the efficacy of the so called ex parte order expends itself in the first Court and that thereafter a defendant can be allowed to appear in the appellate Court and can be beard and can be permitted to urge in that Court the very matters he is shut out from urging in the trial Court; and in the event that the appellate Court considers a remand necessary he can be permitted to do the very things he was precluded from doing in the first instance without wetting the exparte order set aside under Order IX, rule 7.
Now this is not a case in which the defendant with whom we are concerned did not appear at the first hearing.
He did.
The first hearing was on 11 12 1952 at Kotah.
The appellant (the first defendant) appeared through counsel and filed a written statement.
Issues were framed and the case was adjourned till the 16th March at Udaipur for the petitioners evidence alone from the 16th to the 21st March.
Therefore, Order IX, rules 6 and 7 do not apply in terms.
But we have been obliged to examine this order at length because of the differing views taken in the various High Courts and because the contention is that Order XVII, rule 2 throws one back to the position under Order IX, rules 6 and 7, and there, according to one set of (1) 5 I.A. 233.
3 18 views, the position is that once an ex parte "order" is "Passed" against a defendant he cannot take further part in the proceedings unless he gets that 'corder" set aside by showing good cause under rule 7.
But that is by no means the case.
If the defendant does not appear at the adjourned hearing (irrespective of whether or not he appeared at the first hearing) Order XVII, rule 2 applies and the Court is given the widest possible discretion either "to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit".
The point is this.
The Court has a discretion which it must exercise.
Its hands are not tied by the so called ex parte order; and if it thinks they are tied by Order IX, rule 7 then it is not exercising the discretion which the law says it should and, in a given case, interference may be called for.
The learned Judges who constituted a Full Bench of the Lucknow Chief Court (Tulsha Devi vs Sri Krishna(1) ) thought that if the original ex parte order did not enure throughout all future hearings it would be necessary to make a fresh ex parte order at each succeeding hearing.
But this proceeds on the mistaken assumption that an ex parte order is required.
The order sheet, or minutes of the proceedings, has to show which of the parties were present and if a party is absent the Court records that fact and then records whether it will proceed ex parte against him, that is to say, proceed in his absence, or whether it will adjourn the hearing; and it must necessarily record this fact at every subsequent bearing because it has to record the presence and absence of the parties at each hearing.
With all due deference to the learned Judges who hold this view, we do not think this is a grave or a sound objection.
A much weightier consideration is that the plaintiff may be gravely prejudiced in a given case because, as ,the learned Rajasthan Judges point out, and as O 'Sullivan, J. thought, when a case proceeds ex parte,the plaintiff does not adduce as much evidence as he would have if it had been contested.
He contents himself with leading just enough to establish a prima facie case.
Therefore, if he is suddenly confronted with a contest after he has closed his case and the defendant then comes forward with an army of witnesses he would be taken by surprise and gravely prejudiced.
That objection is, however, easily met by the wide discretion that is vested in the Court.
If it has reason to believe that the defendant has by his conduct misled the plaintiff into doing what these learned Judges apprehend, then it might be a sound exercise of discretion to shut out cross examination and the abduction of evidence on the defendant 's part and to allow him only to argue at the stage when arguments are heard.
On the other hand, cases may occur when the plaintiff is not and ought not to be, misled.
If these considerations are to weigh, then surely the sounder rule is to leave the Court with an unfettered discretion so that it can take every circumstance into consideration and do what seems best suited to meet the ends of justice in the case before it.
In the present case, we are satisfied that the Tribunal did not exercise its discretion because it considered that it had none and thought that until the ex parte order was set aside the defendant could not appear either personally or through counsel.
We agree with the Tribunal, and with the High Court, that no good cause was shown and so the defendant had no right to be relegated to the position that he would have occupied if he had appeared on 17 3 1953, but that he had a right to appear through counsel on 20 3 1953 and take part in the proceedings from the stage at which they had then reached, subject to such terms and conditions as the Tribunal might think fit to impose, is we think, undoubted.
Whether he should have been allowed to cross examine the three witnesses who were examined after the appearance of his counsel, or whether he should have been allowed to adduce evidence, is a matter on which we express no opinion, for that has to depend on whatever view the Tribunal in a sound exercise of judicial discretion will 20 choose to take of the circumstances of this particular case, but we can find no justification for not at least allowing counsel to argue.
Now the Tribunal said on 23 3 1953 "The exact stage at which the case had reached before us on the 21st of March 1953 was that under the clear impression that respondent No. 1 had failed to appear from the very first date of the final hearing when the ex parte order was passed, the petitioner must have closed his case after offering as little evidence as he thought was just necessary to get his petition disposed of exparte.
Therefore, to all the respondent No. 1 to step in now would certainly handicap the petitioner and would amount to a bit of injustice which we can neither contemplate nor con done".
But this assumes that the petitioner was misled and closed his case "after offering as little evidence as he thought was just necessary to get his petition disposed of ex parte".
It does not decide that that was in fact the case.
If the defendant 's conduct really gave rise to that impression and the plaintiff would have adduced more evidence than he did, the order would be unexceptional but until that is found to be the fact a mere assumption would not be a sound basis for the kind of discretion which the Court must exercise in this class of case after carefully weighing all the relevant circumstances.
We, therefore, disagreeing with the High Court which has upheld the Tribunal 's order, quash the order of the Tribunal and direct it to exercise the discretion vested in it by law along the lines we have indicated.
In doing so the Tribunal will consider whether the plaintiff was in fact misled or could have been misled if he had acted with due diligence and caution.
It will take in to consideration the fact that the defendant did enter an appearance and did file a written statement and that issues were framed in his presence; also that the case was fixed for the "Petitioner 's" evidence only and not for that of the appellant; and that the petitioner examined all the witnesses he had present on the 17th and the 18th and did not give up any of them; that he was given 21 an adjournment on 19 3 1953 for the examination witnesses who did not come on that date and that the examined three more on 20 3 1953 after the defendant had entered an appearance through counsel an( claimed the right to plead; also whether, when the appellant 's only protest was against the bearings a Udaipur on dates fixed for the petitioner 's evidence alone, it would be legitimate for a party acting with due caution and diligence to assume that the other side had abandoned his right to adduce his own evidence should the hearing for that be fixed at some other place or at some other date in the same place.
The Tribunal will also consider and determine whether it will be proper in the circumstances of this case to allow the appellant to adduce his own evidence.
The Tribunal will now reconsider its orders of the 20th, the 21st and the 23rd of March 1953 in the light of our observations and will proceed accordingly.
The records will be sent to the Election Commission with directions to that authority to reconstitute the Tribunal, if necessary, and to direct it to proceed with this matter along the lines indicated above.
There will be no order about costs.
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Notwithstanding the provision in section 105 of the Representation of the People Act (Act XLIII) of 1951 that every order of an Election Tribunal made under the Act shall be final and conclusive, the High Court and the Supreme Court have unfettered jurisdiction to examine whether the tribunal, in the exercise of its undoubted jurisdiction, has acted legally or otherwise, This jurisdiction cannot be taken away by a legislative device that purports to confer power on a tribunal to act illegally.
The legality of an act or conclusion is something that exists outside and apart from the decision of an inferior tribunal.
It is a part of the law of the land which cannot be finally determined or altered by any tribunal of limited jurisdiction.
The High Courts and the Supreme Court alone can determine what the law of the land is vis a vis all other Courts and tribunals and they alone can pronounce with authority and finality on what is legal and what is not.
All that an inferior tribunal can do is to reach a tentative conclusion which is subject to review under Articles 226 and 136 of the Constitution.
The jurisdiction of the High Courts under Article 226, with that of the Supreme Court above them, re main it , fullest extent despite section 105 of the Representation 2 of the People Act.
Limitations on the exercise of, such jurisdiction can only be imposed by the Constitution.
The powers of the High Courts under Article 226 of the Constitution are discretionary and, though no limits can be placed upon that discretion, it must be exercised along recognised lines and not arbitrarily.
In the exercise of their jurisdiction under Article 226, the High Courts should not act as Courts of Appeal or revision to correct mere errors of law which do not occasion injustice in a broad and general sense.
It is a sound exercise of discretion to bear in mind the policy of the legislature to have disputes about special rights, as in election cases, decided as speedily as may be.
The High Courts should not therefore entertain petitions for prerogative writs lightly in this class of case.
The appellant filed an election petition under section 100 of the Representation of the People Act.
He appeared on the first and 'Subsequent hearing at Kotah.
The proceedings were then adjourned for certain hearings at Udaipur.
The appellant did not appear on the first three hearings at that place so the tribunal proceeded ex parte.
His counsel appeared on the fourth hearing but was not allowed to take any further part in the proceedings because no good cause was shown for the earlier non appearance and so the tribunal refused to set aside its "ex parte order".
Held, (1) Under section 90(2) of the Representation of the People Act the procedure for the trial of election petitions is to be, as near as may be, the same as in the trial of suits under the Civil Procedure Code; (2) under the Civil Procedure Code there is no such thing as an ex parte order for non appearance" which precludes further appearance at an adjourned hearing until the Order is set aside.
If a party appears at an adjourned hearing the court has a discretion (which must be exercised judicially) either to allow him to appear oil such terms as it thinks fit, or to disallow further appearance; but (3) if he is allowed to appear then, unless good cause is shown under Order 9, rule 7 for the earlier non appearance the proceedings must continue from the stage at which the later appearance is entered and the party so appearing cannot be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings; also, (4) in exercising its discretion the court must see that justice is done to all concerned, including the witnesses Rule 6 (1) (a) of Order 9 of the Civil Procedure Code is confined to the first hearing of the suit and does not apply, per se to subsequent hearings.
0. 9, r. 7 gives a party a right to be relegated to the position he would have occupied if he had appeared at the earlier hearing or hearings if he shows good cause.
It does not per se prevent further appearance when no good cause is shown.
O. 17, r. 2 applies at the adjourned hearing and there, the Court is given a wide discretion to make such order as it thinks fit.
3 A code of procedure is a body of law designed to facilitate justice and further its ends, and should not be treated as an enactment providing for punishments and penalties.
The laws of procedure are grounded on the principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.
Subject to clearly defined exceptions the laws of procedure should be construed wherever reasonably possible, in the light of that principle.
The court is invested with the widest possible discretion to see that justice is done to all concerned.
No hard and fast rule can be laid down; and the court in the exercise of its judicial discretion will have, in a given case, to determine what consequences are to follow from non appearance.
An order awarding costs, or an adjournment, or the consideration of the written statement and the framing of the issues on the spot, can in some cases meet the ends of justice.
In other cases, more drastic action may be called for.
By "ends of justice" is meant not only justice to the parties but also to witnesses and others who may be inconvenienced.
The convenience of the witnesses, which deserves the greatest consideration, is ordinarily lost sight of in this class of case.
Justice strongly.
demands that this unfortunate section of the general public com pelled to discharge public duties, usually at loss and inconvenience to themselves should not be ignored in the over all picture of what will best serve the ends of justice; and it may well be a sound exercise of discretion in a particular case to refuse an adjournment and permit the plaintiff to examine the witnesses present and not allow the defendant to cross examine them.
But broadly speaking, after all the various factors have been taken into consideration and carefully weighed, the endeavour should be to avoid snap decisions and to afford the parties a real opportunity of fighting out their cases fairly squarely.
The Court must in every case exercise the discretion given to it.
Its hands are not tied by a so called "ex parts order", and, if it thinks they are tied by rule 7 of Order 9 of the Code, then it is not exercising the discretion which the law says it should, and in a given case interference may be called for.
Held, that the Election Tribunal did not exercise the discretion given to it by law because of a misapprehension that it had none.
It was directed to do so now and to proceed with the further hearing of the case in accordance with law.
Hari Vishnu vs Ahmed Ishaque ([1955] 1 S.C.R. 1104), Darga Shankar Mehta vs Thakur Raghuraj Singh ([1955] 1 S.C.R. 267), and Raj Krushna Bose vs Binod Kanungo ([1954] S.C.R. 913, 918), applied.
Hariram vs Pribhdas (A.I.R. 1945 Sind 98, 102), distinguished.
Sewaram vs Misrimal (A.I.R. , 14), overruled.
Venkatasubbiah vs Lakshminarasimham (A.I.R. , approved Balakrishna Udayar vs Vasudeva Ayyar (I.L.R. , 4 T. M. Barret vs African Products Ltd. (A.I.R. 1928 P.C. 261, 262) and Sahibzada Zeinitlabdin Khan vs Sahibzada Ahmed Baza Khan (5 I.A. 233, 236), applied.
Case remitted to, the Tribunal:
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IGINAL JURISDICTION: Special Leave Petition (C) No. 15257 of 1987.
From the Judgment and Order dated 23.4.1987 of the Delhi High Court in CMP No. 268 of 1987.
V.M. Tarkunde, D.D. Thakur, Govinda Mukhoty, A.P. Singh, K.N. Rai, section Balakrishnan, R.N. Keswani, R.F. Nariman, P.H. Parekh, D.Y. Chanderchud, J.P. Pathak, Shishir Sharma, Ms. Gitanjali, Mrs. Biraj Tiwari, Ms. Sunita Sharma, N.K. Sahoo, Arun Jaitley, Ms. Bina Gupta, Ms. Madhu Khatri, L.K. Gupta, R.C. Kaushik, Rajiv Sharma, B.S. Bali, M.C. Dhingra, A.S. Bawa, V.K. Verma, Kirpal Singh, A.S. Pundir, section Srinivasan, Mrs. Sushadra, B.B. 1043 Tawakley, S.K. Mehta, Dhruv Mehta, Atul Nanda, Ms. Mridula Ray, R.M. Tewari, Ms. Rani Jethmalani, Ajit Singh Bawa and Vijay Verma for the Petitioners.
G. Ramaswamy, Additional Solicitor General, R.B. Datar, O.P. Sharma, Dr. L.M. Singhvi, A.K. Sen, Ranjit Kumar, R.C. Gubrele, R.K. Maheshwari, Mensoor Ali, A.M. Singhvi, D. Bhandari, N. Waziri, Mrs. Madhu Bhandari, K.B. Rohtagi, S.K. Dhingra, Baldev Atreya, S.B. Saharya, V.B. Saharya, K.R. Gupta, R.K. Sharrna, Vimal Sharda, Vivek Sharda, Mrs. Nanita Shanaa, Aruneshwar Gupta, Inderbir Singh Alag and Sushil Kumar for the Respondents.
Mrs. Sushma Suri, B.B. Sawhney, P.K. Manohar, Mrs. Indra Sawhney, Mrs. Abha Jain, P.K. Jain, S.S. Hussain, Amlan Ghosh, Jitendra Sharma, R.D. Upadhyay, Y.K. Jain, D.D. Shanaa, Rajesh, Naresh Kabkshi, Mrs. Urmila Kapur, M.M. Kashyap, Anis Ahmad Khan, Manjeet Chawla, S.N. Bhatt, N. Ganpathy, P. Parmeshwaran, A.S. Pundir, Pandey Associate, Arun K. Sinha, M.B. Lal, A.K. Sanghi and S.M. Ashri for the appearing parties.
The following Judgments of the Court were delivered: SHARMA, J.
The petitioners in all these cases claim the right to engage in trading business on the pavements of roads of the city of Delhi.
They have asserted that they have been pursuing their trade with the permission of the municipal authorities for some time, but recently there has been illegal interference by them.
Some of the petitioners have moved this Court under Article 32 of the Constitution and others impugn adverse judgments of the Delhi High Court dismissing their claim.
As the petitioners have challenged the correctness of the decision of a Division Bench of this Court in Pyarelal vs N.D.M.C and another, (1967) 3 SCR page 747, these cases were placed for hearing before a larger Bench.
The petitioners, in their applications before this Court, have alleged that they were allowed by the respond ents to transact their business by occupying a particular area on the pavements, on payment of certain charges de scribed as Tehbazari.
It is contended that the municipal authorities by their refusal to permit the petitioners to continue with their trade are violating their fundamental right guaranteed under Article 19(1)(g) and 21 of the Con stitution.
They have also 1044 complained of mala fides, arbitrariness and discriminatory conduct attracting Article 14 of the Constitution.
The respondents, besides denying the facts alleged by the petitioners, contended that nobody has got a legal right to occupy exclusively a particular area on the road pave ments for pursuing a trading business, and nobody can claim any fundamental right in this regard whatsoever.
It has been strenuously urged that the roads are meant for the use of general public for passing and re passing and they are not laid to facilitate the carrying on of private business.
The main argument on behalf of the petitioners was addressed by Mr. Tarkunde, who appeared for petitioner Sodan Singh in S.L.P. No. 15257 of 1987.
Several learned advocates representing the other petitioners, besides adopting the main argument, made brief supplementary submissions.
The place where petitioner Sodan Singh claims to have the right to squat for soiling ready made garments is within New Delhi.
Several other petitioners have similar claims against the New Delhi Municipal Committee.
The remaining petitioners allege that they have been pursuing their squatting business within Delhi, as defined in the Delhi Municipal Corporation Act, which is administered by the respondent Municipal Corporation of Delhi.
Separate arguments have been made on behalf of the New Delhi Municipal Committee and the Munici pal Corporation of Delhi.
Mr. Tarkunde urged that petitioner Sodan Singh is a poor hawker making his both ends meet by selling ready made garments on an area of 8 ' x 24 ' near Electric Pole No. 12, Janpath Lane, New Delhi as illustrated in the attached map Annexure 'A ' to the petition.
Earlier he was permitted to hawk from time to time by the respondent under licences as per Annexure 'A 2 ', but now the privilege is being denied to him and his goods were removed forcibly from the pavement and were later released only on payment of cost of removal charges.
In the counter affidavit of the respondent the allegations have been denied and it has been pointed out that the photo copy of the licence Annexure 'A 2 ' itself shows that the petitioner was permitted to sell 'Channa ' and 'Moongphali ' on a 'Vehngi ' on and around Bus stop No. 430 on Pt.
Pant Marg; and he was at no point of time allowed to occupy a fixed place for carrying on business in ready made garments.
We do not propose to go into the facts of this or the other petitions and would leave the individual cases to be dealt with by the Division Bench in the light of the general principle which will be discussed in this judgment.
1045 7.
The Municipal Corporation of Delhi was established by a notification issued under section 3 of the Delhi Municipal Corporation Act, 1957, and the provisions of that Act are relevant for the majority of the present cases.
The other cases relate to the other areas forming part of the Union Territory of Delhi governed by the provisions of the Punjab Municipal Act, 1911.
However, the main submissions in all these cases made on behalf of both sides have been with respect to the general principles applicable in India about the right to carry on business by squatting on pavements of public streets.
Mr. Tarkunde contended that the petitioners are poor people and depend on their business for their livelihood.
If they are not allowed to occupy some specific place for conducting their business, they may starve.
This will lead to violation of their fundamental right under Article 21 of the Constitution.
Reliance was placed on the decision in Olga Tellis and others vs Bombay Municipal Corporation and others; , The learned counsel further said that the two respondents have been in the past allowing squatter traders on the pavements on payment of Tehbazari charges.
He drew our attention to the counter affidavit of the respondent in S.L.P. Nos.
4519 23 of 1986 at page 146 where a resolution by the New Delhi Municipal Committee has been mentioned in paragraph III.
In the case of Delhi Munic ipal Corporation also several documents have been relied upon for showing that specific areas have been allowed to be occupied for the purpose of trading business from time to time.
The learned counsel argued that since the two munici palities have been settling specific areas for the purpose of squatting, it is not open to them to deny squatting rights to the petitioners and other persons situated in similar circumstances.
In Pyare Lal etc.
vs N.D.M.C.; , the New Delhi Municipal Committee banned the sale of cooked edibles on public streets, and prevented the petitioners, licensed vendors of potato chops and other edibles, from continuing with their business.
After unsuccessfully moving the Punjab High Court, they came to this Court.
The appeals were dismissed holding that persons in India cannot claim a lawful right to pursue street trading, and the N.D.M.C. was perfectly authorised to take steps under section 173 of the Punjab Municipal Act for stopping the business.
It was also observed that the N.D.M.C. was not empowered under the Act to allow trade on public streets on a permanent basis and that permission for sale of goods could be granted only on special occasions on temporary basis as in the case of festivals etc.
Reliance had been placed on behalf of the 1046 petitioners on certain passages from Halsbury 's Laws of England, which the Court distinguished on the ground that street trading was regulated by certain statutes in England, and there were no such provisions applicable in the cases before this Court.
The right to pursue street trading in India was thus negatived.
Mr. Tarkunde contended that it is not correct to deny the members of the public their right to engage in business on the public streets in the country.
He said that this is one of the fundamental rights guaranteed both, under Article 19(1)(g) and Article 21.
According to the learned counsel, the practice of the street trading is well established for a considerable time in all the civi lised countries of the world including India, England and United States of America.
Refuting the suggestion made on behalf of the respondents that it was only a hawker who sells his goods while moving from door to door and place to place who is allowed on the public streets, Mr. Tarkunde referred to Halsbury 's Laws of England, Vol. 40, paragraphs 431 to 446 under the heading 'Street Trading in Greater London '.
It was suggested that the right of the members of the public in this regard was rounded on the common law right.
The learned counsel further relied on the third paragraph of section 253 of the Chapter 'Highways, Streets, and Bridges ' of 39 American Jurisprudence (2nd Edition) which reads as follows: "A municipality 's power to regulate the use of streets for private gain is to be liberally construed.
The purpose of such regulations is to promote public safety, and not to regulate and control indirectly the user 's business as such.
There is no authority in a municipality to prohibit the use of the street by any citizen or corporation in the carrying on of a legitimate business, harmless in itself and useful to the community, which is independent of the police power under which reasonable regulations in the promotion of the public order, safety, health, and welfare are proper.
In his reply Mr. Singhvi, the learned counsel for N.D.M.C. pointed out that the first two paragraphs of the aforementioned section 253 which are quoted ' below negative the right asserted on behalf of the petitioners and paragraph 3 mentioned above has to be read in that light.
"section 253.
Business purposes: Individuals do not have the inherent right to conduct their private business in the streets, nor can they acquire a 1047 vested right to use the streets for carrying on a commercial business.
However, individuals do have the right to use the streets to some extent for the purpose of bartering or trading with each other, or for prosecuting a busi ness, trade, or calling, although they cannot legally carry on any part of their business in the public streets to the annoyance of the public, or supply the deficiencies in their own premises by monopolizing the street or walk.
The use of public streets as a place for the prosecution of a private business for gain is generally recognised as a special or extraordinary use which the controlling public authority may prohibit or regulate as it deems proper.
When a municipality does permit pri vate individuals to have exclusive possession of the street surface for a private business use, such permit is so unusual, and beyond the ordinary authority and power of a municipali ty, that it may not issue such a permit in the absence of special enabling state legislation.
Assuming that such power exists, the granting of permission to a private person to so use the streets is totally within the discretion of the municipality.
" The learned counsel contended that the grant of exclusive right to occupy any part of the road amounts to the negation of the Common Law theory of dedication of a road for public use.
Reference was also made on behalf of the petitioners to the judgment in M.A. Pal Mohd. vs R.K. Sadarangani, A.I.R. 1985 Madras 23, wherein it was observed that hawker trade so long as it is properly regulated by public authori ties could never be a public nuisance; rather it serves the convenience of the public.
and is found not only in India but also in other countries.
The question of applicability of the English and American laws on the present aspect was considered by a Division Bench of the Madras High Court in C.S.S. Motor Service vs Madras State, A.I.R. 1953 Madras 279 and the decision was later approved by this Court in Saghir Ahmad vs The State of U.P. and others; , After a thorough consideration of the relevant materials Venkatarama Aiyar, J. who delivered the judgment pointed out some of the basic differences in the law of this country on the present subject from the American and English laws, which render the American decisions inapplicable on certain aspects.
The right to carry on business, 1048 although recognised as one of the liberties protected by the American Constitution, did not acquire the full status of the freedoms expressly mentioned in the Constitution, such as, the freedom of speech, of person, and of religion; and was viewed somewhat in the light of an interloper or parvenu among them.
The freedoms expressly mentioned in the American Constitution occupy an exalted position which was denied to the unexpressed freedoms including the right to carry on business.
Under the Indian Constitution this right is one of the freedoms expressly protected under Article 19(1)(g) and is placed on the same footing as freedom of speech, etc.
Further only some trades could be carried on by the American citizens as a matter of right and the others including the transport business on public roads only if the State permit ted.
The learned Judge observed that this is called a 'fra nchise ' or a 'privilege ' and has an English origin.
That is not the case in this country, inasmuch as Article 19(1)(g) does not make any distinction from trade to trade.
So far England is concerned, the rights of citizens to public pathways originated in feudal times when the lands were owned by individuals.
The public highways generally pass through these lands and since the citizens were using these roads the law inferred a dedication of the pathways by the owners for user by the public, but the extent of this user was limited to the passing and re passing on the road.
The position in India has always remained somewhat different and has been summarized in paragraph 24 of the judgment of Venkatarama Aiyar J., in the following terms, which has been quoted with approval by this Court in Saghir Ahmad 's case.
"The true position then is that all public streets and roads vest in the State but that the State holds them as trustee on behalf of the public.
The members of the public are entitled as beneficiaries to use them as a matter of right and this right is limited only by the similar rights possessed by every other citizen to use the pathways.
The State as trustees on behalf of the public is entitled to impose all such limitations on the charac ter and extent of the user as may be requisite for protecting the rights of the public gener ally.
Thus the nature of the road may be such that it may not be suitable for heavy traffic and it will be within the competence of the legislature to limit the use of the streets to vehicles which do not exceed specified size or weight.
Such regulations have been held to be valid as within the police power of the State in America.
Vide 'Morris vs Budy ', , Sproles vs Bindford ', ; , and South Carolina State vs Barnwell 1049 Bros. '[1938] ; For the same reason the State might even prohibit the running of transport buses and lorries on particular streets or roads if such running would interfere with the rights of pedestrians to pass and re pass as it might if the street is narrow or conjested but subject to such limitations the right of a citizen to carry on business in transport vehicles on public pathways cannot be denied to him on the ground that the State owns the highways.
Mr. Singhvi is correct in pointing out that the passages of the American and English laws, as relied upon on behalf of the petitioners, do not establish their right to carry on trading business on public streets, but for that reason their claim cannot be rejected either.
The question requires to be examined further.
The observations in the judgment of Venkatarama Aiyer, J. quoted above prima facie support the petitioners.
They received express approval of this Court in Saghir Ahmad 's case, but there is an important distinction between those cases and the present matter which cannot be ignored.
In both the above cases the petitioners were claiming the right to ply transport vehicles for hire on public streets; in other words, they wanted to use the roads for transport, for which the roads were primarily laid out and while so doing attempted to earn money.
In the present cases before us the petitioners are desirous of conducting their trade business by sale of goods on the roads from stationary points; they do not want to make use of the roads for movement of persons or goods.
The question is whether this makes a material difference.
The primary object of building roads is undoubtedly to facilitate people to travel from one point to another.
Quoting several authorities Byron K. Elliott and William F. Elliott in their treatise on the Law of Roads and Streets have defined a street as a road or public way in a city, town or village.
A way over land set apart for public travel in a town or city is a street, no matter by what name it may be called.
If a way is free to all people it is a highway.
P. Duraiswami Aiyangar in his book dealing with the Law of Municipal Corporation in British India (1914 Edn.) has observed that the primary and paramount use of the street is public travel for man, beast and carriage for goods.
On behalf of the respondents reliance has been placed on the oft repeated adage that public have a right of passing and repassing through a street but have no right "to be on it", which Sri Aiyangar also has mentioned at page 542 of his book.
Halsbury, relied upon by both sides, has stated (Vol.
21 paragraph 107) that the right of 1050 the public is a right to pass alone a highway for the pur pose of legitimate travel, not to be on it, except so far as the public 's presence is attributable to a reasonable and proper user of the highway as such.
These statements cer tainly do not mean that a traveler has to be in perpetual motion when he is in a public street.
It may be essential for him to stop sometime for various reasons he may have to alight from a vehicle or pick up a friend, collect certain articles or unload goods or has to take some rest after a long and strenuous journey, What is, required of him is that he should not create an unreasonable obstruction which may inconvenience other persons having similar right to pass; he should not make excessive use of the road to the prejudice of the others.
Liberty of an individual comes to an end where the liberty of another commences.
Subject to this, a member of the public is entitled to legitimate user of the road other than actually passing or re passing through it.
It has been sometimes argued that since a person is entitled to the user of every part of a public street, he cannot be deprived of the use of any portion thereof by putting up of any obstruction.
This proposition in its extreme form cannot be accepted without subjecting it to several restrictions.
A similar argument was pressed before the Madras High Court in the case of M.A. Pal Mohd. vs R.K. Sadarangani, (supra) based on the provisions of the Madras City Municipal Corporation Act, 1919, and was rightly re pelled by pointing out that since the pavement is also included within the expression 'street ', a member of the public relying upon the aforesaid proposition can insist on his right to walk over a flower bed or structure erected by the public authorities for regulating traffic which will be wholly unpractical.
The authorities are duty bound to locate post boxes, fire hydrants with water tanks, milk booths, bus or jutka stands, rubbish bine etc., in appropriate places in a public street and it would be preposterous to hold that this cannot be done as somebody may insist on keeping every inch of the street available for actual passage.
Winfield and Jolowicz in their book on Tort (12th Edn.) have said that nuisance may be defined, with reference to highways, as any wrongful act or omission upon or near a highway, whereby the public are prevented from freely, safely, and conven iently passing along the highway and that the law requires of users of the highway a certain amount of "give and take".
The case of Harper vs G.N. Maden and Sons, Limited, illustrates this point.
The defendants there who had their house abutting the road decided to add another floor to their existing premises.
Before starting construction they erected "scaffolding" resting On the footpath, and put up a wooden hoarding 1051 next door to the plaintiff 's shop for the purpose of enclos ing a space to be used, during the alterations to their building, for depositing bricks and other materials.
In an action by the plaintiff, for injunction and damages, the trial Judge held that although the scaffolding and hoarding were reasonably necessary for the construction and they did not cause any greater obstruction or remain for any longer period than was reasonably necessary, the obstruction was illegal and that the plaintiff was entitled to damages.
On appeal the judgment Was reversed holding that the obstruc tion to the highway and to the enjoyment by the plaintiff of his adjoining premises being of temporary character and being reasonable in quantum and in duration did not give rise to a legal remedy.
It was very well said that: "The law relating to the user of highways is in truth the law of give and take.
Those who use them must in doing so have reasonable regard to the convenience and comfort of others, and must not themselves expect a degree of convenience and comfort only obtain able by disregarding that of other people.
They must expect to be obstructed occasional ly.
It is the price they pay for the privilege of obstructing others." As to what will constitute public nuisance and what can be included in the legitimate user can be ascertained only by taking into account all the relevant circumstances in cluding the size of the road, the amount of traffic and the nature of the additional use one wants to make of the public streets.
This has to be judged objectively and here comes the role of public authorities.
So far as right of a hawker to transact business while going from place to place is concerned, it has been admittedly recognised for a long period.
Of course, that also is subject to proper regulation in the interest of general convenience of the public including health and security considerations.
What about the right to squat on the road side for engaging in trading business? As was stated by this Court in Bombay Hawkers Union and others vs Bombay Municipal Corporation and others, , the public streets by their nomenclature and definition are meant for the use of the general public: they are not laid to facilitate the carrying on of private business.
If hawk ers were to be conceded the right claimed by them, they could hold the society to ransom by squatting on the busy thoroughfares, thereby paralysing all civic life.
This is one side of the picture.
On the other hand, if properly regulated according to the exigency of the circumstances, the small 1052 traders on the said walks can considerably add to the com fort and convenience of general public, by making available ordinary articles of every day use for a comparatively lesser price.
An ordinary person, not very affluent, while hurrying towards his home after day 's work can pick up these articles without going out of his way to find a regular market.
If the circumstances are appropriate and a small trader can do some business for personal gain on the pave ment to the advantage of the general public and without any discomfort or annoyance to the others, we do not see any objection to his carrying on the business.
Appreciating this analogy the municipalities of different cities and towns in the country have been allowing such traders.
The right to carry on trade or business mentioned in Article 19(1)(g) of the Constitution, on street pavements, if properly regulated cannot be denied on the ground that the streets are meant exclusively for passing or re passing and for no other use.
Proper regulation is, however, a necessary condition as otherwise the very object of laying out roads to facilitate traffic may be defeated.
Allowing the right to trade with out appropriate control is likely to lead to unhealthy competition and quarrel between traders and travelling public and sometimes amongst the traders themselves result ing in chaos.
The right is subject to reasonable restric tions under clause (6) of Article 19.
If the matter is examined in this light it will appear that the principle stated in Saghir Ahmad 's case in connection with transport business applies to the hawkers ' case also.
The proposition that all public streets and roads in India vest in the State but that the State holds them as trustee on behalf of the public, and the members of the public are entitled as bene ficiaries to use them as a matter of right, and that this right is limited only by the similar fights possessed by every other citizen to use the pathways, and further that the State as trustee is entitled to impose all necessary limitations on the character and extent of the user, should be treated as of universal application.
The provisions of the Municipal Acts should be construed in the light of the above proposition.
In case of ambiguity, they should receive a beneficial interpretation, which may enable the municipalities to liberally exercise their authority both, in granting permission to individuals for making other uses of the pavements, and, for removal of any encroachment which may, in their opinion, be constitut ing undesirable obstruction to the travelling public.
The provisions of the Delhi Municipal Corporation Act, 1957, are clear and nobody disputes before us that the Municipal Corporation of Delhi has full authority to permit hawkers and squatters on the side walks where they consider it practical and convenient.
In so far the Punjab Municipal Act 1911 1053 applying to the New Delhi area is concerned, the Bench constituted by three learned Judges observed in Pyare Lal 's case ; that the provisions did not authorise the municipality to permit stalls to be set up in the streets except temporarily on special occasions, like festi vals, etc.
and that the permission to the petitioner in that case had been wrongly granted initially.
We do not agree with these observations, although it appears that in the light of the other circumstances, indicated in the judgment, the decision was a correct one.
The provisions of both sections 173 and 188 should receive liberal construction, so that the New Delhi Municipal Committee may be in a position to exer cise full authority.
Indeed some of the documents on the records before us indicate that the Committee had been in the past actually permitting hawkers and squatters on pave ments in certain areas.
The controversy in the present cases, however, cannot be settled by what has been said earlier.
The claim of the petitioners before us is much higher.
They assert the right to occupy specific places on road pavements alleging that they have been so doing in the past.
As has been stated earlier, the facts have been disputed and individual cases will be considered separately in the light of the present judgment.
The argument, however, which has been pressed on behalf of the petitioners is that they have their fundamen tal rights guaranteed by Articles 19 and 21 of the Constitu tion to occupy specific places demarcated on the pavements on a permanent basis for running their business.
We do not think there is any question of application of Article 21 and we will be briefly indicating our reasons therefore later.
But can there be at all a fundamental right of a citizen to occupy a particular place on the pavement where he can squat and engage in trading business? We have no hesitation in answering the issue against the petitioners.
The petitioners do have the fundamental right to carry on a trade or busi ness of their choice, but not to do so on a particular place.
The position can be appreciated better in the light of two decisions of this Court in Fertilizer Corporation Kamgar Union vs Union of India, ; , and K. Rajendran vs State of Tamil Nadu, ; 19.
In the Fertilizer Corporation case the workmen of the respondent Corporation challenged the legality of the sale of certain plants and equipments of the Sindri Ferti lizer Factory inter alia on the ground that a large number of workers would be retrenched as a result of the sale.
They argued that the sale would deprive them of their fundamental right under Article 19(1)(g) to carry on their occupation as industrial workers.
A Bench of five Judges of this Court rejected the 1054 plea holding that Article 19(1)(g) confers a broad and general right which is available to all persons to do work of a particular kind and of their choice, but it does not confer the right to hold a particular job or to occupy a particular post of one 's choice.
The right to pursue a calling or to carry on an occupation is not the same thing as the right to work in a particular post.
If the workers were retrenched consequent upon and on account of the sale it would be open to them to pursue their rights and remedies under the labour laws.
But the closure of an establishment in which a workman for the time being was employed did not by itself infringe his fundamental right to carry on an occupation which is guaranteed by Article 19(1)(g).
"The choice and freedom of the workers to work as industrial workers is not affected by the sale.
The sale may at the highest affect their locum, but it does not affect their locus, to work as industrial worker" This decision was followed in K. Rajendran vs State of Tamil Nadu, which arose out of a policy decision taken by the State of Tamil Nadu to abolish all the posts of part time Village Officers.
An Ordinance was promulgated for this purpose and was later replaced by an Act.
Rejecting the appeal of the appellants this Court held that the impugned Act did not violate Arti cle 19(1)(g) as it did not affect the right of the incum bents of posts to carry on any occupation of their choice, even though they may not be able to stick on to the post which they were holding.
The ratio of these decisions apply with full force to the cases where the right to pursue a trade or business is involved.
If the opposite view is taken and the plea of the petitioners is allowed a chaotic situa tion may follow.
They may be entitled to insist that they would carry on their business anywhere they like, either on the roads or in the government schools or hospitals or other public buildings.
They may like to enter the class rooms or the patient wards or any public office to advance their prospects.
As was observed in the Bombay Hawkers case ; , they can hold the society to ransom by squatting on the busy thoroughfare, thereby paralysing all civic life.
We do not find any merit in the argument rounded on Article 21 of the Constitution.
In our opinion Article 21 is not attracted in a case of trade or business either big or small.
The right to carry on any trade or business and the concept of life and personal liberty within Article 21 are too remote to be connected together.
The case of Olga Tellis and others vs Bombay Municipal Corporation and others; , , heavily relied upon on behalf of the petitioners, is clearly distinguishable.
The petitioners in that case were very poor persons who had made pavements their homes existing in the midst of filth and squalor, which had to be seen to be believed.
Rabid dogs in search of 1055 stinking meat and cats in search of hungry rats kept them company.
They cooked and slept where they cased, for no conveniences were available to them.
Their daughters, coming of age, bathed under the nosy gaze of passers by, unmindful of the feminine sense of bashfulness.
They had to stay on the pavements, so that they could get odd jobs in the city.
It was not a case .of a business of selling articles after investing some capital, howsoever meagre.
It is significant to note that the judgment in Bombay Hawkers Union and others vs Bombay Municipal Corporation and Others, , and that in Olga Telils were delivered within a week, both by Y.V. Chandrachud, C.J. and some of the counsel appearing m two cases were common, and that while dealing with the rights of the squatting hawkers in the former case the learned Chief Justice confined the consideration of the right under Article 19(1)(g) of the Constitution.
Besides, the Court in the Olga Tellis affirmed the validity of section 314 of the Bombay Municipal Corporation Act on the ground that "Removal of encroachments on the footpaths or pavements over which the public has the right of passage or access, cannot be regarded as unreasonable, unfair or unjust.
" In this connection the Court further proceeded to say, "Footpaths or pavements are public properties which are intended to serve the convenience of the general public.
They are not laid for private use and indeed, their use for a pri vate purpose frustrates the very object for which they are carved out from portions of public streets.
The main reason for laying out pavements is to ensure that the pedestrians are able to go about their daily affairs with a reasonable measure of safety and security.
That facility, which has matured into a right of the pedestrians, cannot be set at naught by allowing encroachments to be made on the pavements.
There is no substance in the argu ment advanced on behalf of the petitioners that the claim of the pavement dwellers to put up constructions on pavements and that of the pedestrians to make use of the pavements for passing repassing, are competing claims and that the former should be preferred to the latter.
No one has the right to make use of a public property for a private purpose without the requisite authorisation and, therefore, it is erroneous to contend that the pavement dwellers have the 1056 right to encroach upon pavements by construct ing dwellings thereon.
Public streets, of which pavements form a part, are primarily dedicated for the purpose of passage and, even the pedestrians have but the limited right of using pavements for the purpose of passing and repassing.
So long as a person does not trans gress the limited purpose for which the pave ments are made, his use thereof is legitimate and lawful.
But, if a person puts any public property to a use for which it is not intended and is not authorised to use it, he becomes a trespasser.
The common example which is cited in some of the English cases (see, for exam ple, Hicknan vs Maisey, ) is that if a person, while using a highway for passage, sits down for a time to rest himself by the side of the road, he does not commit a trespass.
But, if a person puts up a dwelling on the pavement, whatever may be the economic compulsions behind such an act, his user of the pavement would become unauthorised.
" It is also worth noting that assurances had been given on behalf of the State Government in its pleading before this Court which was repeatedly mentioned in the judgment.
On behalf of some of the petitioners it was contend ed that in view of the inclusion of the word "socialist" in the Preamble of the Constitution by the 42nd Amendment greater concern must be shown to improve the condition of the poor population in the country, and every effort should be made to allow them as much benefit as may be possible.
There cannot be any quarrel with this proposition, but that by itself cannot remedy all the problems arising from pover ty.
Even the Constitution as it stood originally was commit ted to economic justice and welfare of the needy.
But for that reason either then or now the other provisions of the Constitution and the laws cannot be ignored.
It is, there fore, not possible to interpret the decision in Olga Tellis in the manner to interpret the decision in Olga Tellis in the manner suggested on behalf of the petitioners to bolster their case with the aid of Article 21.
During his argument Mr. Tarkunde fairly stated that the Municipal Committee may be entitled to regulate the squatting business of the petitioners, but they must make detailed schemes in this regard.
A serious concern was shown in the argument of the other learned advocates also alleging that corruption at large scale was 1057 rampant and huge amounts of money were being realised ille gally by some of the servants of the Municipalities from the poor hawkers.
No rules have been framed with respect to the choice of the persons, the area to be allowed to them or the rate of Tehbazari charges.
The permission to squat was being granted on daily basis or for very short periods to the great inconvenience to the hawkers and no machinery was available to hear their grievances.
A draft scheme has been prepared and filed on behalf of the petitioners with a suggestion that the respondents may be directed to adopt it.
On behalf of the respondents it was said that statutory provisions are already there in this regard, but they had to concede that they are too sketchy and incapable of meeting the need.
We are, in the circumstances, of the view that detailed necessary provisions, dealing with all relevant aspects, and capable of solving the problems arising in the situation in a fair and equitable manner, should be made; and, the respondents should proceed as soon as may be possi ble.
They will be well advised to consider the suggestions of the petitioners while finalising the schemes.
Due regard to the requirements of the relevant laws, e.g., and the Delhi Control of Vehicular and other Traffic on Roads and Streets Regulation, 1980 will have to be given.
We would, however, make 'it clear that the demand of the petitioners that the hawkers must be permitted on every road in the city cannot be allowed.
If a road is not wide enough to conveniently manage the traffic on it, no hawking may be permitted at all, or may be sanctioned only once a week, say on Sundays when the rush considerably thins out.
Hawking may also be justifiably prohibited near hospitals or where necessity of security measures so demands.
There may still be other circumstances justifying refusal to permit any kind of business on a particular road.
The demand on behalf of the petitioners that permission to squat on a particular place must be on a permanent basis also has to be rejected as circumstances are likely to change from time to time.
But this does not mean that the licence has to be granted on the daily basis; that arrangement cannot be convenient to anybody, except in special circumstances.
The authorities, while adopting a scheme, should also consider the question as to which portions of the pavements should be left free for pedestrians and the number of the squatters to be allowed on a particular road.
There should be rational basis for the choice of the licensees.
A policy decision should be taken in regard to the articles which should be permitted to be sold on the pavements.
It is common knowledge (as was taken note of in Bombay Hawkers case) that some 1058 of the hawkers in big cities are selling very costly luxury articles including sophisticated electronic goods, sometimes imported or smuggled.
The authorities will be fully justi fied to deny to such hawkers any facility.
They may frame rules in such a manner that it may benefit only the poor hawkers incapable of investing a substantial amount for starting the business.
Attempt should be made to make the scheme comprehensive, dealing with every relevant aspect, for example, the charges to be levied, the procedure for grant and revocation of the licences, et cetera.
We as a Court in a welfare State do realise the hardship to which many of the petitioners may be exposed if they are prevented from carrying on the business.
The only solution for this is the adoption of the policy of full employment, which even according to leading economists like Keynes will alleviate the problems of the unemployed to some extent.
But as students of economics we also realise that every human activity has the 'optimum point ' beyond which it becomes wholly unproductive.
It is for the Government to take reasonable steps to prevent movement of people from rural areas to urban areas.
That can be done by the develop ment of urban centers in rural areas removed from each other at least by one hundred miles.
This is more a matter of executive policy than for judicial fiat.
We hope and trust that in administering the laws in force the authorities will keep in view humane considerations.
With these observations we dispose of these petitions and remit them to the appro priate Division Bench for final disposal in accordance with this judgment.
KULDIP SINGH, J.
I have read the erudite judgment of L.M. Sharma, J, wherein it has been held that street trad ing, whether as an itinerant vendor/hawker or from a sta tionary position/receptacle/ kiosk/foot path, is a fundamen tal right guaranteed under Article 19(1)(g) of the Constitu tion of India.
The said right is obviously subject to rea sonable restrictions imposed by the State under Article 19(6) of the Constitution.
It has further been held that there is no fundamental right of a citizen to occupy a particular place in any street for the purpose of engaging himself in 'street trading. ' I respectfully agree with these findings arrived at by Sharma, J. I may, however, add few words to support these findings.
The guarantee under Article 19(1)(g) extends to practice any profession, or to carry on any occupation, trade or business. 'Profession ' means an occupation carried on by a person by virtue of his personal and specialised qualifica tions, training or skill.
The word 1059 'ocCupation ' has a wide meaning such as any regular work, profession, job, principal activity, employment, business or a calling in which an individual is engaged. 'Trade ' in its wider sense includes any bargain or sale, any occupation or business carried on for subsistence or profit, it is an act of buying and selling of goods and services.
It may inclUde any business carried on with a view to profit whether manual or mercantile. 'Business ' is a very wide term and would include anything which occupies the time, attention and labour of a man for the purpose of profit.
It may include in its form trade, profession, industrial and commercial opera tions, purchase and sale of goods, and would include any thing which is an occupation as distinguished from pleasure.
The object of using four analogous and overlapping words in Article 19(l)(g) is to make the guaranteed right as compre hensive as possible to include all the avenues and modes through which a man may earn his livelihood.
In a nut shell the guarantee takes into fold any activity carried on by a citizen of India to earn his living.
The activity must of course be legitimate and not anti social like gambling, trafficking in women and the like.
Street trading is an age old vocation adopted by human beings to earn living.
In the olden days the venue of trad ing and business has always been the public streets but, in the course of time fairs, markets, bazars and more recently big shopping complexes and fashionable plazas have come up.
In spite of this evolution in business and trade patterns the 'street trading ' is accepted as one of the legitimate modes of earning livelihood even in the most affluent coun tries of the world.
In England 'street trading ' has been regulated by various Acts of Parliament.
Paras 425 to 448 of Halsbury 's Laws of England, Fourth edition, Volume 40 deal with this subject.
Paras 427 to 430 pertain to 'street trading ' in districts as regulated by the provisions of Local Government (Miscellaneous Provisions) Act, 1982.
Paras 427 and 428 are reproduced as under: "427 Adoption of street trading code and designation of streets.
A district council may resolve that the street trading code is to apply to its district as from a specified day.
Where it has done so, it may by resolution designate any street in its dis trict as a 'prohibited street ' in which street trading is prohibited, a 'licence street ' in which steet trading is prohibited without a licence granted by the district council, or a 'consent street ' in which street trading is prohibited without its consent." 1060 "428.
Street trading licences.
Application for the grant or renewal of a street trading licence under the street trading code may be made by any person aged seventeen or over in writing to the district council.
The council is under a duty to grant the application unless it considers that it ought to be refused on one or more of the following grounds: (1) that there is not enough space for the applicant to trade without causing undue interference or inconvenience to street users; (2) that there are already enough traders trading in the street from shops or otherwise in the particular goods; (3) that the applicant desires to trade on fewer than the minimum number of days resolved on by the council; (4) that by reason of some conviction or otherwise he is unsuitable; (5) that he has been licensed by the council but has per sistently refused or neglected to pay its fees or charges; (6) that he has been granted a street trading consent by the council but has refused or neglected to pay its fees; (7) that he has without reasonable excuse failed to avail himself to a reasonable extent of a previous licence.
The licence specifies the street in which, days on which and times between which, and describes the articles in which, the licence holder is permitted to trade, and may contain such subsidiary terms as the council thinks reasona ble.
Unless previously revoked or surrendered, it remains valid for twelve months or such period as is specified in it, although if the council resolves that the street be designated a prohibited street the licence ceases to be valid when the resolution takes affect.
The council may at any time revoke a licence on grounds similar to heads (1), (4), (5) and (7) above, and the licence holder may at any time surrender his licence to the council.
On receiving an application for the grant or renewal of a 1061 licence, the council must within a reasonable time either grant the licence as applied for, or serve on the applicant a notice specifying, with its grounds, its proposal to refuse the application, to grant a licence on different principal terms, to grant a licence limited to a particular place in a street, to vary the principal terms or to revoke a licence, and stating that within seven days of receiving the notice the applicant may by written notice require the council to give him the opportuni ty of making representations.
In this case the council may not determine the matter until either the applicant has made representations, or the time for doing so has elapsed, or the applicant has failed to make the representa tions which he required the council to allow him to make.
A person aggrieved by certain refus als or decisions of a council may appeal to a magistrates ' court, and appeal from the magis trates ' decision lies to the Crown Court.
The council must give effect to the court 's deci sion.
If a licence holder applies for the renewal of a licence before it expires, the old licence remains valid until a new licence is granted or during the time for appealing or whilst an appeal is pending, and where a council decides to vary the principal terms of a licence or to revoke it, the variation or revocation does not take effect during the time for appealing or whilst an appeal is pending.
A licence holder may employ assist ance without any further licence being re quired.
" Paras 431 to 448 relate to 'street trading ' in Greater London and in the city of London.
London Country Council (General Powers) Act, 1947 and City of London (Various Powers) Act, 1965 provide for designation of streets by the London Borough Council in respect of which applications for grant of 'street trading ' licences are entertained.
There are provisions for the registration of street traders.
The procedure, for grant of Annual licences and the grounds on which such licences may be refused, has been laid down.
There is a complete code, in the shape of various statutes, which regulates the business of 'street trading ' in England.
Trading in the streets of London from a stationary position is a common sight.
Even in the famous Oxford street which is always over crowded, there are kiosks, receptacles and 1062 stalls at every street junction from where fruits, confec tionary, soft drinks, souvenirs, newspapers and various other articles are sold. 'Street trading ' is thus one of the traditionally recognised business or trade in England.
This is so in spite of the fact that there is a complete social security in that country and as such no compulsion on the citizens to be driven to street trading out of poverty or unemployment.
On the other hand abysmal poverty in India warrants outright rejection of the argument that nobody has a right to engage himself in 'street trading '.
"Justice, social, economic and political" and "citizens, men and women equally, have the right to an adequate means to livelihood" which the Constitution of India promises is still a distinct dream.
This Court, in various judgments, has reminded the Government of its constitutional obligations to ameliorate the lot of the poor in India.
Nothing much has been achieved.
An alarming percentage of population in India is still living below poverty line.
There are millions of registered unemployed.
The Government, in spite of constitu tional mandate is unable to provide them with employment.
But when, by gathering meagre resources, they try to employ themselves as hawkers or street traders, they cannot be stopped on the pretext that they have no right, rather the Government should render all help to rehabilitate them.
Mr. Tarkunde contended that street trading, being a common law right, has to be treated as a fundamental right under Article 19(l)(g) of the Constitution of India.
It is not necessary to examine the matter from this aspect.
Once street trading is accepted as legitimate trade, business or occupation it automatically comes within the protection guaranteed under Article 19(1)(g) of the Constitution of India.
There is no dispute that public streets are primarily to be used by the public generally as pathways for passing and repassing but there are other ancillary purposes for which the public streets can be used as of right.
In Manzur Hasan vs Muhammed Zaman, 52 I.A. 61 the Privy Council held as under: "In India, there is a right to conduct a religious processionwith its appropriate observances through a public street so that it does not interfere with the ordinary use of the street by the public, and subject to lawful directions by the magistrates.
A civil suit for a declaration lies against those who interfere with a religious procession or its appropriate observance.
" In Saghir Ahmed vs The State of U. P. and others, [1955] 1 S.C.R. 1063 707, this Court held that a business of transporting passen gers with the aid of vehicles was a trade or business and as such was guaranteed under Article 19(1)(g) of the Constitu tion of India.
In Himat Lal K. Shah vs Commissioner of Police, Ahmedabad and another; , , this Court held that right to hold a public meeting on a public street is a fundamental right under Article 19(1)(a) and (b) of the Constitution of India and the same cannot be arbi trarily denied.
There is thus no justification to deny the citizens of their right to earn livelihood by using the public streets for the purpose of trade and business.
In India there are large number of people who are en gaged in the business of 'street trading '.
There is hardly a household where hawkers do not reach.
The house wives wait for a vegetable vendor or a fruit seller who conveniently delivers the daily needs at the door step.
The petitioners before us are street traders of Delhi and New Delhi areas.
Some of them have licences/Tehbazari from Municipal Corpora tion of Delhi/New Delhi Municipal Committee but most of them are squatters.
There is practically no law regulating street trading in Delhi/New Delhi.
The skeletal provisions in the Delhi Municipal Corporation Act, 1957 and the Punjab Munici pal Act, 1911 can hardly provide any regulatory measures to the enormous and complicated problem of street trading in these areas.
In Bombay Hawkers ' Union and others vs Bombay Municipal Corporation and others, this Court suggested that schemes be framed to regulate the hawking business by creating hawking and non hawking zones.
Again in Municipal Corporation of Delhi vs Gumam Kaur, ; this Court observed as under: " .
We feel that the Municipal Corpora tion authorities in consultation with the Delhi Development Authority should endeavour to find a solution on the lines as suggested in Bombay Hawkers ' Union i.e. by creating Hawking and Non Hawking Zones and shifting the pavement squatters to Areas other than Non Hawking Zones.
The authorities in devising a scheme must endeavour to achieve a twin object viz., to preserve and maintain the beauty and the grandeur of this great historic city of Delhi from an aesthetic point of view, by reducing congestion on the public streets and removing all encroachments which cause ob structions to the free flow of traffic, and rehabilitate those unfortunate persons who by force or circumstances, 1064 are made to ply their trade or business on pavements or public streets.
" Street Trading being a fundamental right has to be made available to the citizens subject to Article 19(6) of the Constitution.
It is within the domain of the State to make any law imposing reasonable restrictions in the interest of general public.
This can be done by an enactment on the same lines as in England or by any other law permissible under Article 19(6) of the Constitution.
In spite of repeated suggestions by this Court nothing has been done in this respect.
Since a citizen has no right to choose a particular place in any street for trading, it is for the State to designate the streets and earmark the places from where street trading can be done.
In action on the part of the State would result in negating the fundamental right of the citizens.
It is expected that the State will do the needful in this respect within a reasonable time failing which it would be left to the courts to protect the rights of the citizens.
R.S.S. Petitions dis posed of.
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The petitioners in these special leave petitions and writ petitions claim the right to engage in trading business on the pavements of roads of the city of Delhi.
The special leave petitions are against the judgments of the Delhi High Court dismissing their claim.
It is contended on behalf of the petitioners that (i) they were allowed by the respondents to transact their business by occupying a particular area on the pavements on payment of certain charges described as Tehbazari and the refusal by the municipal authorities to permit them to continue with their trade is violative of their fundamental right guaranteed under Article 19(1)(g) of the Constitution; and (ii) the petitioners are poor people and depend on their business for their livelihood and if they are not allowed to occupy some specific places demarcated on the pavements on a permanent basis for conducting their business they may starve which will lead to violation of their fundamental right under Article 21 of the Constitution.
The respondents, on the other hand, contend that nobody has got a legal right to occupy exclusively a particular area on the road pavement for pursuing a trading business and nobody can claim any fundamental right in this regard whatsoever.
1039 Disposing of the petitions and remitting the cases to the appropriate Division Bench for final disposal in accord ance with this judgment, this Court, HELD: E.S. Venkataramiah, C J, section Natarajan, L.M. Sharma and N.D. Ojha ,JJ.] Per L.M. Sharma, J. (1) A member of the public is entitled to legitimate user of the road other than actually passing or re passing through it, provided that he does not create an unreasonable obstruction which may inconvenience other persons having similar right to pass and does not make excessive use of the road to the prejudice of the others.
Liberty of an individu al comes to an end where the liberty of another commences.
[1050C, A B] (2) What will constitute public nuisance and what can be included in the legitimate user can be ascertained only by taking into account all the relevant circumstances including the size of the road, the amount of traffic and the nature of the additional use one wants to make of the public streets.
This has to be judged objectively and here comes the role of public authorities.
[1051E] (3) The right to carry on trade or business mentioned in Article 19(1)(g) of the Constitution, on street pavements, if properly regulated, cannot be denied on the ground that the streets are meant exclusively for passing or re passing and for no other use.
Proper regulation is, however, a necessary condition as otherwise the very object of laying out roads to facilitate traffic may be defeated.
Allowing the right to trade without appropriate control is likely to lead to unhealthy competition and quarrel between traders and traveling public and sometimes amongst the traders themselves resulting in chaos.
The right is subject to reasonable restrictions under clause (6) of Article 19.
[1052C D] (4) The proposition that all public streets and roads in India vest in the State but that the State holds them as trustee on behalf of the public and the members of the public are entitled as beneficiaries to use them as a matter of right, and that this right is limited only by the similar rights possessed by every other citizens to use the pathways and further that the State as trustee is entitled to impose all necessary limitations on the character and extent of the user, should be treated as of universal application.
The provisions of the Municipal Acts should be 1040 construed in the light of the above proposition and they should receive a beneficent interpretation.
[1052E G] M.A. Pal Mohd. vs R.K. Sadarangani, A.I.R. (1985) Mad 23; C.S.S. Motor Service vs Madras State, A.I.R. 1953 Mad. 279; Saghir Ahmad vs The State of U.P. & Ors., ; ; liarper vs G.N. Haden & Sons Ltd., ; Bombay Hawkers Union & Ors.
vs Bombay Municipal Corporation (5) The petitioners do have the fundamental right to carry on a trade or business of their choice, but not to do so on a particular place, as circumstances are likely to change from time to time.
But that does not mean that the licence has to be granted on a daily basis; that arrangement cannot be convenient to anybody, except in special circum stances.
[1053F, 1057F] Fertilizer Corporation Kamgar Union vs Union of India, ; ; K. Rajendran vs State of Tamil Nadu, ; , referred to.
(6) Article 21 is not attracted in the case of trade or business either big or small.
The right to carry on any trade or business and the concept of life and personal liberty within Article 21 are too remote to be connected together.
[1054G] Olga Tellis & Ors.v.
Bombay Municipal Corporation & Ors., ; , distinguished.
(7) The provisions of the Delhi Municipal Corporation Act, 1957, are clear and the Municipal Corporation of Delhi has full authority to permit hawkers and squatters on the side walks where they consider it practical and convenient.
[1052G H] (8) The provisions of the Punjab Municipal Act, 1911, as applicable to New Delhi area, should receive a liberal construction so that the New Delhi Municipal Committee may be in a position to exercise full authority to permit hawk ers and squatters on pavements in certain areas.
[1053A C] Pyarelal vs N.D.M.C., ; overruled.
(9) A scheme should be drawn up as soon as possible contain ing 1041 detailed necessary provisions dealing with all relevant aspects, and capable of solving the problems arising in the situation in a fair and equitable manner.
[1057B C] (10) The demand of the petitioners that hawkers must be permitted on every road in the city cannot be allowed.
If a road is not wide enough to conveniently manage the traffic on it, no hawking may be permitted at all, or may be sanc tioned only once a week, say on Sundays when the rush con siderably thins out.
Hawking may also be justifiably prohib ited near hospitals or where necessity of security measures so demands.
There may still be other circumstances justify ing refusal to permit any kind of business on a particular road.
[1057E] (11) Some of the hawkers in big cities are selling very costly luxury articles including sophisticated electronic goods, sometimes imported or smuggled.
The authorities will be fully justified to deny to such hawkers any facility.
They may frame rules in such manner that it may benefit only the poor hawkers incapable of investing a substantial amount for starting the business.
Attempt should be made to make the scheme comprehensive, dealing with every relevant as pect, for example, the charges to be levied, the procedure for grant and revocation of the licences, etc.
[1057H 1058B] Per Kuldip Singh, J. (1) The guarantee under Article 19(1)(g) extends to practice any profession, or to carry on any occupation, trade or business.
The object of using four analogous and overlapping words in Article 19(1)(g) is to make the guaran teed right as comprehensive as possible to include all the avenues and modes through which a man may earn his liveli hood.
In a nut shell the guarantee takes into its fold any activity carried on by a citizen of India to earn his liv ing.
The activity must of course be legitimate and no anti social like gambling, trafficking in women and the like.
[1058H 1059C] (2) Once street trading is accepted as legitimate trade, business or occupation it automatically comes within the protection guaranteed under Article 19(1)(g) of the Consti tution of India.
[1062E] (3) Street trading is an age old vocation adopted by human beings to earn living.
It is one of the traditionally recognised business or trade in England.
This is so in spite of the fact that there is a complete social security in that country and as such no compulsion on the citizens to be 1042 driven to street trading out of poverty or unemployment.
On the other hand, abysmal poverty in India warrants outright rejection of the argument that nobody has a right to engage himself in 'street trading '.
[1059D,1062A B] (4) There is no justification to deny the citizens of their right to earn livelihood by using the public streets for the purpose of trade and business.
[1063B] Saghir Ahmad vs The State of U.P. & Ors., ; ; Manjur Hasan vs Mohammed Zaman, 52 I.A. 61; Himat Lal K. Shah vs Commissioner of Police Ahmedabad & Anr.
, ; , referred to.
(5) Street trading being a fundamental right has to be made available to the citizens subject to Article 19(6) of the constitution.
It is within the domain of the State to make any law imposing reasonable restrictions in the inter est of general public.
This can be done by an enactment on the same lines as in England or by any other law permissible under Article 19(6) of the Constitution.
[1064B] Bombay Hawkers Union & Ors.
vs Bombay Municipal Corpora tion & Ors., ; Municipal Corporation of Delhi vs Gurnam Kaur, ; , referred to.
(6) The skeletal provisions in the Delhi Municipal Corporation Act, 1957 and the Punjab Municipal Act, 1911 can hardly provide any regulatory measures to the enormous and complicated problems of street trading in these areas.
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6164.txt
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Appeal No. 1361 of 1966.
Appeal by special leave from the judgment and order dated April 5, 1963 of the Madras High Court in Second Appeal No. 1287 of 1960.
Niren De, Attorney General, V. A. Seyid Muhammad, R.N. Sachthey and S.P. Nayar, for the appellant.
Lily Thomas, for the respondent.
The Judgment of the Court was delivered by Shah, J.
A.V. Narasimhalu hereinafter called "the plaintiff" imported 43 reels of newsprint 131/4" width under a bill of Entry dated July 15, 1954.
The width of the newsprint being less than 15" no import duty was payable under the Open General Licence The Assistant Collector of Customs held that the commodity imported fell within item 44 of the Customs Tariff and levied a duty of 33 3/8% ad valorem.
The plaintiff paid the duty under protest, and applied for refund of the duty relying upon a decision of the High Court o.f Madras in writ petition No. 402 of 1954 in which it was decided that newsprint of width less than 15" was exempt from duty.
This application was rejected.
An appeal to the Collector of Customs and a revision application to the Central Board of Revenue were unsuccessful.
The customs authorities rejected the claim on the ground that the claim not having been made within three months of the date of demand was barred under section 40 of the .
The plaintiff then instituted an action in the City Civil Court for a decree for Rs. 2,669 62 against the Union of India.
The Trial Court decreed the claim holding that the claim was not barred.
In appeal the Principal Judge, City Civil Court held that the City Civil Court had no jurisdiction to entertain the suit.
In so holding he relied upon the judgment of the Judicial Committee in Secretary of State for India vs Mask & Co. (1).
In Second Appeal, the High Court of Madras reversed the judgment of the Principal Judge, City Civil Court, and restored the decree passed by the trial court.
The Union of India has appealed to this Court with special leave.
It is unnecessary to consider whether the claim is barred under section 40 of the , for, in our judgment, the Civil Court had no, jurisdiction to.
entertain the suit.
Section 188 of the , insofar as it is relevant, provides: "Any person deeming himself aggrieved by any decision or order passed b.y an officer of Customs under (1) L.R. 67 I.A. 222.
147 this Act may, within three months from the date of such decision or order, appeal therefrom to the Chief Customs Authority, or in such cases as the Central Government directs, to any officer of Customs not inferior in rank to a Customs Collector and empowered in that behalf by name or in virtue of his office by the Central Government.
Every order passed in appeal under this section shall, subject to the power of revision conferred by section 191, be final".
Section 191 provides: "The Central Government may, on the application of any person aggrieved by any decision or order passed under this Act by any officer of Customs or Chief Customs Authority, and from which no appeal lies, reverse or modify such decision or order".
The Act is a complete code dealing with liability to pay customs duty and for obtaining relief against excessive or erroneous levy and other related matters.
The jurisdiction of the Civil Court to entertain a suit on the ground that the duty was improperly or illegally levied is excluded.
It is true that the decision or order passed under section 188 of the in appeal to the appellate authority is expressly declared final.
But on that account it cannot be held that by refusing to appeal against the decision or by refusing to claim relief in the manner provided by section 188 and section 191 of the , a party aggrieved by the order of a Customs Officer may invest the Civil Court with jurisdiction to entertain a suit.
In Mask & Company 's case(1) a firm of merchants imported a quantity of betelnuts into.
British India.
The Assistant Collector of Customs assessed them for the purposes of duty on a tariff as "boiled", rejecting the contention of the importers, that they Were "raw sliced betel nuts" subject to duty ad valorem.
The importers, appealed from the decision of the Assistant Collector to the: Collector of Customs.
The appeal was dismissed, and in revision to the Government of India the Collector 's decision was affirmed.
A suit was then filed by the importers to recover the excess amount collected from them, by levying duty upon a tariff and not ad valorem.
Before the Judicial Committee it was contended that the decision or order passed by the officer of Customs could only be challenged by an appeal under section 188 of the and jurisdiction of the Civil Court was excluded.
(1) L.R. 67 I.A. 222.
148 Alternatively it was contended that the right of appeal conferred by section 188 constituted a procedure which was alternative to procedure in the civil courts, and since the importers in that option had chosen to proceed under section 188, they were bound by that election, and were thus excluded from resort to the civil courts.
The Judicial Committee observed that adjudication as to confiscations, increased rates of duty or penalties made under the power conferred by section 182 were decisions or orders within the meaning of section 188, and that the decision of the Collector under section 188 was final and excluded the jurisdiction of the Civil Court.
The Judicial Committee did not express any opinion on the question whether prior to taking an appeal under section 188 the porters would have been entitled to resort to the civil courts.
But in our judgment it would not be open in all situations where a party who had right to appeal to refuse to resort to the procedure prescribed by the statute and to file a suit.
The express declaration in section 188 of the that the order of the Collector in appeal shall be final does not imply that a suit will lie against the decision or order of the original authority.
In a recent judgment of this Court Dhulabhai etc.
vs State Madhya Pradesh and Anr.(1) this Court set out certain principles relating to the exclusion of the jurisdiction of the Civil Court.
The propositions (1), (2), (5), (6) & (7) are relevant.
It may be observed that it was not the case that the Assistant Collector of Customs had not acted in conformity with the fundamental principles of judicial procedure, nor was it the case that the provisions of the Act were ultra vires or unconstitutional.
The Act in terms, creates a special liability and provides for determination of the right of the State to recover duty and the liability of the importer to pay duty and by the clearest implication it is provided that it shall be determined by the Tribunal so constituted.
The High Court in the judgment under appeal observed: " . the: question in these.
appeals is different, namely, whether the Collector could be said to be acting within his jurisdiction, if he, in direct disregard of the provisions of the Act and the Rules made thereunder, levied a duty upon the goods which were not liable to duty and compelled by duress as it were the importer to pay the same before taking delivery of the goods.
The result of his action was that the respective appellants had to part with certain sums of money which were collected from them under the colour of statutory power.
In such a case, a suit will undoubtedly (1) ; 149 be maintainable in a civil court by showing that the Customs authorities had excessively charged duty; it will really be a common law right to property being interfered with.
It may be that the remedy provided under section 188 of the would be available to the aggrieved importer to challenge the levy on the ground that it was either improperly made or that the duty was collected under a mistake or under duress.
But in all such cases, there will also exist a remedy under the common law in a civil Court, for the simple reason that these categories of cases will amount to a levy beyond the jurisdiction of the authority, or one made under duress, or paid by mistake.
" But an erroneous decision of the Customs Authority cannot be said to be reached without jurisdiction merely because it may be shown in some collateral proceeding to be wrong.
Normally an action of an administrative authority interfering with the right to property may be challanged by resort to a civil court, Yet in the case of a right which depends upon a statute, the jurisdiction of the civil court to grant relief may by express provision or by clear implication of the statute be excluded.
Where a statute re enacts a right or a liability existing at common law, and the statute provides a special form of remedy, exclusion of the jurisdiction of the civil court to grant relief in the absence of an express provision, will not be readily inferred.
Where, however a statute creates a new right or liability and it provides a complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the civil court to grant relief is barred, Liability to pay a duty of custom is not a common law liability: it arises by virtue of the : in respect of any grievance arising in consequence of enforcement of that liability machinery has been provided by the Act.
Having regard to the complicated nature of the questions which arise in the determination of liability to pay duty of customs the Legislature has invested the power of determining liability and the manner of enforcement thereof upon a specially authorised hierarchy of tribunals.
An appeal lies against the order of the Assistant Collector of Customs against an order imposing duty as well as an order refusing to refund duty, and the grievance may be carried to the Central Board of Revenue.
In our judgment, the jurisdiction of the civil court is by clear implication of the statute excluded.
We, however, deem it necessary to observe that the civil courts have jurisdiction to examine cases in which the Customs Authority has not complied with the provisions of the statute or the officer of customs has not acted in conformity with the fundamental principles of judicial procedure or the Authority has acted 150 in violation of the fundamental principles of judicial procedure or he has made an order which is not within his competence or the statute which imposes liability is unconstitutional, or where the order is alleged to be mala fide.
A civil suit will lie for obtaining appropriate relief in these cases.
But the exclusion of the jurisdiction of the civil court to entertain a suit does not exclude the jurisdiction of the High Court to issue high prerogative writs against illegal exercise of authority by administrative or quasi judicial tribunals.
The finality which may be declared by the statute qua certain liability either by express exclusion of the jurisdiction of the civil court or by clever implication does not affect the jurisdiction of the High Court to issue high prerogative writs.
The jurisdiction of the civil court to entertain a suit challenging the validity of the imposition of the duty of customs being excluded, the plaintiff 's suit must fail.
But it must be observed that the present is a fair illustration of the administration not making a serious attempt to avoid futile litigation for small claims.
There was a judgment of the High Court of Madras on the identical question which fell to be determined.
If the plaintiff had moved the High Court in exercise of its jurisdiction under Article 226 the Union had practically no defence.
The Union could without loss of face accede to the request of the plaintiff to refund the amount collected.
The learned Attorney General stated that the Union desired to obtain a decision of this Court on the extent of the jurisdiction of the Civil Court to entertain a suit challenging the decision of the Customs Authorities, because in the view of the Law Advisers the High Court had fallen into error in enunciating the principles.
But the High Court recorded the judgment under appeal after the claim was resisted by the Union.
We are glad to record the assurance given by the Attorney General that whatever may be the decision in the appeal, the Union of India will refund the amount of tax unauthorised recovered by the Assistant Collector of Customs.
This was essentially a case in which when notice was served the Central Government should instead of relying upon technicalities have refunded the amount collected.
We trust that the Administrative authorities will act in a manner consistent not with technicalities, but with a broader concept of justice if a feeling is to be nurtured in the minds of the citizens that the Government is by and for the people.
The appeal is allowed.
The suit is ordered to be dismissed.
The order of costs passed by the High Court is however maintained.
There will be no order as to costs in this appeal.
Y.P. Appeal allowed.
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Section 188 of the , provides for an appeal against any order of an officer of customs and the order passed in the appeal is made final subject to the. revision under section 191 of the Act.
The respondent claimed refund of customs duty paid by him under protest.
The claim was rejected.
An appeal to the Collector of Customs and a revision to the Central Board of Revenue= were unsuccessful.
The respondent instituted an action in the Civil Court for refund of the amount.
The trial court decreed the suit but the first appellate court held that the civil court had No. jurisdiction to entertain the suit.
The High Court, in further appeal, restored the decree of the trial court.
Allowing the appeal, this Court, HELD: The civil court had no jurisdiction to entertain the suit.
[146 G H] Where a statute creates a new right or liability and it provides a complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the Civil Court.
to grant relief is barred.
Where however a statute reenacts a right or liability existing at common law, and the statute provides a special form of remedy, exclusion of the jurisdiction of the Civil Court to grant relief in the absence of an express provision will not be readily inferred.
[149 ' D F] Liability to pay duty of customs is not a common law liability; it arises by virtue of the .
In respect of any grievance arising in consequence of enforcement of that liability, machinery has been provided by the Act.
Having regard to the complicated nature of the questions which arise in the determination of liability to.
pay duty of customs, the legislature has invested the power of determining liability and the manner of enforcement thereof upon a specially authorised hierarchy of tribunals.
[149 ' F G] (ii) A civil suit will lie for obtaining appropriate relief in cases where the customs authority has not complied with the provisions of the statute, or the officer of customs has not acted in conformity with the fundamental principles of judicial procedure or the authority has acted in violation of the fundamental principles of judicial procedure or has made an order which is not within his competence or the statute which imposes liability is unconstitutional or the order is alleged to.
be mala fide.
[149 F G] (iii) The exclusion of the jurisdiction of the Civil Court to entertain a suit does not exclude the jurisdiction of the High Court to issue high prerogative writs against illegal exercise of authority by administrative or quasi judicial tribunals.
[150] Dhulabhai etc.
vs State of Madras Pradesh & Anr.
A.I.R. , followed.
Secretary of State for India vs Mask & Co. L.R. 67 I.A. 222, referred to. 146
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2780.txt
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: Criminal Appeal No. 230 of 1976.
(Appeal by Special Leave from the Judgment and order dated 11.9.1975 of the Punjab & Haryana High Court in Crl.
Appeal No. 392 of .1975 and Murder Reference No. 14/75).
S.K. lain, for the Appellant.
O.P. Sharma, for the Respondent.
Judgment The Judgment of the Court was delivered by P.N. Bhagwati, J.
S. Murtaza Fazal Ali, J. gave a separate Opinion.
BHAGWATI, J.
This appeal, by special leave, raises an interesting question of law relating to the construction of section 235(2) of the Code of Criminal Procedure, 1973.
The appellant was tried before the Sessions Judge, Ludhiana for.committing a double murder, one of his mother and the other of her second husband.
He was represented by a lawyer during the trial and after the evidence was concluded and the arguments were heard, the learned Sessions Judge ad journed the case to 13th February, 1975 for pronouncing the judgment.
It appears that on 13th February, 1975, the judgment was not ready and hence the case was adjourned to 20th February, 1975 and again to 26th February, 1975.
The Roznamcha of the proceedings shows that on 26th February, 1975 the appellant was present without his lawyer and the learned Sessions Judge pronounced the judgment convicting the appellant of the offence under section 302 of the Indian Penal Code and sentenced him to death.
It was common ground that after pronouncing the judgment convicting the appel lant, the learned Sessions Judge did not give the appellant an opportunity to be heard in regard to the sentence to be imposed on him and by one single judgment, convicted the appellant and also sentenced him to death.
The appellant preferred an appeal to the High Court and the case was also referred to the High Court for confirmation of the death sentence.
The High Court agreed with the view taken by the learned Sessions Judge and confirmed the conviction as also the sentence of death.
The appellant thereupon preferred the present appeal with special leave obtained from this Court.
The appeal is limited to the question of sentence and the principal argument advanced on behalf of the appellant is that in not giving an opportunity to the appellant to be heard in regard to the sentence to 232 be imposed on him after the judgment was pronounced convict ing him, the learned Sessions Judge committed a breach of section 235 (2) of the Code of Criminal Procedure, 1973 and that vitiated the sentence of death imposed on the appel lant.
This argument is a substantial one and it rests on the true interpretation of section 235(2).
This is a new provision and it occurs in section 235 of the Code of Crimi nal Procedure, 1973 which reads as follows: "235 (,1) After hearing arguments and points of law (if any), the Judge shall give a judgment in the case.
(2) If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of section 360, hear the accused on the question of sentence, and then pass sentence on him according to law.
" This provision is clear and explicit and does not admit of any doubt.
It requires that in every trial before a court of sessions, there must first be a decision as to the guilt of the accused.
The court must, in the first instance, deliver a judgment convicting or acquitting the accused.
If the accused is acquitted, no further question arises.
But if he is convicted, then the court has to "hear the accused on the question of sentence, and then pass sentence on him according to law".
When a judgment is rendered convicting the accused, he is, at that stage, to be given an opportunity to be heard in regard to the sentence and it ' is only after hearing him that the court can proceed to pass the sentence.
This new provision in section 235(2) is in consonance with the modern trends in penology and sentencing proce dures.
There was no such provision in the old Code.
Under the old Code, whatever the accused wished to submit in regard to the sentence had to be stated by him before the arguments concluded and the judgment was delivered.
There was no separate stage for being heard in regard to sentence.
The accused had to produce material and make his submissions in regard to sentence on the assumption that he was ulti mately going to be convicted.
This was most unsatisfacto ry.
The legislature, therefore, decided that it is only when the accused is convicted that the question of sentence should come up for consideration and at that stage, an opportunity should be given to the accused to be heard in regard to the sentence.
Moreover, it was 'realised that sentencing.
is an important stage in the process of adminis tration of criminal justice as important as the adjudica tion of guilt and it should not be consigned to a subsidi ary position as if it were a matter of not much consequence.
It should be a matter of some anxiety to the court to impose an appropriate punishment on the criminal and sentencing should, therefore, receive serious attention of the court.
In most of the countries of the world, the problem of sen tencing the criminal offender is receiving increasing atten tion and that is largely because of the rapidly changing attitude towards crime and criminal.
There is in many of the countries, intensive study of the sociology of crime 233 and that has shifted the focus from the crime to the crimi nal, leading to a widening of the objectives of sentencing and, simultaneously, of the range of sentencing procedures.
Today, more than ever before, sentencing is becoming a delicate task, requiring an inter disciplinary approach and calling for skills and talents vary much different from those ordinarily expected of lawyers.
This was pointed out in clear and emphatic words by Mr. Justice Frankfurter: "I myself think that the bench we lawyers who become judges are not very competent, are not qualified by experience, to impose sentences where any discretion is to be exercised.
I d9 not think it is in the domain of the training of lawyers to know what to do with a fellow after you find out he is a thief.
I do not think legal training gives you any special competence.
I, myself, hope that one of these days, and before long, we will divide the functions of criminal justice.
I think the lawyers are people who are competent to ascertain whether or not a crime has been committed.
The whole scheme of common law judicial machinery the rule of evidence, the ascertainment of what is relevant and what is irrelevant and what is fair, the whole question of whether you can introduce prior crimes in order to prove intent I think lawyers are peculiarly fitted for that task.
But all the questions that follow upon ascertainment of guilt, I think require very different and much more diversified talents than the lawyers and judges are normally likely to posses.
" The reason is that a proper sentence is the amalgam of many factors such as the nature of the offence, the circumstances extenuating or aggravating of the offence, the prior criminal record ', if any, of the offender, the age of the offender, the record of the offender as to employment, the background of the offender with reference to education, home life, society and social adjustment, the emotional and mental condition of the offender, the prospects for the rehabilitation of the offender, the possi bility of return of the offender to a normal life in the community, the possibility of treatment or training of the offender, the possibility that the sentence may serve as a deterrent to crime by the offender or by others and the current community need, if any, for such a deterrent in respect to the particular type of offence.
These are factors which have to be taken into account by the court in deciding upon the appropriate sentence, and there fore, the legislature felt that, for this purpose, a separate stage should be provided after convic tion when the court can bear the accused in regard to these factors bearing on sentence and then pass proper sentence on the accused.
Hence the new provision in section 235(2).
But, on the interpretation of section 235(2), another question arises and that is, what is the meaning and content of the words "hear the accused".
Does it mean merely that the accused has to be given an opportunity to make his submissions or he can also produce 17 1003 SCI/76 234 material bearing on sentence which has so far not come before the Court? Can he lead further evidence relating to the question of sentence or is the hearing to be confined only to.
oral submissions ? That depends on the interpreta tion to be placed on the word 'hear '. 'Now, the word 'hear ' has no fixed rigid connotation.
It can bear either of the two rival meanings depending on the context in which it occurs.
It is a well settled rule of interpretation, hal lowed by time and sanctified by authority, that the meaning of an ordinary word is to be found not so much in strict etymological propriety of language, nor even in popular use, as in the subject or occasion on which it is used and the object which is intended to be attained.
It was Mr. Justice Holmes who pointed out in his inimitable style that "a word is not a crystal, transparent and unchanged: it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used".
Here, in this provision, the word 'hear ' has been used to give an opportunity to the accused to place before the court various circumstances bearing on the sen tence to be passed against him.
Modern penology, as pointed out by this Court in Ediga Annamma vs State of Andhra Pradesh(1) ' "regards crime and criminal as equally material when the right sentence has to be picked out".
It turns the focus not only on the crime, but also on the criminal and seeks to personalise the punishment so that the reformist component is as much operative as the deterrent element.
It is necessary for this purpose that "facts of a social and personal nature, sometimes altogether irrelevant, if not injurious, at the stage of fixing the guilt, may have to be brought to the notice of the court when the actual sentence is determined".
We have set out large number of factors which go into the alchemy which ultimately produces an appropriate sentence and full and adequate material relating to these factors would have to be brought before the court in order to enable the court to pass an appropriate sen tence.
This material may be placed before the court by means of affidavits, but if either party disputes the cor rectness or veracity of the material sought to be produced by the other, an opportunity would have to be given to the party concerned to lead evidence for the purpose of bring ing such material on record.
The hearing on the question of sentence, would be rendered devoid of all meaning and content and it would become an idle formality, if it were confined merely to hearing oral submissions without any opportunity being given to the parties and particularly to the accused, to produce material in regard to various fac tors beating on the question of sentence, and if necessary, to lead evidence for the purpose of placing such material before the court.
This was also the opinion expressed by the Law Commission in its Forty Eighth Report where it was stated that "the taking of evidence as to the circum stances relevant to sentencing should be encouraged and both the prosecution and the accused should be allowed to cooper ate in the process." The Law Commission strongly recommend ed that 'if a request is made in that behalf bY either the prosecution or the accused, an opportunity for leading "evidence on the question" of sentence "should be given".
We are, therefore, of the view that the hearing.
(1) ; 235 contemplated by section 235(2) is not confined merely to hearing oral submissions, but it is also intended to give an opportunity to the prosecution and the accused to place before the court facts and material relating to various factors beating on the question of sentence and if they are contested by either side, then to produce evidence for the purpose of establishing the same.
Of course, care would have to be taken by the court to see that this hearing on the question of sentence is not abused and turned into an instrument for unduly protracting the proceedings.
The claim of due and proper hearing would have to be harmonised with the requirement of expeditious disposal of proceedings.
Now there can be no doubt that in the present case the requirement of section 235(2) was not complied with, inas much as no opportunity Was given to the appellant, after recording his conviction, to produce material and make submissions in regard to the sentence to be imposed on him.
Since the appellant was.
convicted under section 302 of the Indian Penal Code, only two options were available to the Sessions Court in the matter of sentencing the appellant: either to sentence him to death or to impose on him sentence of imprisonment for life.
It the Sessions Court had, in stead of sentencing him to death, imposed on him sentence of life imprisonment, the appellant could have made no griev ance of the breach of the provision of section 235(2), because, even after hearing the appellant, the Sessions Court would not have passed a sentence more favourable to the appellant 'than the sentence of life imprisonment.
In such a case, even if any complaint of violation of the requirement of section 235 (2) were made, 'it would not have been entertained by the appellate court as it would have been meaningless and futile.
But, in the _present case, the Sessions Court chose to inflict death sentence on the appel lant and the possibility cannot be ruled out that if the accused had been given opportunity to produce material and make submissions on the question of sentence, as contemplat ed by section 235(2), he might have been able to persuade the Sessions Court to impose the lesser penalty of life imprisonment.
The breach of the mandatory requirement of section 235(2) cannot, in the circumstances, be ignored as inconsequential and it must be held to vitiate the sentence of death imposed by the Sessions Court.
It was, however, contended on behalf of the State that non compliance with the mandatory requirement of section 235(2) was a mere irregularity curable under section 465 of the Code of Criminal Procedure.
1973 as no failure of jus tice was occasioned by it and the trial could not on that account be held to be bad.
The State leaned heavily on the fact that the appellant did not insist on his right to be heard under section 235(2) before the Sessions Court, nor did he make any complaint before the High Court that the Sessions Court had committed a breach of section 235(2) and this omission on the part of the appellant, contended the State, showed that he had nothing to say in regard to the question of sentence and consequently, no prejudice was suffered by him as a result of non compliance with section 235(2).
This contention is, in my opinion, without force and must be rejected.
It must be remembered that section 235(2) is a new provision intro 236 duced for the first time in the Code of Criminal Procedure, and 1973 and it is quite possible that many lawyers and judges might be unaware of it.
Before the Sessions Court, the appellant was not represented by a lawyer at the time when the judgment was pronounced and obviously he could not be aware of this new stage in the trial provided by section 235(2).
Even the Sessions Judge was not aware of it, for it is reasonable to assume that if he had been aware, he would have informed the appellant about his right to be heard in regard to the sentence and given him an opportunity to be heard.
It is unfortunate that in our country there is no system of continuing education for judges so that judges can remain fully informed about the latest developments in the law and acquire familiarity with modern methods and tech niques of judicial decision making.
The world is changing fast and in our own country, vast social and economic changes are taking place.
There is a revolution of rising expectation amongst millions of human beings who have so far been consigned to a life of abject poverty, hunger .and destitution.
Law has, for the first time, adopted a posi tive approach and come out openly in the service of the weaker sections of the community.
It has ceased to be merely an instrument providing a framework of freedom in which men may work out their destinies.
It has acquired a new dimension, a dynamic activism and it is now directed towards achieving socio economic justice which encompasses not merely a few privileged classes but the large masses of our people who have so far been denied freedom and equality social as well as economic and who have nothing to hope for and to live for.
Law strives to give them social and economic justice and it has, therefore, necessarily to be weighted in favour of the weak and the exposed.
This is the new law which judges are now called upon to administer and it is, therefore, essential that they should receive proper training which would bring about an orientation in their approach and outlook, stimulate sympathies in them for the vulnerable sections of the community and inject a new awareness and sense of public commitment in them.
They should also be educated in the new trends in penology and sentencing procedures so that they may learn to use penal law as a tool for reforming and rehabilitating criminals and smoothening out the uneven texture of the social fabric and not as a weapon, fashioned by law, for protecting and per petuating the hegemony of one class over the other.
Be that as it may, it is clear that the learned Sessions Judge was not aware of the provision in section 235(2) and so also was the lawyer of the appellant in the High Court unaware of it.
No inference can, therefore, be drawn from the omission of the appellant to raise this point, that he had nothing to Say in regard to the sentence and that consequently no prejudice was caused to him.
So far as section 465 of the Code of Criminal Procedure, 1973 is concerned, I do not think it can avail the State in the present ease.
In the first place, non compliance with the requirement of section 235(2) cannot be described as mere irregularity in the course of the trial curable under section 465.
It is much more serious.
It amounts to by passing an important stage of the trial and omitting it altogether, so that the trial cannot be aid to be that contemplated in the Code.
It 237 is a different kind of trial conducted in a manner different from that prescribed by the Code.
This deviation consti tutes disobedience to an express provision of the Code as to the mode of trial, and as pointed out by the Judicial Com mittee of the Privy Council in Subramania Iyer vs King Emperor(1), such a deviation cannot be regarded as a mere irregularity.
It goes to the root of the matters and the resulting illegality is of such a character that it vitiates the sentence.
Vide Pulukurti Kotayya vs King Emperor(2) and Magga & Anr.
vs State of Rajasthan.(3) Secondly, when no opportunity has been given to the appellant to produce material and make submissions in regard to the sentence to be imposed on him, failure of justice must be regarded as implicit.
Section 465 cannot, in the circumstances, have any application in a case like the present.
I accordingly allow the appeal and whilst not interfer ing with the conviction of the appellant under section 302 of the Indian Penal Code, set aside the sentence of death and remand the case to the Sessions Court with a direction to pass appropriate sentence after giving an opportunity to the appellant to be heard in regard to the question of sentence in accordance with the provision of section 235 (2) as interpreted by me.
FAZAL ALI, J. I entirely agree with the judgment pro posed by my learned brother Bhagwati, J., and I am at one with the views expressed by him in his judgment, but I would like to add a few lines of my own to highlight some impor tant aspects of the question involved in this appeal.
In this appeal by special leave which is confined only to the question of sentence an interesting question of law arises as to the interpretation of the provisions of section 235(2) of the Code of Criminal Procedure, 1973 hereniafter after referred to as 'the 1973 Code '.
In the light of the arguments advanced before us by the parties the question may be framed thus: "Does the non compliance with the provi sions of section 235(2) of the 1973 Code vitiate the sentence passed by the Court?" In order to answer this question it may be necessary to trace the historical background and the social setting under which section 235(2) was inserted for the first time in the 1973 Code.
It would appear that the 1973 Code was based on a good deal of research done by several authorities includ ing the Law Commission which made several recommendations for revolutionary changes in the provisions of the previous Code so as to make the 1973 Code in consonance with the growing needs of the society and in order to solve the social problems of the people.
Apart from introducing a number of changes in the procedure, new rights and powers were conferred on the Courts or sometimes even on the ac cused.
For instance, a provision for anticipatory bail was introduced to enable the, accused to be saved from (1) (1901) 28 I.A. 257.
(2) (1947) 74 I.A. 65.
(3) ; at pp.
983 984. 238 unnecessary harassment.
In its 48th Report the Law Commis sion,.
while recommending the insertion of a provision which would enable the accused to make a representation against the sentence to be imposed after the judgment of conviction had been passed, observed as follows: "It is now being increasingly recognised that a rational and consistent sentencing policy re quires the removal of several deficiencies in the present system.
One such deficiency is the lack of comprehensive information as to characteristics and background of the offender.
" "We are of the view that the taking of evi dence as to the circumstances relevant to sentenc ing should be encouraged, and both the prosecution and the accused should be allowed to co operate in the process.
" In the aims and objects of 1973 Code which have been given clause by clause, a reference to this particular provision has been made thus; "If the judgment is one of conviction, the accused will be given an opportunity to make his representation, if any, on the punishment proposed to be awarded and such representation shall be taken into consideration before imposing the sen tence.
This last provision has been made because it may happen that the accused may have some grounds to urge for giving him consideration in regard to the sentence such as that he is the bread winner of the family of which the Court may not be made aware during the trial.
" Para 6(d) of the statement of objects and reasons of the 1973 Code ' runs thus: "6.
Some of the more important changes in tended to provide relief to the poorer sections of the community are : "(d) the accused will be given an opportunity to make representation against the punishment before it is imposed. ' ' The statement of objects and reasons further indicates that the recommendations of the Law Commission were examined carefully keeping in view, among others, the principle that "an accused person should get a fair trial in accordance with the accepted principles of natural justice".
In these circumstances, therefore, I feel that the provisions of section 235 (2) are very salutary and contain one of the cardinal features of natural justice, namely, that the accused must be given an opportunity to make a representation against the sentence proposed to be imposed on him.
239 Section 235 of the 1973 Code runs thus: "235(1) After hearing arguments and points of law (if any), the Judge shall give a judgment in the case.
(2) If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of section 360, hear the accused on the question of sentence, and then pass sentence on him according to law.
" A perusal of this section clearly reveals that the object of the 1973 Code was to split up the sessions trial or the warrant trial, where also a similar provision exists, into two integral parts (i) the stage which culminates in the passing of the judgment of conviction or acquittal; and (ii) the stage which on conviction results in imposition of sentence on the accused.
Both these parts are absolutely fundamental and non compliance with any of the provisions would undoubtedly vitiate the final order passed by the Court.
The two provisions do not amount merely to a ritual formula or an exercise in futility but have a very sound and definite purpose to achieve.
Section 235 (2) of the 1973 Code enjoins on the Court that after passing a judgment of conviction the Court should stay its hands and hear the accused on the question of sentence before passing the sentence in accordance with the law.
This obviously postulates that the accused must be given an opportunity of making his representation only regarding the question of sentence and for this purpose he may be allowed to place such materials as he may think fit but which may have bear ing only on the question of sentence.
The statute, in my view, seeks to achieve a socio economic purpose and is aimed at attaining the ideal principle of proper sentencing in a rational and progressive society.
The modern concept of punishment and penology has undergone a vital transformation and the criminal is now not looked upon as a grave menace to the society which should be got rid of but is a diseased person suffering from mental malady or psychological frus tration due to subconscious reactions and is, therefore, to be cured and corrected rather than to be killed or de stroyed.
There may be a number of circumstances of which the Court may not be aware and which may be taken into consideration by the Court while awarding the sentence, particularly a sentence of death, as in the instant case.
It will be difficult to lay down any hard and fast rule, but the statement of objects and reasons of the 1973 Code itself gives a clear illustration.
It refers to an instance where the accused is the sole bread earner of the family.
In such a case if the sentence of death is passed and executed it amounts not only to a physical effacement of the criminal but also a complete socio economic destruction of the family which he leaves behind.
Similarly there may be cases, where, after the offence and during the trial, the accused may have developed some virulent disease or some mental infirmity, which may be an important factor to be taken into consideration while passing the sentence of death.
It was for these reasons that section 235(2) of the 1973 Code was enshrined in the Code for the purpose of making the Court aware of these circumstances so that even if the highest penalty of 240 death is passed on the accused he does not have a grievance that he was not heard on his personal, social and domestic circumstances before the sentence was given.
My learned brother has very rightly pointed out that our independence has led to the framing of numerous laws on various social concepts and a proper machinery must be evolved to educate not only the people regarding the laws which have been made for their benefit but also the Courts, most of whom are not aware of some of the recent and the new provisions.
It is, therefore, the prime need of the hour to set up Training Institutes to impart the new judicial re cruits or even to serving judges with the changing trends of judicial thoughts and the new ideas which the new judi cial approach has imbibed over the years as a result of the influence of new circumstances that have come into exist ence.
The next question that arises for consideration is whether noncompliance with section 235(2) is merely an irregular ity which can be cured by section 465 or it is an illegality which vitiates the sentence.
Having regard to the object and the setting in which the new provision of section 235(2) was inserted in the 1973 Code there can be no doubt that it is one of the most fundamental part of the criminal procedure and non compliance thereof will ex facie vitiate the order.
Even if it be regarded as an irregularity the prejudice caused to the accused would be inherent and implicit because of the infraction of the rules of natural justice which have been incorporated in this statutory provision, because the accused has been completely deprived of an opportunity to represent to the Court regarding the proposed sentence and which manifestly results in a serious failure of justice.
There is abundant authority for this proposition to which reference has been made by my learned brother.
The last point to be considered is the extent and import of the word "hear" used in section 235(2) of the 1973 Code.
Does it indicate, that the accused should enter into a fresh trial by producing oral and documentary evidence on the question of the sentence which naturally will result in further delay of the trial? The Parliament does not appear to have intended that the accused should adopt dilatory tactics under the cover of this new provision but contem plated that a short and simple opportunity has to be given to the accused to place materials if necessary by leading evidence before the Court bearing on the question of sen tence and a consequent opportunity to the prosecution to rebut those materials.
The Law Commission was fully aware of this anomaly and it accordingly suggested thus: "We are aware that a provision for an oppor tunity to give evidence in this .respect may necessitate an adjournment; and to avoid delay adjournment, for the purpose should, ordinarily be for not more than 14 days.
It may be so provided in the relevant clause.
" 241 It may not be practicable to keep up to the time limit suggested by the Law Commission with mathematical accuracy but the Courts must be vigilant to exercise proper control over the proceedings so that the trial is not unavoidably or unnecessarily delayed.
I, therefore, agree with the order of my learned Bhag wati, J., that the appeal should be allowed on the question of the sentence and the, matter should be sent back to the Trial Court for giving an opportunity to the accused to make a representation regarding the sentence proposed.
V.P.S. Appeal allowed.
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The appellant was convicted by the Sessions Court under section 302, IPC, and sentenced to death.
On the date of the judgment his advocate was not present.
The trial court did not give the accused an opportunity to be.
heard in regard to the sentence as required by section 235(2), Cr.P.C., 1973.
The appellant also did not insist on his right to be heard.
The conviction and sentence.
were, confirmed by the High Court.
Even in the High Court the accused did not complain that the trial court had committed a breach of section 235(2).
On the question whether the sentence is vitiated because of the violation .of section 235(2), HELD: The matter should be remanded to.
the trial court for giving an opportunity to the appellant on the question of sentence.
Per Bhagwati, J: (1) Under section 235(1) the court must, in the first instance, deliver a judgment convicting or acquit ting the accused.
If the accused is acquitted, no further question arises.
If the accused is convicted, at that stage, he must be given an opportunity to be heard in regard to the sentence, and it is only after hearing him that the court can pass sentence.
[232 D E] (2) Section 235(2) is a new provision in consonance with the modern trends in penology and sentencing procedures.
Sentencing is an important stage in the process of adminis tration of criminal justice, and should not be consigned to a subsidiary position.
Many factors have to be considered before a proper sentence is passed such as the nature of the offence; the circumstances extenuating or aggravating of the offence; the prior criminal record, if any, of the offender; his age; his record of employment; his background with reference to education; home life.
sobriety and social adjustment; his emotional and mental condition; the pros pects for his rehabilitation; the possibility of his return to a normal life in the community; the possibility of treat ment or training Of the offender; the possibility that the sentence may Serve as a deterrent to crime by the offender or by others and the current community need, if any for such a deterrent in respect to the particular type of of fence.
The material relating to these factors may be placed before the court by means of affidavits.
The hearing contem plated by section 235(2) is not confined merely to hearing oral submissions, but .it is also intended to give an opportunity to the prosecution and the accused to place.
before the court facts and material relating to the various factors bearing on the question of sentence, and if they are con tested by the other side, then to produce evidence for the purpose of establishing those factors.
Otherwise, the hearing would be devoid of meaning and content.
The Court must however be vigilant to see that this hearing on the question of sentence is not abused and turned into an in strument for unduly protracting 1he proceedings.
[232 E; G A B] Ediga Anammo vs State of Andhra Pradesh ; referred to.
(3) If the trial court had, instead of sentencing the appellant to death, imposed on him the sentence of the imprisonment, he would not be, aggrieved by the breach of section 235(2 ), because, even after hearing the appellant, the. trial court could not have passed a more favourable sen tence.
But the trial court imposed death sentence and the possibility cannot be ruled out that if the 230 appellant has been given an opportunity to produce material and make submissions on the question of sentence, he might have been able to persuade, the trial court to impose the lesser penalty.
[235 D E] (4) Since the section is a new provision it is quite possible that many lawyers and judges might be unaware of it.
In the present case obviously the trial court as well as the appellant 's advocate in the High Court were aware of it.
No inference can, therefore, be drawn against the appellant that he had nothing to say from his omission to raise this point in the High Court.
[236 A] (5)(a) Non compliance with the requirement of the sec tion cannot be described as a mere irregularity curable under section 465.
It amounts to by_passing an important stage of the trial so that the trial cannot be said to be that contemplated by the Code.
Such deviation constitutes diso bedience of an express provision of the Code as to the mode of trial and hence cannot be regarded as a mere irregulari ty.
[236 H] Subramania Iyer vs King Emperor (1901) 28 I.A. 257 referred to.
(b) The; violation goes to the root of the matter and the resulting illegality is of such a character that it vitiates the sentence.
[237 B] Pulukuri Kotayya vs King Emperor, (1947) 74 I.A. 65 and Magga vs State of Rajasthan, ; referred to.
(c) When no opportunity has been given to the appellant in regard to the sentence to be imposed on him, failure of justice must be regarded as implicit and section 465 cannot have any application.
[137 B] Per Fazal Ali J. (1) The 48th Report of the Law Commis sion and the statement of objects and reasons of the 1973 Code of Criminal Procedure show that section 235(2) is a very salutary provision.
It contains one of the cardinal fea tures of natural justice, namely, that the accused must be given an opportunity to make a representation against the sentence proposed to be imposed on him.
It seeks to achieve a socio econonmic purpose and is aimed at attaining the ideal principle of proper sentencing in a rational and progressive society.
Section 235 is split up into two inte gral parts, (a) the stage which culminates in the passing of the judgment of conviction or acquittal; and (b) the stage which, on conviction, results in imposition of sentence on the accused.
Both these parts are absolutely fundamental and non compliance with any of the provisions would undoubt edly vitiate the final order passed by the Court.
Section 235(2) enjoins on the Court to stay its hands after passing a judgment oF conviction and hear the accused on the ques tion of sentence before passing sentence.
[238 H; 239 E; C] (2) There may lye a number of circumstances of which the Court may not be aware but which may be taken into consider ation by the court while awarding the sentence, particularly a sentence of death.
The accused must be given an opportu nity of making his representation and placing such materials which have a bearing on the question of sentence.
Parlia ment has not intended that the accused should adopt dilatory tactics under the cover of this new provision but contem plated that a short and simple opportunity has to be given to the accused to place materials bearing on the question of sentence, if necessary by leading evidence, before the .Court, and a consequent opportunity to the prosecution to rebut those materials.
The Court must be vigilant to exercise proper control over the proceedings so that the trial is not unavoidably or unnecessarily delayed.
[240 F G] (3) Non compliance with the section is not a mere irreg ularity which can be cured by section 465 of the Code.
It is an illegality which vitiates the sentence.
Having regard to the object and the setting in which the new provision was in serted, there can be no doubt that it is one of the most fundamental parts of criminal procedure and non compliance thereof will ex facie vitiate the order.
231 Even if it be regarded as an irregularity the prejudice caused to the accused would be inherent and implicit because of the infraction of the rules of natural justice which have been incorporated in this provision, since the accused has been completely deprived of an opportunity to represent to the Court regarding the proposed sentence and this manifest ly results in a serious failure of justice.
[240 B C] [Both the learned Judges indicated that there must be a system of training judges in the application of socio eco nomic laws and in modern methods and techniques of decision making and sentencing procedures]
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3680.txt
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minal Appeal No. 201 of 1962.
Appeal by special leave from the judgment and order dated February 20, 1962, of the Bombay High Court in Criminal Appeal No. 1405 of 1961.
C. L. Sareen, for the appellant.
H. B. Khanna and R. H. Dhebar, for the respondent.
January 23.
The judgment of the Court was delivered by SUBBA RAO, J.
This appeal by special leave is directed against the judgment of a division Bench of the 'Bombay High Court setting aside the order of acquittal made by the Additional Sessions judge, Kolaba, and convicting the appellant under section 302, read with section 34, of the Indian Penal Code and sentencing him to imprisonment for life.
The case of the prosecution may be briefly stated.
In the year 1959, two persons by name Ramachandra Budhya and Govind Dhaya were murdered by some people.
In all II accused, including one Deoram Maruti Patil, were brought to 680 trial; and out of them 8 accused, including the said Deoram Maruti Patil, were acquitted.
During that trial Deoram Maruti Patil 's uncle, by name Vishwanath, actively helped Deoram Maruti Patil in the conduct of his defence.
Accused 1 and 2 in the present case are the sons of Govind Dhaya and accused 3 and 4 are the nephews of Ramachandra Budhya.
They bore a grudge against Vishwanath for helping Deoram Maruti Patil and bringing about his acquittal.
On August 19, 1960, Vishwanath and one Mahadeo Pandu Patil left their village at about 8.30 p.m. in order to go to Pezari en route to Alibag.
When they were walking along a bund, accused I to 4 came from behind, armed with long sticks and the stick carried by accused 1 had a blade attached to it.
They belaboured the deceased resulting in his death.
The four accused had to stand their trial for the murder of Vishwanath before the Court of the Additional Sessions judge, Kolaba.
The charge against them was that they, in view of their common grudge against the deceased, combined together and did away with the deceased.
The said four persons were charged under section 302, read with section 34, of the Indian Penal Code for committing the murder of the deceased in furtherance of their common intention.
All of them were also charged separately for the substantive offence under section 302 of the Indian Penal Code.
All the accused pleaded not guilty to the charge.
While accused 1, 3 and 4 pleaded alibi, accused 2 raised a plea of private defence.
The prosecution examined eye witnesses, who deposed that the four accused overtook the deceased when he was going to village Pezari and felled him down by giving him lathi blows.
None of the witnesses spoke to the presence of any other person, named or unnamed, who took part in the assault of the deceased.
The learned Additional Sessions judge found that the prosecution witnesses were not speaking 681 the truth and that the version given by accused 2 was the probable one.
In the result he acquitted all the accused.
The State preferred an appeal to the High Court against the said order of acquittal under section 302, read with section 34, of the Indian Penal Code ; but no appeal was preferred against the order of acquittal under section 302 of the Indian Penal Code.
The judgment of the High Court discloses that the learned judges were inclined to believe the evidence of the witnesses, other than Kashinath and Shridar.
But they dismissed the appeal against accused 1, 3 and 4 on the ground that the appeal was against an order of acquittal.
But in regard to accused 2, they held that he was one of the participants in the assault and there was no basis for his plea of private defence.
Having come to that conclusion, the learned judges convicted accused 2 under section 302, read with section 34, of the Indian Penal Code.
As regards the persons who participated in the assault along with accused 2, it would be appropriate to quote the words of the High Court itself : "Some of the other accused were undoubtedly concerned with the incident along with accused No. 2.
Since it is possible that the story as given by the prosecution witnesses, and parti cularly by Mahadeo, was exaggerated, it is not safe to hold that each one of the other accused was also a participant in the offence.
In view of the possibility that one or more of the other accused, i.e., accused Nos. 1, 3 and 4, might not have participated in the offence, we do not propose to interfere with the acquittal of these accused.
But we are satisfied that accused No. 2 along with one or more of the other accused committed this offence and that accused No. 2 was, therefore, clearly guilty under section 302 read with section 34 I. P. Code".
To put it in other words, they, acquitted accused 1, 3 and 4 on the ground that it was doubtful whether 682 any one of them participated in the commission of the offence and convicted accused 2 on the ground that one or more of them might have participated in the offence.
Accused 2 has filed the present appeal against the judgment of the High Court.
The argument of teamed counsel for the appellant may be put thus : The learned Additional Sessions judge acquitted the accused under section 302 of the Indian Penal Code and also under section 302, read with section 34, of the said Code.
The appeal in the High Court was confined only to the acquittal of the accused under section 302, read with section 34, of the Indian Penal Code.
The charge as well as the evidence was only directed against the four named accused as the participants in the common intention to commit the murder of the deceased.
The High Court having acquitted accused 1, 3 and 4.
inconsistently convicted accused 2 for having committed the murder of the deceased jointly with the three accused who had been acquitted.
To put it differently, the argument is that when three of the four named accused, who were charged under section 302, read with section 34, of the Indian Penal Code, were acquitted, the court could not convict only one of the accused on the basis of constructive liability.
Learned counsel for the respondent counters this argument by stating that though the charge as well as the evidence was directed against the 4 named accused, a court could come to the conclusion that 3 of the 4 named accused are not identified but more than one had taken part in the commission of the offence and that in the present case on a fair reading of the entire judgment we should hold that the High Court found that though accused 1, 3 and 4 were not identified, 3 unidentified persons must have taken part in the murder.
Section 34 of the Indian Penal Code reads : "When a criminal act is done by several per sons, in furtherance of the common intention 683 of all, each of such persons is liable for that act in the same manner as if it were done by him alone.
" It is well settled that common intention within the meaning of the section implied a pre arranged plan and the criminal act was done pursuant to the prearranged plan.
The said plan may also develop on the spot during the course of the commission of the offence; but the crucial circumstance is that the said plan must precede the act constituting the offence.
If that be so, before a court can convict a person under section 302, read with section 34, of the Indian Penal Code, it should come to a definite conclusion that .the said person, had a prior concert with one or more other persons, named or unnamed, for committing the said offence.
A few illustrations will bring out the impact of section 34 on different situations.
(1) A, B, C and D are charged under section 302, read with s.34, of the Indian Penal Code, for committing the murder of E.
The evidence is directed to establish that the said four persons have taken part in the murder.
(2) A, B, C and D and unnamed others are charged under the said sections.
But evidence is adduced to prove that the said persons, along with others, named or unnamed, participated jointly in the commission of that offence.
(3) A, B, C and D are charged under the said sections.
But the evidence is directed to prove , hat A, B, C and D, along with 3 others, have jointly committed the offence.
As regards the third illustration, a Court is certainly entitled to come to the conclusion that one of the, named accused is guilty of murder under section 302, read with section 34, of the Indian Penal Code, though the 684 other three named accused are acquitted, if it accepts the evidence that the said accused acted in concert along with persons, named or unnamed, other than those acquitted, in the commission of the offence.
In the second illustration, the Court can come to the same conclusion and convict one of the named accused if it is satisfied that no prejudice has been caused to the accused by the defect in the charge.
But in the first illustration the Court certainly can convict two or more of the named accused if it accepts the evidence that they acted conjointly in committing the offence.
But what is the position if the Court acquits 3 of the 4 accused either because it rejects the prosecution evidence or because it gives the benefit of doubt to the said accused ? Can it hold, in the absence of a charge as well as evidence ', that though the three accused are acquitted, some other unidentified persons acted conjointly along with one of the named persons ? If the Court could do so, it would be making out a new case for.
the prosecution : it would be deciding contrary to the evidence adduced in the case.
A Court cannot obviously make out a case for the prosecution which is not disclosed either in the charge or in regard to which there is no basis in the evidence.
There must be some foundation in the evidence that persons other than those named have taken part in the commission of the offence and if there is such a basis the case will be covered by the third illustration.
In support of the contention that a Court, even in the first illustration, can acquit 3 of the 4 accused named in the charge on the ground that their identity has not been established, and convict one of them on the ground that more than one took part in the commission of the offence, reliance is placed upon the decision of this Court in Mohan Singh vs State of Punjab (1).
There, the appellants, along with three others, were charged with having committed offence under section 302, read with section 149, as well as section 323, read (1) [1962] Supp. 3 S.C.R. 848. 858. 685 with section 149, of the Indian Penal Code.
The Sessions judge acquitted two of them, with the result 3 of them were convicted.
One of the accused was convicted under section 302 and section 147 and two of the accused were convicted under section 302, read with section 149 and section 147, of the Indian Penal Code.
The High Court confirmed their convictions.
On appeal by special leave to this Court, two of the accused convicted under section 302, read with sections 149 and 147, of the Indian Penal Code, contended, inter alia, that as two of the five accused were acquitted, their conviction under section 302, read with sections 149 and 147, was bad in law, This Court held on the evidence that the said two accused had done the act pursuant to a pre arranged plan and therefore they could be convicted under section 302, read with section 34, of the Indian Penal Code.
But in the course of the judgment different situations that might arise in the context of the question now raised were noticed.
Adverting to one of the situations similar to that now before us, this Court observed : "Cases may also arise where in the charge, the prosecution names five or more persons and alleges that they constituted an unlawful assembly.
In such cases, if both the charge and the evidence are confined to the persons named in the charge and out of the persons so named two or more are acquitted leaving before the court less than five persons to be tried, then section 149 cannot be invoked.
Even in such cases, it is possible that though the charge names five or more persons as composing an unlawful assembly, evidence may nevertheless show that the unlawful assembly consisted of some other persons as well who were not identified and so not named.
In such cases, either the trial court or even the High Court in appeal may be able to come to the conclusion that the acquittal of some of the persons named in the charge and tried will not necessarily 686 displace the charge under section 149 because along with the two or three persons convicted were others who composed the unlawful assembly but who have not been identified and so have not been named.
In such cases, the acquittal of one or more persons named in the charge does not affect the validity of the charge under section 149 because on the evidence the court of facts is able to reach the conclusion that the persons composing the unlawful assembly nevertheless were five or more than five.
It is true that in the last category of cases, the court will have to be very careful in reaching the said conclusion.
But there is no legal bar which prevents the court from reaching such a conclusion.
" It will be seen from the.
said observations that this Court was visualizing a case where there was evidence on the record from which the court can come to such a conclusion.
It may be that the charge discloses only named persons; it may also be that the prosecution witnesses named only the said accused; but there may be other evidence, such as that given by the court witnesses, defence witnesses or circumstantial pieces of evidence, which may disclose the existence of named or unnamed persons, other than those charged or deposed to by the prosecution witnesses, and the court, on the ' basis of the said evidence, may come to the conclusion that others, named or unnamed, acted conjointly along with one of the accused charged.
But such a conclu sion is really based on evidence.
The observations of this Court really apply to a case covered by the third illustration given by us.
But the present case falls outside the said three illustrations.
The High Court gave conflicting findings.
While it acquitted accused 1, 3 and 4 under section 302, read with section 34 of the Indian Penal 687 Code, it convicted accused 2 under section 302, read with section 34, of the said Code, for having committed the offence jointly with the acquitted persons.
That is a legally impossible position.
When accused were acquitted either on the ground that the evidence was not acceptable or by giving benefit of doubt to them, the result in law would be the same : it would mean that they did not take part in the offence.
The effect of the acquittal of accused 1, 3 and 4 is that they did not conjointly act with accused 2 in committing the murder.
If they did not act conjointly with accused 2, accused 2 could not have acted conjointly with them.
Realizing this mutually destructive findings of the High Court, learned counsel for the State attempted to sustain the findings of the High Court by persuading us to hold that if the said finding was read in the context of the whole judgment, it would be clear that the learned judges meant to hold that persons other than the acquitted accused conjointly acted with the convicted accused.
We have gone through the entire judgement carefully with the learned counsel.
But the observations of the learned judges ;is regards the " 'other participants" in the Grime must in the context refer only to the " 'one or other of the said three acquitted accused participated in the offence committed by accused 2.
There is not a single observation in the judgment to indicate that persons other than the said accused participated in the offence, nor is there any evidence in that regard.
We, therefore, hold that the judgment of the High Court cannot stand.
We are satisfied that on the findings arrived at by the High Court, the conviction of accused 2 is clearly wrong.
In the result, we allow the appeal, set aside the conviction of the appellant and direct him to be set at liberty.
Appeal allowed.
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The four accused persons stood their trial before the Additional Sessions judge for the murder of one Vishwanath.
The charge against them was that they in view of their common grudge a against the deceased, combined together and did away with the deceased.
They were charged under section 302 read with section 34 of the Indian Penal code and were also separately charged under section 302 of the Penal Code.
All pleaded not guilty to the charge and accused 1, 3 and 4 pleaded alibi, while accused 2 raised a plea of private defence.
The learned Additional Sessions judge acquitted all the accused on the ground that the prosecution witnesses were not speaking the truth and the version given by accused 2 was the probable one.
The State preferred an appeal to the High Court against the order of acquittal under section 302, read with section 34, but not against the acquittal under section 302 of the Penal Code.
The High Court acquitted accused 1, 3 and 4 on the ground that it was doubtful whether any one of them participated in the commission of the offence and convicted accused 2 on the ground that one or more of them might have participated in the offence.
Accused 2, the appellant, therefore, filed this appeal and contended that when three of the four named accused, who were charged under section 302, read with section 34, were acquitted, the court could not convict only one of the accused on the basis of constrictive liability.
Held that before a court could convict a person under section 302, read with section 34, it should come to a definite conclusion that the said person had a prior concert with one or more other persons, named or unnamed, for committing the said offence.
Held, further, that when accused were acquitted either on the ground that the evidence was not acceptable or by giving 679 benefit of doubt to them, the result in law would be the same it would mean that they did not take part in the offence.
The effect of the acquittal of accused 1, 3 and 4 is that they did not conjointly act with accused 2 in committing the murder.
If they did not act conjointly with the appellant, he could not have acted conjointly with them.
The judgment of the High Court does not indicate that persons other than the said accused participated in the offence, nor is there any evidence in that regard, therefore, the conviction of the appellant must be set aside.
Mohan Singh vs State of Punjab, [1962] Supp.
3 section C. R. 848, held inapplicable.
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1575.txt
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Civil Appeal No. 1153 of 1975.
Appeal by Special Leave from the Judgment and order dated the 29th November 1974 of the Mysore High Court at Bangalore Writ Petition No. 117 of 1973.
section V. Gupte, K. R. Nagaraja for the Appellant.
Shyamla Pappu (Mrs.) for Respondent No. 3.
The Judgment of the Court was delivered by Gupta, J.
on the application of the appellant the Regional Transport Authority, Mandya, granted him.
a contract carriage permit on February 8, 1972, valid for the entire State of Karnataka.
The grant was cancelled by the Karnataka State Transport Appellate Tribunal by its order dated August 19, 1972 on appeal preferred by the third respondent, Karnataka State Road Transport Corporation.
The appellant filed a writ petition in the High Court of Karnataka at Ban galore challenging the order of the Appellate Tribunal.
The High Court dismissed the petition by its order dated November 29, 1 974 agreeing with the Appellate Tribunal that the Regional Transport Authority, Mandya, had no jurisdiction to grant permits valid throughout the State of Karnataka in view of the first proviso to sub section (1) of section 45 of the (hereinafter referred to as the Act).
The correctness of that decision is questioned by the appellant in this appeal by special leave.
Section 45(1) with its first proviso which is the only part of the section relevant for the present purpose is in these terms: General provision as to applications for permits.
30 "45 (1) Every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle or vehicles: Provided that if it is proposed to use the vehicle or vehicles in two or more regions lying within the same State, the application shall be made to the Regional Transport Authority of the region in which the major portion of the proposed route or area lies, and in case the portion of the proposed route or area in each of the regions is approximately equal, to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles :" As its marginal note indicates, section contains a general provision regulating applications for permits.
The proviso, quoted above, lays down that where the applicant for a permit proposes to use his vehicle in two or more regions in the same State, the application must be made to the Regional Transport Authority within whose jurisdiction the major portion of the proposed route or area lies.
The appellant had asked for a contract carriage permit that would be valid throughout the State of Karnataka which meant that he proposed to use his vehicle in all the different regions lying in the State.
The second proviso to section 44(1) of the Act lays down that the area specified as the region of a Regional Transport Authority shall not be less than an entire district, or the whole area of a Presidency town.
In the State of Karnataka there are 19 Regional Transport Authorities, one for each district in the State.
In terms of the first proviso to section 45 (1), an application for an inter regional permit that the appellant was asking for had to be made to the Regional Transport Authority of the region that included the major portion of the proposed area.
The question debated before the appellate tribunal and the High Court was whether the area lying within the jurisdiction of the Regional Transport Authority, Mandya, was larger than the area within the region of any other Regional Transport Authority in the State, and in that context the meaning of the term 'area ' in the first proviso to section 45 (1) arose for consideration.
According to the applicant for the permit, 'area ' in section 45 meant the extent of motorable tract in the region, and the Regional Transport Authority, Mandya, agreeing with this interpretation of the word 'area ' found that the 'Mandya Region has more motorable roads than any other district in the State".
The appellate tribunal and the High Court both refused to accept this meaning of 'area ' which they held to mean plain geographical area and as the Regional Transport Authority, Mandya, was admittedly not the largest district in that State, the High Court dismissed the writ petition and affirmed the decision of the appellate tribunal that the grant of permit was without jurisdiction.
Before proceeding to consider the merits of the rival contentions as to the meaning of the word 'area ' in the first proviso to section 45(1), it would be helpful to refer to certain other provisions of the Act which seem to be relevant in this context.
The appellant had asked for a contract carriage permit.
Section 2(3) defies a contract carriage as a motor vehicle which carries passengers for hire or reward under a contract for the use of the vehicles as a whole either on a time basis or 31 from one point to another, and in both cases without stopping to pick up or set down along the line of route passengers not included in the contract.
A motor vehicle is defined in section 2(18) as a mechanically propelled vehicle 'adapted for use upon roads '.
Section 49 lays down the particulars that an application for a contract carriage permit shall contain, and the 'area ' for which the permit is required is one of the matters that the application must state.
The word route which has been used in association with 'area ' in section 45(1) is defined by section 2(28A) as "a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another." Section 2(1) defines 'area ' as follows: " "area", in relation to any provision of this Act, means such area as the State Government may, having regard to the requirements of that provision, specify by notification in the official Gazette;" The terms and expressions defined in section 2 will apply only if there is nothing repugnant in the subject or context as the opening words of the section indicate.
The first proviso to section 45 (1) speaks of the route or area proposed in an application for a permit and, as such, there can be no question here of the State Government specifying the area.
Clearly, the definition of area in section 2(1) has no relevance in this context.
The question therefore remains to be answered, whether 'area` in section 45(1) has been used in the wider sense of geographical area, or it means only the area of motorable roads ? The section uses both the words, 'route ' and 'area ', whichever is applicable in a given case.
A route as defined is a line of travel between two termini on a highway, but the idea of a route as a notional line that the definition suggests has not been consistently maintained in the Act.
In Dosa Satyanarayanamurty etc.
vs The Andhra Pradesh State Road Transport Corpn.
(1) this Court observed: "There is no inherent in consistency between an "area" and a "route".
The proposed route is also an area limited to the route proposed.
" A similar observation was made in C.P.C. Motor Service, Mysore vs The State of Mysore(2) that in the scheme of the Act, by the word "route" is meant "not only the notional line but also the actual road over which the omnibuses run".
Of course, it would not be correct to say that the Act recognizes no distinction between 'route ' and 'area '.
A route may mean not only the notional line of travel between one terminus and another, but also the area of the road over which the motor vehicles ply, yet the two terms are not interchangeable; as pointed out in C.P. Sikh Regular Motor Service etc.
vs The State of Maharashtra,(3) "a route is an area plus something more".
This "something" is the notional line of travel between two termini which distinguishes a route ` from an area simpliciter.
The first proviso to section 45(1) speaks of "route or area" apparently making a distinction between them to cover applications relatable to either.
A contract carriage does not ply along a fixed route or routes but over an area, which is why an application for a contract carriage permit has to contain a statement as to the proposed area.
(1) (644).
(2) [1962 Supp.
(1) S.C.R. 717 (725).
(3) ; 32 All the decisions to which we have referred above have taken the view that by area is meant the road, the physical tract, over which the motor vehicles ply without reference to any notional line of travel.
Of course, this meaning was given to the word 'area ' in the context of the provisions of the Act considered in these cases, in none of which section 45 came up for consideration.
We do not however find any reason to think that 'area ' in section 45 ( 1 ) has a different connotation.
Except that the territorial jurisdiction of the regional transport authorities is fixed in terms of geographical area districtwise in the State of Karnataka 'area ' in that wider sense is irrelevant to the purposes of the Act.
Counsel for the respondent, Mysore State Road Transport Corporation, Bangalore, built an argument on the provisions of section 12 of the Act that the meaning of 'area ' is not restricted only to the area of motorable roads in a region.
Section 42 prohibits the use of a transport vehicle in any public place except in accordance with the conditions of a valid permit.
A transport vehicle includes a motor vehicle used for the carriage of passengers [section 2(33) and section 2(25).
Public place has been defined by section 2(24) of the Act as "road, street, way or other place, whether a thoroughfare or not, to which the public have a right of access, and includes any place or stand at which passengers are picked up or set down by a stage carriage".
lt was argued that a contract carriage which does not ply on a fixed route could be used in any public place which need not necessarily be a road; this, according to counsel, indicated that the word area occurring in section 45(1) meant geographical area and not motorable roads only.
We do not find it possible to accept this contention.
Assuming that a contract carriage could be used in places which are not really roads, the fact remains that a contract carriage being a motor vehicle is intended for use upon roads, and any casual use of it in places other than roads is not decisive on the interpretation of the word area.
The prohibition against the use of transport vehicles in public places which are not roads serves to repel a possible claim that for using a motor vehicle in places which cannot be called roads no permit was necessary.
We hold therefore that the word area in the first proviso to section 45(1) of the Act means the area of motorable roads within the territorial jurisdiction of a regional transport authority.
The Regional Transport Authority, Mandya, held that it had within its jurisdiction the largest area of motorable roads in the State of Karnataka, and this finding has not been disturbed by the appellate tribunal.
The appellate tribunal thought that the expression "motorable roads" was vague as the area comprising of motorable roads would be changing from time to time", but the jurisdiction of a regional transport authority to grant an inter regional permit depends on the existing area of motorable roads when an application for a permit is made.
In the course of arguments before us doubts were expressed on the reasonableness of a provision which requires an application for an inter regional permit to be made to the regional transport authority of the region in which the major portion of the proposed route or area lies when section 63 of the Act provides elaborate checks and lays 33 down conditions for the validation of permits for use outside the region in which it has been granted.
It was submitted that in view of the provisions of section 63 there was no point in insisting on the application being made to the Regional Transport Authority of any particular region.
We see the logic of this submission, but this is a matter of policy on which the court has no say.
However, the policy itself does not appear to have been stated very clearly.
On the provisions as they are it is difficult to say that the construction put forward on behalf of the third respondent is altogether implausible.
It is also true that there can be practical difficulties, whichever interpretation was adopted.
This being the position we should have thought that instead of leaving the law in such a slippery state, the State should clarify it by appropriate legislation so that the law may be clear and easily ascertainable by the concerned section of the public.
The appeal is allowed and the impugned order including the order of the Mysore State Transport Appellate Tribunal is set aside.
We make it clear that all we have decided in this case is that the Regional Transport Authority, Mandya, had jurisdiction to issue the permit to the appellant, whether the permit satisfies the other conditions of a valid inter regional permit did not arise for consideration in this appeal In the circumstances of the case we make no order as to costs.
S.R. Appeal allowed.
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Section 45(1) of the , a general provision regulating applications for inter regional route permits within a State requires an application to be made to the appropriate Regional Transport Authority mentioned in the proviso thereto namely, either to the Regional Transport Authority of tho region in which the major portion of the proposed route or area lies or to the Regional Transport Authority of the region in which it is proposed to keep the vehicle or vehicles in case the portion of the proposed route or area in each of the regions are approximately equal.
The appellant applied for a contract carriage permit that would be valid throughout the State of Karnataka, which meant that he proposed to use his vehicle in all the nineteen regions, to the Regional Transport Authority, Mandya, who granted him on 8 2 1972 a contract carriage permit valid for the entire State of Karnataka.
The permit was granted as Mandya region has more motorable roads than any other district in the State.
On appeal preferred by the State Road Transport Corporation, taking the view that geographically Mandya region was smaller in area and, as such, the jurisdiction of the Regional Transport Authority, Mandya was ousted, the permit granted to the appellant was cancelled by the State Transport Appellate Tribunal by its Order dated 19 8 1972, resulting in a writ Proceedings before the Karnataka High Court which was dismissed.
On appeal by Special Leave, the Court, ^ HELD: (1) The word "route" which has been used in association with "area specifically notified by the State Government".
However, the terms and "a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another".
Section 2(1) defines "area" as "area specifically notified by the State Government".
However, the terms and expressions defined in section 2 will apply only if there is nothing repugnant in the subject or context.
Tho first proviso to section 45(1) speaks of the route or area proposed in an application for a permit and, as such, there can be no question of the State Government specifying the area.
The definition of "area" in section 2(1) has therefore no relevance in this context.
[31B D] (2) section 45 uses both the words "route" and "area" whichever is applicable in a given case.
A route as defined is a line of travel between two termini on a highway, but the idea of a route as a notional line that the definition suggests has not been consistently maintained in the Act.
[31D E] (3) A route may mean not only the notional line of travel between one terminus and another, but also the area of the route over which the motor vehicles ply, yet the two terms are not interchangeable.
"A route is an area plus some thing more." This "something" is the notional line of travel between the two termini which distinguishes a route from an area simpliciter.
The first proviso to section 45(1) speaks of "route or area" apparently making a distinction between 29 them to cover applications relatable to either.
A contract carriage does not ply along a fixed "route or routes" but over an "area" which is why an application for a contract carriage permit has to contain a statement as to the pro posed area.
[31G H] Dosa Satyanarayanamurty etc.
vs The Andhra Pradesh State Road Transport Corpn., (644).
C. P. C. Motor Service, Mysore vs The State of Mysore, [1962]Supp.
(1) S.C.R. 717 (725).
C. P. Sikh Regular Motor Service etc.
vs The State of Maharashtra, [1975] (2) S.C.R. 10, followed.
(4)The word "area" in the first proviso to section 45(1) of the Act means the area of motorable roads within the territorial jurisdiction of a regional transport authority.
Except that the territorial jurisdiction of the regional transport authority is fixed in terms of "geographical area "district wise in the State of Karnataka "area" in that wider sense is irrelevant to the purpose of the Act.
[32 B, F] (5) The jurisdiction of a regional transport authority to grant an inter regional permit depends on the existing areas of motorable roads when an application for a permit is made.
[32 G] [On the question of the reasonableness of a provision which requires an application for an inter regional permit to be made to the Regional Transport Authority of the region where the major portion of the proposed route or area lies, the Court observed that this was a matter of policy but added that the policy has not been stated very clearly, and that instead of leaving the law in such a "slippery state," the State should clarify it by appropriate legislation so that the law may be clear and easily ascertainable by the concerned section of the public.]
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3397.txt
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Appeal No. 265 of 1956.
Appeal from the judgment and order dated August 26, 1954, of the Calcutta High Court in Income tax Reference No. 107 of 1952.
S.Mitra, Dipak Choudhry and B. N. Ghosh, for the appellants.
C.K. Daphtary, Solicitor General of India, K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the respondent.
356 1959.
March 16.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
Messrs.
Mcgregor & Balfour, Ltd., Calcutta (hereinafter called the Company) is a Company incorporated in the United Kingdom.
Its head office is also there.
It, however, does business in India also.
In some of the previous years, the Company was required to pay excess profits tax both in England and in India.
When it did so, it obtained deduction of the amounts from its profits and gains for purposes of the Indian lncome tax Act, under s.12(2) of the Indian Excess Profits Tax Act.
In the assessment year 1947 1948 which corresponded to the accounting year of the Company ending on October 31, 1946, 'it obtained a repayment of Rs. 2,31,009 out of the excess profits tax paid in England.
This was under section 28(1) of 4 & 5, Geo.
VI, Ch. 30.
For purposes of the levy of the Indian Income tax, this sum was included in the taxable profits of the Company by the Income tax Officer.
He purported to act under section 11(14) of the Indian Finance Act, 1946 (hereinafter called the Act).
The income of the Company in India was held to be Rs. 6,34,937 (including the sum of Rs. 2,31,009) while the in ' come outside the taxable territory was held to be Rs. 4,29,620.
Applying section 4A(c)(b) of the Indian Income tax Act, the Income tax Officer assessed the Company on its total world income.
The appeals of the Company made successively to the Appellate Assistant Commissioner and the Incometax Appellate Tribunal were dismissed.
The Tribunal, however, referred the following questions of law to the High Court at Calcutta under section 66 of the Indian Income tax Act: "(1) Whether on the above facts and circumstances of this case the Tribunal was right in holding that the sum of Rs. 2,31,009 was income of the assessee during the assessment year under consideration and was liable to be assessed under the Indian Income tax Act ? and (2)If so, whether this amount could not be taken into consideration for determining the residence of the 357 assessee under section 4A(c)(b) of the Indian Income tax Act ? " This reference was heard by Chakravarti, C. J., and Lahiri, J., who by their judgment dated August 26, 1954, answered the first question in the affirmative and the second in the negative.
They, however, granted a certificate under section 66A of the Indian Income tax Act, read with article 135 of the Constitution to appeal to this Court.
No appeal has been filed on behalf of the Department, and the second of the two questions must be taken to be finally settled in this case.
The contentions of the Company in this appeal, thus, concern only the first question, and they are two: It was said firstly that section 11(14) of the Finance Act could not be made applicable to the assessment year 1947 1948, because the provision was not incorporated in the Indian Income tax Act or repeated in the subsequent Finance Acts.
This argument was not seriously pressed before us, and beyond mentioning it, Mr. Mitra for the Company did not choose to elaborate it.
We think that Mr. Mitra has been quite correct in not pursuing the matter.
The section framed as it is, does apply to subsequent assessment years just as it did to the assessment for 1946 1947, and prima facie, it was not necessary to follow one of the two courses detailed above.
Since the point was not pressed before us, we need not give our reasons here.
It was said nextly that the High Court was in error in construing section 11(14) of the Finance Act as a provision which created a liability proprio vigore, as if it was a charging section.
It was contended that the repayment was not within the taxable territory, and in view of the answer to the second question as to the applicability of section 4A(c)(b), there could be no tax upon it.
On behalf of the Department it was argued that the sub section created a charge by itself and the fiction therein created being sufficient and clear, it was not necessary to consider where the income arose.
Section 11(14) of the Finance Act reads as follows: " Where under the provisions of sub section (2) of 358 section 12 of the Excess Profits Tax Act, 1940 (XV of 1940), excess profits tax payable under the law in force in the United Kingdom has been deducted in computing for the purposes of income tax and supertax the profits and gains of any business, the amount of any repayment under sub section (1) of Section 28 of the Finance Act, 1941, (4 & 5, Geo.
6, c. 30), as amended by Section 37 of the Finance Act, 1942 (5 & 6, Geo 6, c. 21), in respect of those profits, shall be deemed to be income for the purposes of the Indian Income tax Act, 1922, and shall, for the purpose of assessment to income tax and super tax, be treated as income of the previous year during which the repayment is made.
" This section may be compared with R. 4(1) of the Rules which are applicable to cases 1 and 11 of sch.
D of the Income tax Act, 1918 (8 & 9, Geo.
V, c. 40): " Where any person has paid excess profits duty, the amount so paid shall be allowed as a deduction in computing the profits or gains of the year which included the end of the accounting period in respect of which the excess profits duty has been paid; but where any person has received repayment of any amount previously paid by him by way of excess profits duty, the amount repaid shall be treated as profit for the _year in which the repayment is received.
" The English rule above quoted deals first with the deduction of the amount paid as excess profits duty from the profits or gains of the year which includes the end of the accounting period in respect of which the excess profits duty has been paid a matter dealt with in section 12(2) of, the Indian Excess Profits Tax Act, and next with the assessability to tax of the amount repaid from the excess profits duty previously charged a matter dealt with in sub sections (11) and (14) of section 11 of the Finance Act.
The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verbal they are substantially in the same words and also in pari materia.
The concluding words of the English rule " the amount repaid shall be treated as profits of the year in which the repayment is received ", and which have been interpreted by 359 English Courts may specially be compared with the concluding words of sub section
(14) of section 11 of the Finance Act, which run: " any repayment. shall, for the purposes of assessment to income tax and super tax, be treated as the income of the previous year during which the repayment is made.
" There can be no doubt that the intention underlying the two provisions is the same, and the language is substantially similar.
Now, the English rule was interpreted by the English Courts to create a liability irrespective of considerations arising from the general provisions of the income tax law.
In Eglinton Silica Brick Co., Ltd. vs Marrian (1), the assessee company which had gone into voluntary liquidation in 1904 was carried on by the liquidator till 1921 when the business was sold to another company which took it over on October 5, 1921, and the business of the appellant company then ceased.
The income tax assessment for the year 192122 was apportioned between the two companies and inasmuch as the assessee company had suffered a loss, it was reduced to nil in its case.
The assessee company then received pound, 7,224 and pound, 1,150 in 1952 after it had ceased to carry on business as repayments of excess profits duty, and this income was assessed under R. 4(1) above mentioned.
The question was whether this was right.
The case was considered by the Lords of the First Division, and they are their opinion against the assessee firm.
The Lord President (Clyde) with whom Lords Skerrington, Cullen and Sands agreed (Lord Sands dubitans) explained the two parts of the rule as follows: " The principle is obvious.
It is that if a taxpayer has made profits assessable (directly, or indirectly through the operation of the three years ' average) to income tax, and the Revenue takes a share of those profits in the name of Excess Profits Duty, it is only fair that the profits actually assessed to Income Tax should suffer some corresponding deduction. . ." (1)(1924) , 98.
360 The problem which arose in the case of repayment of Excess Profits Duty was different.
Nobody knew or could know how soon, or how late, repayment might fall to be made; nor whether the business whose profits were assessed to Excess Profits Duty would be in the same hands when repayment (if any) came to be made.
By that time the business might have ceased to be in existence.
Repayment might therefore have to be made to a person who was not carrying on the original business.
The original trader might have given up business, died, and an executor might have come in his place.
The solution provided for all these cases is that contained in the second part of the paragraph, according to which the amount repaid to any person is to be I treated as profit for the year in which the repayment is received. ' It is obvious that the amount of the former trading profits so repaid could not actually be trading profits for such year.
None the less, the amount repaid is to be treated as if it were that which in fact it is not, and cannot be.
The amount repaid consists of trading profits which reach the taxpayer out of their proper time.
However belated his fruition of them, they have not lost their original character as trading profits.
In my opinion, this is what explains the position of paragraph (1) of Rule 4 as part of the Rules under Cases I and 11 of Schedule D, which are concerned with the profits of trades and vocations.
That some artificial rule should be formulated was in the circumstances inevitable, and the highly artificial character of the rule adopted is shown by the words in which it is expressed , the amount repaid shall be treated as profit for the year in which the repayment is received.
In short, the amount repaid is deemed to be something that it is not, and could not in the actual circumstances possibly be.
Nor is this in any way unreasonable or contrary to what might be expected, if regard be had to the subject matter.
For, as has been seen, the Excess Profits Duty was itself a part of the trading profits computed by methods familiar under the Income Tax Act.
It was not merely a part of something which entered into the computation of profit; it was actual 361 computed profit.
And, but for the disparity between the ' accounting period ' and the three years ' average, it would have been directly assessable to Income Tax.
" A similar view was taken in the Court of Appeal by Lord Hanworth, M. R., Scrutton, L. J., and Romer, J. (Scrutton, L. J., dubitans) in A. & W. Nesbitt Ltd. vs Mitchell (1).
There too, the assessee company after suffering losses in the accounting period May 1 to November 25, 1920, went into liquidation and ceased to trade.
On April 22, 1924, the repayment of Excess Profits Duty took place, and this was assessed to income tax.
The Master of the Rolls described the amount received as repayment in these words: " But in respect of what is that payment made ? It is not a legacy, it is not a sum which has fallen from the skies ; it, is a sum which is repaid because there was too large a sum paid by the Company to the Revenue Authorities over the whole period during which Excess Profits Duty was paid, and that sum means and is intended to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading.
It comes back, therefore, not having lost its character but being still the repayment of a sum too much, it is true, but a sum taken out of the profits which were made by the Company in the course of its trading, profits which at the time they were made were subject to Income Tax and subject to Excess Profits Duty, and that is the character of the repayment that has been made.
" Dealing with the rule, the Master of the Rolls observed : "I have pointed out, this is a case where the Company has received payment of an amount previously paid by way of Excess Profits Duty and having that characteristic attaching to it; and we are told by the Statute that when such a sum is repaid it is to be treated as a profit for the year in which the repayment is received.
It is said it may be treated as a (1) 217, 218.
46 362 profit; but it ought not to be treated as an assessable profit.
The answer, to my mind, is that it is paid back not by way of a sum which has no origin or ancestry ; it is a sum which represents a repayment of the amount previously paid by that company in the form of Excess profits duty upon their trading.
If it is to have that character and is to be treated as such a profit, although it be a repayment of sums paid in respect of profits, it is to be treated as a profit for the year in which the repayment is received.
The word ' treated ' indicates that it is to be deemed to be something which in fact it is not, or whether it is so or not it is to be treated as a profit, and therefore it is, to my mind, impossible to discuss the question of whether or not difficulties may arise or whether it may be criticised as financially not quite sound that it should be treated in this method in that particular year; but we are told by the Statute that it is to be treated as a profit for the year in which the repayment is received.
" In a case similar on facts as the ones cited above (Kirke 's Trustees vs The Commissioners of Inland Revenue (1)), the House of Lords Viscount Cave, L. C., Lord Atkinson, Lord Shaw of Dunfermline, Lord Sumner and Lord Carson) placed the same construction upon the latter part of R. 4(1).
The following passage in the speech of Lord Sumner, explaining the extent of the fiction in the latter part of the Rule, is extremely instructive : " The express mandatory terms of the sentence show, in carefully chosen language, that he is to submit to something by reason of his having previously enjoyed this advantage in the shape of repayment of an amount previously paid by way of Excess Profits Duty.
Something which is not a profit, but is only a money repayment, something which may not result in a profit, because although trading goes on there is so great a loss on the year that this repayment does not make up the deficit, something which may not be a trading profit, because trading has ceased altogether, nevertheless is to be treated as profit and as profit for the year.
Treated ' is a, fresh word free from legal technicality.
(1) , 332.
363 It is the widest word that could be chosen.
The Legislature avoided saying 'shall be assessed as ' or I shall be brought into the computation of profit and loss , and simply says that something which is not profit but mere payment shall be treated as profit, which it c may or may not be, and as profit for the year.
I think, therefore, that the word treated is an apt word to impose a charge ".
See also in this connection Olive and Partington Ltd. vs Rose (1).
These cases were relied on by Chakravarti, C. J., and Lahiri, J., in the judgment under appeal, and the learned Judges pointed out that the addition of the words " for the purposes of assessment to income tax and super tax " rather strengthen the reasoning in its application to the words of the Indian Statute.
We agree with this statement.
It is to be noticed that the sub section creates two fictions.
By the first fiction it makes the amount of any repayment ' income ' for the purposes of the Indian Income tax Act, and goes on to say that that ' income ' shall be ' treated ' for purposes of assessment to income tax and super tax, as the income of the previous year.
Mr. Mitra, for the Company contends that no doubt the amount may be treated as 'income ' for the purposes of the Indian Income tax Act, but the Department is still under a duty to prove that the Company is liable to tax at all.
According to him, this will have to be treated as income received outside the taxable territory, because if the fiction contemplated its being treated as 'within the taxable territory ', it would have said so specifically.
In our opinion, this submission cannot be accepted.
That this would have been taxable income but for the provisions of section 12(2) of the Excess Profits Tax Act, goes without saying.
The income character of the receipt is restored by the fiction, and it is to be brought under assessment without any further proof than this that it has been received as repayment of the United Kingdom tax, in respect of which a deduction was made in the earlier years.
The distinction between (1) 364 incomes within and without taxable territories is made unnecessary by demanding that this amount by way of repayment shall be brought to tax and ' treated ' as income within the previous year.
The effect thus is that the sub section charges the said amount with a liability to tax by its own force or to borrow the words of Lord Sumner, is apt to ' impose a charge '.
In our opinion, the amount received as repayment of excess profits tax must be deemed to be 'income ' for the purposes of the Indian Income tax Act and for assessment it must be treated as income of the previous year.
The answer to question No. 1 given by the Calcutta High Court was thus correct.
The appeal fails, and is dismissed with costs.
Appeal dismissed.
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The appellant carried on business in England and in India.
For the previous years it paid excess profits tax in both countries and it obtained deduction of the amounts so paid from its profits and gains for the purposes of the Indian Income tax Act.
In the assessment year 1947 48 it obtained a repayment of RS.
2,31,009 out of the excess profits tax paid in England.
The Income tax authorities acting under section 11(14), Indian Finance Act 1946, included this amount received in England in the taxable profits of the appellant.
The appellant contended that the repayment not being within the taxable territory it could not be taxed.
Held, that the amount received as repayment of the excess profits tax was rightly taxed.
Under section 11(14) the amount of repayment was deemed to be 'income ' for purposes of the Indian Income tax Act and that ' income ' was to be treated as the income for the previous year during which the repayment was made.
Section 11(14) created a liability irrespective of the considerations arising from the general provisions of the income tax law.
The distinction between incomes within and without taxable territories was made unnecessary by section 11(14).
Eglinton Silica Brick Co. Ltd. vs Maryian, (1924) 9 Tax Cas. 92; A. & W. Nesbitt Ltd. vs Mitchell, (1926) " Tax Cas. 217 and Kirke 's Trustees vs The Commissioners of lnland Revenue, , applied.
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No. 1275 of 1989 etc.
(Under Article 32 of the Constitution of India).
Ms. Rani Chhabra, K. Ramkumar, Govind Mukhoty and Vimal Dave for the Petitioners.
M.K. Ramamurthy (NP), K.K. Venugopal, H.S. Gururaj Rao, Ms. Chandan Ramamurthi, M.A. Krishnamurthi, T.V.S.N. Chaff, section Markandeya, W.A. Nomani, G.S. Giri Rao and A.K. Raina for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
These are petitions under article 32 of the Constitution.
Petitioners are promotee Engineers of the Roads & Buildings Wing of the Andhra Pradesh Engineering Service and challenge mainly is to certain earlier decisions of this Court resolving similar disputes by judgments ren dered in writ petitions and to the guidelines formulated by the State Government in the matter or ' the drawing up of the seniority list by way of implementation of this Court 's directions.
705 Facts are not in dispute.
Shortly stated, under the Rules substantive vacancies in the category of Assistant Engineers have to be filled up from two sources 37 I/2 per cent by direct recruitment and the remainder of 62 1/2 per cent by transfer of Supervisors and Draughtsmen and by promotion of Junior Engineers.
Regular direct recruitment had not been made as and when due and promotees beyond the limit had been put in in the place of direct recruits.
While disposing of a group of petitions in a contest of this type in K. Siva Reddy & Ors.
vs State of A.P. & Ors.
, ; , a two Judge Bench of this Court instead of disturbing the entire group of promotee Engineers in excess of the quota, made the following direction: "Reopening the question of inter se seniority on the basis of non enforcement of the rules from the very beginning may create hardship and that would be difficult to mitigate but we see no justification as to why the benefit of the scheme under the rules should not be made available to direct recruits at least from 1982.
When the State Government by rules duly framed prescribed the method of recruitment and put the scheme into operation it had the obligation to comply with it.
The explanation offered by the State Govern ment for non compliance of the requirements of the rules does not at all impress us.
We, therefore, direct that as on December 31, 1982, the State Government must ascertain the exact substantive vacancies in the category of Assistant Engineers in the service.
On the basis that 37 1/2 per cent of such vacancies were to be filled up by direct recruit ment, the position should be worked out.
Promotees should be confined to 62 1/2 per cent of the substantive vacancies and in regard to 371/2 per cent of the vacancies the shortfall should be filled up by direct recruitment.
General Rules shall not be applied to the posts within the limits of 37 1/2 percent of the substantive vacancies and even if promo tees are placed in those posts, no seniority shall be count ed.
The State Government shall take steps to make recruitment of the shortfail in the direct recruitment vacancies within the limit of 37 1/2 per cent of the total substantive vacan cies up to December 31, 1987 within four months from today by following ,the normal method of recruitment for direct recruits.
The seniority list in the cadre of Assistant Engineers shall be redrawn up, as directed by the Tribunal, by the end of September 1988, keeping the directions re ferred to above in view.
There 706 shall be a direction issued to the State of Andhra Pradesh to make recruitment to the category of Assistant Engineers by strict compliance of Special Rules henceforth.
" The State Government came forward to implement the direction and published the draft seniority list drawn up on the basis of discussed guidelines.
Keeping the directions in view the draft list placed the 1982 direct recruits from serial nos.
234 to 269 without disturbing promotees upto serial No. 233 and the remainder of promotees given promo tion prior to 1982 were placed against serial nos.
270 to 300.
Writ petition No. 369 of 1989 C. Radhakrishna Reddy & Ors.
vs State of A. P. & Ors., had earlier raised the same dispute.
By judgment dated November 10, 1989, while dismiss ing the said writ petition a two Judge Bench of this Court said: "In Siva Reddy 's case this Court found that promotees had exceeded the quota and even got regularised in respect of the posts in excess of the limit.
Taking into consideration the fact that regularisation had been done after the promo tees had put in some years of service and disturbing regu larisation would considerably affect the officers concerned, regularisation was not interfered with.
This Court 's inten tion obviously was not to take away the benefit of regulari sation in respect of the officers belonging to the promotee group in excess of their quota but the Court did not intend to allow such regularised officers in excess of the quota to also have the benefit of such service for purposes of sen iority.
A reading of the judgment in Siva Reddy 's case clearly indicates that this Court intended what the Govern ment have laid down by way of guideline.
We see no justifi cation to interfere with the Government direction.
A draft seniority list on the basis of such direction has already been drawn up and has been circulated.
We are told that objections have been received and would be dealt with in usual course by the appropriate authorities.
This writ petition had been entertained in view of the allegation that the Government direction was on a misconception of what was indicated in the judgment and in case there was any such mistake the same should be rectified at the earliest.
Now that we have found that the Government order is in accord with the Court direction, this writ petition must be dis missed and individual grievances, if any, 707 against the draft seniority list would, we hope, be consid ered on the basis of objections filed by the competent authority.
" At the hearing Mr. Mukhoty, appearing in support of the main petition, vehemently contended that serious injustice had been done to the promotees and accrued rights of theirs had been disturbed.
He submitted that some of the direct recruits had been given the benefit of seniority by counting service prior to their actual recruitment and relied upon observations made by this Court in some cases to the effect that for computation of length of service the period prior to selection was being counted by a deeming position of employment prior to recruitment.
When called upon to sub stantiate his allegation, he has not been able to do so.
On the other hand, the Court had taken a very equitable view in not disturbing the regularisation contrary to the quota and had taken every care to ensure that the cause of justice was not made to suffer and a balance was maintained by an appro priate admixture of relief by confining the reconsideration for a period after 1982.
The year 1982 was fixed, as the reasonings indicate, on account of two features (i) that regular disputes had been raised from that time; and (ii) a period of 5 6 years was not too long a period to give rise to a sense of conclusiveness generated by long lapse of time.
The promotee Engineers should have been happy and thankful to their lot that their regularisation was not disturbed and even seniority prior to 1982 was not being affected.
Oblivious of these benefits which they have re tained though acquired out of turn, they have proceeded on the footing that their cause has been affected and justice to them has been denied by placing a group of them below the 1982 recruits.
We do not think that for dismissing this group of petitions anything more should be said excepting to quote with approval what this Court had said in Dr. G. Marulasiddaiah vs Dr. T.G. Siddapparadhya & Ors., ; "The canker of litigiousness has spread even to a sphere of life where discipline should check ambition concerning personal preferment.
" A government servant is justified in taking legal action when he feels that a stigma or punishment is undeserved but he is expected to bear with fortitude and reconcile himself to his lot suppressing disappointment when he finds a co worker raised to a position which he himself aspired after.
708 Ordinarily, we would have awarded exemplary costs but with a view to allowing an appropriate reconciliation of the petitioners to their lot and not to give them a feeling of infliction of any new injury, we refrain from doing so.
P.S.S. Petitions dis missed.
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Sub rule 3(a) of rule 3 of the Andhra Pradesh (Roads and Buildings) Engineering Service Rules, 1965 prescribes that the substantive vacancies in the category of Assistant Engineers 37 1/2 per cent shall be filled up by direct recruitment and the remaining 62 1/2 per cent by transfer and promotion of junior officers.
In K. Siva Reddy vs State of Andhra Pradesh, ; , filed by direct recruits, the Court had directed the State Government to ascertain the exact sub stantive vacancies in the category of Assistant Engineers in the service as on December 31, 1982, work out the quota prescribed under rule 3(3)(a) of the Rules and draw up a seniority list accordingly.
In the draft seniority list drawn up by the State Gov ernment on the basis of the guidelines, it placed the 1982 direct recruits from serial Nos.
234 to 269 without disturb ing promotees upto serial No. 233 and the remainder of promotees given promotion prior to 1982 were placed against serial Nos. 270 to 300.
In C. Radhakrishna Reddy vs State of A.P., W.P. No. 369 of 1989 decided on November 10, 1989 the Court found the said list in accord with the directions.
In these writ petitions preferred by the promotee As sistant Engineers, it was contended for them that serious injustice had been done to them as the accrued rights of theirs had been disturbed and some of the direct recruits had been given the benefit of seniority above them by count ing service prior to their actual recruitment.
Dismissing the writ petitions, the Court, HELD: 1.
A Government servant is justified in taking legal action 704 when he feels that a stigma or punishment is undeserved but he is expected to bear with fortitude and reconcile to his lot suppressing disappointment when he finds a co worker raised to a position which he himself aspired after.
[707G] Dr. G. Marulasiddaiah vs Dr. T.G. Siddapparadhya & Ors., ; , referred to.
In K. Siva Reddy 's case, the Court had taken a very equitable view in not disturbing the regularisation contrary to the quota and had taken every care to ensure that the cause of justice was not made to suffer and a balance was maintained by an appropriate admixture of relief by confin ing the reconsideration for a period after 1982.
The year 1982 was fixed on account of two features, (i) that regular disputes had been raised from that time, and (ii) a period of 5 6 years was not too long a period to give rise to a sense of conclusiveness generated by long lapse of time.
The promotee engineers should have been happy and thankful to their lot that their regularisation was not disturbed and even seniority prior to 1982 was not being affected though they had acquired these benefits out of turn.
[707C E]
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ivil Appeal No. 2368 of 1986 Etc. 656 From the Judgment and Order dated 30.5.1986 of the Delhi High Court in CW No. 1295 of 1986.
K.K. Venugopal, A.K. Ganguli, Yogeshwar Prasad, P.R. Seetharaman, S.K. Gupta and A.K. Srivastava for the Appel lants.
Soli J. Sorabjee, Attorney General, Kapil Sibbal, Addi tional Solicitor General.
G.L. Sanghi, section Ganesh, Mrs. Sushma Suri, EMS Anam, Atul Namda.
Aman Vachher, S.K. Mehta, Kailash Vasdev and S.R. Srivastava for the Respondents.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
The common question which arises for consideration in these appeals, by special leave, and the writ petition filed under Article 32 of the Constitution is, whether a person who was inducted as a tenant in premises, which are public premises for the purpose of the (hereinafter referred to as the 'Public Premises Act '), and whose tenancy has expired or has been terminated, can be evicted from the said premises as being a person in unautho rised occupation of the premises under the provisions of the Public Premises Act and whether such a person can invoke the protection of the Delhi Rent Control Act, 1958 (hereinafter referred to as the 'Rent Control Act ').
In short, the ques tion is, whether the provisions of the Public Premises Act would override the provisions of the Rent Control Act in relation to premises which fall within the ambit of both the enactments.
Civil Appeals Nos. 2368 and 2369 of 1986 relate to the premises which are part of a building situated at 5 Parlia ment Street, New Delhi.
The said building originally be longed to Punjab National Bank Ltd., a banking company.
Ashoka Marketing Ltd. (Appellate No. 1 in Civil Appeal No. 2368 of 1986) and M/s Sahu Jain Services Ltd. (Appellant No. 1 in Civil Appeal No. 2369 of 1986) were tenants of premises located in the said building since July 1st, 1958.
As a result of the enactment of the Banking Companies (Acquisi tion and Transfer of Undertakings) Act.
1970 (hereinafter referred to as the 'Banks Nationalisation Act '), the under taking of the Punjab National Bank Ltd., was transferred and vested in Punjab National Bank a body corporate constituted under the provisions of the said Act and the aforesaid appellants became the tenants of Punjab National Bank.
By notices dated May 18, 1971 issued under Section 106 of the Transfer of Property Act, the tenancies of both the appel lants were terminated by 657 Punjab National Bank, with effect from, November, 30, 1971.
Thereafter, the said Bank initiated proceedings under the Rent Control Act against both the appellants.
In those proceedings an objection was raised by the said appellants that proceedings for eviction under the Rent Control Act were not maintainable in view of the provisions contained in the Public Premises Act.
During the pendency of the said proceedings under the Rent Control Act, proceedings were initiated by the Estate Officer against the appellants under the provisions of the Public Premises Act and while the said proceedings under Public Premises Act were pending the earlier proceedings initiated under the Rent Control Act were dismissed by the Additional Rent Controller, Delhi, by orders dated August 6, 1979.
In the proceedings, under the Public Premises Act, the Estate Officer passed orders for eviction against the appellants and the appeals filed by the appellants against the said orders of the Estate Officer were dismissed by the Additional District Judge.
Delhi.
The appellants filed writ petitions under Article 226 of the Constitution, in the Delhi High Court.
The said writ peti tions were dismissed by the High Court by orders dated May 30, 1986.
Aggrieved by the said orders of the High Court, the appellants have filed these appeals after obtaining special leave to appeal.
Civil Appeal No. 3725 of 1986 relates to an office room in the Allahabad Bank Building situated at 17, Parliament Street, New Delhi.
The said building belongs to Allahabad Bank, a body corporate constituted under the provisions of the Banks Nationalisation Act.
The said premises were let out to Pt.
K.B. Parsai, the appellant in this appeal, for a period of three years with effect from, February 1, 1982.
After the expiry of the said period eviction proceedings under the provisions of the Public Premises Act were initi ated to evict the appellant and in those proceedings the Estate Officer passed an order dated March 29, 1986.
The appellant filed a writ petition under Article 226 of the Constitution, wherein he challenged the validity of the order passed by the Estate Officer.
The said writ petition was dismissed by the Delhi High Court by order dated August 7, 1986.
The appellant has filed this appeal against the said decision of the Delhi High Court after obtaining Spe cial Leave to Appeal.
Writ Petition No. 864 of 1985, relates to premises in the building located at 10, Darya Ganj, New Delhi.
The said building originally belonged to Bharat Insurance Company Limited, as Insurance Company which was carrying on life insurance business.
M/s Bennett Coleman & Co. Ltd., (peti tioner No. 1 in the writ petition) was in occupation of a part of the said property as a tenant under M/s Bharat 658 Insurance Co. Ltd. since 1948.
The life insurance business was nationalised under the whereby the Life Insurance Corporation was established and the life insurance business carried on by the various insurance companies, including M/s Bharat Insurance Company Ltd., was nationalised and vested in the Life Insurance Corporation.
As a result petitioner No. 1 became a tenant of the Life Insurance Corporation.
The Life Insurance Corpora tion gave a notice under Section 106 of the Transfer of Property Act terminating a tenancy of petitioner No. 1 with effect from, August 31, 1953 and thereafter proceedings for eviction were initiated against petitioner No. 1 under the provisions of the Public Premises Act and notices dated December 15, 1984 were issued by the Estate Officer under Section 4(1) and Section 7(3) of the Public Premises Act.
Feeling aggrieved by these notices the petitioners have filed the writ petition.
Before we proceed to deal with the submissions of the learned counsel for the appellants in the appeals and for the petitioners in the writ petition (hereinafter referred to as 'the petitioners ') it would be relevant to advert to the legislative history of Public Premises Act.
The Public Premises Act was preceded by two such enact ments.
The first enactments was the Government Premises (Eviction) Act, 1950 (hereinafter referred to as 'the 1950 Act ') which was enacted by Parliament to provide for the eviction of certain persons from Government premises and for certain matters connected therewith.
It was confined, in its application, to premises (a building or a part of a build ing) belonging to or taken on lease or requisitioned by the Central Government and it empowered the competent authority tO evict a person in unauthorised occupation of such prem ises after issuing a notice to such person.
The 1950 Act did not define the expression "unauthorised occupation" and it also did not prescribe the procedure to be followed by the competent authority before passing the order of eviction.
There was a provision for appeal to the Central Government against the order of the competent authority.
The 1950 Act was declared as unconstitutional by the Calcutta High Court (in Jagu Singh vs M. Shaukat Ali, and by the Punjab High Court (in Satish Chander & Anr.
vs Delhi Im provement Trust, Etc., AIR 1958 Punjab 1) on the ground that it imposed unreasonable restriction on the fight of the citizens to acquire, hold and dispose of property guaranteed under Article 19(1)(f) of the Constitution, and by the Allahabad High Court (in Brigade Commander, Meerut Sub Area vs Ganga Prasad, on the ground that it was violative 659 of the rights to equality guaranteed under Article 14 of the Constitution.
Thereupon Parliament enacted the Public Premises (Evic tion of Unauthorised Occupants) Act, 1958 (hereinafter referred to as 'the 1958 Act ').
In the 1958 Act, the defini tion of Public Premises was enlarged to include, in relation to the Union Territory of Delhi, premises belonging to Municipal Corporation of Delhi, or any municipal committee or notified area committee and premises belonging to Delhi Development Authority.
In the 1958 Act, the expression "unauthorised occupation" was defined.
It also laid down the procedure to be followed by the Estate Officer for evicting a person in unauthorised occupation of public premises and it made provision for filing an appeal against every order of the Estate Officer before the District Judge or such other Judicial Officer in that district of not less than ten years standing as the District Judge may designate in that behalf.
In Northern India Caterers Private Limited vs The State of Punjab & Anr., ; Section 5 of the Punjab Public Premises and Land (Eviction and Rent Recovery) Act, 1959 was held to be void by this Court on the ground that the said provision conferred an additional remedy over and above the remedy by way of suit and that by providing two alternative remedies to the Government and in leaving it to the unguided discretion of the Collector to resort to one or the other and to pick and choose some of those in occupa tion of public properties and premises for the application of the more drastic procedure under Section 5, the said provision was violative of Article 14 of the Constitution.
The provisions contained in the Punjab Act were similar to those contained in the 1958 Act.
Keeping in view the deci sion of this Court in Northern India Caterers Private Limit ed 's case (supra), Parliament enacted Public Premises (Eviction of Unauthorised Occupants) Amendment Act, 1968 whereby the 1958 Act was amended and Section 10E was intro duced and a bar was created to the jurisdiction of civil court to entertain any suit or proceeding in respect of eviction of any person in unauthorised occupation of any public premises or the recovery of the arrears of the rent or damages payable under the provisions of the 1958 Act.
The Delhi High Court (in P.L. Mehra etc.
vs D.R. Khanna, etc., AIR 1971 Delhi 1)held that whole of the 1958 Act was void under Article 15(2) being violative of the provisions of Article 14 of the Constitution and the amendment of 1968 was ineffective This led to the enactment of the Public Premises Act by Parliament in 1971.
It was brought into effect from 16th September, 1958, 660 the date on which the 1958 Act came into force.
The provi sions of the Public Premises Act are similar to those con tained in the 1958 Act.
The definition of 'public premises ' contained in Section 2(e) of the Public Premises Act has been widened so as to include premises belonging to or taken on lease by or on behalf of a company, as defined in Section 3 of the , in which not less than fifty one per cent of the paid up capital is held by the Central Government as well as premises belonging to or taken on lease by or on behalf of any corporation (not being a compa ny, as defined in Section 3 of the in 1956, or a local authority) established by or under a Central Act and owned and controlled by the Central Government.
It contains certain additional provisions, providing for offences and penalties (Section 11), liability of heirs and representa tives (Section 13) recovery of rent etc.
as an arrear of land revenue (Section 14) and bar of jurisdiction of Courts (Section 15).
The validity of the Public Premises Act was upheld by this Court in Hari Singh & Ors.
vs The Military Estate Officer & Anr., 15.
The Public Premises Act was amended in 1980 by the Public Premises (Eviction of Unauthorised Occupants) Amend ment Act, 1980, whereby the definition of 'public premises ' in Section 2(e) was amended to include premises belonging to or taken on lease by or on behalf of certain autonomous and statutory organisations, viz., any University established or incorporated by any Central Act, any Institute incorporated by the , any Board of Trustees constituted under the major Port Trusts Act, 1963, and the Bhakra Management Board and as well as premises belonging to or taken on lease by any Company which is subsidiary of a Company as defined in Section 3 of the in which not less than fifty one per cent of the paid up capital is held by the Central Govern ment.
By the said Amending Act of 1980, the total period taken in eviction proceedings was also sought to be cur tailed by reducing the period for showing cause against notice of eviction, the period within which an unauthorised occupant should vacate the premises after eviction order has been passed and the period for filing an appeal against the order of an Estate Officer.
By the said Amending Act of 1980 provisions were also made, by inserting Sections 5A, 5B and 5C, to deal with the squatting or spreading of goods on or against or in front of any public premises and removal of unauthorised constructions or encroachments on public prem ises.
The Public Premises Act was further amended in 1984 by the Public Premises (Eviction of Unauthorised Occupants) Amendment Act, 1984 whereby certain further amendments were made to provide for increased penalties and 661 making the offences under the Act cognisable and to enable the Estate Officers to exercise their powers under the Act effectively.
As stated in the preamble, the Public Premises Act has been enacted to provide for the eviction of unauthorised occupants from public premises and, for certain incidental matters.
In Section 2, various expressions have been de fined.
The definitions of the following expressions which are of relevance are reproduced as under: "(c) "Premises" means any land or any building or part of a building and includes (i) the garden, grounds and out houses.
if any, appertaining to such building or part of a building, and (ii) any fitting affixed to such building or part of a building for the more beneficial enjoyment thereof;" "(e) "Public Premises" means (1) any premises belonging to, or taken on lease or requisi tioned by, or on behalf of, the Central Government, and includes any such premises which have been placed by that Government, whether before or after the commencement of the Public Premises (Eviction of Unauthorised Occupants) Amend ment act, 1980 under the control of Secretariat of either House of Parliament for providing residential accommodation to any member of the staff of that Secretariat; (2) any premises belonging to, or taken on lease by, or on behalf of, (i) any company as defined in Section 3 of the (1 of 1956) in which not less than fifty one per cent of the paid up share capital is held by the Central Government or any Company which is a subsidiary (within the meaning of the Act) of the first mentioned company, (ii) any corporation (not being a company as defined in Section 3 of the ( 1 of 1956), or a local authority) established by or under a Central Act and owned or controlled by the Central Government, 662 (iii) any University established or incorporated by any Central Act, (iv) any Institute incorporated by the Institutes of Tech nology Act, 1961 (59 of 1961); (v) any Board of Trustees constituted under the (38 of 1963); (vi) the Bhakra Management Board constituted under Section 79 of the Punjab Recoganisation Act, 1966 (31 of 1966) and that Board as and when renamed as the Bhakra Beas Management Board under Sub section (6) of Section 80 of the Act; and (3) in relation to the Union Territory of Delhi (i) any premises belonging to the Municipal Corporation of Delhi, or any municipal committee or notified area committee and (ii) any premises belonging to the Delhi Development Author ity, whether such premises are in the possession of, or leased out by the said Authority." "(g) "Unauthorised Occupation", in relation to any public premises, means the occupation by any person of the public premises without authority for such occupation, and includes the continuance by any person of the public premises after the authority (whether by way of grant or any other mode of transfer) under which he was allowed to occupy the premises has expired or has been expired for any reason whatsoever." Section 3 makes provision for appointment by Central Govern ment of gazetted officer of Government or officers of equal rank of the statutory authority as Estate Officers.
Section 4 relates to issue of show cause against order of eviction and provides as under: "(1) If the Estate Officer is of opinion that any persons are in unauthorised occupation of any public premises and that they should be evicted, the Estate Officer shall issue in the manner hereinafter provided a notice in writing calling 663 upon all persons concerned to show cause why an order of eviction should not be made.
(2) The notice shall (a) specify the grounds on which the order of eviction is proposed to be made; and (b) require all persons concerned, that is to say, all persons who are, or may be, in occupation of, or claim interest in, the public premises , (i) to show cause, if any, against the proposed order on or before such date as is specified in the notice, being a date not earlier than seven days from the date of issue thereof; and (ii) to appear before the Estate Officer on the date speci fied in the notice alongwith the evidence which they intend to produce in support of the cause shown, and also for personal hearing, if such hearing is desired.
(3) The Estate Officer shall cause the notice to be served by having it affixed on the outer door or some other con spicuous part of the public premises and in such other manner as may be prescribed, whereupon the notice shall be deemed to have been duly given to all persons concerned.
(4) Where the Estate Officer knows or has reasons to believe that any persons are in occupation of the public premises, then, without prejudice to the provisions of subsection (3), he shall cause a copy of the notice to be served on every such person by post or by delivering or tendering it to that person or in such other manner as may be prescribed.
" Section 5 relates to eviction of unauthorised occupants and provides as under ' "(1) If, after considering the cause, if any, shown by any person in pursuance of a notice under Section 4 and any evidence produced by him in support of the same and after personal hearing, if any, given under clause (b) of sub 664 section (2) of Section 4, the estate officer is satisfied that occupation of public premises is unauthorised, the estate officer may make an order of eviction, for reasons to be recorded therein, directing that the public premises shall be vacated on such date as may be specified in the order, by all persons who may be in occupation thereof or any part thereof, and cause a copy of the order to be af fixed on the outer door or some other conspicuous part of the public premises.
(2) If any person refuses or fails to comply with the order of eviction on or before the date specified in the said order or within fifteen days of the date of its publication under sub section (1) whichever is later, the estate officer of any other officer duly authorised by the estate officer in this behalf may after the date so specified or after the expiry of the period aforesaid, whichever is later, evict that person from, and take possession of the public premises and may, for that purpose, use such force as may be neces sary." Section 5A provides for removal of unauthorised construc tions/structures or fixtures, cattle or other animal from public premises.
Section 5B deals with demolition of unau thorised constructions.
Section 5C empowers the Estate Officer to seal unauthorised constructions.
Section 6 pro vides for disposal of property left on public premises by unauthorised occupants.
Section 7 empowers the Estate Offi cer to require payment of rent or damages on account of use and occupation of public premises alongwith interest by the person found in unauthorised occupation.
Section 8 lays down that an Estate Officer shall, for the purpose of holding any inquiry under the Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, when trying to suit in respect of certain matters, viz. summoning and enforcing the attendance of any person and examining him on oath, requiring discovery and production of documents; and any other matter which may be prescribed.
Section 9 provides for an appeal from every order of the Estate Offi cer in respect of any public premises passed under Sections 5, 5B, 5C and 7 to an appellate officer who shall be a district judge of the district in which the public premises are situated or such other judicial officer in the district of not less than ten years ' standing as the district judge may designate in this behalf.
It also prescribes the period of limitation for filing such appeals and also lays down that the appeal shall be disposed of by the appellate offi cer as expeditiously as possible.
Sections 10 attaches finality to the orders 665 made by an Estate Officer or appellate officer and provides that the said orders shall not be called in questions in any original suit application or execution proceeding and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act.
Section 11 provides for offences and penalties and Section 11A lays down mat the offences under Section 11 would be treated as cognizable offences under the Code of Criminal Procedure, 1973.
Section 15 relates to bar of jurisdiction and it provides as under: "No court shall have jurisdiction to entertain any suit or proceeding in respect of (a) the eviction of any person who is in unauthorised occu pation of any such public premises, or (b) the removal of any building, structure of fixture or goods, cattle or other animal from any public premises under Section 5 A, or (C) the demolition of any building or other structure made, or ordered to be made, under Section 5B, or (cc) the sealing of any erection or work or of any public premises under Section 5 C, (d) the arrears of rent payable under sub section (1) of Section 7 or damages payable under sub section (2), or interest payable under sub section (2 A) of that section, (e) the recovery of (i) costs of removal of any building, structure or fixture or g.gods.
cattle or other animal under Section 5 A, or (ii) expenses of demolition under Section 5 B, or (iii) costs awarded to the Central Government or statutory authority under sub section (5) of Section 9, or (iv) any portion of such rent, damages, cost of removal, expenses of demolition or costs awarded to the Central Government or the statutory authority.
" 666 In exercise of the powers conferred by Section 18 of the Public Premises Act, the Central Government has made the Public Premises (Eviction of Unauthorised Occupants) Rule, 1971 (hereinafter referred to as the 'Public Premises Rules ').
Rule 5 of said Rules relates to holding of in quiries and Rule 9 relates to procedure in appeals.
We will first deal with the contentions urged by the learned counsel for the petitioners with regard to the scope of the definition of the expression 'Public Premises ' con tained in Section 2(e) and 'unauthorised occupation ', con tained in Section 2(g) of the Public Premises Act.
As mentioned earlier, the appeals relate to premises belonging to nationalised Banks, viz. Punjab National Bank and Allahabad Bank, constituted under the provisions of the Banks Nationalisation Act.
It has been urged by Shri Yogesh wer Prasad, that the premises belonging to a nationalised bank do not fall within the ambit of the definition of 'Public Premises ' contained in Section 2(e) of the Public Premises Act, for the reason that nationalised bank is not a company as defined in Section 3 of the and it is also not a corporation established by or under a Central Act.
The submission of the learned counsel for the respondent banks is that the nationalised bank is a corpora tion established by a Central Act, viz. the Banks Nationali sation Act, and the premises belonging to a nationalised bank are 'public premises ' under Section 2(e)(2)(ii) of the Public Premises Act.
The question which, therefore, requires to be considered is whether a nationalised bank is a corpo ration established by or under a Central Act and is owned or controlled by the Central Government.
The nationalised banks have been established under the Banks Nationalisation Act, wherein the nationalised banks have been described as 'corresponding new bank '.
In sub section (i) of Section 3 of the Banks Nationalisation Act, it has been provided that on the commencement of the said Act, there shall be constituted such corresponding new banks as are specified in the First Schedule.
In subsection (2) of Section 3, it is laid down that the paid up capital of every corresponding new bank constituted under sub section (1) shall, until any provision is made in this behalf in any scheme made under Section 9, be equal to the paid up capital of the existing bank in relation to which it is the corre sponding new bank.
Sub section(3) of Section 3 provides that the entire capital of the new bank shall stand vested in, and allotted to the Central Government.
Sub section (4) of Section 3 lays down that every corresponding new bank shall be a body corpo 667 rate with perpetual succession and a common seal with power, subject to the provisions of the said Act, to acquire, hold and dispose of property, and to contract, and may sue and be sued in its name.
From the aforesaid provisions contained in Section 3 of the Banks Nationalisation act it is evident that the nationalised banks have been established under the provisions of the said Act and the same are distinct juris tic persons with perpetual succession and the power to acquire, hold and dispose of property and to contract and having the right to sue and be sued in their own name and further that the entire capital of the said banks is vested in the Central Government, meaning thereby, that the said banks are owned by the Central Government.
Shri Yogeshwer Prasad has pointed out that, in view of Section 3(4) of the Banks Nationalisation Act, the nationa lised bank is a body corporate and not a corporation and that there is a distinction between a body corporate and a corporation inasmuch as a body corporate includes bodies, such as companies, co operative societies, etc., which are not corporations.
Reliance has been placed in this regard on the decision of Delhi High Court in Oriental Bank of Com merce and Another vs Delhi Development Authority and Anoth er, We find no substance in this contention.
In English law a corporation has been defined as "a body of persons or an office which is recognised by the law has having a personality which is distinct from the separate personalities of the members of the body or the personality of the individual holder for the time being of the office in question." (See Halsbury 's Laws of England, Fourth Edition, Volume 9, Para 1201).
Generally speaking, corporations are of two kinds; corporation aggregate and corporation sole.
A corporation aggregate has been described as an incorporated group of co existing persons and a corporation sole as an incorporated series of successive persons, (Salmond on Jurisprudence, 12th Edition P 308.
The distinctive feature of a corporation are that it has the capacity of continuous existence and succession, notwithstanding changes in its membership and it possesses the capacity of taking, holding and conveying property, entering into contracts.
suing and being sued, and exercising such other powers and priviledges conferred on it by law of its creation just as a natural person may (See S.S. Dhanoa vs Municipal Corporation, Delhi & Ors.
, ; Corporations aggregate may be public or private.
A public corporation is a corporation formed for a public purpose e.g. local government authori ties, and it is usually incorporated by a public general Act of Parliament.
A private corporation is a corporation formed for profit 668 e.g. a limited company, and it is usually incorporated under a statutory enactment.
After the second world war there has been development of a new pattern of public corporations in England as an instrument of planning in the mixed economy.
The general characteristics of such a public corporation is that it is normally created by a special statute; it has no shares and no shareholders either private or public, and its shareholder, in the symbolic sense, is the nation represent ed through Government and Parliament; the responsibility of the public corporation is to the Government, represented by the competent Minister and through the Minister to Parlia ment; the administration of the public corporation is en tirely in the hands of a board which is appointed by the competent Minister; and it has the legal status of a corpo rate body with independent legal personality.
(See W. Fried man: The New Public Corporations and the Law [1947] 12 Mod.
LR 234 236.) There is a similar growth of this type of public corporation in other countries.
This trend is also evident in our country since independence and a number of such public corporations have been constituted by Acts of Parliament.
The distinction between such a public corporation and a corporation generally known in law has been explained in the following observations of Denning L.J., as he then was: "The Transport Act, 1947, brings into being the British Transport Commission, which is a statutory corporation of a kind comparatively new to English law.
It has many of the qualities which belong to corporations of other kinds to which we have been accustomed.
It has, for instance, defined powers which it cannot exceed; and it is directed by a group of men whose duty it is to see that those powers are proper ly used.
It may own property, carry on business, borrow and lend money, just as any other corporation may do, so long as it keeps within the bounds which Parliament has set.
But the significant difference in this corporation is that there are no shareholders to subscribe the capital or to have any voice in its affairs.
The money which the Corporation needs is not raised by the issue of shares but by borrowings and its borrowing is not served by debentures; but is guaranteed by the Treasury.
If it cannot repay, the loss falls on the Consolidated Fund of the United Kingdom; that is to say, on the taxpayer.
There are no shareholders to elect the direc tors or to fix their remuneration.
There are no profits to be made or distributed." (Tamfin vs Hannaford, 669 Reference has already been made to the provisions of the Banks Nationalisation Act which show that the nationalised bank has been constituted as a distinct juristic person by the Act and it is owned by the Central Government.
There are other provisions in the Banks Nationalisation Act which show that the general superintendence, direction and management of the affairs of the business of the bank is vested in a Board of Directors constituted by the Central Government and the Central Government has the power to remove a person from the membership of the Board of Directors (Section 7(2) & 7(3) and in the discharge of its functions the Bank is to be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Governor of the Reserve Bank, give (Section 8).
This indicates that the nationalised bank has all the attributes of the new pattern of public corpora tion.
Merely because the expression 'body corporate ' has been used in relation to the nationalised banks in Section 3(4) of the Banks Nationalisation Act and the expression 'corpo ration ' has not been used, does not mean that the nationa lised bank is not a corporation.
The expression 'body corpo rate ' is used in legal parlance to mean a 'public or private corporation ' (Black 's Law Dictionary p. 159).
Shri Yogeshwer Prasad has urged that in order to consti tute a corporation there must exist persons, i.e. members, composing it, and that this element is missing in the natio nalised banks inasmuch as the Banks Natiolisation Act does not provide for any membership to these banks.
This conten tion is without any merit because, as noticed earlier, in the new pattern of public corporations which have developed, there are no shares and no shareholders, either public or private, and its shareholder, in the symbolic sense, is the nation represented through Government and Parliament.
A similar contention was raised before the High Court of Australia in the Bank of New South Wales & Ors.
vs The Commonwealth, in relation to the Common wealth Bank established as a body corporate by the Common wealth Bank Act, 1945.
While rejecting this contention, Latham C.J. has observed: "The Commonwealth Parliament has declared that the bank is a corporation and the Court must on this, as on many previous occasions, accept that the bank (though it has no corpora tors) exists as a new kind of juristic person." (p. 227) 670 Similarly Dixon J. has observed: "Although the Commonwealth Bank is declared to be a body corporate there are no corporators.
I see no reason to doubt the constitutional power of the Federal Parliament, for a purpose within its competence, to create a juristic person without identifying an individual or a group of natural persons with it, as the living constituent or constituents of the corporation.
In other legal systems an abstraction or even an inanimate physical thing has been made an artificial person as the object of rights and duties." (p. 36 1) It may also be mentioned that in R.C. Cooper vs Union of India, ; this Court, while referring to nationalised banks constituted under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969, has treated the nationalised banks as corporations.
While construing the expression 'corporation ' in Section 2(e) (2)(ii) of the Public Premises Act it cannot be ignored that the object of the legislation in enlarging the defini tion of 'public premises ' in Section 2(e) is to make avail able the machinery of the Act for evicting unauthorised occupants not only from the premises belonging to the Cen tral Government but also from premises belonging to Compa nies, Corporations and statutory bodies in which the Central Government has a substantial interest.
Under Section 2(e)(2)(i) premises belonging to a company incorporated under the , in which not less than fifty one per cent of the paid up capital is held by the Central Government, are to be treated as public premises.
It could not be the intention of Parliament that premises belonging to public corporations whose entire paid up capital vests in the Central Government and who are the instrumentalities of State would be excluded from the ambit of the definition of 'public premises '.
In our opinion,.
therefore, the expres sion 'corporation ' in Section 2(e)(2)(ii) of the Public Premises Act would include public corporations of the new pattern constituted under the Central Acts wherein the entire paid up capital vests in the Central Government.
Shri Yogeshwere Prasad has placed reliance on the deci sion of this Court in S.S. Dhanoa 's case (supra) wherein this Court has considered the question whether the Co opera tive Store Ltd., a cooperative society registered under the Bombay Co operative Societies is a corporation established by or under a Cen tral, Provincial or State Act, for the purposes of clause Twelfth of Section 21 of the Indian Penal Code.
This Court has observed that a corporation established by or under an Act of legislature could only mean a body corporate which owes its existence and not merely its corporate status to the Act and a distinction has been drawn between a corpora tion established by or under an Act and a body incorporated under an Act.
It has been held that the Co operative Store Ltd., which is a society registered under the Bombay Co operative Societies Act, 1925, is not a statutory body because it is not created by a statute and that it is a body created by an act of a group of individuals in accordance with the provisions of a Statute.
This decision does not lend any assistance to the contention of Shri Yogeshwer Prasad.
In Oriental Bank of Commerce 's case (Supra) the over ruled question for consideration was, whether the Chairman of a nationalised bank is a public servant and sanction under Section 197 of Code of Criminal Procedure was neces sary to prosecute him.
M.L. Jain, J. has held that the nationalised bank is a body corporate and not a corporation within the meaning of clause Twelfth of Section 21 I.P.C. and, therefore, the Chairman of the nationalised bank is not a public servant under Section 21 I.P.C.
The learned Judge has further held that even if the nationalised bank is a corporation, the Chairman of the said bank is not in the service or pay of the bank and further (in the facts of the case) it could not be said that the Chairman was acting or purporting to act in the discharge of official duty.
Sachar, J. did not consider it necessary to deal with the question, as to whether the nationalised bank is a corporation because he was of the view that Section 197 Cr.
P.C. was not at tracted.
For the reasons mentioned earlier, the judgment of Jian, J. insofar as it draws a distinction between a 'body corporate ' and a 'corporation ' and laws down that the natio nalised bank, though a 'body corporate ' is not a corpora tion, cannot be upheld.
The other reason given by Jain, J. is that the nationalised bank is merely a personified insti tution having no members and is, therefore, not a corpora tion.
This view also cannot be sustained.
We have already pointed out that in order to constitute a corporation it is not necessary that there should be shareholders or members and that in the new pattern of public corporation that has developed there are no shareholders or members.
Keeping in view the provisions of the Banks Nationalisa tion Act we are of the opinion that the nationalised bank is a corporation established by a Central Act and it is owned and controlled by the 672 Central Government.
The premises belonging to a nationalised bank are public premises under Section 2(e)(2)(ii) of the Public Premises Act.
We are, therefore, unable to accept the contention of Shri Yogeshwar Prasad that premises belonging to a nationalised bank do not fall within the ambit of the definition of 'public premises ' contained in Section 2(e) of the Public Premises Act.
Shri Yogeshwer Prasad has also urged that 'public prem ises ' as defined in Section 2(e) of the Public Premises Act, must be confined to premises let out for residential pur poses only and should not cover premises let out for commer cial purposes and that if premises let out for commercial purposes are included, Section 2(e) would be rendered uncon stitutional as being violative of the provisions of Articles 14, 19(1)(g) and 21 read with Articles 39 and 41 of the Constitution.
The submission of Shri Yogeshwer Prasad is that a construction which would sustain the constitutionali ty of the provisions of Section 2(e) should be preferred over a construction which would render them constitutional.
We find no force in this contention.
There is no warrant for confining the scope of the definition of 'public premises ' contained in Section 2(e) to premises used for residential purposes only and to excluded premises used for commercial purposes from its ambit.
In Hari Singh vs Military Estate Officer, (Supra) a similar contention was advanced and it was argued that the expres sion 'premises ' in Public Premises Act would not apply to agricultural land.
This Court rejected that contention with the observation: "The word 'premises ' is defined to mean any land.
Any land will include agricultural land.
There is nothing in the Act to exclude the applicability of the Act to agricultural land.
" We are also unable to hold that the inclusion of prem ises used for commercial purposes within the ambit of the definition of 'public premises ', would render the Public Premises Act as violative.of the right to equality guaran teed under Article 14 of the Constitution or right to free dom to carry on any occupation, trade or business guaranteed under Article 19(1)(g) of the Constitution or the right to liberty guaranteed under Article 21 of the Constitution.
It is difficult to appreciate how a person in unauthorised occupation of public premises used for commercial purposes, can invoke the Directive Principles under Article 39 and 41 of the Constitution.
As indicated in the 673 statement of Objects and Reasons the Public Premises Act has been enacted to provide for a speedy machinery for the eviction of unauthorised occupants of public premises.
It serves a public purpose, viz. making available, for use, public premises after eviction of persons in authorised occupation.
The need to provide speedy machinery for evic tion of persons in unauthorised occupation cannot be con fined to premises used for residential purposes.
There is no reason to assume that such a need will not be there in respect of premises used for commercial purposes.
No dis tinction can, therefore, be made between premises used for residential purposes and premises used for commercial pur poses in the matter of eviction of unauthorised occupants of public premises and the considerations which necessitate providing a speedy machinery for eviction of persons in unauthorised occupation of public premises apply equally to both the types of public premises.
We are, therefore, unable to accept the contention of Shri Yogeshwer Prasad that the definition of public premises contained in Section 2(e) of the Public Premises Act should be so construed as to exclude premises used for commercial purposes from its ambit.
Shri A.K. Ganguli, has urged that a person who was put in occupation of the premises as a tenant and who was con tinued in such occupation after the expiry or the termina tion of his tenancy cannot be regarded as a person in unau thorised occupation under Section 2(g) of the Public Prem ises Act.
The submission of Shri Ganguli is that, the occu pation of a person who was put in possession as a tenant is juridical possession and such an occupation cannot be re garded as unauthorised occupation.
In support of this sub mission, Shri Ganguli has placed reliance on the decision of the Bombay High Court in Brigadier K.K. Verma & Anr.
vs Union of India & Anr., A.I.R. 1954 Bombay 358 which has been approved by this Court in Lallu Yeshwant Singh vs Rao Jag dish Singh & Ors., ; The definition of the expression 'unauthorised occupa tion ' contained in Section 2(g) of the Public Premises Act is in two parts.
In the first part the said expression has been defined to mean the occupation by any person of the Public premises without authority for such occupation.
It implies occupation by a person who has entered into occupa tion of any public premises without lawful authority as well as occupation which was permissive at the inception but has ceased to be so.
The second part of the definition is inclu sive in nature and it expressly covers continuance in occu pation by any person of the public premises after the au thority (whether by way of grant or any other mode of trans fer) under which he was allowed to occupy the premises has 674 expired or has been determined for any reason whatsoever.
This part covers a case where a person had entered into occupation legally under valid authority but who continues in occupation after the authority under which he was put in occupation has expired or has been determined.
The words "whether by way of grant or any other mode of transfer" in this part of the definition are wide in amplitude and would cover a lease because lease is a mode of transfer under the Transfer of Property Act.
The definition of unauthorised occupation contained in Section 2(g) of the Public Premises Act would, therefore, cover a case where a person has en tered into occupation of the public premises legally as a tenant under a lease but whose tenancy has expired or has been determined in accordance with law.
Brigadier K.K. Verma & Anr.
vs Union of India & Anr.
(Supra) was decided under the provisions of the Government Premises (Eviction) Act, 1950, which did not contain the definition of the expression 'unauthorised occupation '.
In that case it has been held that under the Indian law, the possession of a tenant who has ceased to be a tenant is protected by law and although he may not have the right to continue in possession, after the termination of the tenan cy, his possession is juridical and that possession is protected by statute, and therefore, an erstwhile tenant can never become a trespasser and his possession cannot be regarded as unauthorised occupation.
The learned Judges have also observed that unless the legislature had given indica tion of a clear intention that by the expression 'unautho rised occupation ' it meant not only person who had no title at all but also persons who are titled at the inception and whose title came to an end, it would not be proper to give an interpretation to the expression 'unauthorised occupa tion ' which would run counter to the principles of law which have been accepted in this country.
After this decision the legislature intervened and introduced the definition of the expression 'unauthorised occupation ' in the , which defi nition has been reproduced in Section 2(e) of the Public Premises Act and in the said definition the legislature has taken care to make an express provision indicating that the expression 'unauthorised occupation ' includes the continu ance in occupation by any person of the public premises after the authority (whether by way of grant or any other mode of transfer) under which he was allowed to occupy the premises has expired or has been determined for any reason whatsoever.
In the circumstances the petitioners cannot derive any assistance from the decision of the Bombay High Court in Brigadier K.K. Verma 's case (supra).
675 Shri Ganguli has placed reliance on the decision of A.P. Sen, J. in Express Newspapers Pvt. Ltd. & Ors.
vs Union of India & Others, [1985] Suppt.
3 S.C.R. 382 and has submitted that in that case the learned Judge has held that cases involving relationship between the lessor and lessee fall outside the purview of the Public Premises Act.
We have carefully perused the said decision and we are unable to agree with Shri Ganguli.
In that case A.P. Sen, J. has observed that the new building had been constructed by the Express Newspapers Pvt. Ltd. after the grant of permission by the lessor, and, therefore, the Express Newspapers Pvt.
Ltd. was not in unauthorised occupation of the same within the meaning of Section 2(g) of the Public Premises Act.
It was also held by the learned Judge that the Express Building constructed by the Express Newspapers Ltd. with the sanction of lessor on plots Nos. 9 and 10 demised on perpetual lease can, by no process of reasoning, be regarded as public premises belonging to the Central Government under Section 2(e) of the Public Premises Act, and therefore, there was no question of the lessor applying for eviction of the Express Newspapers Pvt. Ltd. under the provisions of the Public Premises Act.
The aforesaid observations indicate that the learned Judge did not proceed on the basis that cases in volving relationship of lessor and lessee fall outside the purview of the Public Premises Act.
On the other hand the said observations show that the learned Judge has held that the provisions of the Public Premises Act could not be invoked in the facts of that case.
Another submission that has been urged by Shri Ganguli is that the question whether a tease has been determined or not involves complicated questions of law and the estate officer, who is not required to be an officer well versed in law, cannot be expected to decide such question and, there fore, it must be held that the provisions of the Public Premises Act have no application to a case when the person sought to be evicted had obtained possession of the premises as a lessee.
It is true that there is no requirement in the Public Premises Act that the estate officer must be a person well versed in law.
But, that, by itself, cannot be a ground for excluding from the ambit of the said Act premises in unauthorised occupation of persons who obtained possession of the said premises under a lease.
Section 4 of the Public Premises Act requires issuing of a notice to the person in unauthorised occupation of any Public Premises requiring him to show cause why an order of eviction should not be made.
Section 5 makes provisions for production of evidence in support of the cause shown by the person who has been served with a notice under Section 4 and giving of a personal hearing by the estate officer.
Section 8 provides that an estate 676 officer, shall, for the purpose of holding any enquiry under the said Act have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, when trying a suit in respect of the matters specified therein namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring discovery and production of documents; and (c) any other matters which may be prescribed.
Rule 5(2) of the Public Premises (Eviction of Unautho rised Occupants) Rules, 1971, requires the estate officer to record the summary of evidence tendered before him.
Moreover Section 9 confers a right of appeal against an order of the estate officer and the said appeal has to be heard either by the district judge of the district in which the public premises are situate or such other judicial officer in that district of not less than ten years ' standing as the dis trict judge may designate in that behalf.
In shows that the final order that is passed is by a judicial officer in the rank of a district judge.
A similar contention was raised before this Court in Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Others, ; wherein the validity of the provisions of Chapter VA of the Bombay Municipal Corporation Act, ' 1888 and the Bombay Government Premises (Eviction) Act, 1955 were challenged before this Court and the said contention was negatived.
Aligiriswami, J. speaking for the majority, has observed as under: "Even though the officers deciding these questions would be administrative officers there is provision in these Acts for giving notice to the party affected, to inform him of the grounds on which the order of eviction is proposed to be made, for the party affected to file a written statement and produce documents and be represented by lawyers.
The provi sions of the Civil Procedure Code regarding summoning and enforcing attendance of persons and examining them on oath, and requiring the discovery and production of documents are a valuable safeguard for the person affected.
So is the provision for appeal to the Principal Judge of the City Civil Court in the city of Bombay, or to a District Judge in the district who has got to deal with the 677 matter as expeditiously as possible, also a sufficient safeguard as was recognised in Suraj Mail Mehta 's case.
" Having dealt with the submissions of learned counsel for the petitioners on the applicability of the provisions of Public Premises Act, we may come to the main question in volved in these matters, namely, whether the provisions of the Public Premises Act override the provisions of the Rent Control Act.
For appreciating the submissions of the learned counsel on this question it is necessary to examine the provisions of both the enactments.
The relevant provisions of the Public Premises Act have already been set out.
We may briefly refer to the provisions of the Rent Control Act.
The Rent Control Act has been enacted by Parliament to provide for the control of rents and evictions and of rate of hotels and lodging houses and for the lease of vacant premises to Government, in certain areas in the Union Terri tory of Delhi.
It extends to the areas included within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and to such urban areas within the limits of the Municipal Corporation of Delhi as are specified in the First Schedule to the Act (Section 1(2).
The expression 'premises is defined in Section 2(i) as under: "Premises means any building or part of a building which is or, is intended to be, let separately for use as a residence or for commercial use or for any other purpose, and in cludes: (i) the garden, grounds and outhouses, if any,, appertaining to such building or part of the building; (ii) any furniture supplied by the landlord for use in such building or part of the building; but does not include a room in a hotel or lodging house.
" Section 3, which excludes the applicability of the Act to certain premises, provide as under: "Nothing in this Act shall apply: (a) to any premises belonging to the Government; (b) to any tenancy or other like relationship created by a 678 grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government Provided that where any premises belonging to Government have been or are lawfully let by any person by virtue of an agreement with the Government or otherwise, then, notwith standing any judgment, decree or order of any court or other authority, the provisions 'of this Act shall apply to such tenancy.
(c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees; or (d) to any premises constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988, for a period of ten years from the date of completion of such construction." Chapter II (Sections 4 to 13) contains provisions re garding rent including fixation of standard rent.
Chapter III (Sections 14 to 25) contains provisions for control of eviction, of tenants.
Section 14 gives protection to tenants against eviction and provides that an order for eviction of a tenant can be passed only on one or more of the grounds mentioned in clauses (a) to (1) of sub section (1).
Special provisions have been made for recovery of immediate posses sion of premises in Sections 14A to 14D in respect of cer tain classes of landlords.
Section 22 contains a special provision for recovery of possession of premises where the landlord is a company or a body corporate or a local author ity or a public institution if the premises are required for the use of employees of such landlord or, in the case of a public institution, for the furtherance of its activities.
In Chapter IIIA (Sections 25 A to 25 C) provisions have been made for summary trial of certain applications for eviction on the ground of bona fide requirement of the landlord.
Chapter IV (Sections 26 to 29) contains provisions relating to deposit of rent.
Chapter V (Sections 30 to 34) contains provisions relating hotels and lodging houses.
Chapter VI (Sections 35 to 43) contains provisions relating to appoint ment of controllers and their powers and functions and appeals.
Section 42 makes provisions for execution of orders passed by the Controller or in appeal, as a decree of civil court.
Section 43 attaches finality to the order passed by the Controller and the order passed in appeal.
Chapter VII (Sections 44 to 49) contains provisions regarding special obligations of landlords and 679 penalties.
Chapter VIII (Sections 50 to 57) contains miscel laneous provisions.
Under Section 50 jurisdiction of civil courts is barred in respect of matters specified therein.
Section 54 saves the operation of certain enactments, name ly, , the and the Delhi Tenants (Temporary Protection) Act, 1956.
On a comparison of the provisions of the Public Premises Act and the Rent Control Act it will be found that: 1.
By virtue of Section 1(2) of the Public Premises Act, the said Act is applicable throughout the territory of India, whereas, view of Section 1(2) of the Rent Control Act, the said Act is confined in its application to areas included within the limits of the New Delhi Municipal Com mittee and the Delhi Cantonment Board and to such urban areas within the limits of the Municipal Corporation of Delhi as are specified in the First Schedule and any other urban area included within the limits of the Municipal Corporation of Delhi to which provisions of the said Act are extended by the Central Government by notification in the Official Gazette.
(2) Under Clauses (c) of Section 2 of the Public Premises Act, the expression 'premises ' has a wider connotation and it includes open land as well as building or part of a building.
Under the Rent Control Act the expression 'prem ises ' as defined in clause (i) of Section 2 has a narrower connotation to mean any building or a part of building and it does not cover open land.
In view of the definition of the expression 'public premises ' contained in clause (e) of Section 2 of the Public Premises Act, the said Act, in addition to the premises belonging to or taken on lease or requisitioned by, or on behalf of, the Central Government, is applicable to premises belonging to or taken on lease by or on behalf of the compa nies and statutory bodies mentioned in clauses (2) and (3) of Section 2(e).
The Rent Control Act, on the other hand, is applicable to all premises except premises belonging to the Government or to any tenancy or other like relationship created by a grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government (Section 3).
In view of the amendment introduced in Section 3 by the Delhi Rent Con 680 trol Act is not applicable to premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees and premises constructed on or after the commencement of the said Amendment Act, for a period of ten years from the date of completion of such construction.
The provisions of the Public Premises Act are applica ble to Public Premises in occupation of a person having no authority for such occupation, including a person who was allowed to occupy the public premises under a grant or any other mode of transfer and who has continued in occupation after the authority under which he was allowed to occupy that premises has expired or has been terminated.
The provi sions of the Delhi Rent Control Act are applicable only to persons who have obtained possession of the premises as tenants and whose tenancy is continuing as well as persons who after the expiration or termination of the tenancy have continued in occupation of the premises.
As a result of this comparison it can be said that certain premises, viz. building or parts of buildings lying within the limits of the New Delhi Municipal Committee and the Delhi Cantonment Board and in urban areas within the limits of the Municipal Corporation of Delhi, which belong to or are taken on lease by any of the companies or statuto ry bodies mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act and which are in occupation of a person who obtained possession of the said premises as a tenant and whose tenancy has expired or has been terminated but who is continuing in occupation of the same, would ex facie fall within the purview of both the enactments.
The question which, therefore, arises is whether the occupant of such premises can seek the protection available under the provisions of Rent Control Act and he can be evicted from the premises only in accordance with the said provisions and proceedings for eviction of such a person cannot be initiat ed under the provisions of the Public Premises Act.
Shri Venugopal and other learned counsel representing the petitioners have urged that the Rent Control Act is a self contained code providing for regulating the relation ship of landlords and tenants and it makes comprehensive provisions with regard to control of rents as well as evic tion of tenants and that the provision of the Rent Control Act, being special in nature insofar as lease hold proper ties in Delhi are concerned, would prevail over the provi sions of the Public 681 Premises Act which are in the nature of general provisions relating to eviction of unauthorised occupants from Govern ment premises in the whole country.
In support of this submission the learned counsel for the petitioners have placed reliance on Sections 22 and 54 and the non obstante clause contained in Section 14(1) of the rent Control Act.
It has also been urged by the learned counsel for the peti tioners that the Public Premises Act does not contain any machinery for the termination of the tenancy and that in view of the decision of this Court in V. Dhanapal Chettiar vs Yesodai Ammal, ; , the jural relationship of landlord and tenant can come to an end only on the pass ing of an order of eviction by a competent court in accor ding with the provisions of the Rent Control Act and that in the absence of an order of eviction under the provisions of the Rent Control Act no proceedings can be initiated against a person who came into occupation of the premises as a tenant and who is continuing in occupation of the said premises after the contractual tenancy has expired or has been terminated.
The learned Attorney General and Shri G.L. Sanghi, appearing on behalf of the respondents in the appeals, have urged that the Public Premises Act is in the nature of a special enactment making provision for speedy and expedi tious recovery of possession of public premises from persons in unauthorised occupation of the same whereas the Rent Control Act is general enactment regulating the relationship of landlord and tenant and since the Public Premises Act is a special enactment it would override the provisions of the Rent Control Act.
It has also been urged that the Public Premises Act is a later enactment, having been enacted in 1971, whereas the Rent Control Act was enacted in 1958, and, therefore, the Public Premises Act would prevail over the Rent Control Act.
It has been urged that Section 15 of the Public Premises Act which bars the jurisdiction of other Courts is in the nature of a non obstante clause which gives overriding effect to the provisions of the Public Premises Act.
The learned Addl.
Solicitor General, appearing for the respondents in the writ petitions, has adopted a different line of argument.
He has contended that the Public Premises Act had been enacted by Parliament in exercise of its legis lative power under Article 246(1) read with entries 32, 95 and 97 of List I of the Seventh Schedule to the Constitution whereas the Rent Control Act has been enacted by Parliament in exercise of its legislative power under Article 246(4) read with entries 6, 7 and 13 of List III of the Seventh Schedule to the Constitution and since the Public Premises Act has been enacted in 682 exercise of the legislative power under Article 246(1) of the Constitution, it would prevail over the Rent Control Act enacted in exercise of legislative power under Article 246(4) of the Constitution.
At this stage, it may be mentioned that in Jain Ink Manufacturing Company vs Life Insurance Corporation of India & Another, ; decided by a bench of three Judges, it has been held that the Public Premises Act over rides the provisions of the Delhi Rent Control Act.
In that case it has been observed that the scope and object of the Public Premises Act is quite different from that of Rent Control Act and while the Public Premises Act operates in a very limited field in that it applies only to a limited nature of premises belonging only to particular sets of individuals, a particular set of juristic persons like Companies, Corporations or the Central Government, whereas the Rent Control Act is of much wider application and it applies to all private premises which do not fall within the limited exceptions indicated in Section 2 of the Public Premises Act and the object of the Rent Control Act is to afford special protection to all the tenants or private landlords or landlords who are neither a Corporation nor Government or Corporate Bodies.
It was, therefore, held that the Public Premises Act is a special Act as compared to the Rent Control Act and it overrides the provisions of the Rent Control Act.
The learned counsel for the petitioners have assailed the correctness of the said decision and have submitted that it needs reconsideration.
As regards rent control legislation enacted by the State legislatures the position is well settled that such legisla tion fall within the ambit of entries 6, 7 and 13 List III of the Seventh Schedule to the Constitution (See: Indu Bhushan Bose vs Rama Sundari Devi & Another, ; ; V Dhanpal Chettiar 's case (supra); Jai Singh Jairam Tyagi etc.
vs Mamanchand Ratilal Agarwal & Others, ; and Accountant and Secretarial Services Pvt. Ltd. & Another vs Union of India & Others, ; The Rent Control Act has been enacted by Parliament in relation to the Union Territory of Delhi in exercise of the legislative power conferred under Article 246(4) of the Constitution which empowers Parliament to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.
The Public Premises Act deals with Government property as well as property belonging to other legal entities men tioned in clauses (2) 683 and (3) of Section 2(e) of the Public Premises Act.
In so far as it relates to eviction of unauthorised occupants from premises belonging to or taken on lease or requisitioned by or on behalf of the Central Government the Public Premises Act would fall within entry 32 of List I being law with respect to a property of the Union.
The property belonging to the various legal entities mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act cannot be regarded as property of the Union and the Public Premises Act cannot be held to have been enacted under entry 32 of List I in respect of the said properties.
In Accountant and Secretarial Services Pvt. Ltd. and Another vs Union of India and Others, (supra) this Court has held that the Public Premises Act, in relation to properties other than the properties belonging to the Central Government has been enacted under the concurrent list.
The learned Additional Solicitor General has placed reliance on the decision of this Court in Smt.
Saiyada Mossarrat vs Hindustan Steel Ltd., ; wherein it has been held that with regard to the subject matter of speedy eviction of unautho rised occupants from properties belonging to a Government company, wherein the Central Government has more than fifty one per cent of the paid up capital, the source of authority can be traced to entry 97 read with entry 95 of Union List (List 1).
This Court has, however, affirmed the decision of the Division Bench of Madhya Pradesh High Court in L.S. Nair vs Hindustan Steel Ltd., AIR 1980 MP 106 wherein it has been held that insofar as the Public Premises Act deals with a lessee or licence of premises belonging to a Government company, the subject matter of the Act would be covered by entries 6, 7 and 46 of List III.
After quoting the observa tions of the Madhya Pradesh High Court in this regard, this Court has observed: "Learned counsel for the petitioner has not been able to show that there is any infirmity in the reasoning of the High Court." This shows that the decision of this Court is rounded on the view mentioned above.
Since the Act was held to be covered by entries 6, 7 and 46 of List III, it was not necessary to invoke the residuary power of legislation under entry 97 of List I.
The observations made by this Court that the source of authority in the matter of speedy eviction of unautho rised occupants from properties belonging to a Government company wherein the Central Government has more than fifty one per cent of the paid up share capital can, in any case, be traced to entry 97 read with entry 95 of List I are obiter in nature only.
There is, therefore, no inconsistency between the decisions of this Court in Accoun 684 tant and Secretarial Services Pvt.
Ltd. (supra) and Smt.
Saiyada Mossarrat case (supra) inasmuch as in both the decisions it is held that the Public Premises Act insofar as it deals with a lessee or licencee of premises other than premises belonging to the Central Government has been enact ed in exercise of the legislative powers in respect of matters enumerated in the Concurrent List.
We are in agree ment with this view.
This means that both the statutes, viz. the PubLic Premises Act and the Rent Control Act, have been enacted by the same legislature, Parliament, in exercise of the legis lative powers in respect of the matters enumerated in the Concurrent List.
We are, therefore, unable to accept the contention of the learned Additional Solicitor General that the Public Premises Act, having been enacted by Parliament in exercise of legislative powers in respect of matters enumerated in the Union List would ipso facto override the provisions of the Rent Control Act enacted in exercise of the legislative powers in respect of matters enumerated in the Concurrent List.
In our opinion the question as to whether the provisions of the Public Premises Act override the provisions of the Rent Control Act will have to be considered in the light of the principles of statutory interpretion applicable to laws made by the same legisla ture.
One such principle of statutory interpretation which is applied is contained in the latin maxim: leges posteriors priores conterarias abrogant, (later laws abrogate earlier contrary.
laws).
This principle is subject to the exception embodied in the maxim: generalia specialibus non derogant, (a general provision does not derogate from a special one).
This means that where the literal meaning of the general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one (Benion: Statutory Interpretation p. 433 34).
The rationale of this rule is thus explained by this Court in the J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs The State of Uttar Pradesh & Others, ; "The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers Judges but springs from the common understanding of man and women that when the same person gives two directions 685 one covering a large number of matters in general and anoth er to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier directions should have effect." (p. 94) In U.P. State Electricity Board & Ors.
vs Hari Shankar Jain & Ors., ; this Court has observed: "In passing a special Act, Parliament devotes its entire consideration to a particular subject.
When a General Act is subsequently passed, it is logical to presume that Parlia ment has not repealed or modified the former Special Act unless it appears that the Special Act again received con sideration from Parliament." (p. 366) In Life Insurance Corporation vs
D.J. Bahadur; , Krishna Iyer, J. has pointed out: "In determining whether a statute is a special or a general one, the focus must be on the principal subject matter plus the particular perspective.
For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with liner points of law." (p. 1127) The Public Premises Act is a later enactment, having been enacted on 23rd August, 1971, whereas the Rent Control Act was enacted on 31st December, 1958.
It represents the later will of Parliament and should prevail over the Rent Control Act unless it can be said that the Public Premises Act is a general enactment, whereas the Rent Control Act is a special enactment and being a special enactment the Rent Control Act should prevail over the Public Premises Act.
The submission of learned counsel for the petitioners is that the Rent Control Act is a special enactment dealing with premises in occupation of tenants, whereas the Public Prem ises Act is a general enactment dealing with the occupants of Public Premises and that insofar as public premises in occupation of tenants are concerned the provisions of the Rent Control Act would continue to apply and to that extent the provisions of the Public Premises Act would not be applicable.
In support of this submission reliance has been placed on the non obstante clauses contained in Section 14 and 22 of the Rent Control Act as well as the provisions contained in Sections 50 and 54 of the said Act.
On the 686 other hand the learned counsel for the respondents have urged that the Rent Control Act is a general enactment dealing with the relationship of landlord and tenant gener ally, whereas the Public Premises Act is a special enactment making provision for speedy recovery of possession of Public Premises in unauthorised occupation and that the provisions of the Public Premises Act, a later Special Act, will, therefore, override the provisions of the Rent Control Act in so far as they are applicable to Public Premises in occupation of persons who have continued in occupation after the lease has expired or has been determined.
The learned counsel for the respondents have placed reliance on Section 15 of the Public Premises Act which bars the jurisdiction of all courts in respect of the eviction of any person who is in unauthorised occupation of any Public Premises and other matters specified herein.
It has been submitted that the said provision is also in the nature of a non obstante clause which gives overriding effect to the provisions of the Public Premises Act.
Thus each side claims the enactment relied upon by it is a special statute and the other enact ment is general and also invokes the non obstante clause contained in the enactment relied upon.
The Rent Control Act makes a departure from the general law regulating the relationship of landlord and tenant contained in the Trnasfer of Property Act inasmuch as it makes provision for determination of standard rent, it specifies the grounds on which a landlord can seek the evic tion of a tenant, it prescribes the forum for adjudication of disputes between landlords and tenants and the procedure which has to be followed in such proceedings.
The rent Control Act can, therefore, be said to be a special statute regulating the relationship of landlord and tenant in the Union Territory of Delhi.
The Public premises Act makes provision for a speedy machinery to secure eviction of unau thorised occupants from public premises.
As opposed to the general law which provides for filing of a regular suit for recovery of possession of property in a competent Court and for trial of such a suit in accordance with the procedure laid down in the Code of Civil procedure, the Public Prem ises Act confers the power to pass an order or eviction of an unauthorised occupant in a public premises on a designat ed officer and prescribes the procedure to be followed by the said officer before passing such an order.
Therefore, the Public Premises Act is also a special statute relating to eviction of unauthorised occupants from public premises.
In other words, both the enactments, namely, the Rent Con trol Act and the Public Premises Act, are special statutes in relation to the matters dealt with therein.
Since, the Public premises Act is a special statute and not a general enactment the 687 exception contained in the principle that a subsequent general law cannot derogate from an earlier special law cannot be invoked and in accordance with the principle that the later laws abrogate earlier contrary laws, the Public Premises Act must prevail over the Rent Control Act.
We arrive at the same conclusion by applying the princi ple which is followed for resolving a conflict between the provisions of two special enactments made by the same legis lature.
We may in this context refer to some of the cases which have come before this Court where the provisions of two enactments made by the same legislature were found to be inconsistent and each enactment was claimed to be a special enactment and had a non obstante clause giving overriding effect to its provisions.
In Shri Ram Narain vs The Simla Banking and Industrial Co. Ltd., ; this Court was considering the provisions contained in the Banking Companies Act, 1949 and the .
Both the enactments contained provisions giving overriding effect to the provisions of the enactment over any other law.
This Court has observed: "Each enactment being a Special Act, the ordinary principle that a special law overrides a general law does not afford any clear solution in this case" (p. 613) "It is, therefore, desirable to determine the overriding effect of one or the other of the relevant provisions in these two Acts, in a given case, on much broader considera tions of the purpose and policy underlying the two Acts and the clear intendment conveyed by the language of the rele vant provisions therein." (p. 615) Similarly in Kumaon Motor Owners ' Union Ltd. and Another vs The State of Uttar Pradesh, 1 there was conflict between the provisions contained in Rule 131(2)(gg) and (i) of the Defence of India Rules, 1962 and Chapter IV A of the Motor Vehicle Act, 1939.
Section 68 B gave overriding effect to the provisions of Chapter IV(A) of the Motor Vehicle Act whereas Section 43 of the Defence of India Act, 1962, gave overriding effect to the provisions contained in the Defence of India Rules.
This Court held that the Defence of India Act was later than the Motor Vehicles Act and, therefore, if there was anything repugnant, the provisions of the later 688 Act should prevail.
This Court also looked into object behind the two statutes, namely, Defence of India Act and Motor Vehicles Act and on that basis also it was held that the provisions contained in the Defence of India Rules would have an overriding effect over the provisions of the Motor Vehicles Act.
In Sarwan Singh & Another vs Kasturi Lal, ; , the question for consideration was, whether the provi sions of Section 14A and Chapter IIIA of the Rent Control Act will prevail over those contained in Sections 19 and 39 of the .
Section 14A and 25A of the Rent Control Act contained non obstante clauses but in Section 54 of the Rent Control Act it was expressly provided that nothing in the said Act shall effect the provisions of the .
Moreover in Section 19 of the mere was non obstante clause and Section 39 of the said Act gave overrid ing effect to the provisions of the said enactment over any other Jaw.
This Court has observed: "When two or more laws operate in the same field and each contains a non obstante clause stating that its provisions will override those of any other law, stimulating and inci sive problems of interpretation arise.
Since statutory interpretation has no conventional protocol, cases of such conflict have to be decided in reference to the obeject and purpose of the laws under consideration." (p. 433) After examining the special and specific purpose under lying the enactment of Section 14A and Chapter IIIA of the Rent Control act and the fact that the Rent Control Act was a later enactment this Court held that the provisions of the Rent Control Act would prevail over those contained in the .
The principle which emerges from these decisions is that in the case of inconsistency between the provisions of two enactments, both of which can be regarded as Special in nature, the conflict has to be resolved by reference to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the relevant provisions therein.
We propose to consider this matter in the light of this principle.
The statement of objects and reasons for the enactment of the 689 Rent Control Act, indicates that it has been enacted with a view: (a) to devise a suitable machinery for expeditious adjudica tion of proceedings between landlords and tenants; (b) to provide for the determination of the standard rent payable by tenants of the various categories of premises which should be fair to the tenants, and at the same time, provide incentive for keeping the existing houses in good repairs, and for further investment in house construction; and (c) to give tenants a larger measure of protection against eviction.
This indicates that the object underlying the Rent Control Act is to make provision for expeditious adjudication of disputes between landlords and tenants, determination of standard rent payable by tenants and giving protection against eviction to tenants.
The premises belonging to the Government are excluded from the ambit of the Rent Control Act which means that the Act has been enacted primarily to regulate the private relationship between landlords and tenants with a view to confer certain benefits on the ten ants and at the same time to balance the interest of the landlords by providing for expeditious adjudication of proceedings between landlords and tenant.
As mentioned earlier, the Public Premises Act has been enacted with a view to provide for eviction of unauthorised occupants from public premises.
In the statement of objects and reasons for this enactment reference has been made to the judicial decisions whereby by the 1958 Act was declared as unconstitutional and it has been mentioned: "The court decisions, referred to above, have created seri ous difficulties for the Government inasmuch as the proceed ings taken by the various Estate Officers appointed under the Act either for the eviction of persons who are in unau thorised occupation of public premises or for the recovery of rent or damages from such persons stand null and void.
It has become impossible for Government to take expeditious action even inflagrant cases of unauthorised occupation of public premises and recovery of rent or damages for such unauthorised occupation.
It is, therefore, considered imper ative to restore a speedy machinery for the eviction of persons who are in unauthorised occupation 690 of public premises keeping in view at the same time the necessity of complying with the provision of the Constitu tion and the judicial pronouncements, referred to above." This shows that the Public Premises Act has been enacted to deal with the mischief of rampant unauthorised occupation of public premises by providing a speedy machinery for the eviction of persons in unauthorised occupation.
In order to secure this object the said Act prescribes the time period for the various steps which are enquired to be taken for securing eviction of the persons in unauthorised occupation.
The object underlying the enactment is to safeguard public interest by making available for public use premises belonging to Central Government, Companies in which the Central Government has substantial interest, Corpora tions owned or controlled by the Central Government and certain autonomous bodies and to prevent misuse of such premises.
It would thus appear that, while the Rent Control Act is intended to deal with the general relationship of landlords and tenants in respect of premises other than government premises, the Public Premises Act is intended to deal with speedy recovery of possession of premises of public nature, i.e. property belonging to the Central Government, or Compa nies in which the Central Government has substantial inter est or Corporations owned or controlled by the Central Government and certain corporations, institutions, autono mous bodies and local authorities.
The effect of giving overriding effect to the provisions of the Pubic Premises Act over the Rent Control Act, would be that buildings belonging to Companies Corporations and Autonomous bodies referred to in Section 2(e) of the Public Permises Act would be excluded from the ambit of the Rent Control Act in the same manner as properties belonging to the Central Govern ment.
The reason underlying the exclusion of property be longing to the Government from the ambit of the Rent Control Act, is that Government while dealing with the citizens in respect of property belonging to it would not act for its own purpose as a private landlord but would act in public interest.
What can be said with regard to Government in relation to property belonging to it can also be said with regard to companies, corporations and other statutory bodies mentioned in Section 2(e) of the Public Premises Act.
In our opinion, therefore, keeping in view the object and purpose underlying both the enactments viz., the Rent Control Act and the Public Premises Act, the provisions of the Public Premises Act have to be construed as overriding the provi sions contained in the Rent Control Act.
691 As regards the non obstante clauses contained in Sec tions 14 and 22 and the provisions contained in Sections 50 and 54 of the Rent Control Act, it may be stated that Par liament was aware of these provisions when it enacted the Public Premises Act contained a specific provision in Sec tion 15 barring jurisdiction of all courts (which would include the Rent Controller under the Rent Control Act).
This indicates that Parliament intended that the provisions of the Public Premises Act would prevail over the provisions of the Rent Control Act inspite of the above mentioned provisions contained in the Rent Control Act.
It has been urged by the learned counsel for the peti tioner that there is no conflict between the provisions of the Rent Control Act and the Public Premises Act and that both the provisions can be given effect to without one overriding the other.
In this regard, it has been pointed out that since no provisions has been made in the Public Premises Act for the termination of the lease, the provi sions of the Rent Control Act can be held applicable upto the stage of termination of the lease, and thereafter, proceedings can be initiated for eviction under the provi sions of the Public Premises Act.
In support of this submis sion, reliance has been placed on Dhanpal Chettiar 's case (supra), wherein it has been held that in view of the spe cial provisions contained in the State Rent Control Acts, it is no longer necessary to issue a notice under Section 106 of the Transfer of Property Act to terminate the tenancy because inspite of the said notice the tenant is entitled to continue in occupation by virtue of the provisions of the said Acts.
In the said case, it has been further laid down that the relationship between the landlord and tenant con tinues till the passing of the order of eviction in accord ance with the provisions of the Rent act, and therefore, for the eviction of the tenant in accordance with the law, an order of the competent Court under the Rent Control Act is necessary.
This would mean that in order to evict a person who is continuing in occupation after the expiration or termination of his contractual tenancy in accordance with law, two proceedings will have to be initiated.
First, there will be proceedings under Rent Control Act before the Rent Controller followed by appeal before the Rent Control Tribu nal and revision before the High Court.
After these proceed ings have ended they would be followed by proceedings under the Public Premises Act, before the Estate Officer and the Appellate Authority.
In other words, persons in occupation of public premises would receive greater protection than tenants in premises owned by private persons.
It could not be the intention of Parliament to confer this dual benefit on persons in occupation of public premises.
692 It has also been urged that in Section 22 of the Rent Control Act, special provision has been made for recovery of possession of premises belonging to a company or other body corporate or any local authority or any public institution and that premises belonging to companies, corporations and autonomous bodies mentioned in clauses (2) and (3) of Sec tion 2(e) of the Public Premises would be covered by the said provision and that in view of this special provision it is not necessary to have a further provision in the Public Premises Act for the recovery of possession belonging to those bodies, and therefore, the provisions of the Public Premises Act should be confined in their application to premises other than premises covered by the Rent Control Act.
Section 22 of the Rent Control Act provides as under: "Where the landlord in respect of any premises is any compa ny or other body corporate of any local authority or any public institution and the premises are required for the use of employees of such landlord or in the case of a public institution for the furtherance of its activities, then, notwithstanding anything contained in Section 14 or any other law, the Controller may, on an application made to him in this behalf by such landlord, place the landlord in vacant possession of such premises by evicting the tenant and every other person who may be in occupation thereof, if the Controller is satisfied (a) that the tenant to whom such premises were let for use as a residence at a time when he was in the service or employment of the landlord, has ceased to be in such service or employment; or (b) that the tenant has acted in contravention of the terms, express or implied, under which he was authorised to occupy such premises; or (c) that any other person is in unauthorised occupation of such premises; or (d) that the premises are required bona fide by the public institution for the furtherance of its activities.
Explanation For the purpose of this section, "public in stitution" includes any educational institutional, library, hospital and charitable dispensary but does not include any 693 such institution set up by any private trust.
" The said special provision shows that, it enables recov ery of possession or premises of which the landlord is a company or other body corporate or any local authority or any public institution in certain circumstances viz., if the premises are required for the use of the employees or such landlord.
In the case of public institutions possession can also be obtained under this provision if the premises are required for the furtherance of its activities.
In other words, recovery of possession is permissible under this provision only in certain circumstances and for certain purposes.
Inspite of this provision Parliament has consid ered it necessary tO extend the Public Premises Act to premises belonging to companies, corporations and statutory bodies mentioned in Clauses (2) and (3) of Section 2(e) by widening the definition of the expression "public premises" in Section 2(e) of the Public Premises Act.
The scope and ambit of the aforesaid power conferred under the Public Premises Act cannot be restricted by reference to the provi sion contained in Section 22 of the Rent Control Act.
It has been urged by the learned counsel for the peti tioners that many of the corporations referred to in Section 2(e)(2)(ii) of the Public Premises Act, like the nationa lised banks and the Life Insurance Corporation, are trading corporations and under the provisions of the enactments whereby they are constituted these corporations are required to carry on their business with a view to earn profit, and that there is nothing to preclude these corporations to buy property in possession of tenants at a low price and after buying such property evict the tenants after terminating the tenancy and thereafter sell the said property at a much higher value because the value of property in possession of tenants is much less as compared to vacant property.
We are unable to cut down the scope of the provisions of the Public Premises Act on the basis of such an apprehension because as pointed out by this Court in M/s Dwarkadas Marfatia and Sons vs Board of Trustees of the Port of Bombay, ; "Every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigour of the Rent Act, must be informed by reason and guided by the public interest.
All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act 694 as private landlords, must be judged by that standard." These observations were made in the context of the provi sions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 whereby exemption from the provisions of the Act has been granted to premises belonging to the Bombay Port Trust.
The consequence of giving overriding effect to the provisions of the Public Premises Act is that premises belonging to companies and statutory bodies referred to in Clauses (2) and (3) of Section 2(e) of the Public Premises Act would be exempted from the provisions of the Rent Con trol Act.
The actions of the companies and statutory bodies mentioned in Clauses (2) and (3) of Section 2(e) of the Public Premises Act while dealing with their properties under the Pubic Premises Act will, therefore, have to be judged by the same standard.
For the reasons aforesaid, we are unable to accept the contention of the learned counsel for the petitioners that the provisions contained in the Public Premises Act cannot be applied to premises which fall within the ambit of the Rent Control Act.
In our opinion, the provisions of the Public Premises Act, to the extent they cover premises falling within the ambit of the Rent Control Act, override the provisions of the Rent Control Act and a person in unauthorised occupation of public premises under Section 2(e) of the Act cannot invoke the protection of the Rent Control Act.
In Civil Appeal No. 3723 of 1966, Shri Yogeshwer Prasad sought to raise contentions relating to the particular facts of that case, namely, that the termination of the lease of the appellant is vitiated by mala fides and that the said appellant could not be held to be a person in unauthorised occupation of the premises and further that the proceedings have not been taken in accordance with the provisions of the Public Premises Act.
We find that in this case the appellant filed a writ petition in the High Court directly against the order passed by the Estate Officer without filing an appeal against the said order before the Appellate Authority.
The High Court has held that the question of mala fides is a disputed question of fact and the same could not be gone into in proceedings under Article 226 of the Constitution.
We are in agreement of the said view of the High Court.
As regards the other contentions we are of the view that the appellant cannot be permitted to agitate matters which could be agitated by him in appeal before the Appellate Authority.
In Civil Appeals Nos. 2368 and 2369 of 1986 the learned counsel 695 for the respondents have raised a preliminary objection with regard to the maintainability of these appeals on the ground that the appellants, on account of their conduct, are not entitled to invoke the jurisdiction of this Court under Article 136 of the Constitution.
The submission of the learned counsel is that before initiating proceedings under the provisions of the Public Premises Act the respondent Bank, viz. the Punjab National Bank, had initiated proceed ings under the Rent Control Act for the eviction of the appellants had in those proceedings the appellants had filed an objection with regard to the maintainability of the eviction proceedings under the Rent Control Act before the Additional Rent Controller and thereupon the Respondent Bank initiated proceedings for eviction of the appellants under the Public Premises Act and thereafter the proceedings initiated by the respondent Bank under the Rent Control Act were dismissed by the Additional Rent Controller by orders dated the 6th August, 1989.
The learned counsel of the respondents have urged that the appellants, having raised the objection against the maintainability of the proceedings for eviction under the Rent Control Act on the ground that proceedings could only be maintained under the provisions of the Public Premises Act and having got them dismissed, cannot turn round and raise an objection that the proceed ings for eviction under the Public Premises Act are not maintainable and the proceedings can only be taken under the Rent Control Act.
The learned counsel for the appellants have submitted that special leave to appeal was granted by this Court after notice to the respondents and at that stage the respondents had raised this objection but this Court granted special leave and it is not permissible for the respondents to agitate this question now.
The orders dated the 6th August, 1989 which were passed by the Additional Rent Controller in the proceedings for eviction initiated by the respondent Bank under Rent Control Act against the appellants in these appeals have been placed on record by the respondents and from the said orders it appears that in the proceedings initiated under the Rent Control Act the appellants had raised a plea that the premises in question had been declared public premises under the Public Premises Act and in view of that the proceedings under the Rent Control Act were not competent.
The said orders also show that the Additional Rent Controller dismissed the proceed ings for eviction under the Rent Control Act on the view that the Public Premises Act is applicable to premises in question and his jurisdiction was excluded.
This would show that the proceedings which were initiated by the Respondent Bank for the eviction of the appellants under the Rent Control Act were dismissed as not maintainable on the ground that the Rent Control Act was not applicable to the premises and the premises are governed by the provisions of the 696 Public Premises Act.
This finding was recorded by the Addi tional Rent Controller in view of the objection raised by the appellants with regard to the maintainability of those proceedings.
In other words, the appellants succeeded in those proceedings on the basis of their plea that the prem ises were not governed by the Rent Control Act and were governed by the provisions of the Public Premises Act.
Having got the proceedings under the Rent Control Act dis missed the appellants are now raising the plea that the proceedings under the Public Premises Act are not maintain able and that the only remedy available is under the Rent Control Act.
This conduct of the appellants would have disentitled them from invoking the jurisdiction of this Court under Article 136 of the Constitution.
Since we are of the view that the appellants cannot succeed on the merits, we do not propose to dismiss the appeals on this preliminary ground.
In the result the appeals and the writ petition are dismissed.
There will be no order as to costs.
The appellants in Civil Appeals Nos. 2368 and 2369 of 1986 had been dispossessed from the premises in their occu pation after the dismissal of their appeals by the Addition al District Judge.
During the pendency of these appeals interim orders were passed by this Court whereunder posses sion of a part of the premises was restored to the appel lants.
Since these appeals have been dismissed the appel lants in both the appeals are directed to handover the possession of the portion of the premises in their occupa tion to the Respondent Bank within one month.
In Civil Appeal No. 3725 of 1986 and Writ Petition No. 864 of 1985, this Court had passed interim orders staying the eviction of the petitioners in those matters.
Since the appeal and the writ petition are being dismissed the said interim orders shall stand vacated.
R.S.S. Petitions dismissed.
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The appellants/petitioners were tenants in the premises belonging to the respondent Banks/Life Insurance Corporation of India.
Their tenancy had expired or had been terminated by the respondents and eviction proceedings initiated against them under the provisions of the .
Writ peti tions under Article 226 were filled by the appellants in the High Court challenging the orders of eviction passed against them, which were dismissed; hence these appeals.
The writ petitioners moved this Court directly under Article 32 of the Constitution against the notices of termination of tenancy issued to them.
The Public Premises Act of 1971 was preceded by two enactments the Government Premises (Eviction) Act 1950, and the Public Premises (eviction of unauthorised occupants) Act, 1958 which were declared unconstitutional by different High Courts.
Jagu Singh vs M. Shaukat Ali, ; Satish Chander & Anr.
vs Delhi Improvement Trust, AIR 1958 Punjab 1; Brigade Commander, Meerut Sub Area vs Ganga Pra sad, ; P.L. Mehar etc.
vs D.R. Khanna, etc., AIR 1971 Delhi 1 and Northern India Caterers Private Ltd. vs State of Punjab & Anr.
, ; 650 This led to the enactment of the Public Premises Act in 1971.
The validity of this act was upheld by this Court in Hari Singh vs The Military Estate Officer, ; Before this Court, the contentions were advanced by the parties mainly on two questions (i) whether the provisions of the Public Premises Act were applicable to the Premises belonging to a nationalised bank; and (ii) whether the provisions of the Public Premises Act override the provi sions of the Delhi Rent Control Act.
In regard to the applicability of the Public Premises act, it was inter alia contended that the premises belonging to a nationalised bank or insurance company did not fall within the ambit of the definition of 'Public Premises ' contained in Section 2(e) of the Public Premises Act for the reason that the nationalised bank was not a company as defined in Section 3 of the and it was also not a corporation established by or under a Central Act.
On the other hand, it was contended that the respond ents being nationalised bank, was a corporation established by a Central Act, viz., the Bank Nationalisation Act, and the premises belonging to a nationalised bank were 'public premises ' under section 2(e)(2)(ii) of the Public Premises Act.
In regard to the second question, each side claimed that the enactment relied upon by it was a special statute and the other enactment was general, and also invoked the not obstante clause contained in the enactment relied upon.
In this connection, it was argued on behalf of the respondents that the Public Premises Act having been enacted by Parlia ment in exercise of legislative power under Article 246(1) of the Constitution in respect of matters enumerated in the Union List would ipso facto override the provisions of the Rent Control Act enacted in exercise of the legislative powers under Article 246(4) in respect of matters enumerated in the concurrent list.
Dismissing the appeals and the writ petition, this Court, HELD: (1) The provisions of the Public Premises Act, to the extent they cover premises failing within the ambit of the Rent Control Act, override the provisions of the Rent Control Act, and a person in unauthorised occupation of public premises under Section 2(e) of the Act cannot invoke the protection of the Rent Control Act.
[694D E] (2) After the second world war there has been develop ment of a new pattern of public corporation in England as an instrument of plan 651 ning in the mixed economy.
The general characteristics of such a public corporation is that it is normally created by a special statute; it has no shares and no share holders, either private or public, and its share holder, in the symbolic sense, is the nation represented through Government and Parliament; and it has the legal status of a corporate body with independent legal personality.
There has been a similar growth of this type of public corporation in other.
countries.
This trend is also evident in our country.
since Independence and a number of such public corporations have been constituted by Acts of Parliament.
[668A C] (3) The expression 'Corporation ' in Section 2(e)(2)(ii) of the Public Premises Act would include public corporations of the new pattern constituted under the Central Acts where in the entire paid up capital vests in the Central Govern ment.
[670G] S.S. Dhanoa vs Municipal Corporation, Delhi, ; , distinguished.
(4) In order to constitute a corporation it is not necessary that there should be shareholders or members and that in the new pattern of public corporation that has developed there are no shareholders or members.
[671G] Bank of New South Wales & Ors.
vs The Common wealth, ; and R.C. Cooper vs Union of India, ; , referred to.
Oriental Bank of Commerce vs Delhi Development Authori ty, , overruled.
(5) Provisions of the Banks Nationalisation Act show that the nationalised Bank has been constituted as a dis tinct juristic person by the Act and it is owned by the Central Government.
They further indicate that the nationa lised bank has all the attributes of the new pattern of public corporation.
[667B] (6) The object of the legislation in enlarging the definition of 'public premises ' in Section 2(e) of the Public Premises Act is to make available the machinery of the Act for evicting unauthorised occupants not only from the premises belonging to the Central Government but also from premises belonging to Companies, Corporation and statu tory bodies in which the Central Government has a substan tial interest.
[670D E] 652 (7) Under Section 2(e)(2)(i) premises belonging to a company incorporated under the , in which not less than fifty one percent of the paid up capital is held by the Central Government, are to be treated as public enterprises.
It could not be the intention of Parliament that premises belonging to public corporations whose entire paid up capital vests in the Central Government and who are the instrumentalities of State would be excluded from the ambit of the definition of 'public premises '.
[670E G] (8) Keeping in view the provisions of the Banks Nation alisation Act the nationalised bank is a corporation estab lished by a Central Act and it is owned and controlled by the Central Government.
The premises belonging to a nationa lised bank are public premises under Section 2(e)(2)(ii) of the Public Premises Act.
[671 H; 672A] (9) There is no warrant for confining the scope of the definition of 'public premises ' contained in section 2(e) to premises used for residential purposes only and to exclude premises used for commercial purposes from its ambit.
[672D] Hari Singh vs Military Estate Officer, ; , referred to.
(10) No distinction can be made between premises used for residential purposes and premises used for commercial purposes in the matter of eviction of unauthorised occupants of public premises and the consideration which necessitate providing a speedy machinery for eviction of persons in unauthorised occupation of public premises apply equally to both the types of public premises.
[673B C] (11) The definition of the expression 'unauthorised occupation ' contained in Section 2(g) of the Public Premises Act is in two parts.
The second part of the definition is inclusive in nature and expressly covers continuance in occupation by any person of the public premises after the authority (whether by way of grant or any other mode of transfer) under which he was allowed to occupy the premises has expired or has been determined for any reason whatsoev er.
The words "whether by way of grant or any other mode of transfer" in this part of the definition are wide in ampli tude and would cover a lease because lease is a mode of transfer under the Transfer of Property Act.
[673F; G H; 674B] Brigadier K.K. Verma vs Union of India, AIR 1954 Bom 358, distinguished.
653 Lallu Yeshwant Singh vs Rao Jagdish Singh & Ors., ; , and Express Newspapers Pvt. Ltd. & Ors.
vs Union of India & Ors.
, [1985] Suppl.
3 SCR 302, referred to.
(12) It is true that there is no requirement in the Public Premises Act that the Estate Officer must be a person well versed in law.
But, that, by itself, cannot be a ground for excluding from the ambit of the said Act premises in unauthorised occupation of persons who obtained possession of the said premises under a lease when the Public Premises Act and the Rules framed thereunder provide for a right of appeal of the District Judge against an order of the Estate Officer.
which shows that the final order that is passed is by a judicial officer.
[675F H] Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Ors., ; , referred to.
(13) As regards rent control legislations enacted by the State legislatures, the position is well settled that such legislation fail within the ambit of entries 6, 7 and 13 of List III of the Seventh Schedule to the Constitution.
[682E] Indu Bhushan Bose vs Rama Sundari Devi & Anr.
, ; ; V. Dhanpal Chettiar 's vs Yesodai Ammal, ; ; Jai Singh Jairam Tyagi Etc.
vs Mamanchand Ratilal Agarwal & Ors., ; ; Accountant and Secretari al Services Pvt. Ltd. & Anr.
vs Union of India & Ors.
, ; , referred to.
(14) The Rent Control Act has been enacted by Parliament in relation to the Union Territory of Delhi in exercise of the legislative power conferred under Article 246(4) of the Constitution which empowers Parliament to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.
[682G] (15) The Public Premises Act deals with Government property as well as property belonging to other legal enti ties mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act.
In so far as it relates to eviction of unauthorised occupants from premises belonging to or taken on lease or requisitioned by or on behalf of the Central Government, the Public Premises Act would fail within entry 32 of List I being law with respect to a property of the Union.
The property belonging to the various legal entities mentioned in clauses (2) and (3) of Section 2(e) of the Public Premises Act cannot be regarded as property of 654 the Union and the Public Premises Act cannot be held to have been enacted under entry 32 of List I in respect of the said properties.
In so far as it deals with a lessee or licensee of premises other than premises belonging to the Central Govt; the Public Premises Act has been enacted in exercising the legislative power in respect of matters enumerated in the concurrent list.
[682H; 683A C] (16) Both the statutes, viz. the Public Premises Act and the Rent Control Act, have been enacted by the same legisla ture, Parliament, in exercise of the legislative powers in respect of the matters enumerated in the Concurrent List.
[684C] Accountant and Secretarial Services Pvt. Ltd. vs Union of India And Ors., ; ; Smt.
Saiyada Mossarrat vs Hindustan Steel Ltd.; , and L.S. Nair vs Hindustan Steel Ltd., AIR 1980 MP.
106, referred to.
(17) The Rent Control Act makes a departure from the general law regulating the relationship of landlord and tenant contained in the Transfer of Property Act inasmuch as it makes provision for determination of standard rent, it specifies the grounds on which a landlord can seek the eviction of a tenant, it prescribes the forum for adjudica tion of disputes between landlords and tenants and the procedure which has to be followed in such proceedings.
The Rent Control Act can, therefore, be said to be a special statute regulating the relationship of landlord and tenant in the Union Territory of Delhi.
[686D F] (18) The Public Premises Act is also a special statute relating to eviction of unauthorised occupants from public premises.
[689E] Jain Ink Manufacturing Company vs Life Insurance Corpo ration of India & Anr., ; , referred to.
(19) Both the enactments, namely, the Rent Control Act and the Public Premises Act, are special statutes in rela tion to the matters dealt with therein.
Therefore, the exception contained in the principle that a subsequent general law cannot derogate from an earlier special law cannot be invoked and in accordance with the principle that the later laws abrogate earlier contrary laws, the Public Premises Act must prevail over the Rent Control Act.
[686H; 687A] J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs The State of Uttar Pradesh, ; ; U.P. State Elec tricity Board vs Hari 655 Shankar Jain; , and Life Insurance Corpora tion vs D.J. Bahadur; , , referred to.
(20) In the case of inconsistency between the provisions of two enactments, both of which can be regarded as Special in nature.
the conflict has to be resolved by reference to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the relevant provisions therein.
[688G] Shri Ram Narain vs The Simla Banking and Industrial Co. Ltd.; , ; Kumaon Motor Owners ' Union Ltd. vs The State of Uttar Pradesh, ; and Sarwan Singh vs Kasturi Lal; , , referred to.
(21) Keeping in view the object and purpose underlying both the enactments viz., the Rent Control Act and the Public Premises Act, the provisions of the Public Premises have to be construed as overriding the provisions contained in the Rent Control Act.
[690H] The Parliament was aware of the non obstante clauses contained in Section 14 and 22 and the provisions contained in Sections 50 and 54 of the Rent Control Act when it enact ed the Public Premises Act containing a specific provision in Section 15 barring jurisdiction of all courts (which would include the Rent Controller under the Rent Control Act).
This indicates that Parliament intended that the provisions of the Public Premises Act would prevail over the provisions of the Rent Control Act inspite of the above mentioned provisions contained in the Rent Control Act.
[691A B] (23) The scope of the provisions of the Public Premises Act cannot be cut down on the basis of an apprehension that the corporations may be induced to earn profits by purchas ing property in possession of tenants at a low price and after buying such property evict the tenants after terminat ing their tenancy and thereafter sell the said property at a much higher value.
Every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public inter est.
[693F; E G] M/s Dwarkadas Marfatia and Sons vs Board of Trustees of the Port of Bombay, ; , referred to.
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6526.txt
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Appeal No. 2416 of 1981 From the Judgment and Order dated 21.1.1981 of the Punjab and Haryana High Court in R.S.A. No. 2985 of 1980.
Rajinder Sachar and R.S. Sodhi for the Appellants.
M.K. Ramamurthy, N.K. Agarwala and S.K. Puri for the Respondents.
The Judgment of the Court was delivered by RAY, J.
This appeal by special leave is against the judgment and decree passed in Regular S.A. No. 2868 of 1980 by the High Court of Punjab & Haryana whereby the appeal was dismissed.
The respondent, Manohar Lal who was at the relevant time working as Sub Inspector in the Police Line, Gurdaspur was compulsorily retired by Order NO.
9754 B dated 24.9.1975 issued by Shri M.M. Batra, Senior Superintendent of Police, Gurdaspur, in public interest.
The said order of 505 compulsory retirement has been challenged by the respondent by filing a suit being case No. 86 of 1977 praying for a declaration that the aforesaid order of compulsory retire ment is illegal.
mala fide.
unconstitutional, against the rules of natural justice and the plaintiff respondent shall be deemed to be in service of the Punjab State to the post of Sub Inspector till his retirement at the age of 58 years i.e. on 13.2.1986.
There is also a prayer for a direction to the defendent appellant for payment of the balance of the salary for the period from 5.9.1974 to 23.9.1975 i.e the suspension period after deducting therefrom the subsistence allowance paid by the defendent and also the increment that had accrued to him under the rules from time to time during that period.
This amount was stated to be Rs. 3,446 for the said period.
The said suit was heard by the Subordinate Judge, Gurdaspur who by his order dated 27th January, 1979 held that the impugned order was not passed at the instance of Sardar Harjit Singh Ahluwalia, Deputy Inspector General of Police nor the same was vitiated by malice or any mala fides.
It was further held that the order was made innocu ously by the Senior Superintendent of Police in public interest in accordance with the provisions of Punjab Civil Services (Premature Retirement) Rules, 1975.
The Subordinate Judge also held that so for as the pay for the period of suspension is concerned the plaintiff was entitled to have recovery of Rs. 3,446 as arrears of pay during the suspen sion period.
The suit was accordingly decreed in part.
Against the said judgment and decree two appeals were filed, one by the plaintiff respondent Manohar Lal being C.A. No. 169/308 of 1979 and another by the State of Punjab regis tered as C.A. No. 170 of 1979 and 12 of 1980.
Both these appeals were heard together and were disposed of by a common judgment by the Additional Sessions Judge, Gurdaspur.
De creeing the Civil Appeal No. 169/308 of 1979 it was held that the order of compulsory retirement was made by an officer namely Senior Superintendent of Police, Gurdaspur who was below the rank of Inspector General of Police who is the appointing authority of the petitioner.
It was also held that the judgment and decree as regards the payment of the balance of emoluments during the period of suspension after the reinstatement of the petitioner, was legal and valid and the said decree was affirmed and the appeal was allowed decreeing the suit.
In that view of the matter the appeal filed by the State was dismissed.
Against the said judgment and decree the State of Punjab preferred the instant appeal being R.S.A. No. 2868 of 1980 before the High Court of Punjab and Haryana.
The High Court dismissed the said appeal and affirmed the judgment and decree of the lower appellate court.
Against this judgment and decree the present appeal was filed before this Court with an application for special leave under Article 136 of the Constitution.
The only question that arises for consideration in this appeal is whether the order of compulsory retirement made by the Senior Superintendent of 506 Police, Gurdaspur is illegal and invalid being passed by an authority lower in rank than the appointing authority which according to the respondent is the Deputy Inspector General of Police.
It appears that the Government of Punjab framed rules under proviso to Article 309 of the Constitution and these rules are termed as the Punjab Civil Services (Prema ture Retirement) Rules, 1975.
In Rule 2(1) the 'Appropriate Authority ' has been defined as meaning the authority which has power to make substantive appointments to the post or service from which the Government employee is required or wants to retire or any other authority to which it is subor dinate.
Rule 3 reads as follows: "3(1)(a) The appropriate authority shall, if it is of the opinion that it is in public interest to do so, have the absolute right, by giving an employee prior notice in writing, to retire that employee on the date on which he completes twenty five years of qualifying service or attains fifty years of age or on any date thereafter to be specified in the notice.
(b) The period of such notice shall not be less than three months: provided that where at least three months ' notice is not given or notice for a period less than three months is given, the employee shall be entitled to claim a sum equivalent to amount of his pay and allow ances, at the same rates at which he was drawing them immediately before the date of retirement for a period of three months or, as the case may be, for the period by which such notice falls short of three months.
" The relevant excerpt of Rule 12.1 is quoted herein below: "The following table summarises the directions given by the provincial Government under Clause (b) of Sub Section (1) of Section 241 of the Government of India Act, 1935, in regard to the authorities competent to make appointments to the nongazetted ranks.
507 Class of Authority to whom the power The extend of Government of appointment is delegated the delegation Servants Inspectors Deputy Inspector General of Full powers police, Assistant Inspector subject to rules General, Government Governing the Railway Police,Assistant conditions of Inspector General, Provincil service as defi Additional Police,(designated ned in Police as Commandant,Provincil Rules.
Additional Police), and the Assistant Inspector General Police (Traffic) Sergeants Superintendents of Police Sub Inspect Commandants of P.A.P vide No. ors and Ass 155 dated 2nd June,1964 and istant Sub Deputy Superintendent (admi Inspectors.
nistrative), Government Railway Police and Assistant Superintentend, Government Railway Police Rule 13.3(2) also provides that substantive promotions to the rank of Sub Inspector and Assistant Sub Inspector shall be made by the Superintendent of Police and the Assistant Superintendent, Government Railway Force.
On considering the provisions of the aforesaid rules it is quite clear and apparent that the Senior Superintendent of Police, Gurdaspur being the competent authority to make the appointment to the non gazetted ranks of Sub Inspectors, is also legally competent to pass the order of compulsory retirement of the plaintiff respondent in public interest in accordance with the provisions of Rule 3(1)(a) and (b) of the said rules.
It has been tried to be contended by referring to the provisions of Rule 13.9, Sub Rule (2) by the respondent wherein it has been provided that substantive promotion to the rank of Assistant Sub Inspector is to be made by the Deputy Inspector General of Police in accordance with the principles prescribed in Rule 13.1 that the Superintendent of Police is not the compe tent authority to make the impugned order.
It is only the Deputy Inspector General of Police who is competent to make the order of compul sory retirement in question.
This argument cannot be sustained in view of the specific provisions made in Rule 12.1 wherein it has been provided that the Superintendent of Police is competent to make the appointment to the non gazetted ranks of Sub Inspectors of Police and Assistant Sub Inspectors of Police.
On a reading of both these provisions of the Rules 12.1 and 13.9(2) it is clear and appar ent that the Senior Superintendent of Police, Gurdaspur is legally competent to make the impugned order of compulsory retirement of the plaintiff respondent from service in public interest after his attaining 50 years of age in accordance with 508 the provisions of Rules 3(1)(a) of the Punjab Civil Services (Premature Retirement) Rules, 1975.
In view of the reasons stated hereinbefore we do not find any merit in the contention made on behalf of the respondent and therefore we allow the appeal and set aside the judgment and order of the High Court in part in so far as it affirms the judgment and decree of the lower appellate court, setting aside the order of compulsory retirement.
The judgment and decree of the trial court is hereby affirmed and the decree of the lower appellate court as regards the payment of Rs. 3,446 being the balance of pay after deducting the subsistence allowance during the period of suspension of the respondent from 5.9.
1974 and 23.9.1975 is hereby affirmed.
There will, however, be no order as to costs.
P.S.S. Appeal allowed.
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Rule 3 of the Punjab Civil Services (Premature Retire ment) Rules, 1975 empowers the appropriate authority to retire an employee on the date on which he completes twenty five years of qualifying service, or attains fifty years of age or thereafter, in public interest by prior notice in writing of not less than three months.
Rule 2(1) designates the officer having powers to make substantive appointments to the post as the 'appropriate authority '.
Rule 12.1 categorises Superintendents of Police as the authority competent to make appointments to the non gazetted ranks of Sub Inspectors and Assistant Sub Inspectors.
Rule 13.9(2) empowers Deputy Inspector General of Police to make substantive promotions to the rank of Assistant Sub Inspec tor in accordance with r. 13.1.
The respondent who was working as Sub Inspector of Police was compulsorily retired by an order dated 24th September, 1975 issued by the Senior Superintendent of Police.
He was earlier suspended from service with effect from 5th September, 1974.
A suit filed by him for a declara tion that the said order was illegal, mala fide, unconstitu tional, and against the rules of natural justice was dis missed by the trial court holding that the impugned order was not vitiated by any malice or mala fides, having been innocuously made in public interest, and decreed the suit in part for the arrears of salary for the suspension period.
Both the State and the respondent preferred appeals.
The appellate court allowing the respondent 's appeal, held that the order of compulsory retirement was made by an officer who was below the rank of Inspector General of Police, the 'appointing authority ' of the petitioner, and that the judgment and decree as regards the payment of balance of emoluments for the period of suspension after the reinstatement was legal and valid and dismissed the appeal filed by the State.
The High Court dismissed the second appeal preferred by the State.
504 Allowing the State 's appeal by special leave in part, the Court, HELD: In view of the specific provision made in role 12.1 of the Punjab Civil Services (Premature Retirement) Rules, 1975 that the Superintendent of Police is competent to make the appointment to the non gazetted ranks of Sub Inspectors of Police, the contention that only the Deputy Inspector General of Police was competent to make the im pugned order cannot be sustained.
[507G] Rule 12.1 read with rule 13.9(2) makes it dear and apparent that the Senior Superintendent of Police was legal ly competent to make the order of compulsory retirement of a Sub Inspector of Police from service in public interest after attaining 50 years of age, in accordance with the provisions of rule 3(1) (a) and (b) of the Rules.
The order of retirement made in the instant case, was, therefore, legal and valid.
[50711] The decree of the lower. "appellate court as regards payment of the balance of pay for the period of suspension of the respondent is affirmed.
[508B]
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5191.txt
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Appeal No. 357 of 1967.
Appeal from the judgment and order dated December 9, 1963 of the Calcutta High Court in Appeal from Original Order No. 110 of 1960.
B. Sen, Sadhu Singh, Jagmohan Khanna, R. N. Kapoor and section K. Dholakia, for the appellants.
G. L. Sanghi, B. Dutta and section P. Nayar, for the respondents.
87 The Judgment of the Court was delivered by P. Jaganmoban Reddy, J.
This is an appeal by certificate under Article 1 3 3 ( 1 ) (b) of the Constitution against the judgment of the Calcutta High Court which dismissed an appeal from an order of the single Judge of that Court discharging a rule granted by it to the appellants calling on the respondents the Collector of Customs and others to show cause why certain orders under various sections of the Sea Customs Act and the Foreign Exchange Regulation Act should not be quashed and why a written complaint made by the respondents under the Foreign Exchange Regulation Act and the case pending in the Court of the Presidency Magis trate, Calcutta, should not be stayed.
The appellant is a registered partnership firm carrying on business of importers, exporters, commission agents, brokers and general merchants.
It consists of two partners, Girdhari Lal Gupta and Pooran Mal Jain.
On the 25th October 1958.
the Cashier of the appellant Bhagwandeo Tiwari handed over a consignment of wooden case to the Swiss Airways at Dum Dum Airport for being sent by air freight to Hongkong.
According to ,the consignment note, the consignment was being sent by one Ramghawan Singh of Karnani Mansions, Park Street, Calcutta, who in fact was a fictitious person.
The Shipping Bill showed that the consignment purported to contain Rassoglla, Achar, Papar and dried vegetables and it was being sent to one Ishwar Lal, 41, Wyndham St., Hongkong who is also alleged to be, a fictitious person.
After the consignment was accepted and when The Customs examined it for clearance on 25th October 1958 before its onward despatch to Hongkong, there was found concealed in a specially made secret cavity on the battens nailed to the inner sides of the case, Indian currency notes of Rs. 51,000/ .
An investigation was set on foot and on 22nd January 1959 a search warrant was issued by the Presidency Magistrate, pursuant to which the Customs Officers caused a search to be made of the office of the firm and the residences of the appellant 's partners.
In the course of search account books and other documents were seized.
This investigation revealed that the Cashier, Bhagwandeo Tiwari had signed the consignment note as Ramchandra which, as the subsequent writings showed, were in his hand.
Even the consignment note appears to have been typed on the typewriter of the appellant firm.
It was further alleged that from a comparison of the consignment note with a letter admittedly sent out by the appellant firm and signed by one of its partners, Girdhari Lal Gupta, it became evident that the slip seized from the office of the appellant firm had contained entries, to show that Bhagwandeo Tiwari was the person who actually transported and booked the offending consignment in question and that he made an entry 88 of Rs. 123.73 being the Air freight paid for its transport to Hongkong which was the exact amount shown on the consignmer the account slip was in his handwriting, and that the expense note.
Bhagwandeo Tiwari, it was said, had in fact admitted the and charges shown therein were also found in the books of account of the appellant firm.
In view of this evidence, the customer authorities served a notice on the appellant firm on April 2, 1959 by which after setting out in detail the aforesaid facts and after pointing out that the exportation of Indian currency out of India was in contravention of section 8 (2) of the Foreign Exchange Regulations Act 1947 read with the Reserve Bank of India Notification dated 27 2 1951 as specified therein, it was asked to show cause and to produce within four days of the receipts of the notice, the permit, if any, of the Reserve Bank of India, for export of the Indian currency and if it did not do so, it would be liable for prosecution under section 23(1) read with section 8(2) of the Foreign Exchange Regulations Act.
On 13 4 1959, the appellant firm replied to the notice denying that the firm had anything to do with the despatch of the box containing currency notes; that it was not aware of any person by the name of Ramghawan Singh or Ishwar Lal, or that Bhagwandeo Tiwari had ever despatched the consignment in question or visited any Air office in connection therewith.
It may be mentioned en passant that in the High Court, in the reply affidavit affirmed on 11 1 1960 to the affidavit in opposition, Girdhari Lal Gupta, one of the partners of the firm went even to extent of denying that Bhagwandeo Tiwari was the Cashier of the firm, notwith standing the fact that in the earlier reply to the show cause notice as also in the Writ Petition, it was tacitly assumed that he was the Cashier.
Apart from the criminal prosecutions that were launched against the partners, in the penalty proceedings which were initiated by the aforesaid show cause notice, the firm was held to be knowingly concerned in the offence and accordingly, a fine of Rs. 1,000/ was imposed on it under section 167(3) of the Sea Customs Act with a further personal liability of Rs. 1,000/under section 167(37) of the said Act.
It was further fined Rs. 51,0001 under section 167(8) of the Act read with section 23 (1) of the Foreign Exchange Regulations Act.
Apart from these fines, the currency notes of Rs. 51,000/ which were seized were confiscated.
This order was challenged before the single Judge of the Calcutta High Court who, as already stated, had issued a rule but later discharged it.
Against that order an appeal was filed 89 Reddy, J.) but that also was dismissed.
Of the four points that were urged in that appeal, the first three have been reiterated before us on behalf of the appellant, viz. : (1) Currency notes are not 'goods ' and there fore the provisions of section 167(3), (8) and (37) of the Sea Customs Act are not attracted; (2) A 'firm ' is not a legal entity and therefore it cannot be a 'person within the meaning of any of the above provisions of law; (3) Even if a firm be a person within the meaning of the said provisions no penalty can be imposed on the firm or any of its members unless it appears from the evidence that the members of the firm had consciously taken any steps to violate the provisions of law; even so only the particular member against whom there is evidence of guilt can be held liable.
Before dealing with the above contentions it will be necessary to consider the relevant provisions of the Foreign Exchange Regulations Act as also those under the Sea Customs Act, Sections 8(1), 23(a), (b), (1A), 23A, 23B and 23C of the Foreign Exchange Regulations Act and section 19, 167(3).
(8) and (37) of the Sea Customs Act are relevant for the purpose of this appeal.
These are given below : 8 (1).
The Central Government may, by notification in the Official Gazette, order that, subject o such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed bring or send into India any gold or silver or any currency notes or bank notes or coin whether Indian or foreign.
Explanation The bringing or sending into any port or place, in India of any such article is aforesaid intended to be taken out of India without being removed from the ship or conveyance in which it is being carried shall nonetheless be deemed to be a bringing L864SupCI/72 90 or as the case may be sending, into India of that article for the purposes of this section.
(2) 23(1) If any person contravenes the provisions of section 4, section 5, section 9 or sub section (2) of section 12 or of any rule, direction or order made thereunder, he shall (a) be liable to such penalty not exceeding three time, , the value of the foreign ex change in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided, or (b) upon conviction by a Court, be punish able with imprisonment for a term which may extend to two years, or with fine, or with both.
23(1A) Whoever contravenes (a) any of the provisions of this Act or of any rule, direction or order made thereunder, other than those referred to in subsection (1) of this section and section 19 shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years, or with fine or with both; (b) any direction or order made under sec tion 19 shall, upon conviction by a court, be punishable with fine which may extend to two thousand rupees.
23A. Without prejudice to the provisions of section 23 or to any other provision contained in this Act, the restrictions imposed by sub sections (1) and (2) of section 8, sub section (1) of section 12 and clause (a) of subsection (1) of section 13 shall be deemed to have been imposed under section 19 of the (8 of 1878), and all the provisions of that Act shall have effect accordingly except that section 183 thereof shall have effect as if for the word 'shall ', therein the word 'may ' were substituted.
23B. Whoever attempts to contravene any of the provisions of this Act or of any rule, direction or order made thereunder shall be deemed to have contravened that provision, rule, direction or order, as the case may be.
23C(1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was incharge of, and was responsible, to the company for the conduct of the business of the Company as well as the company, shall be deemed to be guilty of the contravention and Shall be liable to be proceeded against and punished accordingly Provided that nothing contained in this sub section shall render any such person liable to punishment, it ' he proves that the contraven tion took place without his knowledge or that he exercised ill due diligence to prevent such contravention.
(2) Notwithstanding anything contained in subsection (1), where a contravention tinder this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly".
: "19.
The Central Government may from time to time, by notification in the official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified descrip tion into or out of India across any customs frontier as defined by the Central Government.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the 9 2 same with reference to such offences respectively Offences Section of Penalties.
this Act to which offence has reference.
1 2 3 3.
If any person ship or General such person shall be aid on the shipment or lan liable to a penalty ding of goods, or knowing not exceeding one keep or conceal, or knowingly thousand rupees.
permit or procure to be kept or concealed to be shipped or landed or intended to be shipped or landed, contrary to provision of this Act; or if any person be found to have 11 been on board of any vessel liable to confiscation on account of the commission of an offence under (No. 4) of this section, while such vessel is within any bay, river, creek or arm of the sea which is not a port for the shipment and landing of goods.
If any goods, the importation 18 & 19 such good shall or exportation of which is for be liable to the time being prohibited or rest to confiscation; restricted by or under Chapter IV of this and Act, be imported into or exported from India contrary to such prohibition any person conc or restriction or erned in any such offence shall be liable to a pena lty not exceedig three times the value of the goods, or not exceeding one thousand rupees.
if any attempt be made so to import or export any such goods; or if any such goods be found in any package produced to any officer of Customs as containing no such goods; or if any such goods, or any dutiable goods, be found either before or after landing or shipment to have been concealed in any manner on board of any vessel within the limits of any port in India; or if any goods, the exportation of which is prohibited or restricted as aforesaid, be brought to any wharf in order to be put on board of any vessel for exportation contrary to such prohibition or restriction.
93 37.
If it be found, when any 86 & 137 such package, tog goods are entered at, or brought ether with the to be passed through, a whole of the good custom house, either for contained therein importation or exportation, that shall be liable to confiscation, and every person concerned in any such offence shall liable to a pen lty not exceeding one thousand rupees.
(a)the packages in which they are contained differ widely from the description given in the bill of entry or application for passing them; or (b) the contents thereof have been wrongly described in such bill or application as regards the denominations, characters, or conditions according to which such goods are chargeable with duty or are being imported or exported; or (c) the contents of such packages have been misstated in regard to sort, quality, quantity or value; or (d)goods not stated in the bill of entry or application have been concealed in, or mixed with, the articles specified therein, or have apparently been packed so as to deceive the officers of Customs.
and such circumstance is not accounted for to the satisfaction of the Customs Collector.
" A perusal of these provisions would show that no gold or silver or any currency notes or Bank notes or coin, whether Indian or foreign, can be sent to or brought into India, nor can any gold, precious stones or Indian currency or foreign exchange other than foreign exchange obtained from an authorised dealer can be sent out of India without the general or special permission of the Reserve Bank of India.
These restrictions by virtue of section 23A of the Foreign Exchange Regulation Act are deemed to have been imposed under section 19 of the and all the provisions of the latter Act shall have effect accordingly except section 183 thereof shall have the effect as if for the word 'shall ' therein the word 'may ' were substituted.
What section 23A does is to incorporate by reference the provisions of the by deeming the restrictions under section 8 of the Foreign Exchange Regulation Act to be prohibitions and restrictions under section 19 of the .
The contention is 'that since section 19 restricts the bringing or taking by sea or by land goods of ,my specified description into or out of India, these restrictions are not applicable to the bringing in or taking out the currency notes which are not goods 94 within the meaning of that section, and, therefore, the appellant is not guilty of any contravention of section 19 of the and cannot be subjected to the penal provisions of the said Act.
This argument, in our view, is misconceived, because firstly, it is a well accepted Legislative practice to incorporate by reference, if the Legislature so chooses, the provisions of some other Act in so far as they are relevant for the purposes of and in furtherance of the scheme and objects of that Act and secondly, that merely because the restrictions specified in section 8 of the Foreign Exchange Regulation Act are deemed to be prohibitions and restrictions under section 19 of the , those prohibitions and restrictions are not necessarily confined to goods alone but must be deemed for the purposes of the Foreign Exchange, Regulation Act to include therein restrictions in respect of the articles specified in section 8 thereof, including currency notes as well.
The High Court thought that there is no definition of goods in the and that contained in the Sale of Goods Act which excludes money is inapplicable inasmuch as that Act was a much later statute than the .
It is, however, unnecessary to consider this aspect because even if the currency notes are not goods, the restrictions prescribed in section 8 of the Foreign Exchange Act cannot be nullified by section 23A thereof which incorporates section 19 of the .
We cannot attribute to the Legislature the intention to obliterate one provision by another provision of the same Act.
On the other hand, we construe it as furthering die object of the Act which is to restrict the import into or export out of India of currency notes and to punish contravention of such restrictions.
The second contention that because the firm is not a legal entity, it cannot be a person within the meaning of Section 8 of the Foreign Exchange Regulation Act or of section 167 (3), (8) and (37) of the , is equally untenable.
There is of course, no definition of 'person ' in either of these Acts but the definition in section 2 (42) of the . or section 2(3) of the Act of 1868 would be applicable to the said Acts in both of which 'person ' has been defined as including any company or association or body of individual,, whether incorporated or not.
It is of course contended that this definition does not apply to a firm which is not a natural person and has no legal existence, as such clauses (3), (8) and (37) of section 167 of the are inapplicable to the appellant firm.
In our view, the explanation to section 23C clearly negatives this contention, in that a company for the purposes of that section is defined to mean any body corporate and includes a firm or other association of individuals and a Director in relation to a firm 9 5 means a partner in the firm.
The High Court was clearly right in holding that once it is found that there has been a contravention of any of thee provisions of the Foreign Exchange Regulation Act read with by a firm, the partners of it who are in charge of its business or are responsible for the conduct of the same, cannot escape liability, unless it is proved by them that .he contravention took place without their knowledge or the exercised all due diligence to prevent such contravention.
There is, also no warrant for the third submission that unless it appears from the evidence that members of the firm had consciously taken any steps to violate the provisions of law and even then only the particular members against whom there is evidence of guilt, can alone be held liable.
This contention was said to be based on a decision of this Court in Radha Krishan Bhatia vs Union of India and others,(1) that as the 'person concerned ' specified in section 167(8) of the is the person actually involved or engaged or mixed up in contravening the restrictions imposed under the Foreign Exchange Act or the , he must be the person who must be, shown to be actually concerned.
That was also a case under section 167(8) of the where, in fact, a number of gold bars held to be smuggled were recovered from the person of the ,appellant.
The single Bench of the Punjab High Court ha( allowed the Writ Petition of the appellant on ',he ground that the Collector had not recorded a finding that the appellant was connected with the act of smuggling gold into the country.
This finding was set aside on a Letters Patent Appeal and the writ petition was dismissed.
This Court held that the concern of the appellant in the commission of the offence must be at a stage prior to the completion of the offence of illegal importation of gold into the country.
The mere finding of fact recorded by the Collector of Customs about the smuggled old being recovered from the person of .he appellant was not sufficient to conclude that the appellant was concerned in the illegal importation of gold into the country and, therefore, liable for penalty under section 167(8) of the Act.
What the order of the Collector of Customs must show is that be had considered the question of the person being concerned in the commission of the offence of illegal importation of the goods.
It should further indicate that the matters he had considered had a bearing on the question and the reasons for his arriving at that conclusion.
This has really no bearing on the question before us because under section 23B, even an attempt to contravene any of the provisions of the Act or of any rule, direction or order made thereunder shall be deemed to have contravened that provision, rule, direction or order as the (1) 96 case may be.
in respect of this very incident where the petitioners were prosecuted it was held by this Court in Girdhari Lal Gupta and another vs D. N. Mehta, Assistant Collector of Customs and another,(1) that Girdhari Lal Gupta, one of the two partners and Bhagwandeo Tiwari, Cashier, have been rightly convicted under the provisions of the Foreign Exchange Regulation Act for contravention of the restrictions imposed under section 8(2) read with section 23(1A) of the Foreign Exchange Regulation Act.
In that case it was contended that there is no evidence to show that the contravention took place with the knowledge of Girdhari Lai Gupta or that he did not exercise due diligence to prevent such contravention.
That contention was negatived because he had 'not only stated under section 342, that he alone looks after the affairs of the firm but it had been found that there were entries in his account books.
It is true, that the relevant provisions of the are penal in character and the burden of proof is on the Customs authorities to bring home the guilt to the person alleged to have committed a particular offence under the said Act by adducing satisfactory evidence.
But that is not to say that the absence of direct evidence to connect a person with the offence will not attract the penal provisions to establish the guilt in a criminal proceeding of the type which the customs authorities have to take.
The evidence of the kind which has been adduced in this case would be sufficient to lead to the conclusion that the partner of the firm was interested in or involved in attempting to export Indian currency notes out of India.
As observed by this Court in Thomas Dana vs The State of Punjab(2), while dealing with section 167 of the , that "All criminal offences 'are offences but all offences in the sense of infringement of law are not criminal offences.
Likewise, the other expressions have bean used in their generic sense and not as they are understood in the Indian Penal Code or other laws relating to criminal offences .
Out of more than 82 entries in the schedule to section 167, it is only about a dozen entries which contemplate prosecution in the criminal sense, the remaining entries contemplate penalties other than punishments for a criminal offence".
In the Additional Collector of Customs vs Sita Ran? Agarwal(3), to which the High Court has referred, while dis missing the appeal from the judgment of the Calcutta High Court, this Court had stated that "the High Court was right when it observed that if any one is interested or consciously takes any step whatever to promote the, object of illegally bringing bullion into the country, then even if no physical connection is established between him and the thing brought, he will be guilty.
" In that case, the respondent, Sita Ram Agarwal who was seen moving (1) ; (3) Civil Appeal No. 492/162 decided on 14 9 62.
(2) [1959] Suppl.
(1) S.C.R. 274, 97 in the company of one Bhola Nath Gupta on the western Pavement of Jatindra Mohan Avenue, Calcutta, had proceeded in the direction of a taxi which had come to the place where they were, and on a signal being flashed, a Chinese national alighted therefrom, shook hands, with the respondent after which all the three boarded the taxi.
A police constable who was on the spot raised an alarm and secured the respondent and his companion with the help of the members of the public.
All of them were taken to the police station for the purpose of interrogation but the Chinese national tried to get away and started to run.
He was chased and eventually secured.
Before his apprehension.
however, he was seen to drop three packets which were found to contain 23 bars of illicit gold.
The respondent was charged as a person concerned in the offence of attempting to import contraband gold under section 167(8) of the .
The High Court while holding that there was no evidence to establish that he was in conscious relation with the gold, observed, "in order that a person may be said to be so concerned, some facts have to be proved which will establish that he was in conscious relation with the gold in one or other of the several successive steps preceding its actual receipt into the country".
In order that he was concerned in the offence, the High Court further pointed out that there need be no physical connection between the gold and the person charged and "if the offence did not relate to his being concerned in the importation of the gold.
but related to his having something to do with smuggled gold, the position might have been different".
The facts of the instant case clearly disclosed, as was observed by the High Court, " a well laid plain".
We have earlier stated that the currency notes were secreted in a cavity and were sought to be despatched out of the country in a package which ostensibly looked inocuous.
containing eatables.
The manner in which the attempt was made was to hood wink the Customs officials and escape their detection.
Further, the consignor and the consignee were not shown as real persons but were fictitious so that even if the attempt to smuggle out of the country the currency notes was detected, the real persons could not be traced.
The charges and expenses incurred in connection with the despatch found in the entries in the books of account of the firm were the same a those relating to the offending package which was being despatched to Hongkong.
The freight mentioned in the account slip the exact amount which appears on the consignment note in respect of that offending package.
The amount sought to be sent is half a lakh of rupees which can hardly be within the means of the Cashier.
leading to the inescapable inference that the firm through its partners was concerned in the attempt to transgress the restrictions under section 8 of the Foreign Exchange Regulation Act and liable to penal action by virtue of section 23A 98 under the provisions of the .
On these facts as established, the High Court came to the conclusion and in our view rightly, that it was not unreasonable to infer that it was the firm which was interested in sending the currency notes out of India in a clandestine manner.
In this view, the appeal has no merits and it is dismissed with costs.
S.N. Appeal dismissed.
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The appellant, a partnership firm having 2 partners, carried, on business of importers and exporters, etc.
The Cashier of the firm handed over a wooden case, to the Swiss Airways at Dum Dum for being sent to Hong Kong by air.
According to the consignment note, the consignment was being sent by one R. of Karnani mansions, Calcutta, who was a fictitious person.
The shipping bill showed that the consignment purported to contain food and dried vegetables and was sent to 1, of Hong Kong, also a fictitious person.
After the consignment was accepted and when customs examined it for clearance, it was found that it contained Rs. 51,000 in Indian currency.
On investigation, a search warrant was issued by the Presidency Magistrate and the office of the firm and the residence of partners were searched.
In the course of search, accounts books and other documents were seized.
Investigation revealed that the Cashier, had signed the consignment note as Rs, which, as the subsequent writings showed, were in his hand.
Even the consignment note appears to have been typed on the type writer of the appellant firm.
Thereafter, Customs authorities served a notice, on the appellant pointing out that exportation of Indian currency out of India was in contravention of section 8 (2) of the Foreign Exchange Regulations Act, 1947 read with Reserve Bank Notification dated 27 2 1951 as specified therein and it was asked to show cause and to produce within 4 days the permit, if any, of the Reserve Bank of India, failing which, it would be liable for prosecution under Section 23(1) read with section 8(2) of the Foreign Exchange Regulations Act.
The appellant denied that the firm bad anything to do with the case.
Apart from criminal prosecutions against the partners, a fine of Rs. 1,000 under section 167(3) of the Sea Customs Act with a further personal liability of Rs. 1,000 section 167(37) of the Act was imposed against the firm.
It was further fined Rs. 51,000 section 167(8) of the Act read with section 23(1) of the Foreign Exchange Regulations Act.
Apart from these, the currency notes of Rs. 51,000 which were seized, were also confiscated.
This order was challenged before the single judge of the Calcutta High Court who issued a rule but later discharged it.
An appeal against that order was also dismissed.
In appeal to this Court, three points, raised before the Appellate Court were also reiterated : (1) Currency Notes are not 'goods ' and therefore, the provisions of section 167(3), (8) and (37) of the Sea Customs Act are not attracted.
(2) A firm is not a legal entity and therefore, it cannot be a 'person ' within the meaning of any of the above provisions of law.
(3) Even if a 'firm ' be a 'person, no penalty can be imposed on the firm or any of its members unless the members have consciously taken any step to violate the provisions of law; 8 6 even so, only the partner member against whom there is evidence of guilt can be held liable.
Dismissing the appeal, HELD :P (i) section 23A of the Foreign Exchange Regulations Act, incorporates, by reference, the provisions of the Sea Customs Act by deeming the restrictions under section 8 of the Foreign Exchange Regulations Act, to be prohibiting and restricting under section 19 of the Sea Customs Act.
The legislature can always incorporate by reference, the provisions of some other Act, if they are relevant for the purposes of the scheme and object of that Act.
Restrictions specified in section 8 of the Foreign Exchange Regulations Act are deemed to be prohibitions and restrictions mentioned under section 19 of the Sea Customs Act.
The prohibitions mentioned under section 8 are not necessarily confined to goods alone but must be deemed, for the purposes of Foreign Exchange Regulations Act, to include therein restrictions in respect of the articles specified in section 8 thereof, including currency notes as well.
[94 B] (ii) Although there is no definition of the word 'person ' in either of.
the Acts, the definition in section 2(42) of the or Section 2(3) of the Act of 1863 would be applicable to the present Acts.
in both of which, person has been defined as including any Company or association, or body of individuals whether incorporated or not.
Further, the explanation to section 23C clearly envisages that a company for the purposes of that Section is defined to mean any body corporate and includes a firm or other association of individuals and a Director in relation to a firm also means a partner of the firm.
Therefore, for "he purposes of Foreign Exchange Regulations Act and Sea Customs Act.
a registered partnership firm L is a 'legal entity '.
[94G] (iii) From the evidence, it was clear that the appellant attempted to hoodwink the customs officials (currency notes secreted in a cavity), that the consigner and consignee were not shown as real persons, the charges and expenses incurred.
in connection with the despatch were found in the entry in the books of account of the firm that the amount, sought to be sent was half a lakh of rupees which could hardly be within the mean ', of the Cashier and the High Court was right in holding that it was the firm which was interested in sending the currency notes out of India .,II a clandestine manner.[198 A] Radha Krishna Bliatia vs Union of India & Ors., Thomas Dana vs The State of Punjab, [1959] Supp. 1 S.C.R. 274 and Additional Collector of Custo is vs Sita Ram Agarwal, C.A. No. 492 of 1962 decided on 14 9 1962 referred to and distinguished.
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3039.txt
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Appeal No. 135 of 1962.
Appeal from the judgment and order dated April 30, 1958, of the Orissa High Court in O.J.C. No. 321 of 1955.
M. C. Setalvad, Sarjoo Prasad and A. D. Mathur, for the appellant.
section V. Gupta, Additional Solicitor General, M. section K. Sastri and R. N. Sachthey, for the respondent.
March 5, 1964.
The Judgment of the Court was delivered by WANCHOO, J.
This appeal on a certificate granted by the Orissa High Court raises the question of the constitu tionality of the Shri Jagannath Temple Act, 1954, No. 11 of 1955, (hereinafter referred to as the Act).
The challenge to the Act was made by the father of the present appellant by a writ petition filed in the High Court of Orissa.
The appellant was substituted for his father on the death of the latter while the writ petition was pending in the High Court.
The case put forward in the petition firstly was that the Shri Jagannath Temple (hereinafter referred to as the Temple) was the private property of the petitioner, Raja of Puri, and the Act, which deprived the appellant of his property was unconstitutional in view of article 19 of the Constitution.
In the alternative it was submitted that the appellant had the sole right of superintendence and management of the Temple and that that right could not be taken away without payment of compensation, and the Act inasmuch as it took away that right without any compensation was hit by article 31 of the Constitution.
It was further pleaded that the right of superintendence was property within the meaning of article 19 (1) (f) and inasmuch as the appellant had been deprived of that property by the Act, it was an unreasonable provision which was not L/P(D)1SCI 2 . 34 saved under article 19(5).
The Act was further attacked on the ground that it was was discriminatory and was therefore hit by article 14 of the Constitution, as the Temple had been singled out for special legislation, though there was a general law in force with respect to Hindu religious endowments, namely, the Orissa Hindu Religious Endowments Act No. 11 of 1952.
Reliance was placed on articles 26, 27 and 28 of the Constitution to invalidate the Act, though the appellant did not indicate in the petition how those Articles hit the Act.
Lastly, it was urged that the utilisation of the Temple funds for purposes alien to the interest of the deity as proposed under the Act was illegal and ultra vires.
The petition was opposed on behalf of the State and it was urged that the Temple was not the private property of the appellant.
The case of the State was that it was a public temple and the State always had the right to see that it was properly administered.
Before the British conquered Orissa in 1803, the Temple had for a long time been managed by Muslim Rulers directly, though through Hindu employees.
After 1803, the Temple began to be managed directly by the British Government, though by Regulation IV of 1809 the management was made over to the Raja of Khurda (who is now known as the Raja of Puri), who was appointed as hereditary superintendent in view of his family 's connection in the past with the Temple.
Even so, whenever there was mismanagement in the Temple during the course of the last century and a half, the Government always intervened and many a time administered the secular affairs of the Temple directly through one of its officers in whose favour the then Raja was made to execute a power of attorney divesting himself completely of all powers of management.
The case of the State further was that in view of the reported mismanagement of the Temple, the State legislature passed the Puri Shri Jagannath Temple (Administration) Act, (No. XIV of 1952) for the appointment of a Special Officer for the preparation of a record pertaining to the rights and duties of different sevaks and pujaris and such other persons connected with the seva, puja or management of the Temple and its endowments in order to put the administration of the Temple on a suitable basis.
A Special Officer was accordingly appointed who submitted his report on March 15, 1954, which disclosed serious mismanagement of the affairs of the Temple and in consequence the Act was passed in 1955.
The State contended that the Act was perfectly valid and constitutional and did not offend any constitutional provision.
When the matter came to be argued before the High Court, the appellant gave up the plea that the Temple was his private property and it was conceded that it was a public temple, the properties of which were the properties of the deity 35 and not the private properties of the Raja of Puri.
In view of this concession, the attack on the constitutionality of the Act was based mainly on the ground that it took away the, Raja 's perquisites which had been found to belong to him in the record of rights prepared under the Act of 1952.
It may be mentioned that the Raja of Puri had two fold connection with the Temple.
In the first place, the Raja is the adya sevak, i.e., the chief servant of the Temple and in that capacity he has certain rights and privileges.
In addition to that, he was the sole superintendent of the Temple and was incharge of the management of the secular affairs of the Temple.
The main contention of the appellant before the High Court was that the Act not only took away the management of the secular affairs of the Temple from the appellant but also interfered with his rights as adya sevak and was therefore unconstitutional.
The High Court repelled all the submissions ,on behalf of the appellant and held that the Act was valid and constitutional except for one provision contained in section 28(2)(f) thereof.
The High Court therefore struck down that provision and upheld the constitutionality of the rest of the Act.
Thereupon the appellant applied for a certificate which was granted; and that is how the appeal has come up before us.
Before we consider the attack on the constitutionality of the Act we should like to indicate briefly what the scheme ,of the Act is and what it provides with respect to the management of the Temple.
Section I provides for its commencement.
Section 2 provides for certain repeals.
Section 3 provides that the Orissa Act XIV of 1952 shall be deemed to be a part of the Act and delegates to the committee constituted under section 6 of the Act all powers of the State Government under the 1952 Act from such date as the State Government may notify.
Section 4 is the definition section.
Section 5 vests the administration and the governance of the Temple and its endowments in a committee called the Shri Jagannath Temple Managing Committee.
The Committee shall be a body corporate, having perpetual succession and a common seal and may by the said name sue and be sued.
Section 6 provides for the constitution of the committee with the Raja of Puri as its chairman.
No person who does not profess the Hindu religion shall be eligible for membership.
Besides providing for some ex officio members, the other members of the committee are all nominated by the State Government, one from among the persons entitled to sit on the mukti mandap, three from among the sevaks of the Temple recorded as such in the record of rights, and seven from among those who do not belong to the above two classes.
36 The Collector of the district of Puri is an ex officio member and is designated as the vice chairman of the committee.
Section 7 provides for the appointment of a chairman during the minority of the Raja of Puri or during the time when the Raja is suffering from any of the disabilities mentioned in section 10(1) clauses (a) to (e) and (g) thereof.
Section 8 lays down that nothing in section 7 shall be deemed to affect the rights and privileges of the Raja of Puri in respect of the Gajapati Maharaj Seva merely on the ground that the Raja has ceased to perform the duties of the chairman for the time being.
Section 9 provides for the terms of office of members and section IO gives power to the State Government to remove any member of the committee other than the ex officio members on the rounds specified in cls.
(a) to (g) thereof.
No member can be removed from his membership unless he has been given a reasonable opportunity of showing cause against his removal.
Section 11 provides for dissolution and supersession of the committee in certain contingencies, such as incompetence to perform the duties imposed upon it by ' the Act 'or making of default in performing such duties.
The committee is given an opportunity to show cause against any such action before it is taken, and provision is made for continuing the management during the time the committee is superseded or has been dissolved.
Section 12 provides for casual vacancies, section 13 for the meetings of the committee and section 14 for allowances to the members of the committee payable from the Temple fund, but no member of the committee other than the administrator is to be paid any salary or other re muneration from the Temple fund except such travelling and daily allowances as may be prescribed.
Section 15 provides for the duties of the committee and it may be quoted in full as it is the main target of attack: " 15.
Subject to the provisions of this Act and the rules made thereunder, it shall be the duty of the Committee (1) to arrange for the proper performance of sevapujah and of the daily and periodical Nitis of the Temple in accordance with the Record of Rights; (2) to provide facilities for the proper performance of worship by the pilgrims; (3) to ensure the safe custody of the funds, valuable securities and jewelleries and for the preservation and management of the properties vested in the Temple; (4) to ensure maintenance of order and discipline and proper hygienic conditions in the Temple and of proper standard of cleanliness and purity in the offerings made therein; 37 (5) to ensure that funds of the specific and religious endowments are spent accordi ng to the wishes, so far as may be known, of the donors; (6) to make provision for the payment of suitable emoluments to its salaried staff; and (7) to do all such things as may be incidental and conducive to the efficient management of the affairs of the Temple and its endowments and the convenience of the pilgrims.
" Section 16 provides a ban on the alienation of Temple properties subject to certain conditions.
Section 17 lays down that the committee shall have no power to borrow money from any person except with the previous sanction of the State Government.
Section 18 provides for an annual administration report to be submitted to the Government.
Section 18 A gives power to the committee with the prior approval of the State Government to delegate its functions to the Collector of the district or, as the case may be, to the officer who happens to be a member of the committee in place of such Collector.
Section 9 gives power to the State Government to appoint an administrator for the Temple.
Section 20 provides for the qualifications and conditions of service of the administrator and section 21 for the powers and duties of the administrator.
As this section is specially attacked we quote it here in full.
"S.21.
(1) The Administrator shall be Secretary of the Committee and its chief executive officer and shall subject to the control of the committee have powers to carry out its decision in accordance with the provisions of this act.
(2) Notwithstanding anything in sub section (1) or in section 5, the Administrator shall be responsible for the custody of all records and properties of the Temple, and shall arrange for proper collections of offerings made in the Temple and shall have power (a) to appoint all officers and employees of the Temple; (b) to lease out for a period not exceeding one year at a time the lands and buildings of the Temple which are ordinarily leased out , (c) to call for tenders for works or supplies and accept such tenders when the amount or value thereof does not exceed two thousand rupees; (d) to order for emergency repairs; (e) to specify, by general or special orders, such conditions and safeguards as he deems fit, subject to which any sevak, office holder or servant 38 shall have the right to be in possession of jewels or other valuable belongings of the temple; (f) to decide disputes relating to the collection, distribution or apportionment of offerings, fees and other receipts in cash or in kind received from the members of the public; (g) to decide disputes relating to the rights, privileges, duties and obligations of sevaks, office holders and servants in respect of sevapuja and nitis, whether ordinary or special in nature; (h) to require various sevaks and other persons to do their legitimate duties in time in accordance with the Record of Rights; and (i) in the absence of any sevak or his substitutes or on the failure on the part of any such person to perform his duties, to get the niti or seva performed in accordance with the record ofrights by any other person.
(3) The administrator may subject to such conditions, if any, as the committee may, by general or special order impose, afford facilities on payment of fees for special darshan or for any special service, ritual or ceremony, such darshan, service, ritual or ceremony not being inconsistent with the custom and usage of the Temple and he shall have power to determine the portion, if any, of such fees which shall be paid to the sevaks, office holders or servants of the Temple.
" Section 21 A provides that all sevaks, office holders and servants attached to the Temple or in receipt of any emolu ments or perquisites therefrom shall, whether such service is hereditary or not, be subject to the control of the administrator who may, subject to the provisions of the Act and the regulations made by the committee in that behalf, after giving the person concerned a reasonable opportunity of being heard withhold the receipt of emoluments or perquisites, impose a fine, suspend or dismiss any of them for breach of trust, incapacity, disobedience of lawful orders, neglect of or wilful absence from duty, disorderly behaviour or conduct derogatory to the discipline or dignity of the temple or for any other sufficient cause: Section 22 provides for extraordinary powers of the administrator who is directed to take action in emergency and report forthwith to the committee the action taken and the reasons therefor.
Section 23 provides for the establishment schedule and section 24 provides for an appeal to, the committee against an order of the administrator under section 21 (2)(f) or (g) or section 21 A. Sections 25 to, 27 provide for the preparation of annual budget and audit.
Section 28 provides for a Temple fund and how it is to be utilised.
Section 29 bars suits against 39 the State Government or against the committee or the administrator for anything done or purported to be done by any of them under the provisions of the Act.
Section 30 gives power of general superintendence of the Temple and its endowments to the State Government which may pass any orders for the proper maintenance or administration of the Temple or its endowments or in the interest of the general public worshipping in the Temple.
It also gives power to the State Government to examine the records of the administrator or of the committee in respect of any proceedings with a view to satisfy itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order made therein; and if in any case it appears to the State Government that any such decision or order should be modified, annulled, reversed or remitted, for reconsideration, it may pass orders accordingly.
The State Government is also given the power to stay the execution of any such decision or order in the meantime.
Section 30 A creates an offence which is punishable on conviction with fine which may extend to Rs. 500 whenever any person having duties to perform in respect of the nitis of the Temple or sevapuja of the deity raises any claim or dispute and fails or refuses to perform such duties, knowing or having reasons to believe that the non performance of the said duties would cause delay in the performance of the niti or sevapuja or inconvenience or harassment to the public or any section thereof entitled to worship in the Temple and wilfully disobeys or fails to comply with the orders of the administrator directing him to perform his duties without prejudice to the results of a proper adjudication of such claim or dispute.
Section 31 gives power to the committee to frame regulations as to the conditions of service of office bearers and employees of the Temple, procedure for transfer of sevapuja, chuli or panti in the Temple, observance of nitis and other usages in the Temple in the absence of specific mention in the record of rights; and any other matters for which regulations are required to be made for the purposes of the Act.
Section 32 gives power to the State Government to frame rules.
Section 33 lays down that "the committee shall be entitled to take and be in possession of all movable and immovable properties, including the Ratna Bhandar and funds and jewelleries, re cords, documents and other assets belonging to the Temple" and also lays down the procedure to be followed in case of resistance in obtaining such possession.
Section 34 lays down that "all public officers having custody of any record, register, report or other documents relating to the Temple or any movable or immovable property thereof shall furnish such copies of or extracts from the same as may be required by the administrator".
Section 35 lays down that "no act or proceeding of the committee or of any person acting as a member of the committee shall be deemed to be invalid by reason only 40 of a defect in the establishment or constitution of the commitee or on the ground that any member of the committee was not entitled to hold or continue in such office by reason of any disqualification or by reason of any irregularity or illegality in his appointment or by reason of such act having been done or proceeding taken during the period of any vacancy in the office of member of the committee.
" Similar protection is given to an act or proceeding of the administrator.
Section 36 provides for the removal of difficulties by the State Government so long as the order passed in that behalf is not inconsistent with the Act or the rules made thereunder.
This review of the provisions of the Act shows that broadly speaking the Act provides for the management of the secular affairs of the Temple and does not interfere, with the religious affairs thereof, which have to be performed according to the record of rights prepared under the Act of 1952 and where there is no such record of rights in accordance with custom and usage obtaining in the Temple.
It is in this background that we have to consider the attack on the constitutionality of the Act.
We may first dispose of the attack based on article 14.
It is urged that inasmuch as this special Act has been passed for this Temple and the general Act, namely, the Orissa Hindu Religious Endowments Act No. 11 of 1952 no longer applies to this Temple, there has been discrimination inasmuch as the Temple has been singled out for special treatment as compared to other temples in the State of Orissa.
There is no doubt that the Act is in many respects different from Act 11 of 1952 and substitutes the committee for the Raja of Puri for the purpose of management of the Temple, and there would prima facie be discrimination unless it can be shown that the Temple stands in a class by itself and required special treatment.
As to that the affidavit on behalf of the State Government is that the Temple is a unique institution in the State of Orissa and is in a class by itself and that there is no comparison between the Temple and other temples in the State.
The averment on behalf of the State is that the Temple has been treated as a special object throughout the centuries because of its unique importance and that there is no other temple which occupies the unique place which this Temple occupies in the whole of India.
Also there is no other temple in Orissa with such vast assets or which attracts such a large number of pilgrims which pour into it from the whole of India.
It is also averred that it is absolutely incorrect that there are other temples in Orissa which are equal to it from the standpoint of assets or from the standpoint of their all India character or from the standpoint of the complicated nature of nitis and sevapuja affecting the lives, religious susceptibilities and senti ments of millions of people spread all over India.
There can be no doubt after this averment on behalf of the State that the Temple occupies a unique position in the State of Orissa and 41 is a temple of national importance and no other temple in that State can compare with it stands in a class by itself and considering the fact that it attracts pilgrims from all over India in large numbers it must be a subject of special consideration by the State Government.
In reply to these averments on behalf of the State, all that the appellant stated in his rejoinder was that these averments were not admitted.
There was no denial of the special importance of the Temple as averred on behalf of the State and we have no doubt therefore that this Temple stands in a class by itself in the State of Orissa and therefore requires special treatment.
We may in this connection refer to the decision of the Court in Tilkayat Shri Govindlalji vs State of Rajasthan(1) where in relation to the temple at Nathdwara with respect to which a special Act had been passed by the State of Rajasthan, this Court observed that "a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself".
The attack under article 14 on the constitutionality of the law with respect to the temple at Nathdwara was repelled on the ground that the temple had a, unique position amongst the Hindu Shrines in the State of Rajasthan and no temple could be regarded as comparable with it.
The same reasons in our opinion apply to the Temple in the present case and the Act cannot be struck down under article 14 because the Temple in the present case holds a unique position amongst the Hindu temples in the State of Orissa and no other temple can be regarded as comparable with it.
Next we come to the attack on the constitutionality of the Act on the ground that it has taken away the sole management of the temple which had so far been vested in the appellant or his ancestors.
The reasons why the Act was passed are to be found in the preamble thereof.
The preamble says that the ancient Temple of Lord Jagannath of Puri has ever since its inception been an institution of unique and national importance, in which millions of Hindu devotees from regions far and wide have reposed their faith and belief and have regarded it as the epitome of their tradition and culture.
It further says that long prior to and after the British conquest the superintendence, control and management of the affairs of the Temple have been the direct concern of successive rulers, governments and their officers and of the public exchequer.
it then says that by Regulation IV of 1809 and thereafter by other laws and regulations in pursuance of arrangements entered into with the Raja.
of Khurda, later designated as the Raja of Puri, the said Raja came to be entrusted hereditarily with the management of the affairs of the Temple and its properties as superintendent subject to the control and supervision of the ruling power.
It then goes on to say that in view of grave (1) [1964] 1 S.C.R. 561. 42 and serious irregularities thereafter the Government had to intervene on various occasions in the past.
Finally the preamble says that the administration under the superintendent has further deteriorated and a situation has arisen rendering it expedient to reorganise the scheme of management of the affairs of the Temple and its properties and provide better administration and governance therefor in supersession of all previous laws, regulations and arrangements, having regard to the ancient customs and usages and the unique and traditional nitis and rituals contained in the record of rights prepared under the 1952 Act.
So for all these reasons the appellant was removed from the sole superintendence of the Temple and a committee was appointed by section 6 of the Act for its management.
These statements in the preamble are not seriously in dispute as will be clear from the reports by G. Grome dated June 10, 1905 and by the Special Officer appointed under the 1952 Act dated March 15, 1954 and the correspondence which passed from time to time between the officers of the Government and the predecessors of the appellant.
In these circumstances if the secular management of the Temple was taken away from the sole control of the appellant and vested in a committee of which he still remains the chairman, it cannot be said that the provisions contained in the Act for that purpose are hit either by article 31(2) or by article 19(f).
There is in our opinion a complete parallel between the provisions of the Act and the Act relating to the temple at Nathdwara in Rajasthan, which came up for consideration before this Court in Tilkayat Govindlalji 's case(1).
If anything, the case of the appellant is weaker than that of Shri Govindlalji, for the appellant in the present case was conferred with the power of superintendence by Regulation IV of 1809 after the British conquered Orissa.
Whatever may have been his connection prior to 1809 with the Temple, the history of the Temple shows that the Muslim Rulers had removed him and were carrying on the management of the Temple directly through Hindu officers appointed by them.
The right of management was conferred on the appellant 's ancestor after the British conquest by virtue of the Regulation of 1809 and other laws passed thereafter.
All that the Act has done is to replace his sole right of management by appointing a, committee of which he is the chairman.
Further there can be in the circumstances no question of the application of article 31(2) in the present case.
In the first place the right of superintendence is not property in this case for it carried no beneficial enjoyment of any property with it, and in the second case, that right has not been acquired by the State which article 31(2) requires.
As was pointed out in Tilkayat Govindlalji 's case.(1), all that has happened in the present case is that the sole right of the appellant to (1) 1964 1 S.C.R. 561.
43 manage the property has been extinguished and in its place another body for the purpose of the administration of the property of the Temple has been created.
In other words the office of one functionary is brought to an end and another functionary has come into existence in its place.
Such a process cannot be said to constitute the acquisition of the extinguished office or the vesting of the rights in the person holding that office: (see Tilkayat Govindlalji 's case(1).
As we have already pointed out, the appellant and his predecessors always had two distinct rights with respect to this Temple.
In the first place, they were the adya sevaks and as such had certain rights and privileges and perquisites.
The rights as adya sevak as we shall show later have not been touched by the Act.
The Act has only deprived him of the second right i.e., the sole management of the Temple which carried no beneficial enjoyment of any property with it and has conferred that management on a committee of which he still remains the chairman.
In view of this clear dichotomy in the rights of the appellant and his predecessors there is no question of article 31(2) applying in the present case at all, insofar as this right of superintendence of the appellant is concerned.
The attack on the constitutionality of the Act on the ground that the sole right of superintendence has been taken away from the appellant and that is hit by article 19(1)(f) or article 31(2) must therefore fail.
This brings us to the other aspect of the rights of the appellant as adya sevak, and it is urged that those rights have been taken away by the Act, and insofar as the Act has done that it is unconstitutional in that the provisions with respect to those rights are unreasonable and cannot be protected under article 19(5).
Now we have already referred to the provisions of the Act, and if one looks at those provisions one finds nothing in them which takes away the rights of the appellant as adya sevak.
If anything, there are indications in the Act to show that his rights, other than those of superintendence remain intact.
When we say this we are not to be understood as saying that any rights which the appellant might have had in the capacity of adya sevak but which were of the nature of secular management of the Temple would still remain in him.
Because the appellant and his predecessors were holding a dual position of superintendent and adya sevak, there was in the past a mix up of his rights flowing from being an adya, sevak with his rights as a superintendent.
But apart from the rights which vested in him as the sole manager of the Temple with respect to its management and which have only been taken away from him by the Act, we find nothing in the Act which takes away his rights as an adya sevak (i.e. the chief servant) of Lord Jagannath in the matter of sevapuja, nitis etc.
These rights flow from his position as adya sevak, they (1) [1964] 1 S.C.R. 561. . 44 are religious in character and are referable to his status and obligations as sevak.
We may in this connection refer to section 8 of the Act which lays down that nothing in section 7 shall be deemed to affect the rights and privileges of the Raja in respect of Gajapati Maharaja Seva merely on the ground that the Raja has ceased to perform the duties of the chairman for the time being.
This provision clearly shows that even though the appellant may not be able to act as chairman of the committee because of his minority or because of certain disqualifications mentioned in section 7 read with section 10(1), his rights and privileges in respect of the Gajapati Maharaja Seva (i.e., the daily sevapuja of Lord Jagannath) remain unaffected, and these were the rights which he had as adya sevak.
Therefore section 8 preserves by the clearest implication the rights of the appellant as adya sevak in connection with the sevapuja of Lord Jagannath.
In this connection our attention was drawn to section 14 of the Act, which provides that it shall be within the power of the State Government by order to direct from time to time the payment from out of the Temple fund to the chairman of such allowances at times and in such manner as the State Government may consider reasonable and proper.
It is said that in view of section 14, the appellants rights and privileges as adya, sevak have gone.
We are of opinion that this is not so.
As we have already said, the position of the superintendent and of adya sevak were two different positions, which the appellant and his predecessors held in this Temple.
His position as a Superintendent has gone and in place of it he has become the chairman of the committee constituted under section 6.
When section 14 speaks of allowances to him, it refers to his position as a chairman, which replaces his position as superintendent before the Act.
It has nothing to do with his position as an adva sevak, which is safeguarded by section 8 of the Act inasmuch as rights and privileges in respect of the Gajapati Maharaja Seva are protected, even though he may cease to be the chairman on account of his minority or on account of some other reason.
Therefore, the provisions of section 14 refer to allowances only as a chairman and have nothing to do with the rights, privileges and perquisites as an adya sevak, for he remains as adya sevak even though he may not for certain reasons remain a chairman.
His rights, privileges and perquisites as adya sevak will remain protected under section 8 even though he may not be entitled to anything under section 14 if he ceases to be the chairman in view of section 7.
No provision in the Act has been pointed out to us, which expressly takes away his rights, privileges and perquisites as adya sevak; on the other hand there are other provisions which seem to indicate that even the rights and privileges of sevaks have not been affected by the Act.
If so it is hardly likely in the absence of any specific provision, that the Act would affect the privileges of the appellant as adya sevak.
For example, section 21 (2) (g) gives power to the 45 administrator to decide disputes relating to the rights, privileges, duties and obligations of sevaks , office holders and servants in respect of sevapuja and nitis, whether ordinary or special in nature.
This clearly postulates that the rights and privileges of sevaks remain intact, and if there is any dispute about them, the administrator has to decide it.
Again section 21(2)(f) provides that the administrator shall have power to decide disputes relating to the collection, distribution or apportionment of offerings, fees and other receipts in cash or in kind received from the members of the public.
This again postulates a right in some persons who could only be sevaks etc.
to a share of the offerings, fees and other receipts, and if there is any dispute about its distribution or apportionment, the administrator has been given the power to decide it.
Reading these two clauses together, there can be no manner of doubt that the Act does not affect even the rights, privileges and perquisites of sevakas.
If so, in the absence of express provision, it cannot possibly be argued that the Act affects rights, privileges and perquisites of adya sevak.
As we have already indicated, those rights, privileges and perquisities of adya sevak have also been safe ,guarded under section 8 of the Act.
Then we may refer to section 21 (3) which provides that "the administrator may subject to such conditions, if any, as the committee may, by general or special order 'Impose, afford facilities on payment of fees for special darshan or for any special service, ritual or ceremony such darshan, service, ritual or ceremony not being inconsistent with the custom and usage of the Temple and he shall have power to determine the portion, if any, of such fees which shall paid to the sevakas, office holders or servants of the Temple " This again postulates that the rights, privileges and perquisites of the sevaks are not to be affected by the Act but have to be governed by the record of rights or, as the case may be, by the order of the committee.
The argument that the Act is ultra vires because it takes away the rights, privileges and perquisites of the appellant as adya sevak, some of which may be property must therefore fail in view of the specific provision in section 8 and indications in other provisions of the Act to which we have referred.
Clause (1) of section 15 of the Act is however specially attacked as interfering with the religious affairs of the Temple.
The rest of the provisions of that section deal so obviously with secular matters that they have not been challenged.
This clause provides that it shall be the duty of the committee to arrange for the proper performance of sevapuja and of the daily and periodical nitis of the Temple in accordance with the record of Tights.
As we read this clause we see no invasion of the religious affairs of the Temple therein.
All that it provides is that it shall be the duty of the committee to arrange for the proper performance of sevapuja etc.
of the Temple in accordance with 46 the record of rights.
Sevapuja etc.
have always two aspects.
One aspect is the provision of materials and so on for the purpose of the sevapuja.
This is a secular function.
The other aspect is that after materials etc.
have been provided, the sevaks or other persons who may be entitled to do so, perform the sevapuja and other rites as required by the dictates of religion.
Clause (1) of section 15 has nothing to do with the second aspect, which is the religious aspect of sevapuja; it deals with the secular aspect of the sevapuja and enjoins upon the committee the duty to provide for the proper performance of sevapuja, and that is also in accordance with the record of rights.
So that the committee cannot deny materials for sevapuja if the record of rights says that certain materials are necessary.
We are clearly of the opinion that cl.
(1) imposes a duty on the committee to look after the secular part of the sevapuja and leaves the religious part thereof entirely untouched.
Further under this clause it will be the duty of the committee to see that those who are to carry out the religious part of the duty do their duties properly.
But this again is a secular function to, see that sevaks and other servants, carry out their duties properly; it does not interfere with the performance of religious duties themselves.
The attack on this provision that it interferes with the religious affairs of the Temple must therefore fail.
We may now briefly refer to some other sections of the Act which were attacked.
Apart from the main sections 5 and 6 by which the appellant was divested of the sole management, the first section so attacked is section 11 which deals with the dissolution and supersession of the committee.
We have not been able to understand how this section can be attacked once it is held that sections 5 and 6, constituting the committee in place of the Raja, are valid, as we have held that they are for they are the main provisions by which the management has been transferred from the sole control of the Raja to the control of the committee.
The next section in this group is section 19.
That section provides for the appointment of an administrator to carry on the day to day administration of the secular part of the affairs of the Temple.
We cannot see how this provision is liable to attack once sections 5 and 6 are held good, for the committee must have some officer under it to carry on the day to day administration.
The next provision that is attacked in this group is section 21, which deals with powers and duties of the administrator.
Again we cannot see how this provision can be attacked once it is held that the appointment of the administrator under section 19 is good, for section 21 only delimits the powers and duties of the administrator, and all powers and duties therein specified are with respect to the secular affairs of the Temple, and have no direct impact on the religious affairs thereof.
The next section in this group is section 21 A.
That section is clearly concerned with the secular management of the Temple, for the disciplinary 47 powers conferred thereby on the administrator are necessary in order to carry on the administration of the secular affairs of the Temple.
The next section which is attacked is section 30, which gives over all supervisory power to the State Government.
We cannot see how the control which the State Government is authorised to exercise by section 30 over the committee can be attacked once the appointment of the committee is held to be ,good.
The last section under this group is section 30A, which creates a criminal offence and makes sevaks etc.
liable to a fine on ,conviction.
We think it unnecessary for present purposes to consider the validity of this section.
The matter can be decided if and when a case of prosecution under that section ever arises.
This brings us to the contention relating to articles 26, 27 and 28 of the Constitution, which were referred to in the petition.
Articles 27 and 28 in our opinion have nothing to do with the matters dealt with under the Act.
The main reliance has however been placed on article 26(d) which lays down that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to administer its property in accordance with law.
In the first place besides saying in the petition that the Act was bit by article 26 there was no indication anywhere therein as to which was the denomination which was concerned with the Temple and whose rights to administer the Temple have been taken away.
As a matter of fact the petition was filed on the basis that the appellant was the owner of the Temple which was his private property.
There was no claim put forward on behalf of any denomination in the petition.
Under these circumstances we are of opinion that it is not open to the appellant to argue that the Act is bad as it is hit by article 26(d).
The argument addressed before the High Court in this connection was that the worshippers of Lord Jagannath constitute a distinct religious denomination within the meaning of article 26 and that they had a right to administer the Temple and its endowments in accordance with law and that such administration should be only through the Raja of Puri as superintendent of the Temple assisted by the innumerable sevaks attached thereto.
But inasmuch as the Act has taken away this right of management from the religious denomination, i.e., the worshippers of Lord Jagannath, and entrusted it to the nominees of the State Government, there had been a contravention of the funda mental rights guaranteed under cl.
(d) of Art 26.
This argument was met on behalf of the State with the contention that the Temple did not pertain to any particular sect, cult or creed of Hindus but was a public temple above all sects, cults and, creeds, therefore, as the temple was not the temple of any particular domination no question arose of the breach of cl.(d) of article 26.
The foundation for all this argument which was 48 urged before the High Court was not laid in the writ petition.
In these circumstances we think it was unnecessary for the High Court to enter into this question on a, writ petition of this kind.
The High Court however went into the matter and repelled the argument on the ground that the Temple in the present case was meant for all Hindus, even if all Hindus were treated as a denomination for purposes of article 26, the management still remains with Hindus, for the committee of management consists entirely of Hindus, even though a nominated committee.
In view of the defective state of pleadings however we are not prepared to allow the argument under article 26(d) to be raised before us and must reject it on the sole ground that no such contention was properly raised in the High Court.
For these reasons we find there is no force in this appeal and it is hereby dismissed with costs.
Appeal dismissed.
|
A writ petition was filed in the Orissa, High Court by the father of the appellant challenging the validity of Shri Jagannath Temple Act, 1954.
The petition was dismissed by High Court which held that the Act was valid and constitutional except section 28(2)(f).
The High Court struck down that provision and upheld the constitutionality of the rest of the Act.
The appellant came to this Court after obtaining a certificate of fitness to appeal to Supreme Court.
The contentions raised before this Court were that the Act was discriminatory as the Jagannath Temple alone had been singled out for special treatment as compared to other temples in the State of Orissa.
The Act took away the sole management of the Temple which had so far been vested in the appellant or his ancestors.
section 15 (1) of the Act interfered with the religious affairs of the temple.
The validity of sections 11, 19, 21, 21A and 30 of the Act was also attacked.
Dismissing the appeal, Held: There is no violation of article 14 of the Constitution.
The Jagannath Temple occupies a unique position in the State of Orissa, and is a temple of national importance and no other temple in that State can compare with it.
It stands in a class by itself and considering the fact that it attracts pilgrims from all over India in large numbers, it could be the subject of special consideration by the State Government.
A law may be constitutional even though it related to a single individual if on account of special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself.
(ii) There was no violation of article 19(1) (f) or article 31 (2) of the Constitution.
All that the Act has done is that it has taken away the sole right of the appellant to manage the property of the Temple and another body has been set up in its place with the appellant as its Chairman.
Such a process cannot be said to constitute the acquisition of the extinguished office or of the vesting of the rights in the person holding that office.
The appellant occupied a dual position as Superintendent and Adya Sevak.
His position as Superintendent hers gone and in that place he has become the Chairman of the Committee set up under section 6.
The position of the applicant as Adya Sevak is safeguarded by section 8 of the Act inasmuch as the rights and privileges in respect of Gajapati Maharaja Seva axe protected even though he may cease to be Chairman on account of his minority or on account of some other reason.
(iii) section 15(1) of the Act does not interfere with the religious, affairs of the Temple.
Sevapuja of the Temple has two aspects.
One aspect is the provision of materials and that is a secular, 33 function.
The second aspect is the performance of the Sevapuja and other rights as required by religion.
section 15(1) has nothing to do with the second aspect which is the religious aspect of Seva Raj puja.
While section 15(1) imposes a duty on the committee to look after the secular aspect of the Sevapuja, it leave the religious part entirely untouched.
(iv) Ss. 11, 19 and 21 were valid provisions and could not be attacked sections 5 and 6 constituting the committee in place of the Raja, were valid.
21A and 30 were also valid.
articles 27 and.
28 had nothing to do with the matter dealt with under Act.
It was not open to the appellant to argue that the Act was bad as it was hit by article 26(d).
No such contention was _properly raised in the High Court.
Tilkayat, Shri Govindlal ji vs State of Rajasthan, A.I.R. , referred to.
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1752.txt
|
N: Criminal Appeal No. 144 of 1972.
Appeal by Special Leave from the Judgment and order dated 1 2 1972 of the Madhya Pradesh High Court in Criminal Revision No. 709/71.
R. Nagarathnam for the Appellant.
section K. Gambhir, Miss B. Ramrakhiani and J. M. Khanna for the Respondent.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is preferred by Dr. section L. Goswami by special leave granted by this Court against the judgment of the High Court of Madhya Pradesh at Jabalpur in Criminal Revision No. 709 of 1971.
Criminal Revision No. 709 of 1971 was filed by the appellant 387 before the High Court for quashing the order of the Magistrate, 1st , Class, Jabalpur committing the appellant to Sessions for trial under section 466 read with section 120 B of the Indian Penal Code.
The appellant was prosecuted before the Special Judge, Jabalpur, in Criminal Case No. S of 1967 for an offence under section 5 (1) (d) of the Prevention of Corruption Act, 1947, in connection with the defalcations of Government funds.
In that case one Dr. section C. Barat was examined as a defence witness.
The appellant was convicted and an appeal against his conviction before the High Court failed.
The appellant obtained special leave from this Court to appeal against the order of the High Court.
During the pendency of the appeal before the Supreme Court the High Court was required to prepare a paper book for use in the Supreme Court.
It is alleged that when the paper book was being prepared in the Supreme Court section of the High Court the appellant Dr. Goswami entered into a conspiracy with two of the translators and tampered with the original deposition of Dr. section C. Barat, D.W. 1.
The Additional Registrar of the High Court field a complaint before the First Class Magistrate, Jabalpur, against the appellant for an offence under section 466 read with section 120 B of the Indian Penal Code.
The case was taken on file by the Magistrate as Criminal Case No. 1924 of 1971.
Against the two persons who were alleged to have conspired with the appellant in tampering with the deposition of Dr. Barat a challan was filed by the police before the same First Class Magistrate.
The Magistrate by a common order on 15th November, 1971 committed the appellant as well as two others to the Sessions Court to take their trial for offences under section 466 read with section 120 B of the Indian Penal Code.
The appellant and another with whom we are not concerned preferred a revision petition against the order of his committal before the High Court.
The High Court dismissed the Fr revision filed by the appellant and hence this appeal.
The main contentions that are raised in this appeal are: (i) The Magistrate erred in taking cognizance of an offence under section 466 of the Indian Penal Code read with section 120 B, Indian Penal Code.
without sanction of the Government under section 196 A (2) of the Criminal Procedure Code; and (2) the offence, if any, was not committed in any court in respect of a document produced or given in evidence in such proceeding as required under section 195(i) (c) of the Code of Criminal Procedure.
We will take up the first contention urged by the learned counsel for 11 the appellant, namely that the trial court was in error in taking cognizance of the offence without a complaint by the State Government when the 388 offence charged is one of conspiracy under section 120 B of the Indian Penal Code as required under section 196 A(2) of the Criminal Procedure Code.
Section 196 A(2) reads as follows: "196 A. No court shall take cognizance of the offence! of criminal conspiracy punishable under section 120 B of the Indian Penal Code.
(1) * * * * (2) in a case where the object of the conspiracy is to commit any non cognizable offence, or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards unless the State Government, or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government had by order in writing consented to the initiation of the proceedings; Provided that where the Criminal Conspiracy is one to which the provisions of sub section (4) of section 195 apply no such consent shall be necessary.
" Section 466 deals with a non cognizable offence and the sub clause (2) to section 196A provides that where the object of the conspiracy is to commit a non cognizable offence an order in writing consenting to the initiation of proceedings is necessary by the State Government or the Chief Presidency Magistrate or the District Magistrate empowered in this behalf by the State Government.
No such consent in writing was obtained in this case.
An exception to this requirement is Made by the Proviso which states that if the criminal conspiracy is one to which the provisions of sub section (4) of section 195 apply no such consent shall be necessary.
It is, therefore, necessary to determine whether the offence complained of is one that falls under section 195(4) in which case consent for initiation of the proceedings is not necessary.
Section 195(1) (c) and section 195(4) which are necessary for the discussion may be extracted. "195.
(1) No Court shall take cognizance (a) * * * * (b) * * * * (c) of any offence described in Section 463 or punishable under Section 471, Section 475 or Section 476 of the same Code, when such offence is alleged to have been 389 committed by a party to any proceeding in any Court in respect of a document produced or given in evidence in such proceeding, except on the complaint in writing of such Court, or of some other Court to which such Court is subordinate.
(2) * * * * (3) * * * * (4) The provisions of sub section (1), with reference to the offences named therein, apply also to criminal conspiracies to commit such offences and to the abetment of such offences, and attempts to commit.
(5) * * * * Sub section (4) makes the provisions of sub section (1) with reference to the offences named applicable to criminal conspiracy to commit such offences also.
If the offence falls under provisions of subsection (1) to Section 195 then criminal conspiracy to commit such offences would also fall under section 195(1) and require the complaint in writing by the court before the offence can be taken cognizance of.
The requirements of section 195(1)(C) are: (1) The offence must be one as described in section 463 or punishable under sections 471, 475 or 476 of the I.P.C. (2) Such offences Should be alleged to have been committed by a party to any proceeding in any court; (3) Such offence should be in respect of a document produced or given in evidence in such proceeding.
The offence for which the appellant is committed to take his trial is that there was consent of the appellant also in committing the conspiracy for committing forgery of the record by tampering the evidence of Dr. Barat while the records were being prepared by the High Court for being sent to the Supreme Court for use in the appeal pending before the Supreme Court.
The first requirement is that the offence should be one as described in section 463 or punishable under section 471, section 475 or section 476 of the Indian Penal Code.
It was submitted that as section 466, Indian Penal Code, is not one of the sections mentioned, the offence will not fall under the provisions of section 195(1) (c) 390 and the section will not apply.
In support of this view a decision of his Court in Govind Mehta vs State of Bihar(1), was relied on.
In that case, on a complaint by the District Public Prosecutor the appellant before this Court was committed to the Sessions to take trial under sections 167, 466 and 467 of the Indian Penal Code.
One of the contentions raised before this Court was that the offence under section 466, Indian Penal Code, is not covered by clauses (b) and (c) of section 195(1) and therefore section 195 does not operate as a bar to taking cognizance of an offence under section 466, Indian Penal Code.
this Court after agreeing with the view of the High Court that section 195(1) (b) or (c) is no bar to the Magistrate taking cognizance for an offence under section 167 observed: "The offence under section 466 of the Penal Code is, admittedly, not covered by clause (b) or clause (c) of section 195(1) of the Code.
therefore, that section does not operate as a bar in respect of this office.
" Again at p. 785 this Court observed: "Section 463 of the Penal Code is, no doubt, taken in by Clause (c) of Section 195(1) of the Code.
Even on the basis that Section 465 of the Penal Code will also be covered by Clause (c) as the offence, under Section 463 is dealt with therein, nevertheless, Clause (c) will not operate as a bar to the jurisdiction of the Magistrate in taking cognizance of the said offence is not alleged to have been committed 'by a party to any proceeding in any court. ' We have also referred to the fact that the appellant has been committed only for the offence under Sections 167, 466 and 471 of the Penal Code.
Section 465 of the Penal Code is not the subject of the committal order.
" We have given our careful consideration to the view expressed in the above decision that section 466 of the Indian Penal Code is not covered by clause (c) of section 195(1) of the Criminal Procedure Code.
We regret our inability to subscribe to this view.
At p.785 of the Report the Court took the view that the section 465 of the Indian Penal Code is not specifically mentioned in section 195(1) (c) of the Criminal Procedure Code as the offence under section 463 Indian Penal Code is dealt with in section 465, Indian Penal Code, clause (c) of section 195(1) will not operate as a bar to the Magistrate taking cognizance the offence.
The Court, though section 465 is not specifically mentioned in section ;195(1) (c), held that section 195(1) (c) Is applicable as an offence under section 463 is dealt with under section 465, Indian Penal Code.
On the same reasoning section 466 should also be held to come within the purview of section 195(1)(c), Criminal Procedure Code, as the offence under section 463 is dealt with in section 466.
Section 463, Indian Penal Code, defines forgery.
The elements of (1) [1971] Supp.
S.C.R. 777.
391 forgery are: (1) The making of a false document or part of it; (2) Such making should be with such intention as is specified in the section.
Section 464 states when a person is said to make a false document which is one of the requirements under section 463.
Section 465 provides the punishment for an offence under section 463.
Section 466 is an aggravated form of forgery in that the forgery should relate to a document specified in the section.
One of the documents specified is a document purporting to be a record or proceeding of or in a Court of Justice.
Section 466, Indian Penal Code, is therefore an offence as described in section 463 which is committed in relation to a record or proceeding of or in a court of justice.
The offences that fall within the purview of section 195(1)(c) are offences described in section 463 and offences punishable under sections 471, 475 or 476 of the Indian Penal Code.
The language of section 195(1)(c) is very significant for while referring to sections 474, 475 or 476, Indian Penal Code, it uses the word publishable, in the case of section 463 the words used are the 'offences described in section 463 '.
An offence under section 466 is an offence which falls within the description of section 463 as the offence under section 463 is dealt with therein.
Section 195(1)(a) of the Criminal Procedure Code uses the words "of any offence punishable under section 172" while in clause (b) the words used are "offence punishable under any of the following sections" mentioned therein.
In clause (c) as already pointed out the words used are "of any offence described in section 463 or punishable under section 471, section 475 or section 476 of the same Code".
Thus a clear distinction is maintained in the section between offences punishable under various sections mentioned and the offences described in section 463.
Even on the test laid down by this Court in Govind Mehta vs State of Bihar (supra) section 466 would be included within the purview of section 195(1) (c).
We are, therefore, of the view that the decision that section 466 of the Indian Penal Code is not covered by clause (b) or clause (c) of section 195(1) is erroneous and not good law.
The question of law was not considered and the decision was reached on an admission made by the parties.
We will now deal with the other requirements of section 195 (1) (c) namely that The offence should be alleged to have been committed by a party to any proceeding and that it should be in respect cf a document produced or given in evidence in such proceeding.
It is admitted that the appellant was a party in the appeal that he preferred against his conviction before the High Court but the appeal was decided against him and the conviction confirmed.
Special leave was granted against his conviction and for hearing of the appeal before the 392 Supreme Court the paper book was being prepared by the High Court.
It was during that time that it is alleged that the appellant entered into a conspiracy and tampered with the evidence of one of the defence witnesses which is a record of the court.
The appellant was a party to a proceeding in the High Court when the appeal was heard but the document complained of as having been tampered with i.e. the evidence of the defence witness, was not produced or giver in evidence in the appeal before the High Court.
The document was certainly not produced or given in evidence in the High Court proceedings.
The alleged tampering was after the hearing of the appeal was concluded.
No doubt, the tampering was in a proceeding in relation to the preparation of the record whether such tampering would be in relation to a proceeding in Supreme Court in respect of a document produced or given in evidence before it does not arise for consideration before us as the complaint in the case is filed only by the High Court.
In Abdul Khader and ors.
vs Meera Saheb(1) a Bench of the Madras High Court held that where a decree against Certain defendants had been passed upon the oath of the plaintiffs and where 'the documents alleged to be forgeries have been put into Court but were not given in evidence it would not be an offence committed by a party lo any proceeding in any court in respect of a document given in evidence in such proceeding though the documents were put in court in a suit pending before it but were not given in evidence Subsequent to this decision section 195(1)(c) was amended so as to include documents "produced" in addition to documents given in evidence.
In Pendyala Subbarayudu vs (Gudivada) Gopayya(2) if was held that it was indispensable that the offence committed must in some manner have affected the proceedings or had been designed to effect them or come to light in the course of them but an offence committed after their close is wholly outside the scope of the provision.
We agree with the view expressed in the decision.
In Nirmaljit Singh Hoon vs The State of West Bengal and Anr.(3) it was held that a document produced in a proceeding before the court during the investigation by the police ordered under section 156(3) of the Criminal Procedure Code would not be a document produced ill a proceeding before the court so as to attract the ban under section 195(1) (c) of the Criminal Procedure Code.
This Court in a recent decision in Legal Remembrancer of Government of West Bengal vs Haridas Mundra(4) held that the requirement of section 195(1) (c) is that the document in question should be produced or given in evidence in the (1) I.L.R. 15 M d. 224.
(2) A.l.
R. (3) ; (4) ; 393 proceeding before the court.
We find on the facts of the case that it has not been established that the document was produced or given in evidence in a proceeding before the court.
The requirements of section 195(1)(c) having not been satisfied a complaint by the court in writing is not necessary.
Equally, under sub section (4) to section 195 relating to criminal conspiracy to commit such offence a complaint by the court is not necessary.
Therefore, section 196 A(2) is attracted and a complaint by the State Government or the Chief Presidency Magistrate or a District Magistrate compowered in this behalf by the State Government in writing consenting to the initiation of the proceedings for an offence under section 120 B, Indian Penal Code is necessary.
As in this case no such order consenting to the initiation of proceedings was passed we accept the contention of the learned counsel for the appellant that the Magistrate had no jurisdiction to take cognizance of the offence against the appellant.
In the result, we allow the appeal, reverse the judgment of the High Court and quash the order of committal passed by the Magistrate.
First Class, Jabalpur.
S.R. Appeal allowed.
|
On a complaint by the Additional Registrar of the Madhya Pradesh High Court alleging that, while the Paper Book in the Supreme Court appeal was being prepared, the appellant entered, into a conspiracy with two of the translators of the Court and tampered with the of original deposition of one Dr. section C. Barat (D.W. 1) in an earlier criminal case against the appellant which was under appeal in the Supreme Court for which the aforesaid paper book was being prepared, the First Class Magistrate committed the appellant and two others to the Sessions Court to take their trial for offences under section 466 read with section 120 B of the Penal Code.
The appellant and another preferred a revision petition before the High Court against the said order of committal.
The High Court dismissed the revision petition.
Allowing the appeal by special leave, the Court ^ HELD : 1.
An offence under section 466 I.P.C is covered by clause (c) of section 195(1) of the Criminal Procedure Code and comes within the purview of that section, as the offence under section 463 I.P.C. is dealt within section 466 I.P.C. Section 466 I.P.C. is on aggravated form of forgery in that the forgery should relate to a document specified in that section.
Section 466 I.P.C., is therefore an offence as described in section 463 I.P.C. which is committed in relation to a record or proceeding of or in a court of justice.
[390F, H, 391 A B] The offences that fall within the purview of section 195(1)(c) Criminal P C. are offences described in section 463 I.P.C. and offences punishable under section 471, 475 or 476 of the Penal Code.
The language of section 195(1) (c) of the Crl.
P.C. is very significant for while referring to sections 471, 475 or 476 I.P.C., it uses the word punishable in the case of section 463 I.P.C. the words are 'the offences described in section 463 '.
An offence under section 466 I.P.C. is an offence which falls within the description of section 463 I.P.C., as the offence under section 463 I.P.C. is dealt with therein.
[391B D] Section 195(1)(a) of the Criminal Procedure Code uses the words "of any offences punishable under section 172. " while in clause (b), the words used are "offences punishable under any of the following sections mentioned therein".
In clause (e) the words are "of any offence described in section 463 or punishable under section 471, section 475 or section 476 of the same code".
Thus a clear distinction is maintained in the section between offences 386 punishable under various sections mentioned and the offence described in section 463.
Even on the test laid down in Govind Mehta vs State of Bihar , section 466 I.P.C. would be included within the purview of section 195(1)(c) of the Criminal Procedure Code.
[391D E] Govind Mehta vs State of Bihar ; explained and over ruled.
The requirement; of section 195 (1)(c) is that the document in question should be produced or given in evidence in the proceeding before the Court.
The offence committed must in some manner have affected the proceedings or had been designed to affect them or come to light in the course of them, but an offence committed after their conclusion is wholly outside the scope of the provision.
[392F H, 393A] Legal Remembrancer of Govt.
Of West Bengal vs Hari Das.
Mundra ; , applied.
Pendyala Suhbarayudu vs Gudivada Gopayya A.I.R. 1932 Madras 290; approved.
Nirmal Jit Singh Hoon vs State of West Bengal and Anr. ; and Abdul Khadar and ors.
vs Meera Saheb I.L.R. ; referred to.
In the instant case (a) section 196A(2) of the Criminal Procedure Code is attracted and a complaint by the State Government or the Chief Presidency Magistrate empowered in this behalf by the State Government in writing consenting to the initiation of the proceedings for an offence under section 120 l.
P.C. is necessary.
[393B] (b) The requirement of section 195(1)(c) having not been satisfied a complaint by the Court in writing is not necessary.
[393A] (c) Equally under sub section (4) to section 195 relating to criminal conspiracy to commit such offence a complaint by the Court is not necessary.
[393A]
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3929.txt
|
ivil Appeal Nos. 2542 to 2544 of 1972.
Appeals by Special Leave from the Judgment and order dated 11 12 1970 of the Madras High Court in Civil Revision Petitions Nos.
1824 and 1825/65.
V. P. Raman, Adv.
and A. V. Rangam for the Appellant.
1123 A. T. M. Sampath for Respondent in C.A. 2542/72.
K. section Ramamurthi, Mrs. Saroja Gopalkrishnan for Respondent in C.A. 2542/72.
K. Jayaram and K. Ram Kumar for R. 1 in CA 2544/72.
K. Rajendra Choudhry for R. 2 in C.A. 2544/72.
The Judgment of.
the Court was delivered by KRISHNA IYER J.
The short point of law decided in the long judgment under appeal may justly be given short shrift.
But the batch of Civil Revision Petitions allowed by the High Court involves a legal issue of deep import from the angle of agrarian reform and surplus land available for distribution under its scheme that we deem it proper to discuss the core question at some length.
If the statutory construction which found favour with the High Court be correct the risk of reform legislation being condemned to functional futility is great, and so the State has come up in appeal by Special Leave challenging the High Court 's interpretation of section 22 of the Tamil Nadu Land Reforms (Fixation of Ceiling on land) Act, 1961 (for short, the Ceiling Act).
Presently, we will set out the skeletal facts relating to the civil appeals and the scheme of the Act designed for distributive justice in the field of agricultural land ownership, sufficient to disclose the purpose of the legislation, the mischief it intends to suppress, the reverse effect of the construction put on the key section (section 22) in the judgment under appeal and the consequent stultification of the objective of the Ceiling Act.
While dealing with welfare legislation of so fundamental a character as agrarian reform, the court must constantly remember that the statutory pilgrimage to 'destination social justice ' should be helped, and not hampered, by judicial interpretation.
For, the story of agrarian re distribution in Tamil Nadu, as elsewhere, has been tardy and zigzag, what with legislative delays, judicial stays and invalidations, followed by fresh constitutional amendments and new constitutional challenges and statutory constructions, holding up, for decades, urgent measures of rural economic justice which was part of the pledges of the Freedom struggle.
It is true that judges are constitutional invigilators and statutory interpreters; but they are also responsive and responsible to Part IV of the Constitution being one of the trinity of the nation 's appointed instrumentalities in the transformation of the socio economic order.
The judiciary in its sphere, shares the revolutionary purpose of the Constitutional order, and when called upon to decode social legislation must be animated by a goal oriented approach.
This is part of the dynamic of statutory intretation in the developing countries so that courts are not converted into rescue shelters for those who seek to defeat agrarian justice by cute transac 1124 tions of many manifestations now so similar in the country and illustrated by the several cases under appeal.
This caveat has become necessary because the judiciary is not a mere umpire, as some assume, but an activist catalyst in the constitutional scheme.
The Ceiling Act, in its structure and process, follows the common pattern.
The object is equitable distribution of land to the landless by relieving those who hold more than the optimum extent fixed by the law.
The success of the scheme depends on maximisation of surplus land to be taken over by the State from large landholders.
The strategy of fixing a severe ceiling on land holdings was expected to be paralysed by anticipatory strategems by landholders and so the legislature sought to outwit them and clamped down pre emptive restrictions on transfer whereby the surplus takeover would be sabotaged, Chapter II prescribes the ceiling on land holdings and Chapter III proscribes certain types of deleterious transfers and future acquisitions.
One such provision is section 22 which falls for immediate dissection.
The machinery for working out the scheme includes 'authorised officers ' defined in section 3(5) of the Ceiling Act.
The rest of the infrastructure for implementation of the statutory scheme is not material for our case nor the other chapters relating to compensation, exemptions and the like Chapter XI provides for appeals and revisions and the High Court, by virtue of section 83 read with section 115 of the Code of Civil Procedure, has jurisdiction to entertain revisions against orders of Land Tribunals which enjoy appellate powers over orders of authorised officers in the manner provided.
The present appeals are against a common order of the High Court allowing several revision petitions under section 115 C.P.C.
Now, the respondents before us in the several appeals are persons whose transfers have been held void by the authorised officer and the land Tribunal but upheld by the High Court on a narrow construction of section 22 of the Ceiling Act.
The alienations took many forms ranging from stridhana to bona fide sale but shared one common attribute that they were executed during the suspect spell, if one may say so, between the date of commencement of the Act and the notified date.
The legislature, in its realistic anxiety and pragmatic wisdom, demarcated a lethal zone viz., the period between the two dates stated above when all landholders with lands in excess of the ceiling would desperately salvage their surplus by resort to devices, some bona fide, some not, but all having the effect of frustrating the legislative objective of freezing holdings as on the date of commencement of the Act and seizing the surplus in terms cf the Act for eventual equitable distribution, after payment of statutory compensation.
1125 Before embarking on any further discussion of the project of interdicting transfers, as spelt out in section 22, we may read the provision: "Where on or after tho date of commencement of this Act, but before the notified date, any person has transferred any land held by him by sale, gift (other than gift made in contemplation of death), exchange, surrender, settlement or in any other manner except by request or, has effected a partition of his holding or part thereof, the Authorised officer within whose jurisdiction such land, holding of the major part thereof is situated may, after notice to such person and other persons affected by such transfer on partition and after such enquiry as he thinks fit to make declare the transfer or partition to be void if he finds that the transfer or the partition as the case may be, defeats any of the provisions of this Act.
" Three semantic alternatives compete for judicial acceptance.
The first, which appealed to the Land Tribunal is that all alienations during the dubious period specificated in section 22, if executed by a holder who, but for such shedding operation or alienation, would have had lands in excess of the ceiling prescribed by the Act, are void because they are sure to defeat the 'surplus ' provisions of the Act.
The second alternative, which swings to the other extreme but has met with the High Court 's approval, virtually salvages all such transfers save sham and mala fide ones, for only if they are obnoxious in that sense can they be caught in the coils of section 22.
The third possible construction, which is in between the two extremes and has been forcefully pressed before us by Shri K. section Ramamurthy, validates bona fide transfers even during the offending period, the reason being that regardless of their impact on the scheme of the Act or its provisions, the primary object is bona fide fulfilment of the alienor 's purposes such as discharge of pressing debts or borrowing to perform necessitous obligations and not to defeat or thwart the purposes or provisions of the Act.
The judicial choice from among these triple possibles depends on the rules of statutory interpretation.
In the present case the basic facts are beyond dispute.
The legislature had a defined plan of providing for a ceiling on land holding, taking over the balance and distributing it among the landless according to priorities.
In this perspective it defined the "date of the commencement of this Act in section 3(11) as meaning the 15th day of February, 1970.
It also defined in section 3(31) the notified date.
As stated earlier, the Ceiling Act had 1126 a chequered career in court and, indeed, at one stage the whole Act was struck down as unconstitutional.
However, now it is immune to attack having been included in the Ninth Schedule and there is no challenge to its vires before, us.
On account of extensive mischief done by alienations on a considerable scale calculated to undo the public policy behind agrarian reform the legislature felt the necessity to provide in section 22 that transfers made between 6 4 1960 and 2 10 1962 would be void if they defeated the provisions of the Act.
In all the cases before us the transfers which have been ignored by the Authorised officer fall within this interregnum.
That being admitted, the only question is whether the lethal effect of section 22 operates only in the case of transfers which are sham and specifically intended to defeat the Act or does not affect transfers which are otherwise bona fide or is so pervasive that if the effect of the transfer is to defeat the provisions of the Act, whatever the intent of the parties, the transfer is void and can be ignored vis a vis the Ceiling Act and the Authorised officer may legitimately proceed to compute the surplus area on this basis.
The learned judge adverted to an argument that the Act being a confiscatory one, the public authority "invested with the power to enquire into and to invalidate a transfer should act reasonably, and that such a power should be construed beneficently in favour of the subject who is affected by the statue (emphasis added).
This approach, sanctified by tradition and vintage jurisprudence, is inept and inapplicable when we consider agrarian reform legislation whose avowed purpose is to take away as much extent of land as policy dictates so that distribution thereof among the landless may be achieved.
When a whole legislation is geared to deprivation of property, subject to payment of compensation, rules which have frowned upon confiscatory legislation cannot apply at all.
We are concerned with a Re public created by the people of India, with a social transformation where the State is hot antagonistic to the citizen but harmonises individual interest with community good.
The jurisprudential principles in such a situation cannot be the same as have been inherited from a culture which postulates the State versus the subject.
We do not explore the aspect of the law further as we are satisfied that the answer to the specific question raised before us flows directly from a reading of the Section in the light of well established rules of interpretation.
Section 7 is a key provision and runs as follows: "on and from the date of commencement of this Act, no person shall, except as otherwise provided in this Act but 1127 subject to the provisions of Chapter VIII be entitled to hold land in excess of the ceiling area; Provided that in calculating the total of land held by any person, any extent in excess of the ceiling area and not exceeding half an acre in the case of wet land and one acre in the case of dry land shall, irrespective of the assessment of such land, be excluded.
" Section 8 directs every person who holds land in excess of 30 standard acres to submit a return with specified particulars.
Section 18 is the culmination and provides for the publication of a notification to the effect.
that the surplus land with each landholder is required for a public purpose.
Thereupon such land shall be deemed to have been acquired for a public purpose and shall vest in the Government.
Chapter III is a protective armour created by the statute with prohibitions and proscriptions.
In particular, section 22, which we have quoted earlier, contains an interdict.
If any transfer, contrary to its tenor, is created it can be voided by the Authorised officer.
The whole purpose is to make available land with Government for its equitable dispensation according to the statutory plan.
Section 94 is relevant in this context.
6 4 1960 is the date of commencement of the Act.
2 10 62 is the notified date.
Transfers in between these two dates have been executed by the respondents in the various appeals before us.
The concrete question is wether section 22 has the effect of rendering such transfers invalid ipso facto or whether there is need for further proof that such transfers are "sham, nominal and bogus".
The view taken by the High Court is that: " .
Section 22 seems to cover only those sham, nominal and bogus transfers which are only intended to defeat the provisions of the Act.
If the Legislative intention is also to invalidate all bona fide transactions during the relevant period, it would have made certain consequential provisions as to what are the rights of the transferor and the transferee in relation to the property conveyed, and how the resultant equities between the transferee and the transferor have to be worked out.
This view that section 22 will cover only transactions of sham, nominal and bogus character which are intended only to defeat the provisions of the Act will not be inconsistent with the object provided in section 7." 1128 The learned judge seems to take a liberal view that transactions entered into in anticipation of the Ceiling Act will not be hit by the provisions preventing such transfers except where they are mala fide or oolourable.
The reason partly turns on semantics and the court argue with logical support: "The word "defeat" normally means overcome, thwart, evade, frustrate, circumvent, bypass, disappoint, prevent, the accomplishment of the word "defeat" in Section 22 is one to be taken as having been used to import sinister, motive.
I Maxwell on the interpretation of statutes, twelfth edition, after stating that the Courts will not be astute to narrow the language of a statute so as to allow persons within its purview to escape its net, that the statute has to be applied to the substance rather than the mere from of transactions thus _ defeating any shifts and contrivances which parties may have devised in the hope of falling outside the Act.
" The conclusion categorically reached by the High Court virtually emasculates section 22 as we understand its object and import.
The learned judge winds up with these words: "on a due consideration of the matter, I hold that under section 22 of the Act the authorised officer is entitled to declare as void only those transfers which are sham and nominal entered into with the avowed object of defeating the provisions of the Act, without any bona fide intention to transfer title.
So in the light of the view expressed above the facts of each case have to be considered.
" Section 22, literally read leads only to one conclusion, that any transfer, bona fide executed or not, is liable to be declared void by the Authorised Officer "if he finds that the transfer defeats any of the provisions of this Act.
" There is not the slightest doubt that severally and cumulatively the provisions of the Act seek to make available the maximum extent of land, in excess of the ceiling, to be vested in Government for fulfilment of its purposes.
Chapter II contains a fasciculus of provisions in this behalf and if any transfer carves out of the surplus area some land, pro tanto, the provisions of the Act are defeated.
Indeed, it is not seriously disputed that such will be the conclusion if we do not read into the provisions either the condition that it does not apply to bona fide transfers, as Shri Ramamurthy would have it, or does not apply to any transfers other than sham, nominal or bogus transfers, as the High Court would have it.
A policy oriented interpretation tallies with the literal construction in the 1129 present case.
The mischief rule in Heydon 's case and the grammatical construction which is the Golden Rule converge to the same conclusion in the present case.
The policy of the law of land reform with drastic limit on holdings often drives large holders to evade by manouvres.
They make r .
gifts, execute sales or settlements, enter into other dealings to save their properties from being taken by the State.
May be in a few cases, the owner has real necessity.
But why sell only on The eve of land legislation? Why execute deeds, though for good purposes, only where the bill fixing ceilings is round the corner? By and large, the strategies of extrication of holdings from the arm of the law is the t reason that prompts sudden affection for making gifts, sudden realisation of debts due and sudden awareness of family necessity.
The legislature, astute enough not to be outwitted in its objective, puts a blanket ban on transfers which, in effect, defeat its provisions.
This may cause hardship to some but every cause claims martyrs.
Individual trauma is inevitable while ushering in a new economic order.
This is the rationale of section 22 of the Ceiling Act.
To alloy the sense of the text and to mi alien concepts is to debase the statutory metal.
Likewise, laws are not value free and so he reads the symbols of words best who projects in the process the values of the legislation as distinguished from his own.
Reading other values into the legislators ' words may judicially demonetize the statute and break me comity between constitutional instrumentalities.
The current and correct view of the interpretative process is that words must be given their 'literal ' or 'ordinary ' meaning unless there are compelling reasons, recognised by canons of construction, to the contrary.
It must be remembered that the judicial rule of law for interpreting statutes applies the grammatical approach, thereby to bring out the value judgment incorporated in the statute itself.
Some times it is called the 'equity of the statute '.
As Prof. R. B. Stevens of the Yale University has pointed out: "Whenever the judges support to depart from the literal or ordinary meaning, and apply the mischief rule or the golden rule, there is danger that in place of those irrelevant criteria, the canons of construction, they have more obviously substituted their own (perhaps more harmful) impressions, views, prejudices or predispositions.
Such conflicts between what Parliament intended and what the judges assumed Parliament to have intended have long been appreciated.
"(1) (I) Modern Law Review, Vol.
28,1965 p 525 16 409 SCI/79 1130 Those who have reflected on the meaning of meaning have said that words. "mean" nothing by themselves. (1).
They convey policy and the judge who interprets must seek the intent of the legislature by gaining an insight into this policy and making it manifest through the process of construction.
Looking at the words of section 22 in the light of the scheme, of prohibition of transfers to preserve the surplus lands for distribution, we find no justification for importing into section 22 more than its words convey.
The Section says what it means, nothing more, nothing else.
A simple scan of the provision reveals that any transfer, gift, surrender, settlement or other alienation referred to in the Section may be declared void by the Authorised officer "if he finds that the transfer or the partition. defeats any of the provisions of this Act.".
The trichotomy is obvious.
There must be a transfer or other alienation.
It must have taken place during the period mentioned in the Section.
It must have the effect of defeating any of the provisions, of the Act.
If these three elements are present, the Authorised officer must void the transfer.
There is no room for importing a fourth principal that the transfer should be 'sham, nominal or bogus '.
Nor indeed is there any additional consideration that if the transfer is bona, fide for family necessity or other urgency then it is good, even though it defeats the provisions of the Act.
We cannot amend the Section or dilute its imperatives, scared by the consequences or moved by extraneous sympathies.
Sub conscious forces and individual prepossessions have a subtle way of entering the interpretative verdict of the judge.
We have to be constantly careful to exclude such intrusions.
Moreover, when the whole purpose of the Section is, to prevent any alienation which defeats any of the purpose if visions of the Act, it is impermissible to introduce any requirement, other than is mentioned in the Section, as a condition for its operation.
Obviously, the provision seeks to provide social justice for the landless and it defeats the purpose if, by the interpretative process, soft Justice to large landholders is brought about.
We consider the 'literal ' meaning of the Section to be that any transfer or other alienation mentioned in the Section which reduces or impairs the otherwise available extent of surplus land beyond the ceiling "defeats. the provisions of this Act.
" This is the plain meaning of the Section which gives no room for doubt or justification for importation of any further condition like sham, bogus etc.
A return to the rules of strict construction, when the purpose of (I) C. Ogden and I. Richards, The Meaning of Meaning 9 (10th Edn. 1956) 1131 the statute needs it, is desirable, especially with a view to give effect A to the intention of the legislature.
We are reminded of Lord Denning 's interesting remarks in his recent book "The Discipline of Law" under heading "I am a Portia Man".
In justification of his view Russell LJ quoted a passage from Shakespeare.
It is worth recording because there are lessons to be drawn from it as there often are from Shakes peare. 'I may perhaps be forgiven for saying that it appears to me that Lord Denning MR has acceded to the appeal of Bessanio in the Merchant of Venice.
Bessanio "And, I beseech you, Wrest once the law to your authority: To do a great right, do a little wrong.
But Portia retorted: "It must not be; there is no power in Venice Can alter a decree established: It will be recorded for a precedent, And many an error, by the same example, Will rush into the State: it cannot be." Then said Russell LJ. 'I am a Portia man '.
I cannot believe that Russell LJ would be a 'Portia man ' if it meant aligning himself with Shylock in support of a strict law of penalties which could not be relieved by equity.
To be truly a 'Portia marl ' The lawyer should follow the way ill which Portia avoided an unjust decree.
Not to let the words of the deed be the masters: but so construe them adapt them as the occasion demands so as to do what justice and equity require.
This is how she turned the tables on Shylock: It is in this denouement that I would follow the example of Portia I too am a Portia man In the interpretation of section 22 we too are Portia men.
For this reason we reverse the view of the High Court that section 22 will not apply to nullify any transaction of transfer or partition unless it is further 1132 shown that it is sham, nominal or bogus.
Nor do we agree with Shri Ramamurthy that even if a Transaction defeats the ceiling provisions, it may still be valid if the transfer is, from an individual point of view, bona fide.
The short reply is that from the community 's angle, especially the landless community 's angle hungering for allotment, the alienation, however necessary for the individual, is not bona fide visa vis the community.
Therefore, we allow the appeal in the light of the interpretation we have adopted, restore the tribunal 's holding and rule that if any transfer defeats the provisions of the Act by reducing the extent of surplus land in excess of the ceiling available from any person such transaction bona fide or not, is void in the matter of computation of the permissible area and the surplus area.
May be, that the transaction may be good for other purposes or may not be.
The Authorised officer is within his power if he ignores it as void for purposes of section 22, section 7 and other ceiling related provisions.
The detailed discussion of the High Court on many other aspects of the Act do not affect the core of the matter and cannot deflect us from the conclusion we have arrived at.
The appeals are allowed but in the light of the earlier direction of the Court the State will pay the costs of the respondent.
P.B.R. Appeal allowed.
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Section 7 of the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act 1961, provides that on and from the date of commencement of the Act no person shall, except as otherwise provided in the Act, but subject to the provisions of Chapter VIII, be entitled to hold land in excess of the ceiling area.
Section 22 provides that where on or after the date of commencement of the Act (6th April, 1960) but before the notified date (2nd October, 1962) any person has transferred any land held by him by sale, gift etc.
the Authorised officer within whose jurisdiction such land holding of the major part thereof is situated may, after notice to such person and other persons affected by such transfer or partition and after such inquiry as he thinks fit to make, declare tho transfer or partition to be void if he finds that the transfer or the partition, as the case may be, defeats any of tho provisions of the Act.
Tho alienations in all the cases took many forms ranging from stridhana to bona fide sale and they were executed between the date of commencement of the Act and notified date.
The Land Tribunal held that the alienations were void because but for the alienations the holders would have had the lands in excess of the ceiling prescribed by the Act.
On the interpretation of section 22 of the Act, the High Court was of the view that the section covered only those sham, nominal and bogus transfers which are intended to defeat the provisions of the Act and which are inconsistent with the object provided in section 7.
It was also held that transactions entered into in anticipation of the Ceiling Act would not be hit by the provisions preventing such transfers except where they were mala fide or colourable; and that tho the word "defeat" in section 22 should be taken as having been used to import a sinister motive.
It was therefore held that under section 22 the Authorised officer is entitled to declare as void only those transfers which are sham and nominal entered into with the avowed object of defeating the provisions of the Act without any bona fide intention to transfer title.
^ HELD: (1) If any transfer defeats the provisions of the Act by reducing the extent of surplus land in excess of the ceiling available from any person such transaction, bona fide or not, is void in the matter of computation of the permissible area and the surplus area.
The Authorised officer is within his power if he ignores it as void for purposes of section 22, section 7 and other ceiling related provisions.
[1132C] 1122 (2) Looking at the words of section 22 in the light of the scheme of prohibition of transfers to preserve the surplus land for distribution there is no justification for importing into section 22 more than its words convey.
The section says what it means.
A simple scan of the provision reveals that any transfer, gift, surrender, settlement or other alienations may be declared void by the Authorized Officer, if he finds that the transfer or the partition defeats any of the provision of this Act.
The trichotomy is obvious: There must be a transfer or other n alienation; it must have taken place during the period mentioned in the section; it must have the effect of defeating any of the provisions of the Act.
if these three elements are present, the Authorised officer must void the transfer.
There is no rule for importing a fourth principle that the transfer should be sham, nominal or bogus nor is there any additional consideration that if the transfer is bona fide for family necessity or other urgency then it is good even though it defeats the provisions of the Act.
The provision seeks to provide social justice for the landless and it defeats the purpose if, by the interpretative process, soft justice to large land holders is brought about.
[1130B D] (3) The literal meaning of the section is that any transfer or other alienation mentioned in it which reduces or impairs the otherwise available extent of surplus land beyond the ceiling defeats the provisions of the Act.
This is the plain meaning of the section which gives no room for doubt or justification for importation of any further condition like sham, bogus etc.
(4) The High Court was wrong in its view that the Act being confiscatory one, the public authority "invested with the power to enquire into and to invalidate a transfer should act reasonably, and that such a power should be construed beneficially in favour of the subject who is affected by the statute.
" The approach of the High Court is inept and inapplicable when once considers agrarian reform legislation whose avowed purpose is to take away as much extent of land as policy dictates so that distribution thereof among the landless may be achieved.
When a whole legislation is geared to deprivation of property, rules which have frowned upon confiscatory legislation cannot apply at all.
The jurisprudential principles in such a situation cannot be the same as have been inherited from a culture which postulates the State vs the subject.
[1126E G] (5) While dealing with welfare legislation of so fundamental 3 character as agrarian reform, the Court must constantly remember that the statutory pilgrimage to destination social justice should be helped, not hampered, by judicial interpretation.
It is true that Judges are constitutional invigilators and statutory interpreters; but they are also responsive and responsible to Part IV of the Constitution.
The judiciary, in its sphere, shares the revolutionary purpose of the constitutional order and when called upon to decode social legislation it must be animated by the goal oriented approach.
[1123E H]
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4020.txt
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Civil Appeal No. 662 of 1981 Appeal by special leave from the judgment and order dated the 15th January, 1981 of the Bombay High Court in Letters Patent Appeal No. 611 of 1980.
Soli J. Sorabji G.L. Sanghi, P.H. Parekh, P.K. Shroff and Gautam Philips for the Appellant.
R.P. Khambata, B.R. Agarwala, K.P. Khambata, Ashok C. Mehta and Miss Halida Khatun for Respondent No. 1.
K.K. Venugopal, R. Vaidya, M.B. Rele, Rajiv K. Garg and N.D. Garg for Respondent No. 2.
The following judgments were delivered: FAZAL ALI, J.
This appeal by special leave is directed against an Order dated January 15, 1981 of the Division Bench of the Bombay High Court by which the appeal filed by the appellant against the Order of the Trial Judge was dismissed on the ground that the appeal was not maintainable as the Order impugned was 197 not a judgment within the meaning of clause 15 of the Letters Patent of the High Court.
After hearing counsel for the parties at great length we passed the following Order on April 22, 1981: "We have heard counsel for the parties at great length.
In our opinion, the appeal before the High Court was maintainable and the High Court should have entertained and decided it on merits.
We, therefore, allow this appeal, set aside the judgment dated January 15, 1981 of the Division Bench of the Bombay High Court and remand the case to the same and decide it on merits.
The High Court will dispose of the appeal as quickly as possible.
The interim order passed by this Court on February 16, 1981 will continue until the High Court disposes of the appeal.
Liberty to parties to approach the High Court for fixing an early date of hearing.
In the circumstances, there will be no order as to costs.
Reasoned judgment will follow.
" We now set out to give the reasons for the formal Order allowing the appeal which was passed by us on the aforesaid date.
As we are not at all concerned with the facts of the case it is not necessary to detail the same in this judgment.
Suffice it to say that the plaintiff appellant had filed a suit on the original side of the Bombay High Court for specific performance of a contract and prayed for an interim relief by appointing a receiver of the suit property and injuncting the defendant from disposing of the suit property during the pendency of the suit.
The single Judge after hearing the notice of motion dismissed the application for appointment of receiver as also for interim injunction.
Thereafter, the plaintiff appellant filed an appeal before the Bombay High Court which dismissed the appeal as being non maintainable on the ground that the Order impugned (order of the Single Judge) was not a judgment as contemplated by clause 15 of the letters patent of the High Court.
Hence, this appeal by special leave.
The substantial questions of law raised in this appeal by the Counsel for the parties are as to the scope, ambit and meaning of 198 the word 'judgment ' appearing in clause 15 of the Letters Patent of the Bombay High Court and corresponding clauses in the Letters Patent of other High Courts.
We might mention here that the significance of the word 'judgment ' assumes a special importance in those High Courts which have ordinary civil jurisdiction depending on valuation of the suit or the action.
These High Courts are Calcutta, Bombay, Madras as also Delhi and Jammu & Kashmir.
The other High Courts do not have any ordinary civil jurisdiction but their original jurisdiction is confined only to a few causes like probate and administration, admiralty and cases under .
It seems to us that the interpretation of the word 'judgment ' appearing in the Letters Patent of the High Court has been the subject matter of judicial interpretation by decisions rendered by various High Courts in India.
Unfortunately, however, the decisions are by no means consistent or unanimous.
On the other hand, there appears to be a serious divergence of judicial opinions and a constant conflict between the High Courts regarding the true scope, ambit and meaning of the word 'judgment ' appearing in the Letters Patent so much so that a colossal controversy has been raging in this country for more than a century.
Several tests have been laid down by leading judgments of the Calcutta, Madras and Rangoon High Courts.
Other High Courts have either followed one or the other of the leading judgments regarding the validity of the tests laid down by the three High Courts.
The Calcutta High Court appears to have followed the leading case of its court in The Justices of the Peace for Calcutta vs The Oriental Gas Company where Sir Richard Couch, C.J. had laid down a particular test on a rather strict and literal interpretation of the Letters Patent.
Later decisions of the Calcutta High Court have followed this decision of Sir Richard Couch, C.J. with some modifications and clarifications.
The Madras High Court has taken a very liberal view in its decision in T.V. Tuljaram Row vs M.K.R.V. Alagappa Chettiar.
The Bombay High Court seems to have consistently taken the view that no interlocutory order can ever be said to be a judgment within the meaning of the Letters Patent so as to be appealable from the order of a Single Judge exercising original civil jurisdiction (hereinafter referred to as 'Trial Judge ') to a larger Bench.
The Rangoon High Court speaking through Sir Page, C.J. in In Re Dayabhai Jiwandas & Ors vs A.M.M. Murugappa Chettiur has placed a very narrow interpretation on 199 the term 'judgment ' and has almost equated it with a decree passed by a civil court.
This Court also has incidentally gone into the interpretation of the word 'judgment ' and has made certain observations but seems to have decided the cases before it on the peculiar facts of each case without settling the conflict or the controversy resulting from the divergent views of the High Courts.
This Court, however, has expressed a solemn desire and a pious wish that the controversy and the conflict between the various decisions of the High Courts has to be settled once for all some time or the other.
In this connection, in Asrumati Debi vs Kumar Rupendra Deb Raikot & Ors.
this Court observed as follows: "In view of this wide divergence of judicial opinion, it may be necessary for this Court at some time or other to examine carefully the principles upon which the different views mentioned above purport to be based and attempt to determine with as much definiteness as possible the true meaning and scope of the word 'judgment ' as it occurs in clause 15 of the Letters Patent of the Calcutta High Court and in the corresponding clauses of the Letters Patent of the other High Courts.
We are, however, relieved from embarking on such enquiry in the present case as we are satisfied that in none of the views referred to above could an order of the character which we have before us, be regarded as a 'judgment ' within the meaning of clause 15 of the Letters Patent".
(Emphasis supplied) Similarly, in the case of State of Uttar Pradesh vs Dr. Vijay Anand Maharaj, this Court noticed the divergence of judicial opinions on the subject and observed as follows : "The scope of the expression "judgment" came under the judicial scrutiny of the various High Courts, there is a cleavage of opinion on that question. . . 200 The foregoing brief analysis of judgment shows that the definition given by the Madras High Court is wider than that given by the Calcutta and Nagpur High Courts.
It is not necessary in this case to attempt to reconcile the said decision or to give a definition of our own, for on the facts of the present case the order of Mehrotra, J., would be a judgment within the meaning of the narrower definition of that expression".
After, however, analysing the various judgments this Court did not think it necessary to give any definition of its own and refrained from giving a final decision on the question as to the scope and meaning of the word 'judgment ' appearing in the Letters Patent.
Mudholkar, J. in his concurring judgment expressly refrained from expressing any opinion on the subject.
Again in a later decision in Shankarlal Aggarwal & Ors.
vs Shankarlal Poddar & Ors.
the conflict in the various decisions of various High Courts was again noticed and this Court observed as follows: "There has been very wide divergence of opinion between the several High Court in India as to the content of the expression 'judgment ' occurring in Cl.
15 of the Letters Patent. . .
We consider that occasion has not arisen before us either since in view of the construction which we have adopted of section 202 of the Indian the scope of the expression 'judgment ' in the Letters Patent does not call for examination or final decision".
(Emphasis ours) There are other decisions of this Court also which have touched the fringes of the question but did not choose to give a final verdict on the vexed question and preferred to decide the cases on their own facts.
We shall briefly refer to these decisions at a later stage of this judgment.
With due deference to the desire of this Court to settle the controversy in question once for all, the very able, detailed and lengthy arguments advanced by counsel for the parties on various shades, features and aspects of the interpretation of the word 'judg 201 ment ' appearing in the Letters Patent, the serious legal controversy raging in this country for over a century between the various High Courts resulting in an irreconciliable element of judicial uncertainty in the interpretation of the law and further having regard to the huge backlog and accumulation of arrears in the High Courts, we are clearly of the opinion that the time has now come when the entire controversy on the subject should be set at rest and an authoritative pronouncement on the matter may be given by us so as to maintain complete consistency in deciding the matter by the High Courts whenever it arises.
Mr. Sorabjee, learned counsel for the appellants has submitted four important points of law dwelling on the various facts of the question at issue: (1) It was contended that the provisions of section 104 read with order 43 Rule 1 of the Code of Civil Procedure, 1908 (hereinafter referred to as 'Code of 1908 ') does not impose any bar on the trial held by the Trial Judge and thus by virtue of these provisions the order impugned (the order of the trial court refusing to appoint Receiver and to grant injunction) falls squarely under clauses (r) and (s) of order 43 Rule 1 of the Code of 1908 and is therefore appealable to a larger Bench.
In amplification of this contention it was submitted that the Trial Judge is governed by the procedure prescribed by the Code of 1908 in all matters and hence there is no reason why order 43 Rule 1 should not apply to any order passed by the Trial Judge under any of the clauses of order 43 Rule 1 read with section 104.
(2) Even if we assume that the Letters Patent was a special law which overrides the provisions of the Code of Civil Procedure, the power under section 104 read with order 43 Rule 1 is in no way inconsistent with cl. 15 of the Letters Patent.
Section 104 merely provides an additional remedy and confers a new jurisdiction on the High Court without at all interfering with or overriding the existing provisions of the Letters Patent.
202 (3) Even if order 43 Rule 1 did not apply in terms, the orders which have been mentioned as being appealable to a larger Bench could form valuable guidelines for the Court in arriving at the conclusion that such orders amount to judgments of the Single Judge as contemplated by the Letters Patent.
(4) Even if section 104 read with order 43 Rule 1 does not apply, an order refusing to appoint a receiver or to grant injunction has the trappings and attributes of finality as it affects valuable rights of the plaintiff in an ancillary proceeding though the suit is kept alive and would, therefore, amount to a judgment within the meaning of the Letters Patent.
The learned counsel for the respondents while countering the arguments of Mr. Sorabjee submitted the following propositions: (1) section 104 read with order 43 Rule 1 could not apply to the original trial by the Trial Judge which is governed by the Letters Patent alone.
(2) It was further argued that the forum for an appeal contemplated by section 104 is the same as that for appeals under sections 96 to 100 of the Code of 1908, that is to say, appeals from the courts in the mofussil (district courts) to the High Court and it has no application to internal appeals within the High Court.
In other words, the forum under which an appeal lies from one Judge of the High Court to a larger Bench is not a forum contemplated by section 104 at all but is created by the Letters Patent.
(3) If section 104 of the Code of 1908 is held to be applicable to proceedings before the Trial Judge of the High Court certain strange anomalies will arise, viz., where an appeal lies from a district court under order 43 Rule 1 before a Single Judge, a further appeal will have to lie before a larger Bench against the order of the Trial Judge although section 104 prevents a second appeal against miscellaneous orders under order 43 Rule 1 and permits only one appeal.
This will, therefore, lead to an inconsistent and anomalous position.
203 (4) The word 'judgment ' should be strictly construed as was done by Sir Richard Couch, C.J. in Oriental Gas Company 's case (supra) so as to include only those orders of the Trial Judge which are of a final nature and effectively decide the controversy of the issues in dispute.
We would first deal with the point relating to the applicability of section 104 read with order 43 Rule 1 of the Code of 1908 because it seems to us that the arguments of Mr. Sorabjee on this score are well founded and must prevail.
Moreover, some of the decisions of this Court, those of the Privy Council and other High Courts support the propositions adumbrated by Mr. Sorabjee.
In order, however, to appreciate the applicability of section 104 read with Order 43 Rule 1, it may be necessary to examine some important provisions of the Code of Civil Procedure as also the previous history which led to the enactment of section 104 by the Code of 1908.
It appears that prior to the Code of 1908 in the earlier Code of Civil Procedure there were two kinds of appeals to the High Court (1) appeals against judgments and decrees of the Trial Judge, and (2) appeals against orders, either interlocutory or quasi final, passed by the court during the pendency of the suit or proceedings.
In the Civil Procedure Code of 1877 the section corresponding to order 43 Rule 1 of the Code of 1908 was section 588 which provided for appealable orders under clauses (a) to (t).
Section 588 of the Code of 1877 provided that an appeal from any order specified in section 588 shall lie to the High Court or when an appeal from any other order is allowed by the Chapter it would lie to the Court to which an appeal would lie from the decree in the suit in respect of which such order was made or when such order is passed by a court other than the High Court, then to the High Court.
A perusal of sections 588 and 589 of the Code of 1877 would clearly show that the statute made no distinction between appeals to the High Courts from the district courts in the mofussils or internal appeals to the High Courts under the Letters Patent.
Section 591 clearly provided that except the orders mentioned in section 588 no further appeal could lie from any order passed by any court in exercise of its original or appellate jurisdiction.
Section 591 may be extracted thus: "591.
No other appeal from orders; but error therein may be set forth in memorandum of appeal against decree.
204 "Except as provided in this chapter, no appeal shall lie from any order passed by any Court in the exercise of its original or appellate jurisdiction but if any decree be appealed against, any error, defect or irregularity in any such order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal".
In other words, the position was that while the statute provided only for appeals against orders, all other appeals could only be against a decree passed by the court concerned.
The statute there fore, did not contemplate any other appeal except those mentioned in sections 588 and 591.
The Code of 1877 was later on replaced by the Code of 1882 but the provisions remained the same.
In view of the rather vague and uncertain nature of the provisions of sections 588 to 591 a serious controversy arose between the various High Courts regarding the interpretation of section 588.
The Bombay and Madras High Courts held that under cl. 15 of the Letters Patent of the said High Courts, an appeal could lie only from orders passed under section 588 and not even under the Letters Patent.
In Sonba 'i vs Ahmedbha 'i Habibha 'i a Full Bench of the Bombay High Court held that under cl. 15 of the Letters Patent an appeal to the High Court from an interlocutory order made by one of the Judges lies only in those cases in which an appeal was allowed under the Code of Civil Procedure, that is to say, under sections 588 and 591 of the Code of 1877.
The Madras High Court in Rajgopal & Ors (in Re: L.P.A. No. 8 of 1886 took the same view.
Then came the decision of the Privy Council in the case of Hurrish Chunder Chowdry vs Kali Sundari Debia which while considering section 588 made the following observations: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals is from one of the Judges of the Court to the full Court." (Emphasis ours) 205 This judgment gave rise to a serious conflict of opinions in the High A Courts in India.
The High Courts of Calcutta, Bombay and Madras held that in view of the decision of the Privy Council in the aforesaid case, even though an order may not have been appealable under section 588 it could be appealable provided it was a judgment within the meaning of cl. 15 of the Letters Patent of the respective High Courts.
Toolsee Money Dassee vs Sudevi Dassee,, Secretary of State vs Jehangir; Chappan vs Modin Kutti, However, the Allahabad High Court in Banno Bibi vs Mehdi Husain held that if an order was not appealable under sections 588 and 591 of the Code of 1877 it could not be appealed against even under the Letters Patent of the High Court.
This view was affirmed by a later decision of the same High Court in Muhammad Naim ul Lah Khan vs Ihsan ul Lah Khan.
With due respect we would like to point out that the pointed and terse observations of the Privy Council did not leave any room for any doubt or speculation in the matter.
While construing section 588, the Judicial Committee in Hurrish Chunder Chowdry 's case (supra) had made it clear that appeals would lie under section 588 to the High Court and the section did not contain any restriction to the effect that appeal against the orders of the Trial Judge mentioned in section 588 would not lie to a larger Bench of the High Court.
In other words, the Privy Council intended to lay down clearly that section 588 did not affect nor was it inconsistent with the provisions of the Letters Patent and hence those orders of the Trial Judge which fell beyond section 588 could be appealable to a larger Bench under the Letters Patent if those orders amounted to judgment within the meaning of cl. 15 of the Letters Patent.
Therefore, the views taken by the Calcutta, Bombay and Madras High Courts, referred to above, were undoubtedly correct.
At any rate, since a fresh controversy had arisen, the legislature stepped in to settle the controversy by enacting the new section 104 in the Code of 1908.
Section 104 made it clear that appeals against orders mentioned in order 43 Rule 1 were not in any way inconsistent with the Letters Patent and merely provided an additional remedy by allowing appeals against miscellaneous Orders passed by the Trial Judge to a larger Bench.
In other words, the legislature gave full statutory effect to the views of the Calcutta, 206 Bombay and Madras High Courts.
Even after the introduction of section 104, the conflict between the various High Courts still continued as to whether or not section 104 would apply to internal appeals in the High Court.
That is the question which we shall now discuss.
To begin with, it is not disputed that a Trial Judge has to follow the entire procedure laid down by the Code of 1908 starting from the presentation of the plaint right up to the delivery of the judgment.
The only difference in the assumption of jurisdiction by the High Court is that a suit of a particular valuation has to be instituted in the High Court rather than in the District court.
Secondly, it is indisputable that any final judgment that the Trial Judge passes deciding the suit one way or the other amounts to a decree and under the provisions of the Letters Patent an appeal lies to a larger Bench which normally is a Division Bench as provided for under the Rules made by various High Courts.
Thirdly, the Letters Patent itself does not define the term 'judgment ' and has advisedly not used the word 'decree ' in respect of any judgment that may be given by the Trial Judge.
Section 5 of the Code of 1908 may be extracted thus: "5.
Application of the Code to Revenue Courts: (1) Where any Revenue Courts are governed by the provisions of this Code in those matters of procedure upon which any special enactment applicable to them is silent the State Government may, by notification in the Official Gazette, declare that any portions of those pro visions which are not expressly made applicable by this Code shall not apply to those Courts, or shall only apply to them with such modifications as the State Government may prescribe.
(2) "Revenue Court" in Sub section (1) means a court having jurisdiction under any local law to entertain suits of other proceedings relating to the rent, revenue or profits of land used for agricultural purposes, but does not include a Civil Court having original jurisdiction under this Code to try such suits or proceedings as being suits or proceedings of a civil nature " The importance of this section is that wherever the provisions of the Code of Civil Procedure are sought to be excluded by any special enactment which may be silent on the point, the State 207 Government can by notification apply the provisions of the Code to Revenue courts.
A bare perusal of this section would clearly reveal that excepting Revenue courts all other Civil courts would normally be governed by the provisions of the Code of Civil Procedure in the matter of procedure.
Section 4(1) of the Code of 1908 which is a saving provision clearly provides that in the absence of any specific provision to the contrary the provisions of the Code does not limit or affect any special or local law.
Thus, the test contained in section 4 is not applicable in the instant case because even if the Letters Patent of the High Court be deemed to be a special law as contemplated by section 4, the provisions of section 104 do not seek to limit or affect the provisions of the Letters Patent.
This now takes us to section 104 of the Code of 1908, the relevant portion of which may be extracted thus: "104.(1) An appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders: (a) to (f) annulled; (ff) an order under section 35 A (g) an order under section 95; (h) an order under any of the provisions of this Code imposing a fine or directing the arrest or detention in the civil prison of any person except where such arrest or detention is in execution of a decree; (1) any order made under rules from which an appeal is expressly allowed by rules: (2) No appeal shall lie from any order passed in appeal under this section.
" Thus by the force of section 104 all appeals as indicated in the various clauses of order 43 Rule 1 viz. (a) to (w) would lie to the appellate court.
Section 105 clearly provides that no appeal shall lie from any order of a Court made in the exercise of its original or appellate 208 jurisdiction except according to the procedure laid down by the Code.
The relevant part of section 105 (1) may be extracted thus: "105.
(1) Save as otherwise expressly provided no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal.
" Finally, order, 49 Rule 3 expressly exempts matters contained in clauses (1) to (6) of Rule 3 from the operation of the extraordinary original civil jurisdiction of the chartered High Courts, that is to say, the jurisdiction conferred on the High Court by the Letters Patent.
The relevant portion of this provision may be extracted thus: "O. 49.
(3) The following rules shall not apply to any Chartered High Court in the exercise of its ordinary or extraordinary original civil jurisdiction, namely: (1) rule 10 and rule 11, clauses (b) & (c), of order VII; (2) rule 3 of order X; (3) rule 2 of order XVI; (4) rules 5, 6, 8, 9, 10, 11, 13, 14, 15, and 16 (so far as relates to the manner of taking evidence) of Order XVIII; (5) rules 1 to 8 of order XX; and (6) rule 7 of order XXXIII (so far as relates to the making of a memorandum); and rule 35 of order XLI shall not apply to any such High Court in the exercise of its appellate jurisdiction" It may be pertinent to note that although a number of rules have been exempted from the operation of the Code, order 43 Rule 209 1 and the clauses thereunder have not been mentioned in any of these clauses.
Thus, a combined reading of the various provisions of the Code of Civil Procedure referred to above lead to the irresistible conclusion that section 104 read with order 43 Rule 1 clearly applies to the proceedings before the Trial Judge of the High Court.
Unfortunately, this fact does not appear to have been noticed by any of the decisions rendered by various High Courts.
We might further point out that section 117 of the Code of 1908 expressly applies the provisions of the Code to High Courts also.
Section 117 may be extracted thus: "117.
Save as provided in this Part or in Part X or in rules, the provisions of this Code shall apply to such High Courts".
We find ourselves in complete agreement with the arguments of Mr. Sorabjee that in the instant case section 104 read with Order 43 Rule 1 does not in any way abridge, interfere with or curb the powers conferred on the Trial Judge by cl. 15 of the Letters Patent.
What section 104 read with order 43 Rule 1 does is merely to give an additional remedy by way of an appeal from the orders of the Trial Judge to a larger Bench.
Indeed, if this is the position then the contention of the respondent that section 104 will not apply to internal appeals in the High Courts cannot be countenanced.
In fact, the question of application of the Code of Civil Procedure to internal appeals in the High Court does not arise at all because the Code of Civil Procedure merely provides for a forum and if order 43 Rule 1 applies to a Trial Judge then the forum created by the Code would certainly include a forum within the High Court to which appeals against the judgment of a Trial Judge would lie.
It is obvious that when the Code contemplates appeals against orders passed under various clauses of order 43 Rule 1 by a Trial Judge, such an appeal can lie to a larger Bench of the High Court and not to any court subordinate to the High Court.
Hence, the argument that order 43 Rule 1 cannot apply to internal appeals in the High Court does not appeal to us although the argument has found favour with some of the High Courts.
We might also reiterate that prior to the Code of 1908, in the Code of 1877 an identical provision like order 43 Rule 1 also existed in the shape of section 588 which was absolutely in the same terms 210 as order 43 Rule 1 and its various clauses.
Of course, section 104 was conspicuously absent from the Codes of 1877 or 1882.
As indicated earlier, the question of the application of section 588 (now Order 43 Rule 1) was considered as early as 1882 in Hurrish Chunder Chowdary 's case (supra) where the Privy Council in very categorical terms observed thus: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the full Court.
" We have already shown that a perusal of these observations leaves no room for doubt that the Privy Council clearly held that section 588 undoubtedly applied to appeal from one of the Judges of the High Court to the Full Court, which really now means the Division Bench constituted under the Rules.
In spite of the clear exposition of the law on the subject by the Privy Council it is rather unfortunate that some High Courts have either misinterpreted these observations or explained them away or used them for holding that s.588 does not apply to High Courts.
We shall deal with those judgments and point out that the view taken by the High Courts concerned is not at all borne out by the ratio decidendi of the Privy Council.
So far as the applicability of section 588 to proceedings in the High Courts is concerned, in a later decision the Privy Council reiterated its view in unmistakable terms.
In Mt. Sabitri Thakurain vs Savi & Anr., their Lordships observed as follows: "Section 15 of the Letters Patent is such a law and what it expressly provides, namely an appeal to the High Court 's appellate jurisdiction from a decree of the High Court in its original ordinary jurisdiction, is thereby saved.
Thus regulations duly made by orders and Rules under the Code of Civil Procedure, 1908 are applicable to the jurisdiction exercisable under the Letters Patent, except that they do not restrict the express Letters Patent appeal".
Though not directly, some observations made by this Court also support the consistent view taken by the Privy Council that order 43 Rule 1 applies to the original proceedings before the Trial 211 Judge.
In Union of India vs Mohindra Supply Co., this Court made the following observations: "The intention of the legislature in enacting sub section (1) of section 104 is clear: the right to appeal conferred by any other law for the time being in force is expressly preserved.
This intention is emphasised by section 4 which provides that in the absence of any specific provision to the contrary nothing in the Code is intended to limit or otherwise affect any special jurisdiction or power conferred by or under any other law for the time being in force.
The right to appeal against judgments (which did not amount to decrees) under the Letters Patent, was therefore not affected by section 104 (1) of the Code of Civil Procedure, 1908".
Thus, this Court has clearly held that the right to appeal against judgments under the Letters Patent was not affected by section 104 (1) of the Code of 1908 and the decision therefore fully supports the argument of Mr. Sorabjee that there is no inconsistency between the Letters Patent jurisdiction and section 104 read with order 43 Rule 1 of the Code of 1908.
Similarly, in Shankarlal Aggarwal 's case (supra) this Court while construing the provisions of section 202 of the Indian observed as follows: "There was no doubt either that most of the orders or decisions in winding up would not be comprehended within the class of appealable orders specified in section 104 or O. 43 r.1.
If therefore the contention of the respondent were accepted it would mean that in the case of orders passed by the District Courts appeals would lie only against what would be decrees under the Code as well as appealable orders under section 104 and o. 43 r.1.
and very few of the orders passed in the Courts of the winding up would fall within these categories.
On the other hand, the expression "judgment" used in cl. 15 is wider.
The learned Judge therefore rejected a construction which would have meant that the same orders passed by District Courts and by a Single Judge of a High Court would be subject to different rules as to appealability".
There is yet another aspect of the matter which shows that section 104 merely provides an additional or supplemental remedy by way 212 of appeal and, therefore, widens rather than limits the original jurisdiction of the High Court.
For instance, in this very case with which this Court was dealing, an order passed under section 202 of the was appealable to a larger Bench and yet it was argued that the order being of an interlocutory nature would not be a judgment and therefore no appeal would lie to the Division Bench.
This contention was negatived by the Supreme Court and it was held that against the order passed by a Trial Judge under the , an appeal would lie to the Division Bench.
On a parity of reasoning, therefore, section 104 read with order 43 Rule 1 expressly authorises and creates a forum for appeal against orders falling under various clauses of order 43 Rule 1, to a larger Bench of the High Court without at all disturbing, interfering with or overriding the Letters Patent jurisdiction.
There are a number of other Acts also which confer additional powers of appeal to a larger Bench within the High Court against the order of a Trial Judge.
Take, for instance, a case under the Arbitration Act.
Suppose in a suit the matter is referred to arbitration and after the award is filed by the Arbitrator certain objections are taken, under section 39 of the Arbitration Act an appeal would lie to a Larger Bench from the order of a Single Judge disposing of the objections taken by the parties against the award.
Section 39 runs thus: "39.
Appealable orders. (1) An Appeal shall lie from the following orders passed under this Act (and from no others) to the Court authorised by law to hear appeals from original decree of the Court passing the orders; An Order (i) superseding an arbitration; (ii) on an award stated in the form of a special case; (iii)Modifying or correcting an award; (iv) filing or refusing to file an arbitration agreement; (v) staying or refusing to stay legal proceedings where there is an arbitration agreement; (vi)setting aside or refusing to set aside an award: Provided that the provisions of this section shall not apply to any order passed by a small Cause Court.
213 (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court".
It cannot be contended by any show of force that the Order passed by the Trial Judge being an interlocutory order, no appeal would lie to the Division Bench or that the provisions of the Arbitration Act giving a right of appeal to a litigant from the order of a Trial Judge to the Division Bench in any way fetter or override the provisions of the Letters Patent.
There are, however, a number of decisions of the various High Courts which have held that the provisions of order 43 Rule 1 clearly apply to a Trial Judge.
As early as 1872, the Bombay High Court in Sonba 'i 's case (supra) held that in regard to appeals against orders of the Trial Judge the practice of the Bombay High Court has been that in all matters the provisions of the Code concerned would be applicable.
In this connection, Sargent, Acting C.J., speaking for the court observed as follows: "the word "judgment" may be taken to include any preliminary or interlocutory judgment, decree, order, or sentence within the meaning of clause 40, and effect may be given to section 37 by limiting the orders open to appeal to those orders which are expressly declared appealable in the various sections of the Civil Procedure Code, or in other words by incorporating the provisions of the Civil Procedure Code relating to appeals with Sec.
IS of the Letters Patent, and holding the word 'judgment ' to mean all judgments and orders which are appealable under the provisions of the Civil Procedure Code".
This case was followed by a Division Bench of the Madras High Court which clearly held that an order passed under section 592 was controlled by section 588.
We have already pointed out that in the Code prior to 1882, order 43 Rule 1 appeared in the shape of section 588 and even under order 43 Rule 1 an order rejecting an appeal in forma pauperis is not appealable and does not appear in any of the clauses of order 43 Rule 1.
The Madras High Court in Rajgopal 's case (supra), relying on the decision of the Bombay High Court, observed thus: 214 "An order passed under section 592 of the Code of Civil Procedure rejecting an appeal in forma pauperis is not appealable under section 588, which provides that no appeal shall lie from orders not specified in that section.
It has already been decided in Achaya vs Ratnavelu (ILR that section 15 of the Letters Patent is controlled by a similar section in the Civil Procedure Code, which provided that an order shall be final, and that enactments to such effect are not beyond the legislative powers of the Governor General in Council".
Thus, even in the earlier times the High Court had veered round to the view that section 588 would be applicable to the High Courts also even in respect of internal appeals in, the High Court.
Similarly, in Ruldu Singh vs Sanwal Singh, Shadi Lal, C.J. Speaking for the court observed thus; Now, section 588 of the old Code, which has now been replaced by section 104 and Order XLIII, rule of the new Code, enacted that an appeal lay from the orders specified in that section and from no other orders"; and it was consequently decided by a Full Bench of that Court in Muhammad Naim ul Lah Khan vs Ihsan Ullah Khan All. 226 that clause 10 of the Letters Patent was controlled in its operation by section 588, and that no appeal lay under the Letters Patent from an order made under the Code if it was not one of the orders enumerated in that section.
Section 104 of the new Code, however, expressly saves the right of appeal otherwise provided by 'any law for the time being in force '.
It seems to us that the object of the Legislature in enacting sub section (2) was to make it clear that there was no second appeal under the Code from the orders specified in Sub section (1) of section 104, and that sub section (2) was not intended to override the express provisions of the letters patent." The Lahore High Court relied on the decision of the Privy Council in Hurrish Chunder Chowdrys case (supra).
The High Court further held that section 104 does not in any way take away the 215 right of appeal conferred by the Letters but Patent of the High Court merely bars a second appeal from orders passed under O.43 R. 1 to Division Bench.
A contrary view was taken by the Allahabad High Court in Ram Sarup vs Kaniz Ummehani where the following observations were made: "It may, however, be conceded that this saving clause does not occur in sub section (2) of section 104.
But under the corresponding section 588 of the old Code, where the words were "orders passed in appeal under this section shall be final", their Lordships of the Privy Council in Hurrish Chunder Chowdhry vs Kalisunduti Debi Cal. 482 observed that section 588, which had the effect of restricting certain appeals, did not apply to a case where the appeal is from one of the Judges of the High Court to the Full Court to the full Court.
In any case section 104 (2) does not contain any express provision which would suggest that the provisions of the Letters Patent have been abrogated.
We accordingly hold that under clause 10 of the Letters Patent an appeal lies from the order of a single Judge passed in appeal." With due deference to the Hon 'ble Judges we are of the opinion that the decision of the Allahabad High Court on this point is based on a serious misconception of the legal position.
It is true that section 104 was introduced by the Code of 1908 and the aforesaid section, as we have already indicated, clearly saved the Letters Patent jurisdiction of the High Court.
From this, however, it does not necessarily follow that the restriction that there is no further appeal from the order of a Trial Judge to a larger Bench would be maintainable or permissible.
In the first place, once section 104 applies and there is nothing in the Letters Patent to restrict the application of section 104 to the effect that even if one appeal lies to the Single Judge, no further appeal will lie to the Division Bench.
Secondly, a perusal of clause 15 of the Letters Patent of the Presidency High Courts and identical clauses in other High Courts, discloses that there is nothing to show that the Letters Patent ever contemplated that even after one appeal lay from the subordinate court to the Single Judge, a second appeal would again lie to a Division Bench of the Court.
All that the Letters Patent provides for is that where the Trial Judge passes an order, an appeal against the judgment of the said Trial Judge would 216 lie to a Division Bench.
Furthermore, there is an express provision in the Letters Patent where only in one case a further or a second appeal could lie to a Division Bench from an appellate order of the Trial Judge and that is in cases of appeals decided by a Single Judge under section 100 of the Code of Civil Procedure.
Such a further appeal would lie to a Division Bench only with the leave of the court and not otherwise.
The relevant portion of cl. 15 of the Letters Patent may be extracted thus: "And we do further ordain that an appeal shall lie to the said High Court of Judicature at Madras, Bombay, Fort William in Bengal from the judgment.
Of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act, and that notwithstanding anything hereinbefore provided, an appeal shall lie to the said High Court from a judgment of one Judge of the said High Court or one Judge of any Division Court, pursuant to section 108 of the Government of India Act, made (on or after the first day of February, 1929) in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court where the Judge who passed the judgment declares that the case is a fit one for appeal.
" A perusal of the Letters Patent would clearly reveal two essential incidents (1) that an appeal shall lie against any order passed by the Trial Judge to a larger Bench of the same High Court, and (2) that where the Trial Judge decides an appeal against a judgment or decree passed by the district courts in the mofussil, a further appeal shall lie only where the judge concerned declares it to be a fit one for appeal to a Division Bench.
Thus, the special law, viz., the Letters Patent, contemplates only these two kinds of appeals and no other.
There is, therefore, no warrant for accepting the argument of the respondent that if order 43 Rule 1 applies, then a further appeal would also lie against the appellate order of the Trial Judge to a Division Bench.
As this is neither contemplated nor borne out by the provisions of the Letters Pantent extracted above, the contention of the respondent on this score must be overruled.
A further second appeal Lying to a Division Bench from an appellate order of the Trial Judge passed under order 43 Rule 1 is wholly foreign to the scope and spirit of the Letters Patent.
Un 217 fortunately however, the Allahabad High Court in Ram Sarup 's case (supra) refused to follow a Division Bench decision in Piari Lal vs Madan Lal and also tried to explain away the Full Bench decision in Ram Sarup 's case (supra) where it was clearly pointed out that in such cases no further appeal would lie to the Division Bench under the Letters Patent.
The distinction drawn by the Allahabad High Court regarding the application of section 104 is a distinction without any difference.
Sir John Edge, C.J., in Muhammad Naim ul lah Khan 's case (supra) dealing with this aspect of the matter observed thus: "It appears to me that the Code of Civil Procedure (Act No. XIV of 1882), as did Act No. X of 1877, contemplates a High Court in two aspects.
It contemplates a High Court doing the ordinary work of a Court of original and appellate jurisdiction; having the necessary powers of review and revision in certain cases and certain other powers such as are generally found vested in the Courts of the importance of High Courts. whatever those powers may be, it is quite clear to my mind that the power conferred on a High Court under Chapter XLV of the Code of Civil Procedure are special powers and entirely distinct from the ordinary powers required by the High Court in the carrying on of its ordinary judicial business." and Mahmood, J. Observed thus: "To hold then that where this statute of ours, namely, our present Code of Civil Procedure, declares a decree or order non appealable, such decree or order can be made the subject of consideration by the whole of this Court under the Letters Patent, is to hold that wherever no appeal lies to this Court the ceremony of presenting it to this Court to a Single Judge of this Court who would undoubtedly reject the appeal, makes it the subject of consideration by a Bench of the Court.
" The other Judges agreed with the view taken by the Chief Justice and Mahmood, J. In Piari Lal 's case (supra) which was decided after section 104 was introduced in the Code of 1908, the following observations were made: 218 "A preliminary objection has been taken to the hearing of the appeal based on the Full Bench decision in the case of Muhammad Naimullah Khan vs Ihsan ullah Khan All. 226.
Section 104 of the Code of Civil Procedure provides for the cases in which an appeal shall lie against an "order '.
Clause (ii) provides that "No appeal shall lie from any order passed in appeal under this section".
The contention of the respondent in the preliminary objection is that no second appeal lies and reliance is placed upon the authority quoted to show that even a Letters Patent appeal is not permissible.
We are of course bound by the Full Bench ruling of this Court.
It is contended, however, that the words in section 588 of the Code of Civil Procedure, which was in force when the decision in the Full Bench case was given, differed from the words of the present Code.
The only difference is that in the old Code the words were "The order passed in appeals under this section shall be final", whereas in the present Code the words are "No appeal shall lie".
We cannot see how the change in the words can in any way help the appellant.
Possibly the reason for the change is that under the words in the old Code it might have been argued that even a "revision" or a "review of judgment" would not lie against an order passed by an appellate court.
We think the preliminary objection must prevail and we accordingly dismiss the appeal with costs." Thus, in these two cases it was clearly held that where a Trial Judge had passed an order in an appeal against an order passed by the district judge under order 43 Rule 1, a further appeal under the Letters Patent was not maintainable.
This view is fully supported by the express language in which clause 15 of the Letters Patent has been couched, as referred to above.
Thus the latter decision of the Allahabad High Court in Ram Sarup 's case (supra) was clearly wrong in holding that an appeal under the Letters Patent would lie even against an appellate order of the Trial Judge passed under O.43, R. 1 even though it was prohibited by section 104 (2) of the Code.
Similarly, in Chappan 's case (supra) the Court on an interpretation of section 588 (which now corresponds to the present Order 43 Rule 1 clearly held that an appeal would lie to the High Court 219 against the orders contemplated in various clauses of section 588 of the Code of 1877.
The Court held thus: "The result of this judgment (so far as it applies to the question before us) appears to me to come to this, that if the order made by a single Judge only amounts to an order such as is intended by chapter XLII of the Code, it is not appealable unless it is within section 588." The Madras case heavily relied on the decision of the Privy Council in Hurrish Chunder Chowdry 's case (supra).
In Lea Badin vs Upendra Mohan Roy Chaudhury & Ors.
while criticising the judgment of Sir Richard Couch, C.J. in The Justice of the Peace for Calcutta (supra) the Court as an alternative argument clearly held that order 43 Rule 1 would apply pro tanto to the Trial Judge and on this ground also the order would be appealable to a Division Bench.
In this connection, the celebrated jurist Sir Manmatha Nath Mookerjee, J. Observed as follows: "But there is another and a far simpler ground on which it must be held that an appeal is competent.
The order in the present case is one for which a right of appeal is provided in cl.
(s) of r. 1 of or 43 of the Code.
Under the present Code (Act V of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court " Another important decision regarding the applicability of order 43 Rule 1 to an order passed by the Trial Judge was rendered by a Full Bench in Mathura Sundari Dassi vs Haran Chandra Shaha & Ors.
where Sanderson, C.J. Observed thus: "By the terms of section 117, the Code is made applicable to the High Court, and O. 43, R. 1 gives a right of appeal in the very case under discussion.
But it is said that this Code and the rules made under it do not apply to an appeal from a learned Judge of the High Court.
I cannot follow that argument.
It is part of the defendant 's case that O.9 R. 8 applies.
That order is in effect a part of the Civil Procedure Code.
It seems to me strange that the plaintiff 220 should be subjected to O. 9, R. 8 and be liable to have his suit dismissed for want of appearance, yet when he has had his suit dismissed under one of the rules of the Code and wants to call in aid another of the rules which when his application for reinstatement has been refused gives him a right of appeal against that refusal, he is met with the argument that he cannot call in aid that rule because there is no appeal from the learned Judge of the High Court under the Civil Procedure Code.
I think this is not a true view or a reasonable construction to put upon the Code and the rules made under it.
In my judgment, the Code and the rules do apply and the plaintiff has a right of appeal." and Woodroffo 'J ' made similar observations: "Whether or not as a question of jurisdiction an appeal lies under clause 15 of the Letters Patent in a case in which an appeal is allowed under the Code, I think it may be said that there are prima facie grounds for holding that an appeal should be held to lie under the Letters Patent where it is allowed under the Code; for the fact that the Legislature has in the Code allowed an appeal in a particular case, a affords to my mind prima facie grounds for supposing that case is of a class which this Court considers appealable under its Letters Patent.
Looking at the nature of the order appealed from, I think I should hold that it is appealable as a 'judgement ' under the Letters Patent." and Mookerjee, J. Observed thus: "The term "Rule" which finds a place in section 117 is defined in clause 18 of section 2 of the Code to mean "a rule contained it the First Schedule or made under section 122 or section 125.
" our attention has not been drawn to any such rule which makes O. 43, R, 1, clause (c) inapplicable.
On the other hand, O. 49, R. 3 which excludes the operation of other rules, lends support to the contention of the appellant that O. 43, R. 1 clause (c) is applicable to the present appeal.
"section 104 of the Code of 1908 is materially different from section 588 of the Code of 1882.
It provides that lie from 221 the orders mentioned in the first clause of that section and, save as otherwise expressly provided in the body of the Code or by any law for the time being in force from no other orders.
" The effect of section 104 is thus, not to take away a right of appeal given by clause 15 of the Letters Patent, but to create a right of appeal in cases even where clause 15 of the Letters Patent is not applicable.
I hold accordingly that this appeal is competent under Clause (c), R. 1, O. 43 of the Civil Procedure Code.
I am further of opinion that the appeal is competent also under Clause 15 of the Letters Patent." (Emphasis ours) We find ourselves in complete agreement with the view taken and the reasons given by the three eminent Judges in the aforesaid case which furnishes a complete answer to the arguments of the respondents that order 43, Rule I will have no application to internal appeals in the High Court under the provisions of the Letters Patent.
A similar view was taken in Lea Badin 's case (supra) where the following observations regarding the applicability of order 43 Rule I in respect of an order passed by a Trial Judge were made: "As an order refusing an application for the appointment of a receiver based on provision in the indenture of hypothecation, that on a breach of any one of the covenants contained therein the plaintiff 's assignor would be entitled to have a receiver appointed, the order has determined a right which is one of the matters in the controversy itself, and so it satisfies the definition of Couch, C.J., as well.
The order appealed from in this case is, in our opinion, a judgment ' within the meaning of Cl.
IS, Letters Patent.
We may add that there are decisions of this Court in which orders discharging or refusing to discharge a receiver appointed in a suit, after the suit had come to an end or had become infectious, have been held to be ' judgments ' and so appealable.
But there is another and a far simpler ground on which it must be held that an appeal is competent.
The order in the present case is one for which a right of appeal is provided in cl.
(s), R. 1, 222 O. 43 of the Code.
Under the present Code (Act S of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court, such a contention was elaborately dealt with and repelled in the case of Malhura Sundari Dassi vs Haran Chandra Shaha & Ors.
(AIR (Emphasis ours) In Toolsee Money Dassee & Ors.
vs Sudevi Dassee & ors.
(supra) Maclean, C.J. while relying on the decision of the Judicial Committee in Hurrish Chunder Chowdry 's case made the following pithy observations: "To my mind the first of these points has been authoritatively decided against the view of the present respondents by the Judicial Committee of the Privy Council in the case of Hurrish Chunder Chowdhry vs Kali Sunderi Debi (10 I. A. 4).
I need not travel into the facts of that case, but there their Lordships said at page 494 of the report in the Indian Law Reports: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals, applies to such a case as this where the appeal is from one of the Judges of the Court to the Full Court.
" It is clear from the report that the point was elaborately argued, and the clear expression of their Lordships ' opinion must be read in connection with that argument." and Prinsep, J. who agreed with the Chief Justice, made the following identical observations: "We have it, therefore, that if beyond clause 15 of the Letters Patent, 1865, section 588 of the Code of Civil Procedure gives the right of appeal against any order of the description specified therein, there is no Court of Appeal constituted to hear it, if such order not being a judgment had been made by the Judge on the original Side of the High Court. .
I understand this to mean that section 588 does not affect any matter coming within clause 15 of the Letters 223 Patent, and if I may venture to say so, the reasons which led to the expression of that opinion and which have not been given in the judgment reported may be those stated by me for arriving at the same conclusion.
I have no doubt that we are bound to follow to the fullest extent the opinion expressed by their Lordships of the Privy Council that section 588 of the Code does not apply to the case now before us, and that this matter has thus become settled law".
And Ammer Ali, J. while dissenting from the applicability of section 588 held that the order appealable under section 588 was a judgment within the meaning of the Letters Patent.
Two decisions of the Rangoon High Court also have consistently taken the view that the provisions of section 104 read with order 43 Rule I apply to the Trial Judge.
In P. Abdul Gaffor vs The Official Assignee (1) the following observations were made: For an order made in exercise of the ordinary original civil jurisdiction to be appealable, it must come either under order XLIII, Rule 1 or be a judgment within the meaning of Section 13 of the Letters Patent, so that for the purpose of this application the appellant must establish that it is a judgment within the meaning of section 13".
(Emphasis ours) The question of the applicability of order 43 Rule I to an appeal from the Trial Judge under the Letters Patent was raised and decided by the Jammu & Kashmir High Court in Abdul Samad & Ors.
vs The State of J & K (2) a decision to which one of us (Fazal Ali, C.J. as he then was) was a party.
After an exhaustive review of various decisions on the subject, the High Court observed as follows: G The legal position that emerges, therefore, is that orders of the character specified in Section 104 and order 43, Rule I, Civil P.C. excepting clause (JJ) thereof, would 224 be construed as judgments and an appeal against any one of such orders would lie to the.
Division Bench of the High Court notwithstanding the fact that it is passed by one of the judges of the High Court sitting on the original side".
It may be mentioned that like the Presidency High Courts, the High Court of Jammu & Kashmir had also been invested with ordinary civil original jurisdiction.
The question of the applicability of order 43 Rule 1 to an appeal against an order of a Trial Judge to the Division Bench was directly in point and fully considered by a Division Bench of the Calcutta High Court and a Full Bench of the Rangoon High Court.
In Kumar Gangadhar Bagla vs Kanti Chunder Mukerjee & Anr.
while dwelling on this aspect of the matter it was observed as follows: "Mr. Bose did not seek to argue, that the formal order of the 7th of June, 1935, was one of the appealable orders provided for in the Code of Civil Procedure.
On the contrary, he went so far as to aver with considerable vehemence that neither sec. 104 nor order XLIII, r. l of the Civil Procedure Code has any application to the High Court.
I would point out that it is clear from sec.
117 of Code of Civil Procedure and still clearer from Or.
XLIX, r. 3, C.P.C., that both sec.
104 and Or.
XLIII, r. 1, do apply to the High Court".
(Emphasis ours) It is manifest from the observations made above that in view of the clear and explicit provisions of section 117 and order 49 Rule 3 which while exempting other provisions from the jurisdiction of the High Court did not exempt the various clauses of order 43 Rule 1.
An identical view seems to have been taken by Sir Page, C.J. in a Full Bench decision of the Rangoon High Court in In re: Dayabhai Jiwandas & Ors.
(supra) where the Chief Justice pithily observed as follows : "In many statutes in India, of course, a Right of appeal from an order passed pursuant to the statute is expressly provided, and in such cases an appeal will lie on the terms and conditions therein prescribed.
I will not pause to enumerate or discuss these enactments, although 225 many such statutes were cited at the Bar.
But, except A where otherwise a right of appeal adhoc is given under some statute or enactment having the force of a statute, the right of appeal from orders that do not amount to "judgment" is regulated by the provisions of the Code of Civil Procedure; (see section 104 and order 43, Rule 1)".
Thus, there appears to be a general consensus of judicial opinions on the question of the applicability of order 43 Rule 1 to Letters Patent appeals.
This now brings us to the second limb of the argument of Mr. Sorabjee that even assuming that order 43 Rule I does not apply to the High Court so far as the Trial Judge of the said court is concerned, there can be no doubt that the orders indicated in various clauses of order 43 Rule 1 possess the attributes and incidents of a final order which conclusively decides a particular issue so far as the Trial Court is concerned.
Thus, there can be no difficulty, even without applying order 43 Rule 1 to hold by a process of analogical reasoning that the appeals and orders mentioned in the various sub clauses would amount to a judgment within the meaning of cl. 15 of the Letters Patent because they contain the traits, trappings and qualities and characteristics of a final order.
In other words, the argument advanced was that we could still apply the provisions of order 43 Rule 1 by the process of analogy.
We fully agree with this argument because it is manifest that the word 'judgment ' has hot been defined in the Letters Patent but whatever tests may be applied, the order passed by the Trial Judge appealed against must have the traits and trappings of finality and there can be no doubt that the appealable orders indicated in various clauses of order 43 Rule I are matters of moment deciding valuable rights of the parties and in the nature of final orders so as to fall `within the definition of 'judgment '.
This Court in Radhey Shyam vs Shyam Behari Singh (1) clearly held that an application under order 21 rule 90 to set aside the auction sale is a judgment as the proceeding raises a controversy between the parties regarding their valuable rights.
In this connection, this Court observed thus : "In our view an order in a proceeding under o. XXI, r. 90 is a "judgment" inasmuch as a proceeding raises 226 a controversy between the parties therein affecting their valuable rights and the order allowing the application certainly deprives the purchaser of rights accrued to him as a result of the auction sale".
On a parity of reasoning, an order refusing to appoint a receiver or grant an injunction and similar orders mentioned in various clauses of order 43, Rule 1 fall within the tests laid down by this Court in the aforesaid case.
We are aware that there are some decisions which have taken a contrary view by holding that section 104 read with order 43 Rule I does not apply to a Trial Judge under the Letters Patent.
These decisions do not appear to have considered the various shades and aspects and the setting of the provisions of sections 104 and 117 and order 49 Rule 3 but seem to have proceeded on the basis that the Letters Patent being a special law or a special jurisdiction, the same over rides section 104 which in terms does not apply where a special law makes certain special provisions.
We now proceed to discuss these cases briefly.
In Pandy Walad Dagadu Mahar & Anr.
vs Jammadas Chotumal Marwadi (1) the identical point which is at issue in the instant appeal was not involved and the finding given by the High Court was merely incidental.
The Division Bench seems to have relied on a judgment of Sir Basil Scott and Hayward, JJ.
where the question was only incidentally dealt with.
Martin, J.
In Pandy 's case observed thus : "Shortly stated, therefore, this Full Bench decision amounts to this,.
that appeals under the Letters Patent are governed by the Letters Patent, and appeals under Code are governed by the Code.
Further, the Code only deals with appeals from certain Courts and it does not deal with appeals within the High Court from the decision of one Judge of the Court to another.
That is in my opinion, the true view of the relative position of the Letters Patent and the Code".
With due respect, a close analysis of this decision would reveal that the Judges followed a fallacious process of reasoning, According to their opinion, the appeals under the Code of Civil 227 Procedure and those under the Letters Patent were, so to say two separate compartments having different spheres of their own.
With due deference, we might point out that such a view is based on a total misinterpretation and misconstruction of the true nature and object of the Code of Civil Procedure and the Letters Patent.
In fact, as we have pointed out earlier, there is no inconsistency, whatsoever between the Letters Patent and section 104 read with order 43 Rule l; The first premise of the Court that internal appeals in the High Court were governed by the Letters Patent alone and not by the Code appears to be legally fallacious.
We have already pointed out that a large number of decisions, including the Privy Council, have clearly taken the view that although the Letters Patent is a special law certain provisions of the Code of Civil Procedure in the matter of procedure do apply to appeals against the decision of a Trial Judge to a larger Bench or to quote the Bombay Judges to 'internal appeals '.
Secondly, the Court completely overlooked the legal effect of section 117 and order 49 Rule 3 which completely demolishes the presumptuous process of logic adopted by the court.
Thirdly, the Court appears to have overlooked that far from excluding the Code there could be other special Acts which could and did confer additional jurisdiction even in internal appeals to the High Court, viz., from an order passed by a Trial Judge to a larger Bench, for instance, section 39 of the Arbitration Act or section 202 of the Indian and other similar local or special Acts.
If these special Acts could without affecting the jurisdiction of the Letters Patent or overriding the same provided a supplementary or additional jurisdiction, there was no reason why the Code of Civil Procedure also could not do the same particularly when the Trial Judge had to adopt the procedure contained in the Code, starting from the presentation of the plaint to the delivery of judgment.
Fourthly, the Division Bench does not seem to have considered the fact that what the Letters Patent did was merely to confer original civil jurisdiction on the High Court to be exercised by a Single Judge, who would undoubtedly be a Trial Judge, but of an elevated status so that only such suits could be filed in the Court of the said Judge as are of a very high valuation which may differ from High Court to High Court.
This was done in order that in heavy suits involving substantial questions of fact and law, the hearing of the suit by a senior Court of the status of a High Court Judge would repose, endeanr and generate greater confidence in the people.
Thus if, interlocutory orders passed by District courts in the mofussil could be appealable to the High Court, there was no reason why inter 228 locutory orders passed by a Trial Judge could not be appealable to a larger Bench irrespective of the question whether or not they were judgments within the meaning of cl. 15 of the Letters Patent.
This appears to us to be the cardinal philosophy of the Code in applying the provisions of order 43 Rule I, to the original suit tried by the Single Judge (Trial Judge).
Furthermore, the concept of internal appeals in the High Court seems to be a legal fiction without any factual existence imported by some of the High Courts in order to get rid of some of the provisions of the Code of Civil Procedure which is totally opposed not only to the aim and object of the Code but also to the very spirit of the Letters Patent.
In a later judgment of the Bombay High Court in Vaman Ravji Kulkarni vs Nagesh Vishnu Joshi & Ors.,(1) the following observations were made: "I am, with respect, of opinion that the view taken by the full Bench of the Madras and Calcutta High Courts in the cases referred to above is correct, and that the question must be regarded as having been finally settled by the decision of the Privy Council in 10 I. A. 4.
(Hurrish Chunder Chowdry vs Kali Sundari Debi) section 104.
Civil P.C., which refers only to appeals to the High Court from Courts subordinate to it, cannot apply to appeals filed under Cl.
15 of the Letters Patent from a single Judge OF the High Court to a bench.
(Wadia, J.) . .
There can be no doubt that the provisions of the Letters Patent have conferred special powers regarding appeals within the High Court.
Those powers are not specifically taken away by section 104, Civil P.C. and are not, therefore, affected by it .
Special enactments are not repealed by later general Acts unless there be some express reference to the previous legislation or a necessary inconsistency in the two Acts standing together, which prevents the maxim from being applied.
Sub section (2) of section 104, Civil P.C., does not refer to the Letters Patent and say that in spite of Cl. 15 of the Letters Patent no appeal lies from any order passed in an appeal under Sub section
Sub section
(2) is in no way 229 inconsistent with cl. 15 of the Letters Patent and the two can stand together, the former applying to appeals under the Code, and the latter to special appeals within the High Court.
I am satisfied that section 104, Civil P.C .
does not control cl. 15 of the Letters Patent, and in spite of the absence of a saving clause in sub section
(2) of section 104 does not affect or cut down the right of appeal conferred by the Letters Patent." (Lokur, J.) As regards the first part of the observations of Wadia, J, we are constrained to observe that the learned Judge has not correctly construed the true ratio of the decision of the Privy Council in Hurrish Chunder Chowdry 's case (supra) where, as indicated, the Privy Council has in express terms held that section 588 (which now corresponds to order 43 Rule 1) clearly applies to appeals against orders of a Trial Judge to a larger Bench of the High Court.
Similarly, the observations made by Lokur, J. run against the plain interpretation of section 104 by assuming that there is a conflict between section 104 read with order 43 Rule I and the Letters Patent when in fact, as pointed out, there is no such conflict at all all that section 104 does is to give an additional jurisdiction apart from the Letters Patent which is in no way unconstitutional with the Letters Patent.
We may like to observe here that there is no non obstante clause in the provisions of the Letters Patent to indicate that the provisions of the Code of Civil Procedure, particularly section 104 would not apply either expressly or by necessary intendment.
In this view of the matter, therefore, we are clearly of the opinion that the Bombay decisions are wrongly decided and must, therefore, be overruled.
In Vishnu Pratap and Ors.
vs Smt.
Revati Devi and Ors.(l) the Court held that no appeal against an order passed by a Trial Judge under section 202 of the would lie to a Division Bench in view of the Letters Patent.
This argument was negatived and overruled in Shankarlal Aggarwal 's case (supra) as already discussed above.
As regards the applicability of order 43, the following observations were made in Vishnu Pratap 's case: "It is true that orders 40 & 43 both apply to the High Court but the question here is whether o. 43 makes provision for an appeal from one court to another or it is intended to cover cases of an appeal from one Judge to a bench of 230 the same Court.
While section 96 deals with original decree, section 104 Civil P.C. deals with orders, not being decrees, and the orders that are appealable are set out under o. 43, C.P.C. The question of an appeal from one Court to another Court is no doubt governed by the provisions of the Code of Civil Procedure but the provision for appeal from one Judge of a Court to a bench of the same Court is not provided for by the Code and must be governed by the Letters Patent.
If section 104 read with O. 43 makes all these orders appealable then what would be the Court to which appeals would lie from an order passed by a Division Bench and not by a single Judge.
We are not satisfied that section 104 or O. 43 ever intended to deal with appeals from a Judge or Judges of one Court to a larger number of Judges in the same Court.
It is no doubt true, as has been held by their Lordships of the Judicial Committee.
in 'Mt. Sabitri Thakurain vs Savi ' (AIR that section 104 as well as o. 43 apply to High Courts but it does not mean that they give any right to an appeal from an order by a Judge or Judges of that Court to a larger number of Judges of the same Court independently of the Letters Patent of the Court.
As we have said if o. 43 or section 104, Civil P.C., were made applicable per se, without reference to the Letters Patent, then even an order passed by a bench would come under those provisions, but before an appeal can be filed there will have to be a Court constituted for hearing an appeal and the only provision for hearing an appeal, from the judgment of a single Judge, by a bench of two or more Judges of the same Court is contained in the Letters Patent of the Chartered High Courts.
An order, to come under the Letters Patent must be a judgment, and, if an order is not a judgment, then cl. 10 of the Letters Patent would not apply and there is no provision for constituting a bench of more than one Judge to hear such an appeal.
We, therefore, fail to understand how O. 43 R. 1, or section 104, Civil P.C. without any reference to cl. 10 of the Letters Patent, can help the appellants. ' In this case also, the line of reasoning adopted by the court is the same as that of the Bombay High Court referred to above.
231 One of the reasons given is that while order 43 makes provision for A appeal from one court to another, it is not intended to apply to an appeal from one Judge of the High Court to a bench of the same Court.
No reasons have been given by the Judges for holding why this is not so particularly in the face of the clear provisions of section 117 and order 49 Rule 3, as discussed above.
Thus, the first part of R the reasoning of the High Court is totally irrelevant and wholly unintelligible.
The point at issue is if section 104 read with order 43, Rule I applies to an order passed by District Courts in the mofussil, why could it not apply to the one passed by the Trial Judge when the Letters Patent does not in any way bar such an appeal.
Another ground taken by the Court is that if order 43 Rule I is made applicable to the High Court then a strange anomaly will arise in that where an appeal lies to the Division Bench, how could a further appeal lie to some other bench of the court.
This argument also is based on a misconception of order 43 Rule 1.
It is manifest that if order 43 Rule I were to apply to orders passed by the Trial Judge, the order would be one passed by only one Judge of the High Court and, therefore, in the context of the original jurisdiction exercised by a Single Judge of the High Court, the appellate jurisdiction would lie with the Division Bench as contemplated by the Letters Patent and the Rules framed by the High Court.
We are unable to see any anomaly or inconsistency in this position.
Thirdly, the court seems to have relied on a decision of the Privy Council in Mt. Sabitri Thakurain vs Savi (AIR and has interpreted the ratio of this case to mean that section 104 would not apply to High Courts which is exactly what the Privy Council does not say.
With due respect, therefore, the learned Judges have not correctly appreciated the decision of the Privy Council which has nowhere indicated that order 43 Rule I would not apply to internal appeals in the High Court.
On the other hand their Lordships of the Privy Council had held to the contrary as discussed above.
For these reasons, therefore, we are of the opinion that this case has also not been correctly decided and we disapprove the reasons given and the decision taken in this case.
We might also notice a full Bench decision of the Nagpur High Court in Madhukar Trimbaklal vs Shri Sati Godawari Upasani Maharaj 232 of Sakori & Ors.
(1) where Niyogi, J. Observed as follows : "Clause 10, Letters Patent defines the appellate jurisdiction of the High Court vis a vis the judgment passed by a single Judge of that Court.
It should be observed that the Civil Procedure Code does not make any provision in this behalf.
The right of appeal from a decree of a single Judge to the High Court is not governed by section 96 or section 100 or section 104, Civil P.C., but by cl. 10, Letters Patent.
This right of appeal depends on the special provision made in the Charter.
section 4, Civil P.C., provides that the Code does not affect any special jurisdiction or power conferred, or any special form of procedure prescribed by or under any other law for the time being in force.
Since the special jurisdiction or power is conferred on the High Court by cl. 10, Letters Patent the provisions in the Civil Procedure Code regarding appeals cannot come into operation in regard to an appeal from a single Judge of the High Court to the High Court".
With due respect, we are unable to agree with the opinion expressed by Niyogi, J. who has made a bald statement that the Code of Civil Procedure does not make any provision in regard to an appeal from an order passed by a Trial Judge to a Division Bench and that the right of appeal from a decree of a Civil Judge to a High Court is not governed by section 100 or section 104 but by cl. 10 of the Letters Patent of the Nagpur High Court.
Here again, the learned Judge seems to have committed an error apparent on the face of the record.
An examination of the language of sections 96 to 100 would clearly show that the scope of these sections is quite different from that of section 104.
Sections 96 to 100 expressly deal with the forum of appeal provided by the Code against decrees or orders amounting to decrees passed by the District Court in the mofussil.
Section 104 is couched in very general terms and cannot be limited to appeals against orders passed by the courts contemplated in sections 96 to 100.
Moreover, section 104 does not deal with appeal against a decree at all but provides a forum for appeal against orders under order 43 Rule I which are mainly orders of a final or quasi final nature passed during the pendency of a suit.
Section 104, therefore, has a much wider application, as discussed above, and neither overrides the Letters Patent nor is it inconsistent with the same.
For these reasons, therefore, we are unable to accept the line of reasoning adopted by the aforesaid High Court in holding 233 that section 104 does not apply to internal appeals in the High Court and A we accordingly overrule this decision.
A some what identical view was taken by a later decision of the Nagpur High Court in Ratanlal Jankidas Agarwal vs Gajadhar & Ors.
(l) Where the following observations were made "Firstly, O. 43 has not been made applicable to appeals from appellate decrees by o. 43, R. 1, though the rules of o. 41 have been made applicable to them.
So section 104 bars an appeal from the order.
Moreover, the Civil Procedure Code makes no provision for an appeal within the High Court, that is to say, from a single Judge of the High Court.
Power is given to a Division Bench of the High Court to hear appeals from decisions of a single ' ' Judge of the High Court only under cl. 10 of the Letters Patent".
For the reasons which we have already given above, we hold that the learned Judges have fallen into the same error which was committed by the earlier Nagpur case.
The first reasoning given by Mangalmurti, J. that order 43 is not applicable to appeals from appellate decrees is wholly irrelevant because the question is whether under order 43 Rule 1, an appeal could lie from a Trial Judge to a Division Bench of the High Court.
Secondly, the learned Judge says that section 104 bars a second appeal from the order and that the Code of Civil Procedure makes no provision for appeal within the High Court.
Here again, the learned Judge is wrong because we have already pointed out that as far back as Hurrish Chunder Chowdry 's case (supra) it was clearly held by the Judicial Committee that section 588 was applicable even to internal appeals in the High Court.
On a parity of reasoning, therefore, on the basis of which we have overruled the decisions of the other High Courts, taking a similar view we find ourselves unable to agree with the view taken by Mangalmurti and Bose, JJ.
in the aforesaid case and hold that this case is not correctly decided.
A later decision of the Allahabad High Court also seems to have taken the same view.
In Standard Glass Beads Factory & Anr.
vs Shri Dhar & Ors.
(2) the following observations were made : "Such an order if made by a subordinate court is appealable under or.
43 R. 1, C.P.C.; it is, as we have seen an order from which in England an appeal lies, without 234 leave, to the Court of Appeal.
If the narrower view of the meaning of the word 'judgment ' be correct such an order when made by a Judge of a High Court in India exercising original jurisdiction would not be appealable".
Here also with due deference to the Judges constituting the Full Bench, we are of opinion that they committed an error in drawing inspiration from the procedure prevailing in England in the court of appeal.
In the first place the hierarchy of the Courts in India under the Civil Procedure Code is essentially different from that in the United Kingdom.
Secondly, there is no provision existing in the English law corresponding to Order 43 Rule 1 of an appeal from a Trial Judge to a Division Bench under various circumstances.
Lastly, this case does not seem to have considered a large number of decisions referred to by us, clearly holding that section 104 read with order 43 Rule I applies to appeals under the Letters Patent in the High Court.
For these reasons, therefore, we hold that this case also was not correctly decided and must be overruled.
Another case taking a contrary view is again a case of the Bombay High Court which also makes a rather interesting reading.
In J.K Chemicals Ltd. vs Kreba and Co. (1) Desai, J. speaking for the court observed on this part of the case thus: "The reply to the said argument is that the provisions of section 104 and O. 43, R. I provide for an appeal only from the subordinate Court to the higher Court and not from one part of the Court to the other.
It has been held that the provisions relating to appeals contained in the Civil Procedure Code deal with appeals from subordinate Courts to higher Courts and do not deal with appeals from the decisions and decrees of the High Court in the exercise of its ordinary or extra ordinary civil jurisdiction except so far as the appeal to the Supreme Court is concerned.
The subject of an appeal from the decision of a single Judge of the High Court to a Division Bench of the same High Court is dealt with only under the Letters Patent and such right is not governed by the provisions of the Civil Procedure Code relating to appeals.
This view has been taken consistently by the High Courts in India and also by the Privy Council (see Hurrish Chunder vs Kali Sunderi Debi (1883) ILR at p. 494)".
235 The first part of the observations follows the reasonings of the A two decisions of the Bombay High Court, discussed above, and are therefore open to the same criticism which we have levelled against the previous decisions.
Secondly, the court seems to think that all the High Courts in India have consistently taken the view that order 43 Rule 1 does not apply to internal appeals in the High Courts.
This is doubtless factually incorrect because we have referred to a large number of decisions which have taken a contrary view.
The High Court was, therefore, not quite correct in observing that the High Courts in India had taken a consistent view in regard to this matter.
Thirdly, the High Court seems to have relied heavily on the decision of the Privy Council in Hurrish Chunder Chowdry 's case (supra) and on Chappan 's case (supra) in holding that order 43 did not apply to internal appeals in the High Courts which were governed by the Letters Patent alone.
Here also, with due respect, the High Court has gravely erred.
We have pointed out while dealing with Hurrish Chunder Chowdry 's case (supra) that the Privy Council had clearly laid down that section 588 applied to the High Court and this position has been understood in this very sense by several judgments discussed above.
The High Court, therefore, has not correctly appreciated the real ratio of the Privy Council case, referred to above.
As regards Chappan 's case (supra), the conclusion of the High Court is not borne out by the ratio of the Full Bench in the said case.
It would appear that the Full Bench in the aforesaid case was concerned with two questions: (1) Whether in view of section 622 of the old Code (which corresponds to section 115 of the Code of 1908) an order passed by a trial Judge could be revised by a larger Bench, and (2) Whether the right of appeal given by cl. 15 of the Letters Patent against an order passed by a trial Judge was controlled and limited by sections 588 and 591 of the Code of 1877 (which now corresponds to order 43 Rule 1).
In the instant case we are not concerned with the revisional power but only with what old section 588 was.
Far from deciding that section 588 was not controlled by the Letters Patent, the learned Judge decided to the contrary.
To begin with, Benson, J. formulated 236 the questions referred to the Full Bench thus : (1) Whether the jurisdiction exercised by the High Court under section 622, Civil Procedure Code, is included in the expression "appellate jurisdiction" as used in section 13 of the High Court Act (24 and 25 Vict.
104 and in section 36 of the Letters Patent of 1866, and (2) Whether the right of appeal given by section 15 of the Letters Patent against an order passed by a single Judge of the High Court is controlled and limited by sections 588 and 591, Civil Procedure Code? I am of opinion that both of these questions must be answered in the affirmative".
and Shephard, Acting C.J. Observed as follows: "Accordingly I think it must be assumed that the judgment of a single Judge acting under section 622 of the Code is open to appeal, unless the right of appeal has been taken away by section 588 of that Code.
On that question I entirely agree with Mr. Justice Subramania Ayyar.
The question is, in my opinion, concluded by authority which it is beyond our province to criticise".
and Boddam, J. expressed the following opinion : "The result of this judgment (so far as it applies to the question before us) appears to me to come to this, that if the order made by a single Judge only amounts to an order such as is intended by chapter XLIII of the Code, it is not appealable unless it is within section 588".
and Moore, J. Observed as follows : "It is clear, however, that this could not have been done, for the provisions of sections 588 and 591 do, in certain cases, most certainly apply to the High Court.
For example, section 588, clause 1, provides that if a District Munsif passes an order under section 20 of the Code, an appeal lies to the District Judge, but that there is no second appeal to the High Court, while if a District Judge passes 237 such an order an appeal can be preferred to the High Court.
Whatever view be taken of section IS of the Letters Patent it would have been impossible to include section 588 among those sections that do not apply to the High Court".
Thus, the ratio decidendi of the decision clearly goes to indicate that the Full Bench of the Madras High Court had held in no uncertain terms that section 588 applied to the High Court and orders mentioned therein passed by a Trial Judge would be appealable to a larger Bench.
This, therefore, knocks the bottom out of the decision of the Bombay High Court when Chappan 's case (supra) in no way supported the view taken by them.
For the reasons given above, we hold that J.K Chemicals 's case (supra) was also wrongly decided and can no longer be treated as good law.
It is rather unfortunate that despite clear, explicit, pointed and pragmatic observations of the Privy Council in Hurrish Chunder Chowdry 's case (supra) and further clarification by the legislature by introducing section 104 of the Code of 1908, some of the High Courts n seem to have stuck to the antiquated view that the provisions of order 43 Rule I do not apply to internal appeals within the High Courts.
Thus after considering the arguments of counsel for the parties on the first two limbs of the questions, our conclusions are : (1) That there is no inconsistency between section 104 read with order 43 Rule I and the appeals under the Letters Patent and there is nothing to show that the Letters Patent in any way excludes or overrides the application of section 104 read with order 43 Rule I or to show that these provisions would not apply to internal appeals within the High Court.
(2) That even if it be assumed that order 43 Rule I does not apply to Letters Patent appeals, the principles governing these provisions would apply by process of analogy.
(3) That having regard to the nature of the orders contemplated in the various clauses of order 43 Rule 1, there can be no doubt that these orders purport to decide valuable rights of the parties in ancillary proceedings even though the suit is kept alive and 238 that these orders do possess the attributes or character of finality so as to be judgments within the meaning of cl. 15 of the Letters Patent and hence.
appealable to a larger Bench.
(4) The concept of the Letters Patent governing only the internal appeals in the High Courts and the Code of Civil Procedure having no application to such appeals is based on a serious misconception of the legal position.
This now brings us to the second important point which is involved in this appeal.
Despite our finding that section 104 read with order 43 Rule I applies to Letters Patent appeals and all orders passed by a Trial Judge under clauses (a) to (w) would be appealable to the Division Bench, there would still be a large number of orders passed by a Trial Judge which may not be covered by order 43 Rule l.
The next question that arises is under what circumstances orders passed by a Trial Judge not covered by order 43 Rule 1 would be appealable to a Division Bench.
In such cases, the import, definition and the meaning of the word 'judgment ' appearing in cl.
15 assumes a real significance and a new complexion because the term 'judgment ' appearing in the Letters Patent does not exclude orders not falling under the various clauses of order 43 Rule 1.
Thus the serious question to be decided in this case and which is indeed a highly vexed and controversial one is as to what is the real concept and purport of the word 'judgment ' used in cl.
IS of the Letters Patent.
The meaning of the word 'judgment ' has been the subject matter of conflicting decisions of the various High Courts raging for almost a century and in spite of such length of time, unfortunately, no unanimity has so far been reached.
As held by us earlier it is high time that we should now settle this controversy once for all as far as possible.
We now proceed to deal with the main controversy as to what is the true scope, meaning and purport of the word 'judgment ' used in cl. 15 of the Letters Patent.
Numerous authorities on both sides were cited before us in the course of the very able arguments advanced by counsels for the parties and it appears that there are three leading judgments which have spelt out certain tests to determine as to when an order passed by a Trial Judge can be said to be a 'judgment ' within the meaning of.
cl IS of the Letters Patent.
A very narrow view on this point was taken by a Division Bench 239 Of the Calcutta High Court in the case of The Justice of the Peace for Calcutta (supra) where Sir Couch, C.J. On an interpretation of cl. 15 of the Letters Patent observed thus: "We think that "judgment" in clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability.
It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.
" An analysis of the observations of the Chief Justice would reveal that the following tests were laid down by him in order to decide whether or not an order passed by the Trial Judge would be a judgment: (1) a decision which affects the merits of the question between the parties; (2) by determining some right or liability; (3) the order determining the right or liability may be final, preliminary or interlocutory, but the determination must be final or one which decides even a part of the controversy finally leaving other matters to be decided later.
Thus, examining the tests laid down by Sir Richard Couch, C.J,, it seems to us that the view taken by the learned Chief Justice appears to place a very strict and narrow interpretation on the word 'judgment ' under which orders deciding matters of moment or valuable right of the parties without finally deciding the suit may not amount to a judgment and hence, not appealable.
In giving this interpretation the learned Chief Justice was guided by two considerations: (I) that a liberal interpretation may allow vexed litigants to carry any discretionary order of the Trial Court in appeal, and (2) that it would confer more extensive right to appeal against the Judge sitting on the original side than the right of appeal given to a Trial Judge sitting in the mofussil.
We are doubtless impressed with the argument of the Chief Justice and fully appreciate the force of the reasons given by him but we feel that despite those considerations the law must be interpreted as it stands and a court is not 240 justified in interpreting a legal term which amounts to a complete distortion of the word 'judgment ' so as to deny appeals even against unjust orders to litigants having genuine grievances so as to make them scapegoats in the garb of protecting vexatious appeals.
In such cases, a just balance must he struck so as to advance the object of the statute and give the desired relief to the litigants, if possible.
Although it is true that this decision is practically the locus classicus so far as the Calcutta High court is concerned and has been consistently followed by later decisions at the same time it cannot be denied that in a number of cases the conscience of the Judges was so shocked that they tried to whittle down or soften the rigours of this decision so much so that in one case the observations of the Chief Justice were not only not followed but were described as antiquated and in other cases the Judges strongly expressed them selves that the High court should give up its fondness to stick to the principles laid down by the learned Chief Justice.
It is not necessary for us to burden this judgment with later decisions of the Calcutta High court in trying to comment on the correctness of the principles laid down by sir Couch, c J. but a few instances may be quite revealing.
In Chandi Charan Saha vs Jnanendra Nath Bhattacharjee and Ors.
,(l) Sir Asutosh Mookerjee in his leading judgment modified the strict rule of interpretation of 'judgment ' laid down by sir Couch, C.J. and pointed out that the words 'merits of the question between the parties by determining a right of liability ' were not to be confined or restricted to the controversy in a suit itself but could take within its fold any right involved in any application which puts an end to the suit or the proceeding.
sir Mookerjee, J. has widened the scope of the observations of sir Couch, c.
J and adopted some of the observations of Sir White, C.J. in Tuljaram Row 's case (supra) and in this connection observed thus: "It is plain that the expression 'some right or liability is not restricted to the right in controversy in the suit itself on the other hand, if we adopt the wider definition formulated by White C.J. in the case of Tuljaram Row vs Alagappa Chettiar (ILR , the decision is unquestionably a judgment within the meaning of the Letters Patent.
The test is, not what the form of the adjudication is, but what is its effect in the suit or proceeding in which 241 it is made.
If its effect, whatever its form may be and whatever may be the nature of the application on which it is made, is to put an end to the suit or proceeding so far as the Court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, the adjudication is a judgment: Mathura vs Haran Cal. 857).
" In Lea Badin 's case (supra), the following observations were made: "To remove the incongruity which appears in the decision of this Court and to lay down some definite rule by which orders might be tested when it has to be determined whether or not they are 'judgments ' within the meaning of the clause, this Court will some day have to abandon its fond adherence to the antiquated definition of Couch, C.J., and boldly acknowledge its allegiance to the tests laid down by White, C.J." (Emphasis supplied) After making these observations the Court further reiterated the position in the following words.
"In more decisions than one of this Court this definition of 'Judgment ' given by Couch, C.J. has been described as classical, and yet in a long course of decisions this Court has repeatedly expressed the view that the definition is absolutely exhaustive.
Treating this definition as not of an inflexible character and yet not expressly purporting to extend it, the Court has in numerous cases emphasised the necessity of scrutinizing the nature of the decision in each particular case in order to find out whether the decision amounts to a 'judgment ' within the meaning of the Clause.
In Shorab Merwanji Modi and Anr.
vs Mansata Film Distributors and Anr., the following observations were made: "On a strict construction of the Calcutta test, the Tight or liability must mean some right or liability which is 242 a subject matter of controversy in the suit or proceeding but in its application to individual cases, that strict construction has not been adhered to and was indeed often departed from by Couch, J., himself who was the author of the test.
Orders concerning the jurisdiction of the Court to entertain a suit, as distinguished from matters of the actual dispute between the parties, were held by him to come within the category of judgments." In Mooammed Felumeah vs section Mondal & Ors.
the Court pithily observed as follows: "Now, so far as this Court is concerned, there is a considerable body of judicial opinion, which, while holding that Sir Richard Couch 's above definition is classical and of pre eminent practical importance and usefulness, has consistently refused to regard it as, in any sense.
exhaustive or inflexible.
Indeed, in essence and truth, it has been accepted merely as the starting point on a broad open field, stretched in front of it in all its vastness and immense magnitude, and Judges have always endeavoured to extend it and expand the different aspects of the term and to give it a wide and extended meaning, though, of course, within certain limits.
" The other leading case which puts even a narrower interpretation and in our opinion, a clearly wrong one, on the word 'judgment ' is the Full Bench decision of the Rangoon High Court In Re Dayabhai Jiwandas 's case (supra) where the following observations were made: "I am of opinion that in the Letters Patent of the High Courts the word judgment ' means and is a decree in a suit by which the rights of the parties at issue in the suit are determined." With due respect to the learned Chief Justice and the Judges who agreed with him, we are unable to accept the interpretation of the word judgment ' given by the Chief Justice which runs counter to the very spirit and object of the word 'judgment ' appearing in cl. 15 of the Letters Patent.
The learned Chief Justice seems to 243 have fallen into the error of equating the word 'judgment ' with 'decree ' as used in the Code of Civil Procedure when, as pointed out above, the words 'judgment ' and 'decree ' used in the Code cannot form a safe basis to determine the definition of the word 'judgment ' in the Letters Patent particularly when the Letters has deliberately dropped the word 'decree from judgment. ' We are, therefore, unable to hold that the view taken by the Chief Justice, Sir Page, is correct and accordingly overrule the same.
The next leading case which lays down the test of a 'judgment ' and which seems to have found favour with most of the High Courts in India is the test laid down by Sir Arnold White, C.J. in Tuljaram Row 's case (supra) where the learned Chief Justice pointedly spelt out various tests and observed thus: "The test seems to me to be not what is the form of the adjudication but what is its effect in the suit or proceeding in which it is made.
If its effect, whatever its form may be, and whatever may be the nature of the application on which it is made, is to put an end to the suit or proceeding so far as the Court before which the suit or proceeding is pending is concerned, or if its effect, if it is not complied with, is to put an end to the suit or proceeding, I think the adjudication is a judgment within the meaning of the clause.
An adjudication on an application which is nothing more than a step towards obtaining a final adjudication in the suit is not, in my opinion, a judgment within the meaning of the Letters Patent.
" I think, too, an order on an independent proceeding which is ancillary to the suit (not instituted as a step towards judgment, but with a view to rendering the judgment effective if obtained) e.g., an order on an application for an interim injunction, or for the appointment of a receiver is a 'judgment ' within the meaning of the clause.
" Analysing the observations of the learned Chief Justice it would appear that he has laid down the following tests in order to assess the import and definition of the word 'judgment ' as used in cl.
IS of the Letters Patent : (1) It is not the form of adjudication which is to be seen but its actual effect on the suit or proceeding; 244 (2) If, irrespective of the form of the suit or proceeding, the order impugned puts an end to the suit or proceeding it doubtless amounts to a judgment; (3) Similarly, the effect of the order, if not complied with, is to terminate the proceedings, the said order would amount to a judgment; (4) Any order in an independent proceeding which is ancillary to the suit (not being a step towards judgment) but is designed to render the judgment effective can also be termed as judgment within the meaning of the Letters Patent.
So far as this test is concerned, the learned Chief Justice had in mind orders passed by the Trial Judge granting or refusing ad interim injunction or appointing or refusing to appoint a receiver.
(5) An order may be a judgment even if it does not affect the merits of the suit or proceedings or does not determine any rights in question raised in the suit or proceedings.
(6) An adjudication based on a refusal to exercise discretion the effect of which is to dispose of the suit, so far as that particular adjudication is concerned, would certainly amount to a judgment within the meaning of the Letters Patent.
Similarly, Krishnaswami Ayyar, J., who agreed with tile Chief Justice in the above case, pointed out that even an interlocutory judgment which determines some preliminary or subordinate point or plea or settles some step without adjudicating the ultimate right of the parties may amount to a judgment.
With due respect we think that if the observations of Krishnaswamy Ayyar, J. are carried to its logical limit every interlocutory order would have to be held to be appealable.
So far as the tests laid down by White, C.J., and as analysed by us, are concerned we are inclined to agree generally with these tests though we feel that some of the tests laid down are far too 245 wide and may not be quite correct.
While the view taken by Sir Richard Couch, C.J. in The Justice of the Peace for Calcutta (supra) is much too strict, the one taken by Sir White, C.J. is much too wide.
The correct test seems to lie somewhere in between the tests laid down by the aforesaid jurists.
We might point out that the tests laid down by the Calcutta High Court have been consistently followed by the Bombay High Court and also by a large majority of the later decisions of the Calcutta High Court in Lea Badin vs Upendra Roy Chaudhury, Kumar Gangadhar vs Kanti Chunder Mukherjee, Shorab Merwanji Modi vs Mansata Film Distributors, Mohammed Felumeah vs section Mondal.(supra) Some of the decisions have sounded a discordant note and have gone to the extent of characterising the view of Sir Couch, C.J, as being antiquated and have strongly expressed the view that the Calcutta High Court should give up its fondness for the strict test laid down by Sir Couch in The Justice of the Peace for Calcutta 's case.
On the other hand, the tests laid down by Sir White, C.J. in Tuljaram Row 's case have been followed by the Lahore High Court in Ruldu Singh vs Sanwal Singh and by some other High Courts in Standard Glass Beads Factory Shri Dhar & Ors.
and later decisions of the Madras High Court as also by Andhra Pradesh High Court in Kuppa Viswappathi vs Kuppa Venkata Krishua Sastry.
A Full Bench of the Allahabad High Court, however, in Mt. Shahzadi Begam vs Alak Nath dissented from the view taken by the Madras High Court and held that the tests laid down by that High Court in the aforesaid case were rather too wide.
In this connection, Sulaiman, C.J., speaking for the Court observed as follows : "We would like to point out that the test laid down by the learned Chief Justice of the Madras High Court is put in too wide a language and cannot be accepted as laying down the correct criterion".
Similarly, in a later Full Bench decision of the Nagpur High Court in Manohar Damodar Bhoot vs Baliram Ganpat Bhoot, Hidayatullah.
J. (as he then was) who wrote the leading judgment, very pithily described the essential requisites and the exact meaning 246 of the word 'judgment ' as used in the Letters Patent and observed thus: "A judgment means a decision in an action whether final, preliminary or interlocutory which decides either wholly or partially, but conclusively in so far as the Court is concerned, the controversy which is the subject of the action.
It does not include a decision which is on a matter of procedure, nor one which is ancillary to the action even though it may either imperil the ultimate decision or tend to make it effective.
The decision need not be immediately executable 'per se ' but if left untouched must result inevitably without anything further, save the determination of consequential details, in a decree or decretal orders, that is to say, an executive document directing something to be done or not to be done in relation to the facts of the controversy.
The decision may itself order that thing to be done or not to be done or it may leave that over till after the ascertainment of some details but it must not be interlocutory having for its purpose the ascertainment of some matters or details prior to the determination of the whole or any part of the controversy".
The pointed observations of the Hon 'ble Judge try to synthesize the conflicting views taken by the Calcutta and the Madras High Courts and, in our opinion, they represent the true scope and import of the word 'judgment ' as used in the Letters Patent.
The learned Judge while making these observations has made an exhaustive analysis of a large number of cases.
Having dealt with the main cases of the various High Courts reflecting different and variant views, we do not think it necessary to multiply authorities on this subject which have been fully debated in the decisions we have referred to.
We shall now proceed to refer to the decisions of this Court with respect to the incidental observations made by them regarding the scope and meaning of the word 'judgment ' before giving our own view of the matter.
Before, however, dealing with the cases of this Court we might indicate that in view of the decisions taken by us regarding the applicability of section 104 read with order 43 Rule 1 even to internal appeals in the High Court, the controversy regarding the meaning of the word 'judgment ' has been largely narrowed down and sufficiently abridged because the orders mentioned in clauses (a) to (w) of order 43 Rule 1 having 247 been held to be appealable, there would be only a few cases left in A which the question as to whether or not the orders passed by the Trial Judge are judgments would arise.
After discussing the decisions of this Court, we shall give a list of illustrative cases which may justly be described as 'judgment ' within the meaning of the Letters Patent so as to cover almost the entire field though a few cases still may have to be determined according to the principles laid down.
The first decision of this Court which is relevant is Asrumati Debi 's case (supra).
In this case the only question involved was whether an order transferring a suit under cl. 13 of the Letters Patent satisfied the tests of a judgment as mentioned in cl. 15 of the Letters Patent.
This Court referring to the Calcutta and Madras decisions refrained from giving any particular decision except that they held that the mere order of transfer under cl. 13 of the Letters Patent could not be said to be a judgment and was therefore not appealable.
This Court pointed out that the order neither affected the merits of the controversy not did it terminate or dispose of the suit.
In this connection, the Court observed as follows: "The judgment must be the final pronouncement which puts an end to the proceeding so far as the court dealing with it is concerned.
It certainly involves the determination of some right or liability, though it may not be necessary that there must be a decision on the merits. .
We have indicated that the essential features of a 'judgment ' are according to both the, Calcutta and the Madras High Courts and all that we need say is that, in our opinion, an order under clause 13 of the Letters Patent does not satisfy the tests of a 'judgment ' as formulated by either of these High Courts".
Apart from this what is more important is that the Court clearly observed that as an order granting leave under cl. 12 of the Letters Patent constitutes the very foundation of the suit, hence if by an order such leave is rescinded the suit automatically comes to an end and there can be no doubt that such an order would be a judgment.
In this connection, this Court observed as follows: "Leave granted under clause 12 of the Letters Patent constitutes the very foundation of the suit which is 248 instituted on its basis.
If such leave is rescinded, the suit automatically comes to an end and there is no doubt that such an order would be a judgment".
Thus, from this case an important test that can be spelt out is that where an order which is the foundation of the jurisdiction of the Court or one which goes to the root of the action, is passed against a particular party, it doubtless amounts to a judgment.
As we have already pointed out apart from these observations this Court refused to embark on an enquiry as to in what cases an order passed by a Trial Judge would be a 'judgment ' for purposes of appeal before a larger Bench.
Again in Union of India vs Mohindra Supply Co. (supra) this Court clearly held that in enacting section 104 the intention of the Legislature was to preserve the Letters Patent jurisdiction of the High Court and provided for a right to appeal from the Trial Judge to the Division Bench without affecting the provisions of the Code of 1908.
In this connection, the Court observed as follows : "Under the Code, as amended, the view has consistently been taken that interlocutory judgments (i.e., decisions though not amounting to decrees which affect the merits of the questions between the parties by determining some right or liability) passed by single Judges of Chartered High Courts were appealable under the Letters Patent".
We might mention here that the observations of this Court completely demolish the arguments of some of the High Courts that section 104 does not apply to internals in the High Court because this Court while referring to the Code made specific reference to section 104 in the previous paragraph.
Apart from this, there is no observation by this Court regarding essential requisites of a Judgment.
In State of U.P. vs Dr. Vijay Anand Maharaj (supra) the order impugned passed by the Single Judge was an order dismissing an application filed by the applicant to review the order of the Trial Judge.
The question for determination was whether the order was a judgment so as to be appealable to the Division Bench.
This Court referred to the observations of Hidayatullah, J. extracted in Manohar V. Baliram (supra) and though they did not expressly approve this decision they indirectly seem to have been impressed by the reasons given by Hidayatullah, J. Nothing further was said by this Court because it held that on the facts of that case the 249 order of the Trial Judge dismissing the application for review was A appealable.
We might mention here that under clause (w) of order 43 Rule 1 an order granting an application for review is appealable.
On a parity of reasoning, therefore, an order dismissing an application for review would also be appealable under the Letters Patent being a judgment though it is not made appealable under order 43 Rule 1.
In Shankarlal Aggarwal 's case (supra) while indicating the divergence of judicial opinion on the subject this Court held that an order under section 202 of the Indian was a judgment within the meaning of Letters Patent and therefore appealable.
We might mention here that the which confers additional original jurisdiction on the Trial Judge expressly makes an order passed by the Trial Judge under section 202 appealable and, therefore, it is manifest that any order passed under section 202 would have to be appealable under the and therefore it was rightly construed as a judgment.
In Radhey Shyam vs Shyam Behari (supra) the question was whether in an application under order 21 rule 90 to set aside an auction sale an order passed by the Court would be a judgment affecting valuable rights.
This Court held that an order in such proceedings affected valuable rights and was therefore appealable.
In this connection, the Court observed as follows: "In our view an order in a proceeding under O. XXI, r. 90 is a "judgment" in as much as such a proceeding raises a controversy between the parties therein affecting their valuable rights and the order allowing the application certainly deprives the purchaser of rights accrued to him as a result of the auction sale.
" Thus, the only point which emerges from this decision is that whenever a Trial Judge decides a controversy which affected valuable rights of one of the parties, it must be treated to be a judgment within the meaning of the Letters Patent.
250 The last case of this Court to which our attention has been drawn is Shanti Kumar R. Canji vs The Home Insurance Co. Of New York where the court was considering the effect of an order passed by the Trial Judge allowing amendment of the plaint and the question at issue was whether such an order would be a judgment within the meaning of the Letters Patent.
The following observations were made by this Court in the aforesaid case.
"We are in agreement with the view expressed by the High Court at Calcutta in the M.B. Sirkar 's case (AIR 1956 Cal. 630) as to when an order on an application for amendment can become a judgment within the meaning of clause 15 of the Letters Patent.
If an amendment merely allows the plaintiff to state a new cause of action or to ask a new relief or to include a new ground of relief all that happens is that it is possible for the plaintiff to raise further contentions in the suit, but it is not decided whether the contentions are right.
Such an amendment does nothing more than regulate the procedure applicable to the suit.
It does not decide any question which touches the merits of the controversy between the parties.
Where, on the other hand, an amendment takes away from the defendant the defence of immunity from any liability by reason of limitation, it is a judgment within the meaning of clause 15 of the Letters Patent.
The reason why it becomes a judgment is that it is a decision affecting the merits of the question between the parties by determining the right or liability based on limitation.
It is the final decision as far as the trial court is concerned.
In finding out whether the order is a judgment within the meaning of clause 15 of the Letters Patent it has to be found out that the order affects the merits of the action between the parties by determining some right or liability.
The right or liability is to be found out by the court.
The nature of the order will have to be examined in order to ascertain whether there has been a determination of any right or liability".
(Emphasis ours) 251 Thus, having noticed the ratio of some of the cases of this Court referred to above, regarding the tests to determine the import and meaning of the word 'judgment ' we now proceed to deal with the specific question after interpreting cl.15 of the Letters Patent of the Bombay High Court and the corresponding clauses of Letters Patent of other High Courts.
We shall endeavour to interpret the connotation and the import of the word 'judgment ' particularly in the light of pertinent and pointed observations made by this Court on earlier occasions as discussed above.
The relevant portion of cl. 15 of the Letters Patent may be extracted thus : "We do further ordain that an appeal shall lie to the said High Court of Judicature at Madras, Bombay, Fort William in Bengal from the judgment. . of one Judge of the said High Court. " Clause 15 makes no attempt to define what a judgment is.
As Letters Patent is a special law which carves out its own sphere, it would not be possible for us to project the definition of the word 'judgment ' appearing in section 2 (9) of the Code of 1908, which defines 'judgment ' into the Letters Patent: "judgment ' means the statement given by the Judge of the grounds of a decree or order".
In Mt. Shahzadi Begam vs Alak Nath and Ors., Sulaiman, C.J., very rightly pointed out that as the Letters Patent were drafted long before even the Code of 1882 was passed, the word 'judgment ' used in the Letters Patent cannot be relatable to or confined to the definition of 'judgment ' as contained in the Code of Civil Procedure which came into existence long after the Letters Patent were given.
In this connection, the Chief Justice observed as follows : "It has been held in numerous cases that as the Letters Patent were drafted long before even the earlier Code of 1882 was passed, the word 'judgment ' used therein does not 252 mean the judgment as defined in the existing Code of Civil Procedure.
At the same time the word 'judgment ' does not include every possible order, final, preliminary or interlocutory passed by a Judge of the High Court".
We find ourselves in complete agreement with the observations made by the Allahabad High Court on this aspect of the matter.
The definition of the word 'judgment ' in sub section
(9) of section 2 of the Code of 1908 is linked with the definition of 'decree ' which is defined in sub section
(2) of section 2 thus: "decree" means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final.
It shall be deemed to include the rejection of a plaint and the determination of any question within section 47 or section 144, but shall not include (a) any adjudication from which an appeal lies as an appeal from an order, or (b) any order of dismissal for default.
Explanation: A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of.
It is final when such adjudication completely disposes of the suit.
It may be partly preliminary and partly final".
Thus, under the Code of Civil Procedure, a judgment consists of the reasons and grounds for a decree passed by a court.
As a judgment constitutes the reasons for the decree it follows as a matter of course that the judgment must be a formal adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy.
The concept of a judgment as defined by the Code of Civil Procedure seems to be rather narrow and the limitations engrafted by sub section
(2) of section 2 253 cannot be physically imported into the definition of the word 'judgment ' as used in cl. 15 of the Letters Patent because the Letters Patent has advisedly not used the terms 'order ' or 'decree ' anywhere.
The intention, therefore, of the givers of the Letters Patent was that the word 'judgment ' should receive a much wider and more liberal interpretation than the word 'judgment ' used in the Code of Civil Procedure.
At the same time, it cannot be said that any order passed by a Trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent.
It seems to us that the word 'judgment ' has undoubtedly a concept of finality in a broader and not a narrower sense.
In other words, a judgment can be of three kinds :.
(1) A Final Judgment a judgment which decides all the questions or issues in controversy so far as the Trial Judge is concerned and leaves nothing else to be decided.
This would mean that by virtue of the judgment, the suit or action brought by the plaintiff is dismissed or decreed in part or in full.
Such an order passed by the Trial Judge indisputably and unquestionably is a judgment within the meaning of the Letters Patent and even amounts to a decree so that an appeal would lie from such a judgment to a Division Bench (2) A preliminary judgment This kind of a judgment may take two forms (a) where the Trial Judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable.
Here also, as the suit is finally decided one way or the other, the order passed by the Trial Judge would be a judgment finally deciding the cause so far as the Trial Judge is concerned and therefore appealable to the larger Bench.
(b) Another shape which a preliminary judgment may take is that where the Trial Judge passes an order after hearing the preliminary objections raised by the defendant relating to maintainability of the suit, e.g., bar of jurisdiction, res Judicata, a manifest defect in the suit, absence of notice under section 80 and the like, and these objections are decided by the Trial Judge 254 against the defendant, the suit is not terminated but continues and has to be tried on merits but the order of the Trial Judge rejecting the objections doubtless adversely affects a valuable right of the defendant who, if his objections are valid, is entitled to get the suit dismissed on preliminary grounds.
Thus, such an R order even though it keeps the suit alive, undoubtedly decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to larger Bench.
(3) Intermediary or Interlocutory judgment Most of the interlocutory orders which contain the quality of finality are clearly specified in clauses (a) to (w) of order 43 Rule 1 and have already been held by us to be judgments within the meaning of the Letters Patent and, therefore, appealable.
There may also be interlocutory orders which are not covered by o. 43 R.1 but which also possess the characteristics and trappings of finality in that, the orders may adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding.
Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote.
For instance, where the Trial Judge in a suit under order 37 of the Code of Civil Procedure refuses the defendant leave to defend the suit, the order directly affects the defendant because he loses a valuable right to defend the suit and his remedy is confined only to contest the plaintiff 's case on his own evidence without being given a chance to rebut that evidence.
As such an order vitally affects a valuable right of the defendant it will undoubtedly be treated as a judgment within the meaning of the Letters Patent so as to be appealable to a larger Bench.
Take the converse case in a similar suit where the trial Judge allows the defendant to defend the suit in which case although the plaintiff is adversely affected but the damage or prejudice caused to him is not direct or immediate but of a minimal nature and rather too remote because the plaintiff still possesses his full right to show that the defence is 255 false and succeed in the suit.
Thus, such an Order passed by the Trial Judge would not amount to a judgment within the meaning of cl. 15 of the Letters Patent but will be purely an interlocutory order.
Similarly, suppose the Trial Judge passes an Order setting aside an exparte decree against the defendant, which is not appealable under any of the clauses of O. 43 R.1 though an order rejecting an application to set aside the decree passed exparte falls within O. 43 R.l cl.
(d) and is appealable, the serious question that arises is whether or not the order first mentioned is a judgment within the meaning of Letters Patent.
The fact, however, remains that the order setting aside the ex parte decree puts the defendant to a great advantage and works serious injustice to the plaintiff because as a consequence of the order, the plaintiff has now to contest the suit and is deprived of the fruits of the decree passed in his favour.
In these circumstances, therefore, the order passed by the Trial Judge setting aside the ex parte decree vitally affects the valuable rights of the plaintiff and hence amounts to an interlocutory judgment and is therefore, appealable to a larger Bench.
In the course of the trial, the Trial Judge may pass a number of orders whereby some of the various steps to be taken by the parties in prosecution of the suit may be of a routine nature while other orders may cause some inconvenience to one party or the other, e.g., an order refusing an adjournment, an order refusing to summon an additional witness or documents, an order refusing to condone delay in filing documents, after the first date of hearing an order of costs to one of the parties for its default or an order exercising discretion in respect of a procedural matter against one party or the other.
Such orders are purely interlocutory and cannot constitute judgments because it will always be open to the aggrieved party to make a grievance of the order passed against the party concerned in the appeal against the final judgment passed by the Trial Judge.
Thus, in other words every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights 256 of the parties and which work serious injustice to the party concerned.
Similarly, orders passed by the Trial Judge deciding question of admissibility or relevancy of a document also cannot be treated as judgments because the grievance on this score can be corrected by the appellate court in appeal against the final judgment.
We might give another instance of an interlocutory order which amounts to an exercise of discretion and which may yet amount to a judgment within the meaning of the Letters Patent.
Suppose the Trial Judge allows the plaintiff to amend his plaint or include a cause of action or a relief as a result of which a vested right of limitation accrued to the defendant is taken away and rendered nugatory.
It is manifest that in such cases, although the order passed by the trial Judge is purely discretionary and interlocutory it causes gross injustice to the defendant who is deprived of a valuable right of defence to the suit.
Such an order, therefore, though interlocutory in nature contains the attributes and characteristics of finality and must be treated as a judgment within the meaning of the Letters Patent.
This is what was held by this Court in Shanti Kumar 's case (supra), as discussed above.
Let us take another instance of a similar order which may not amount to a judgment.
Suppose the Trial Judge allows the plaintiff to amend the plaint by adding a particular relief or taking an additional ground which may be inconsistent with the pleas taken by him but is not barred by limitation and does not work serious injustice to the defendant wh o would have ample opportunity to disprove the amended plea taken by plaintiff at the trial.
In such cases, the order of the Trial Judge would only be a simple interlocutory order without containing any quality of finality and would therefore not be a judgment within the meaning of cl. 15 of the Letters Patent The various instances given by us would constitute sufficient guidelines to determine whether or not an order passed by the Trial Judge is a judgment within the meaning of the Letters Patent.
We must however hasten to add that instances given by us are illustrative and not exhaustive.
We have already referred to the various tests laid down by the Calcutta, Rangoon and Madras High Courts.
So far as the Rangoon High Court is concerned we have already pointed out that the strict test that an order passed by the Trial Judge would be a judgment only if it amounts to a decree 257 under the Code of Civil Procedure, is legally erroneous and opposed to the very tenor and spirit of the language of the Letters Patent.
We, therefore, do not approve of the test laid down by the Rangoon High Court and that decision therefore has to be confined only to the facts of that particular case because that being a case of transfer, it is manifest that no question of any finality was involved in the order of transfer.
We would like to adopt and approve of generally the tests laid down by Sir White, C.J. in Tuljaram Row 's case (supra) (which seems to have been followed by most of the High Courts) minus the broader and the wider attributes adumbrated by Sir White, C.J. Or more explicitly by Krishnaswamy Ayyar, J. as has been referred to above.
Apart from the tests laid down by Sir White, C.J., the following considerations must prevail with the court: (1) That the Trial Judge being a senior court with vast experience of various branches of law occupying a very high status should be trusted to pass discretionary or interlocutory orders with due regard to the well settled principles of civil justice.
Thus, any discretion exercised or routine orders passed by the Trial Judge in the course of the suit which may cause some inconvenience or, to some extent, prejudice one party or the other cannot be treated as a judgment otherwise the appellate court (Division Bench) will be flooded with appeals from all kinds of orders passed by the Trial Judge.
The courts must give sufficient allowance to the Trial Judge and raise a presumption that any discretionary order which he passes must be presumed to be correct unless it is ex facie legally erroneous or causes grave and substantial injustice.
(2) That the interlocutory order in order to be a judgment must contain the traits and trappings of finality either when the order decides the questions in controversy in an ancillary proceeding or in the suit itself or in a part of the proceedings.
(3) The tests laid down by Sir White, C.J. as also by Sir Couch, C.J. as modified by later decisions of the Calcutta High Court itself which have been dealt with by us elaborately should be borne in mind.
258 Thus, these are some of the principles which might guide a Division Bench in deciding whether an order passed by the Trial Judge amounts to a judgment within the meaning of the Letters Patent.
We might, however, at the risk of repetition give illustrations of interlocutory orders which may be treated as judgments: (1) An order granting leave to amend the plaint by introducing a new cause of action which completely alters the nature of the suit and takes away a vested right of limitation or any other valuable right accrued to the defendant (2) An order rejecting the plaint.
(3) An order refusing leave to defend the suit in an action under Order 37, Code of Civil Procedure.
(4) An order rescinding leave of the Trial Judge granted by him under clause 12 of the Letters Patent.
(5) An order deciding a preliminary objection to the maintainability of the suit on the ground of limitation, absence of notice under section 80, bar against competency of the suit against the defendant even though the suit is kept alive.
(6) An order rejecting an application for a judgment on admission under order 12 Rule 6.
(7) An order refusing to add necessary parties in a suit under section 92 of the Code of Civil Procedure.
(8) An order varying or amending a decree.
(9) An order refusing leave to sue in forma pauperis.
(10) An order granting review.
(11) An order allowing withdrawal of the suit with liberty to file a fresh one.
(12) An order holding that the defendants are not agriculturists within the meaning of the special law.
(13) An order staying or refusing to stay a suit under section 10 of the Code of Civil Procedure.
259 (14) An order granting or refusing to stay execution of the decree.
(15) An order deciding payment of court fees against the plaintiff.
Here, it may be noted that whereas an order deciding the nature of the court fees to be paid by the plaintiff would be a judgment but this order affects only the plaintiff or the Government and not the defendant.
Thus, only the plaintiff or the Government as the case may be will have the right to file an appeal in the Division Bench and not the defendant because the question of payment of court fees is a matter between the Government and the plaintiff and the defendant has no locus in this regard.
We have by way of sample laid down various illustrative examples of an order which may amount to judgment but it is not possible to give such an exhaustive list as may cover all possible cases.
Law with its dynamism, pragmatism and vastness is such a large ocean that it is well nigh impossible for us to envisage or provide for every possible contingency or situation so as to evolve a device or frame an exhaustive formula or strategy to confine and incarcerate the same in a straitjacket.
We, however, hope and trust that by and large the controversy raging for about a century on the connotation of the term 'judgment ' would have now been settled and a few cases which may have been left out, would undoubtedly be decided by the court concerned in the light of the tests.
Observations and principles enunciated by us.
In the instant case, as the order of the Trial Judge was one refusing appointment of a receiver and grant of an ad interim injunction, it is undoubtedly a judgment within the meaning of the Letters Patent both because in view of our judgment, order 43 Rule 1 applies to internal appeals in the High Court and apart from it such an order even on merits contains the quality of finality and would therefore be a judgment within the meaning of cl. 15 of the Letters Patent.
The consistent view taken by the Bombay High Court in the various cases noted above or other cases which may not have been noticed by us regarding the strict interpretation of cl. 15 of the Letters Patent are hereby overruled and the Bombay High Court is directed to decide the question in future in the light of our decision.
We, therefore, hold that the order passed by the Trial Judge in the instant case being a judgment within the meaning of cl. 15 of the 260 Letters Patent, the appeal before the Division Bench was maintainable and the Division Bench of the High Court was in error in dismissing the appeal without deciding it on merits.
We have already directed the High Court to decide the appeal on merits by our formal order dated April 22, 1981.
Before closing this judgment we may indicate that we have refrained from expressing any opinion on the nature of any order passed by a Trial Judge in any proceeding under article 226 of the Constitution which are not governed by the Letters Patent but by rules framed under the Code of Civil Procedure under which in some High Courts writ petitions are heard by a Division Bench.
In other High Court writ petitions are heard by a Single Judge and a right of appeal is given from the order of the Single Judge to the Division Bench after preliminary hearing, In the circumstances we make no order as to costs.
AMARENDRA NATH SEN, J.
The only question which falls for determination in this appeal by special leave is whether an order passed by a Single Judge on the original side of the Bombay High Court refusing to grant an injunction or to appoint a receiver in an interlocutory application made in the suit, is appealable or not ? In other words, the maintainability of an appeal filed before a Division Bench of the Bombay High Court against an order of a learned single Judge of the High Court dismissing an interlocutory application for injunction and for appointment of a receiver by way of interim relief pending final disposal of the suit in the original side of the High Court, forms the subject matter of the present appeal.
The question is of some importance, as there appears to be no uniformity of the view amongst the various High Courts on the competence and the maintainability of such an appeal.
The appellant has filed in the original side of the Bombay High Court a suit for specific performance of an agreement dated 12th January, 1979.
In the said suit the appellant, as plaintiff in the suit, took out a notice of motion seeking the following reliefs: (a) that pending the hearing and final disposal of the suit, the respondent i.e. the defendant in the suit, be restrained by an order and injunction from in any 261 manner dealing with or disposing of or alienating or A encumbering the right, title and interest in respect of the said lands and the said land or any part thereof or parting possession of the said land or any part thereof; (b) that pending the hearing and final disposal of the suit, the Court receiver High Court Bombay or some other fit and proper person be appointed receiver of the said lands which forms the subject matter of the agreement, with all powers under 0.40, rule I of the Code of Civil Procedure; (c) ad interims in terms of prayers (a) (b); and (d) for such further and other reliefs as the nature and circumstances of the case may require.
A learned single Judge dealing with the said application of the appellant on the original side of the Bombay High Court dismissed the said application.
Against the order of the learned single Judge, the appellant preferred an appeal to the High Court of Bombay.
A preliminarily objection has been raised before the appellate Court as to the maintainability of the appeal on the ground that no appeal lay from the order of the learned Single Judge on the original side of the High Court, as the order could not be considered to be a 'judgment ' within the meaning of cl.
IS of the Letters Patent and the appeal was incompetent and not maintainable.
The appellate Court for reasons recorded in the Judgment upheld the said preliminary objection, holding that the order under appeal was not a judgment and no appeal would lie from the said order and the appeal, therefore was incompetent and not maintainable.
Against the order of the Division Bench of the Bombay High Court, the appellant has preferred this appeal by special leave granted by this Court.
After the hearing of the appeal was concluded, this Court in view of the urgency of the matter passed an order allowing the appeal and remanding the matter to the Bombay High Court for decision of the appeal on merits and this Court observed at the time of the passing of the order that this Court would state reasons later on.
The full text of the order has been set out in the judgment of my learned brother Fazal Ali.
J. 262 I have had the benefit of reading the judgment of my learned brother Fazal Ali, J. in advance.
I concur generally with the views expressed by my learned brother.
1, however, propose to state my own reasons for the order earlier passed by us.
The learned counsel appearing on behalf of the respective parties invited us only to decide the question of appealability of the order under appeal without going into the merits of the case.
The learned counsel for the parties have submitted before us that there is a conflict of decisions on the question of appealability of an order of this kind and maintainability of an appeal from such an order and this Court should resolve the conflict and decide the question of appealability of such an order and necessarily the maintainability of the appeal to a Division Bench of the High Court.
It has been further submitted before us that in the event of this Court holding that an appeal lay from the order in question and an appeal to the the Division Bench from the order was competent and maintainable, this Court should remand the appeal to the High Court for decision on merits and should not in this appeal go into the merits of the case.
The learned counsel for the parties, in view of the aforesaid submissions made, did not advance any arguments on the merits of the case before us.
The only question with which we are concerned in this appeal, as I have already indicated, therefore, is whether the order of the learned Single Judge refusing to grant an injunction or to appoint a receiver on the interlocutory application of the appellant, is appeal able or not; or, whether the appeal against the order of the learned Single Judge to the Division Bench of the High Court is competent and maintainable or not.
Mr. Sorabjee, learned counsel appearing on behalf of the appellant, has raised two principal contentions.
The first contention urged by Mr. Sorabjee is that in view of the provisions contained in section 104 of the Code of Civil Procedure read with order 43 thereof, the order is appealable under the Code and an appeal from the order becomes clearly maintainable.
The other contention raised by Mr. Sorabjee is that the order should in any event be considered to be a judgment within the meaning of clause IS of the Letters Patent, bearing in mind the provisions contained in section 104 of the Code of Civil Procedure and also order 43 thereof.
In support of his first contention, Mr. Sorabjee has argued that an appeal is a creature of statute and in the absence of any 263 statutory provisions making any other appealable no appeal will A normally lie against any order passed by a single Judge.
Mr. Sorabjee contends that cl.
I S of the Letter Patent makes such provision for an appeal being filed against any order passed by a learned Single Judge on the original side of the High Court.
It is the contention of Mr. Sorabjee that as Cl. 15 of the Letters Patent makes provision for preferring an appeal against an order passed by a learned Single Judge on the original side, provided the conditions laid down in the said clause are satisfied, Code of Civil Procedure and various other Statutes also make provision regarding appeal from orders passed by a learned Single Judge.
Mr. Sorabjee has submitted that the Code of Civil Procedure confers substantive rights of preferring appeals against particular orders specified in the Code.
In this connection Mr. Sorabjee has drawn our attention to section 104 and also order 43 of the Code of Civil Procedure.
Mr. Sorabjee argues that the Code of Civil Procedure confers a right of appeal on a litigant in respect of the orders which have been made statutorily appealable by the provisions contained in section 104 and order 43 of the Code of Civil Procedure.
It is the argument of Mr. Sorabjee that the Code of Civil Procedure makes inter alia general provisions with regard to appeals and also specifically confers on the litigant a right in respect of various orders, just as various other statutes make special or specific provisions with regard to the right of appeal in respect of any order under the particular statute.
Mr. Sorabjee has submitted that section 104 of the Civil Procedure Code and order 43 thereof clearly apply to the original side of a High Court.
In support of these submissions, Mr. Sorabjee has drawn our attention to the various provisions of the Code and particularly to Ss. 4, 98 104, 116 to 120, and section 122 and to order 43 rule 1 thereof.
Mr. Sorabjee in this connection has also relied on the following decisions : 1.
Mathura Sundari Dass vs Haran Chandra Shall(1) 2.
Lea Badin vs Upendra Mohan Roy Choudhary (2) 3.
Union of India vs Mohindra Supply Co. (3) 4.
Kumar Gangadhar Bagla vs Kanti Chander Mukherji (4) 5.
Sonbai vs Ahmedbhai Habibhai (5) 264 Mr. Sorabjee has criticised the view expressed by the Bombay High Court that section 104 of the Code of Civil Procedure and order 43 thereof do not apply to an order passed by a learned Single Judge on the original side of the High Court and an order passed by a learned Single Judge on the original side can only become appealable if the order can be said to be a 'judgment ' within the meaning of cl. 15 of the Letters Patent.
Mr. Sorabjee comments that cl.
IS of the Letters Patent does not, in any way, seek to control or curb the provisions contained in section 104 and order 43 of the Code of Civil Procedure.
He submits that a plain reading of the various sections of the Code of Civil Procedure make it clear that the pro visions contained in section 104 and order 43 of the Code are applicable to the original side of the High Court.
It is his submission that the provisions of the Code and the provisions contained in cl. 15 of the Letters Patent are not at all in conflict, as, clause IS of the Letters Patent may make such orders which may not be appealable under the Code, still appealable as judgment under cl. 15 of the Letters.
Patent.
In other words, it is the submission of Mr. Sorabjee that cl.
IS of the Letters Patent and the provisions of the Code are indeed supplementary to each other.
Mr. Sorabjee has fairly submitted that before the Division Bench of the Bombay High Court this argument that the order is appealable under the provisions of the Code and the appeal is, there t fore, competent was not advanced.
It is his submission that this argument was not advanced before the Division Bench of the Bombay High Court, as the view of the Bombay High Court has been that the provisions of section 104 and of order 43 of the Code of Civil Procedure do not apply to the original side of the Bombay High Court.
Mr. Sorabjee has argued that though in this appeal this aspect was not argued before the Division Bench of the Bombay High Court, he is entitled to urge this point before this Court as this point is a pure point of law.
Mr. Sorabjee has next contended that in any event the order under appeal should be considered to be a judgment within the meaning of cl. 15 of the Letters Patent.
He argues that the word 'judgment ' in clause 15 of the Letters Patent should be construed liberally so as to include within its fold any order which has been made appealable by virtue of the provisions contained in the Code or in any other statute.
He submits that such an interpretation will be in conformity with the principles of justice and will truly reflect intention of the Legislature and will avoid any kind of conflict 265 between the provisions contained in cl. 15 of the Letters Patent and A the provisions contained in the Code of Civil Procedure and in any other statute.
It is his submission that the word 'judgment ' in cl. 15 of the Letters Patent may include various other orders which may not otherwise be appealable under the provisions of the Code or any other Statute but may still become appealable as 'judgment ' by virtue of the provisions contained in the Letters Patent.
In other words, it is the contention of Mr. Sorabjee that the expression 'judgment ' in cl. 15 of the Letters Patent should be so construed as to include necessarily all orders which are appealable under any statute and also in appropriate cases various other orders which are not expressly made appealable by any statute.
He contends that the provisions of the Code contained section 104 and order 43 or in any other statute with regard to the appealability of any order do not have the effect of curtailing or affecting the special jurisdiction and power of the Court of entertaining an appeal from any other order, if the Court is satisfied that the order is in effect a judgment within the meaning of cl. 15 of the Letters Patent.
Mr. Sorabjee has submitted that as to the true meaning, effect and import of the word 'judgment ' in cl. 15 of the Letters Patent, there is a divergence of judicial opinion, and the word `judgment ' has come up for consideration before various Courts in many cases.
In this connection, Mr. Sorabjee has referred to the following decisions : 1.
The Justice of the Peace for Calcutta vs The Orientatal Gas Co. Ltd. (1) 2.
T.V. Tulzaram Row vs M.K.R.V. Allagappachettiar (2) 3.
Ruldu Singh vs Sanwal Singh (3) 4.
Shah Hari Dial & Sons vs Sohnamal Beliram (4) 5.
In Re: Dayabhai Jiwandas and Ors.
vs A.M.M. Muru gappa Chettiar (5) 6.
Abdul Samad & Ors.
vs State of J. & K. (6) 266 7.
Standard Glass Beads Factory vs Shri Dhar & Ors.(1) 8.
Sri Raja Vallanki Venkata Chinnayamma Rao Bahadur Zimidarni Garu vs Sri Raja Kotagiri Subemma Rao Bahadur Zimidarni Garu (2) 9.
Chitaranjan Mandal vs Shankar Prosad Sahani (3) 10.
Manohar Damadar Bhoot vs Baliram Ganpat Bhoot (4) 11.
Masanta Film Distributors Calcutta vs Sorab Marwanji Modi (5) 12.
J.K. Chemicals Ltd. vs Kreba and Co.(6) 13.
Kedar Nath Mitter vs Denobandhu Shaha(7) 14.
Shorab Merwanji Modi and Anr.
vs Mansata Film Distributors and Anr.(8) 15.
M.B. Sarkar and Sons vs Powell and Co.(9) 16.
Asrumati Devi vs Kumar Rupendra Deb Rai and Ors.(10) 17.
State of U.P. vs Dr. Vijay Anand Maharaj(11) 18.
National Bell Co. vs Metal Goods Co. (P) Ltd.(12) 19.
Shanti Kumar R. Canji vs The Home Insurance Co. Of New York(13) Mr. Sorabjee has submitted that this Court should lay down the guidelines or enumerate the principles to remove the confusion and resolve the conflict in the sphere of judicial determination as 267 to what constitutes 'judgment ' within the meaning of cl 15 of the Letters Patent.
Mr. Kapadia and Mr. Venugopal, learned counsel for the Respondents, have submitted that the provisions of the Code of Civil Procedure contained in section 104 and order 43 thereof are not applicable to the original side of the Bombay High Court which is a Chartered High Court in view of the provisions contained in cl. 15 of the Letters Patent.
They have argued that special jurisdiction has been conferred in the matter of preferring an appeal against an order of a Single Judge on the original side of a Chartered High Court by cl. 15 of the Letters Patent and this special jurisdiction of the High Court cannot in any way be affected by the provisions of the Code.
In support of this contention reference has been made to Ss. 3 and 4 of the Code of Civil Procedure and particular reliance has been placed on section 4.
They have also strongly relied on the decision of the Bombay High Court in the case of Vaman Raoji Kulkarni vs Nagesh Vishnu Joshi(1) and also on the decision of the same High Court in the case of J.K. Chemicals Ltd. vs Kreba and Co. (supra).
They have submitted that these judgments for cogent reasons recorded therein represent correct law and the view expressed by the Bombay High Court to the effect that section 104 and order 43 of the Code of Civil Procedure do not apply to the original side of the Bombay High Court, has been consistently followed by the Bombay High Court and should be upheld by this Court.
They have also relied on the following observations of the Judicial Committee in the case of Hurrish Chunder Chowdhry vs Kali Sundari Debia(2) at p. 17: "It only remains to observe that their Lordships do not think that sec.
588 of Act X. Of 1877, which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the full Court.
" They have argued that if the provisions of the Code are not held to be applicable to the original side of the Bombay High Court, then the appeal from the order of the learned Single Judge can only be maintained if the order becomes a 'judgment ' within the meaning 268 of cl. 15 of the Letters Patent.
They have contended that an order on an interlocutory application refusing to grant an injunction or appoint a receiver cannot be considered to be a 'judgment within the meaning of cl. 1 S of the Letters Patent, as such an order virtually does not decide anything and does not in any way affect the merits of the suit.
They have also relied on the decisions which were cited by Mr. Sorabjee and they have placed particular reliance on the decision of the Bombay High Court in the case of J.K. Chemicals Ltd. vs Kreba and Co. (supra).
Mr. Kapadia and Mr. Venugopal have both pointed out to us that the question of appealability of the order under the provisions of the Code was not argued before the High Court in the instant case and was sought to be argued for the first time in this Court.
Both of them, however, have fairly stated that the question is one of law and one of of considerable importance and the Court should decide the same.
I propose to deal with the question of applicability of the provisions contained in section 104 and order 43 of the Code of Civil Procedure to the original side of the Bombay High Court in the first instance.
Before I deal with the contentions urged by the counsel for the respective parties, it will be convenient to consider the relevant provisions of the Code.
section I of the Code makes it clear that the Act is applicable to whole of India excepting the places mentioned in the said section and the Act, therefore, applies to Maharashtra.
section 3 of the Code provides that for the purpose of this Code, the District Court is subordinate to the High Court, and every Civil Court of a grade inferior to that of a District Court and every Court of Small Causes is subordinate to the High Court and District Court.
section 4 of the Code reads: "(1) In the absence of any specific provision to the contrary, nothing in this Code shall be deemed to limit or otherwise affect any special or local law now in force or any special jurisdiction or power conferred, or any special form of procedure prescribed, by or under any other law for the time being in force.
(2) In particular and without prejudice to the generality of the proposition contained in sub section (1), nothing in this Code shall be deemed to limit or otherwise 269 affect any remedy which a landholder or landlord may have under any law for the time being in force for the recovery of lent of agricultural land form the produce of such land.
" section 5 of the Code deals with the applicability of the provisions of the Code to Revenue Courts.
section 100 of the Code deals with appeals from Appellate Decree and section 100 A which has been introduced into the Code w.e.f.
1.2.1977 by the Amending Act, 104 of 1976 provides that notwithstanding anything contained in Letters Patent for any High Court or in any other instrument having the force of law or in any other law for the time being in force, where any appeal from an appellate decree or order is heard and decided by a single Judge of a High Court, no further appeal shall lie from the judgment, decision or order of such Single Judge in such appeal or from any decree passed in such appeal.
The material provisions of section 104 are: "section 104 (1); An appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders : x x x x x x x x (ff) an order under section 35A; (fa) an order under section 91 or section 92 refusing leave to institute a suit of the nature referred to in section 91 or section 92 as 'the case may be; (g) an order under S 95; (h) an order under any of the provisions of this Code imposing a fine or directing the arrest or detention in the Civil prison of any person except where such arrest or detention is in execution of a decree; (i) any order made under rules from which an appeal is expressly allowed by rules; Provided that no appeal shall lie against any order specified 270 in clause (i) save on the ground that no order, or an order for the payment of a less amount, ought to have been made.
(2) No appeal shall lie from any order passed in appeal under this section.
" Sections 105 and 106 may also be quoted: "(1) Save as otherwise expressly provided no appeal shall lie from any order made by a Court in the exercise of its original or appellate jurisdiction; but, where a decree is appealed from, any error, defect or irregularity in any order, affecting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal; (2) Notwithstanding anything contained in sub section (1), where any party aggrieved by an order of remand from which an appeal lies does not appeal the reform, he shall thereafter be precluded from disputing its correctness.
section 106: Where an appeal from any order is allowed it shall lie to the Court to which an appeal would lie from the decree in the suit in which such order was made, or where such order is made by a court (not being a High Court) in the exercise of appellate jurisdiction, then to the High Court. ' ' Special provisions relating to the High Courts, not being the court of a Judicial Commissioner, are made in para IX of the Code which consists of five sections namely Ss.
116 to 120 and the said sections are as follows: "section 116: This Part applies only to High Courts not being the Court of a Judicial Commissioner.
section 117: Save as provided in this Part or in part X or in rules, the provisions of this Court shall apply to such High Courts.
section 118: Where any such High Court considers it necessary that a decree passed in the exercise of its original civil jurisdiction should be executed before the amount of 271 the costs incurred in the suit can be ascertained by taxation, the Court may order that the decree shall be executed forthwith, except as to so much thereof as relates to the costs: and, as to so much thereof as relates to the costs, that the decree may be executed as soon as the amount of the costs shall be ascertained by taxation.
section 119: Nothing in this Code shall be deemed to authorise any person on behalf of another to address the Court in the exercise of its original civil jurisdiction, or to examine witnesses, except where the Court shall have in the exercise of the power conferred by its charter authorised him so to do, or to interfere with the power of the High Court to make rules concerning advocates, vakils and attorneyes.
section 120: The following provisions shall not apply to the High Court in the exercise of its original civil jurisdiction, namely, secs.
16, 17 and 20.
section 122 empowers the High Courts, not being the Court of a Judicial Commissioner to make rules regulating their own procedure and the procedure of the Civil Courts subjects to their superintendence.
section 129 further provides: "Notwithstanding anything in this Code, any High Court not being the Court of a Judicial Commissioner may make such rules not inconsistent with the Letters Patent or order or other law establishing of it to regulate its own procedure in the exercise of its original civil jurisdiction as it shall think fit, and nothing herein contained shall affect the validity of any such rules in force at the commencement of this Code.
The material provisions contain in O. XLIII of the Code of Civil Procedure may be set out: "An appeal shall lie from the following orders under the provisions of section 104, namely: x x x x x x x x 272 (q) an order under rule 2, rule 3 or rule 6 of order XXXVIII: (r) an order under rule 1, rule 2, rule 2A, rule 4 or rule 10 of O. XXXIX; (s) an order under rule 1, or rule 4 of order XL.
x x x x 2.
The rules of O. XLI shall apply, so far as may be, to appeals from orders." On a proper analysis of the relevant provisions of the Code there cannot be, in my opinion, any manner of doubt that section 104 and order 43 of the Code of Civil Procedure apply, to the original side of the Bombay High Court.
It is not in dispute and it cannot be disputed that the Code of Civil Procedure applies to the High Court.
section 1 of the Code which provides for territorial extent of the operation of the Code makes this position abundantly clear.
The argument is that section 104 and order 43 of the Code do not have any application to the original side of the High Court, although various other provisions of the Code may apply to the High Court including its original side.
This argument, as we have earlier noticed, is made mainly on the basis of the provisions contained Ss. 3 and 4 of the Code.
section 3 of the Code deals with subordination of Courts.
It is no doubt true that a learned Single Judge dealing with any matter on the original side discharges his duties as a Judge of the High Court, and he can, therefore, be in no way subordinate to the High Court.
When a division Bench of a High Court hears an appeal from any decree, order or judgment of any Single Judge of the High Court in its original side there can be no question of any subordination of the Judge, presiding over a Bench on the original side of the High Court to the High Court.
An appeal admittedly lies to a division Bench of the High Court from any order passed by a learned single Judge on the original side under cl. 15 of the Letters Patent, if the order is a 'Judgment ' within the meaning of the said clause.
An appeal also admittedly lies from a decree passed by a Single Judge on the original side of the High Court to a division Bench of the High Court.
A division Bench, properly constituted, is perfectly competent to hear an appeal from any such order which may constitute a judgment within the meaning of cl. 15 and from any decree by a Single Judge on the original side of the 273 High Court.
In the same way, in case of any other order in respect of which right to prefer any appeal has been conferred by a statute, a division Bench of the High Court will be competent to hear such an appeal.
S.3 of the Code, in my opinion, has really no bearing on the question and creates no bar to the competence and maintainability of an appeal from an order passed by a Judge on the original side, if the order is otherwise appealable.
section 4 of the Code has been enacted to preserve any special or local law in force.
An analysis of the material part of this section clearly indicates that in the absence of any specific provision to the contrary, no provision in the Code shall be deemed to limit or otherwise affect any special or local law in force or special jurisdiction or power conferred or any special form of procedure prescribed by or under any Jaw for the time being in force.
The argument that section 104 and order 43 of the Code affect the special jurisdiction or power conferred on the High Court under cl. 15 of the Letters Patent is, to my mind, untenable.
15 of the Letters Patent was enacted to provide for an appeal from the Courts of original jurisdiction to the High Court in its appellate jurisdiction and the said clause undoubtedly confers power for the hearing of an appeal from a judgment of any judge on the original side of the High Court.
Though cl. 15 makes special provisions in relation to appeal from a judgment of a learned single Judge on the original side, yet it cannot be said that the side clause intended to lay down that in no other case an appeal will lie from an order passed by any learned Judge on the original side, even if any specific provision is made in any other statute making any other order appealable.
An appeal, it has to be remembered, is a creature of a statute and litigant generally does not have a right of appeal against any decision of a competent Court unless a right of appeal has been specifically conferred on the litigant by law.
Cl. 15 of the Letters Patent confers on the litigant a right to prefer an appeal against any judgment.
Any order which is considered to be a 'judgment ' will be appealable by virtue of the provisions contained in cl. 15 of the Letters Patent.
In the same way other statutes may confer on the litigant the right to prefer an appeal against an order; and by virtue of the provisions of the statute such an order shall become appealable.
If any other statute confers on the litigant any right to prefer an appeal in respect of any other order, it cannot be said that such a provision creating a right of appeal in any way affects the provisions contained in cl. 15 of the Letters Patent.
The special power and jurisdiction of the High court under cl. 15 to entertain an appeal from any judgment is in no way affected and is fully retained; 274 and in addition to the said power, a High Court may be competent to entertain other appeals by virtue of specific statutory provisions.
section 4 of the Code cannot, therefore, be said to be in conflict with the provisions contained in cl. 15 of the Letters Patent and section 4 of the Code does not limit or otherwise affect the power and jurisdiction of the High Court under cl. 15 of the Letters Patent.
On the other hand, the Code contains specific provisions which go to indicate in which case or to which Court the provisions of the Code, may or may not be applicable.
section S of the Code makes specific provisions regarding the nature and manner of applicability of the Code to Revenue Courts and the Revenue Court has also been defined in the said section.
On the other hand, in Ss. 116 to 120 it is convincingly indicated that section 104 and order 43 of the Code of Civil Procedure apply to the original side of a High Court.
Ss. 116 to 120 are contained in part IX of the Code which makes special provisions relating to High Courts (not being the Court of Judicial Commissioner).
section 117 specifically provides that the provisions of the Code shall apply to High Court save as provided in part IX or in part X. section 120 contained in part IX lays down that the provisions contained in Ss. 16, 17 and 20 of the Code shall not apply to the High Court in the exercise of its original civil jurisdiction.
Part X which deals with rules and manner of framing thereof does not have any material bearing on the question of applicability of section 104 and order 43 of the Code to the original side of the High Court.
The effect of the special provisions contained in part IX relating to High Courts, therefore, clearly appears to be that the provisions of the Code have as provided in Part IX or Part X or in rules, apply to the original side of the High Court and Ss. 16,17 and 20 of the Code do not apply to the High Court in the exercise of its original civil jurisdiction.
section 104 of the Code is contained in part VII which deals with appeals.
Part VII of the Code dealing with appeals consists of the sections commencing from Ss. 96 to 112.
This part VII dealing with appeals makes provisions for an appeal from original decrees, appeals, appellate decrees, appeals from orders, general provisions relating to appeals and also appeals to the Supreme Court.
section 104 of the Code provides for appeals from orders and clearly stipulates that an appeal shall lie from the orders mentioned therein and save as otherwise expressly provided in the body of the Code or by any law for the time being in force, from no other order.
Order 43 which is attracted by section 104 of the Code clearly provides that an appeal shall lie from the orders mentioned in rule 1 of o. 43 under the provisions of section 104 and the orders referred to therein particularly in (q), (r) and (s) clearly 275 indicate that the order in question is an appealable order.
As I have earlier observed that an appeal is a creature of a statute and the right to appeal is only enjoyed, if law confers any right.
The Code of Civil Procedure clearly makes the order in question an appealable one.
The legislature has thought it fit to confer a right on the litigant to prefer an appeal in respect of the orders mentioned in section 104 of the Code read with order 43 thereof.
A Court will be slow to deprive a litigant of the statutory right merely on the ground that the order in question has been passed by a learned Judge on the original side of the High Court.
It may further be pointed out that section 104 which makes the order under appeal and also various other orders referred to therein appealable under the Code, recognises that apart from the order made appealable under the Code there may be other orders appealable by any law for the time being in force and further provides that no appeal will lie from any orders other than the orders expressly provided in the body of the Code or by any other law in force.
The right of appeal against a judgment of a learned single Judge on the original side under cl. 15 of the Letters Patent is a right conferred by any other law in force.
It may be pertinent to point out in this connection that by incorporating section 100A in the Code (by the Amending Act 104 of 1976, section 38), the Legislature has thought it fit to interfere with the right of appeal in certain cases, even if such right had been conferred by Letters Patent or any other law.
This right of appeal under cl. 15 of the Letters Patent is in no way curtailed or affected by section 104 of the Code of Civil Procedure and section 104 seeks to confer the right of preferring an appeal in respect of the various orders mentioned therein.
In other words, by virtue of the provisions contained in section 104(1), a litigant enjoys the right of preferring an appeal in respect of various orders mentioned therein, even though such orders may or may not be appealable under cl. 15 of the Letters Patent as a judgment and the right of appeal under cl.
15 of the Letters Patent remains clearly unimpaired.
In this connection the following observations of this Court in the case of Union of India vs Mohindra Supply Co. (supra) at p. 511 may be usefully quoted: "The intention of the legislature in enacting the sub s.(1) of section 104 is clear: the right to appeal conferred by any other law for the time being in force is expressly preserved This intention is emphasised by section 4 which provides that in the absence of any specific provision to the contrary 276 nothing in the Code is intended to limit or otherwise affect any special jurisdiction or power conferred by or under any other law for the time being in force.
The right to appeal against judgments (which did not amount to decrees under the Letters Patent, was therefore not affected by section 104(1) of the Code of Civil Procedure, 1908".
It will be apt in this connection to bear in mind the view expressed by the Privy Council in the case of Mt. Savitri Thakurain vs Savi and Anr.,(1) the Judicial Committee held at p. 82 83 as follows: "The orders and rules under the Code are by Section 121 given the same affect as if they had been enacted in the Code, and therefore order 41, Rule 10, is one of the pro visions of the Code.
It applies to appeals in the High Court, including the present appeal, unless any particular section of the Act can be found to exclude it.
Section 104(1) is the section relied on for this purpose It prescribes what orders shall be appealable and enumerates them, and among the orders enumerated there is not included such an order as that made by Choudhary, J. Out of the operation of Section 104 there are, however, expressly excepted matters, which are otherwise expressly provided for in the body of the Code.
In order to appreciate the full effect of section 104 it should be compared with the corresponding section of the Act of 1882, Section 588.
The earlier section enacted that appeals should lie in certain cases, which it enumerated, 'and from no other such orders. ' This raised this question nearly whether an appeal, expressly given by Section 15 of the Letters Patent and not expressly referred to in Section 588 of the Code of 1882, could be taken away by the general words of the section 581 and in the wording of section 104 of the Act of 1908 is significant for it runs, 'and same as otherwise expressly provided. by any law for the time being in force, from the other orders '.
Section 15 of the Letters Patent is such a law, and what it expressly provides namely, an appeal to the High Court 's appellate jurisdiction from a decree of the High 277 Court in its original ordinary jurisdiction, is thereby saved.
Thus regulations duly made by orders and Rules under the Code of Civil Procedure, 1908 are applicable to the jurisdiction exercisable under the Letters Patent, except that they do not restrict the express Letters Patent appeal.
" The effect of sub section (1) section 104, therefore, is clearly not to affect any existing special or local law or any special jurisdiction or power conferred and to preserve any existing right of appeal whether under any statute or the Letters Patent and to create a further right of preferring an appeal in respect of the orders enumerated therein.
C In the case of Mathura Sundari Dassi vs Haran Chandra Shaha and Ors.
(supra), Sanderson, C.J. Observed at p. 362 as follows: "I would be very loth to hold that this order is not a 'judgment ' within the meaning of cl. 15 of the Letters Patent, but it is not necessary in my judgment to give a definite opinion upon it because I think, on the second point, the Code does give a right of appeal.
By clause 14 of the Letters Patent it is provided as follows: 'And we do further ordain and declare that all the provisions of these our Letters Patent are subject to the legislative powers of the Governor General in Council, exercised at meetings for the purpose of making law and regulations '.
By the terms of section 117 the code is made applicable to the High Court, and o. 43.
R. 1, gives a right of appeal in the very case under discussion.
But it is said that this Code and the rules made under it do not apply to an appeal from a learned Judge of the High Court.
I cannot follow that argument.
It is part of the defendant 's case that O.9, R. 8 applies.
That order is in effect a part of the Civil Procedure Code.
It seems to me strange that the plaintiff should be subjected to O.9, R. 8, and be liable to have his suit dismissed for want of appearance, yet when he has had his suit dismissed under one of the rules of the Code and wants to call in aid another of the rules which when his application for reinstatement has been refused gives him a right of appeal against that refusal, he is met with the argument that he cannot call in aid that rule because there is no appeal from the learned Judge of the High Court under the Civil Procedure Code.
I think this 278 is not a true view or a reasonable construction to put upon the Code and the Rules made under it.
In my judgment, the Code and the rules do apply and the plaintiff has a right of appeal.
" Sri Aushotosh Mookherji in his judgment in the same case at pp.
364 365 held as follows: "The question, consequently, arises whether O,43, r. 1, clause (c), is applicable to an order under o. IX, r. 9, made by a Judge on the original side of this Court.
On behalf of the appellant, reliance has been placed upon section 117 of the Code which lays down that 'save as provided in this part or in part X or in rules, the High Court established under the Indian High Courts Act, 1961. ' The only provision in Part IX, which may have any possible hearing is that contained in section 120 which obviously does not touch the present question.
The provision in Part X, which deal with the matter, is contained in section 129: this also does not militate against the contention of the appellant.
The term 'rule ', which finds a place in section 117, is defined in clause 18 of section 2 of the Code to mean 'a rule contained in the first Schedule or made under section 122 or section 125 '.
Our attention has not been drawn to any such rule which makes o. 43, R. 1, Clause (e), inapplicable.
On the other hand O.49, R. 3, which excludes the operation of other rules, lends support to the contention of the appellant that o. 43, r. 1, cl.
(c) is applicable to the present appeal.
But it has been argued on behalf of the respondents, on the authority of the decision of the Judicial Committee in Hurriah Chandra Choudhary vs Kali Sudari Dasi that the Civil Procedure Code, in so far as it provides for appeals, does not apply to an appeal preferred from a decision of one Judge of a High Court to the Full Court.
The true effect of the decision of the Judicial Committee was considered by this Court in Toolses Money Dassesv.
Sudevi Dasses (1890) 25 Cal. 361) but it is not necessary for my present purpose to determine its hearing in all its implications, because in my opinion, the law has been substantially altered since that decision was pronounced.
section 104 279 Of the Code of 1908 is materially different from section 588 of Code of 1882.
It provides that an appeal shall lie from the orders mentioned in the first clause of that section, and save as otherwise expressly provided in the body of the Code or by any law for the time being in force, from no other orders '.
The effect of section 104 is thus, not to take away a right of appeal given by clause IS of the Letters Patent, but to create a right of appeal in cases even where clause 15 of the Letters Patent is not applicable.
I may here observe perethically that in the case of Tooles Money Dasses vs Sudevi Dasses.
Princep J. felt pressed by the argument that if an appeal was deemed to have been allowed by the Code of Civil Procedure, there was no provision for the Constitution of a Court to which such an award might be preferred.
section 106 of the Code, however, lays down that "where an appeal from any order is allowed, it shall lie to the Court to which an appeal would lie from the decree in the suit in which such order was made. ' Consequently, where a right of appeal has been so given, it would be the duty of this Court to constitute a Court of Appeal under section 13 of the Indian High Courts Act.
1 hold accordingly that this appeal is competent under cl.
tc), R. 1, o. 43 of the Civil Procedure Code.
" In the case of Lea Badin vs Upendra Mohan Roy Chaudhry (supra), a Division Bench of the Calcutta High Court held at p. 37 as follows: "But there is another and far simpler ground on which it must he held that an appeal is competent.
The order in the present case is one for which a right of appeal ii provided in cl.
R. 1, o. 43 of the Code.
Under the pre sent Code (Act 5 of 1908) it cannot be contended that the Code and the Rules made under it do not apply to an appeal from a learned Judge of the High Court; such a contention was elaborately dealt with and repelled in the case of On a plain reading of the various provisions of the Code and on a proper construction thereof I have no hesitation in holding that section 104 of the Code of Civil Procedure applies to the original side of the High Court and the order in question is clearly appealable by virtue of the provisions contained in section 104(1) read with order 280 43 thereof.
The authorities to which I have referred also lend support to the view that I have taken.
A contrary view expressed by any High Court must necessarily be considered to be wrong and incorrect.
The leading decision of the Bombay High Court in the case of Baman Rao Kulkarini vs Naresh Vishnu Joshi (supra) proceeds on an incorrect appreciation and interpretation of the provisions of the Code.
As I have earlier discussed, there is no question of section 104 of the Code of Civil Procedure purporting to control of cl. 15 of the Letters Patent.
It may, on the other hand, be said that section 104 of the Code seeks to supplement cl. 15 of the Letters Patent by conferring a right of appeal in the case of various orders mentioned in sub section (1) of section 104, which brings in its purview section 43 of the Code.
The further approach of the Bombay High Court in that case as to subordination of a judge of the High Court sitting singly on the original side, is fallacious and untenable.
An appeal under cl. 15 of the Letters Patent from a judge sitting singly on the original side of the High Court becomes competent to a division Bench and a learned judge against whose judgment the appeal is preferred does not become subordinate to the High Court.
There is in fact no question of subordination at all.
The observations of the Judicial Committee in the case of Hurish Chandra Choudhary vs Kali Sudari Dasi (supra) at p. 17 relied on by the learned counsel for the Respondents are of no material assistance to them.
I have already quoted the said observations of the Judicial Committee.
The said observations made in relation to the provisions of section 588 of the Act 10 of 1877 only go to lay down that the said section which has the affect of restricting certain appeals does not have the affect of restricting the right of appeal under cl. 15 of the Letters Patent and does not apply to a case where an appeal is one under cl. 15 of the Letters Patent.
It may further be noted that the law has since the said decision been substantially altered and section 104 of the Code of Civil Procedure of 1908 is materially different from section 588 of the Code of 1882.
This decision of the Judicial Committee has already come up for consideration by a division Bench of the Calcutta High Court in the Mathura Sudari Dassi vs Haran Chandra Shaha (supra).
I, therefore, accept the first contention of Mr. Sorabjee that the order in question is appealable under section 104 (1) of the Code read with order 43 thereof and the said provisions of the Code apply to the original side of the Bombay High Court and the appeal preferred 281 from the order of the learned single judge to the Division Bench of A the Bombay High Court was competent and maintainable.
In view of my accepting the first contention of Mr. Sorabjee it does not really become necessary for me to consider the other contention raised by him, namely, that the order in question is also appealable as a 'judgment ' under cl. 15 of the Letters Patent.
As elaborate arguments have been advanced on this aspect and various decisions have been cited, my learned brother Fazal Ali, J. has in his judgment also considered this aspect and has dealt with various cases, in deference to the submissions made from the bar that this Court should lay down guidelines as to what will constitute a 'judgment ' within the meaning of cl.
l S of the Letters Patent.
An order which is appealable under the Code or under any other statute becomes appealable as the statute confers a right on the litigant to prefer an appeal against such an order.
Such an order may or may not be appealable as 'judgment ' under cl. 15 of the Letters Patent.
An order which may be appealable under cl.
IS of the Letters Patent as a 'judgment ' becomes appealable as Letters Patent confers on the litigant a right of appeal against such an order as 'judgment '.
An order appealable under the Letters Patent may or may not be appealable under the Code.
A right of appeal is a creature of Statute.
A litigant does not have an inherent right to prefer an appeal against an order unless such a right is conferred on the litigant by law.
Certain orders become appealable under the Code, as the Code makes such orders appealable.
Other Statutes may confer a right of appeal in respect of any order under the Statute.
The Letters Patent by cl. 15 also confers a right to prefer an appeal against a 'judgment '.
An order which satisfies the requirements of 'judgment ' within the meaning of cl.
15 becomes appealable under the Letters Patent.
What kind of an order will constitute a 'judgment ' within the meaning of cl. 15 of the Letters Patent and will become appealable as such much necessarily depend on the facts and circumstances of each case and on the nature and character of the order passed.
The question whether a particular order constitutes a judgment within the meaning of cl. 15 of the Letters Patent to be appealable under the provisions thereof has come up for consideration before the various Courts in a number of decision.
Very many decisions have been cited in the present case and they have been considered by my learned brother, Fazal Ali, J. in his judgment.
The question indeed, is not free from difficulties and divergent views have been expressed by different Courts and by various learned 282 Judges.
This Court had also the occasion to consider as to what may constitute a judgment within the meaning of cl. 15 of the Letters Patent in certain cases.
In the case of Shanti Kumar R. Canji vs The Home Insurance Co. Of New York (Supra) this Court referring to the earlier decision of this Court in the case of Asrumati Debi vs Kumar Rupendra Deb Rajkot & ors (supra), observed at p. 550 "This Court in Asrumati Debi 's case said that a judgment within the meaning of cl. 15 of the Letters Patent would have to satisfy two tests.
First, the judgment must be the final pronouncement which puts an end to the proceedings as far as the Court dealing with it is concerned.
Second, the judgment must involve the determination of some right or liability though it may not be necessary that there must be a decision on merits".
This Court further observed at p. 555 "The view of the High Courts of Calcutta and Madras with regard to the meaning of 'judgment ' are with respect preferred to the meaning of 'judgment ' given by the Rangoon and Nagpur High Court.
" This Court also held at p. 556 "In finding out whether the order is a 'judgment ' within the meaning of cl.
IS of the Letters Patent it has to be found out that the order affects the merits of the action between the parties by determining some right or liability.
The right or liability has to be found out by a Court.
The nature of the order will have to be examined in order to ascertain whether there has been a determination of any right or liability.
" In my opinion, an exhaustive or a comprehensive definition of 'judgment ' as contemplated in ch IS of the Letters Patent cannot be properly given and it will be wise to remember that in the Letters Patent itself, there is no definition of the word 'judgment '.
The expression has necessarily to be construed and interpreted in each particular case.
It is, however, safe to say that if any order has the effect of finally determining any controversy forming the subject matter of the suit itself or any part thereof or the same affects the question of Court 's jurisdiction or the question of limitation, such an order will normally constitute 'judgment ' within the meaning of cl.
IS of the Letters Patent.
I must not, however, be understood to say that any other kind of order may not become judgment within the meaning of cl.
IS of the Letters Patent to be appealable under the provisions thereof.
As already stated, it is not necessary to decide in the present case whether the order in question would be appealable under cl.
IS of the Letters Patent as judgment; and I, therefore, refrain from expressing any opinion on this question.
|
In a suit for specific performance of an agreement to sell filed on the original side of the Bombay High Court the plaintiff (appellant) prayed for certain interim reliefs.
A single Judge of the High Court dismissed the application.
A Division Bench of the High Court, on appeal by the plaintiff, held that the appeal was not maintainable on the ground that the impugned order of the single Judge was not a 'judgment ' within the meaning of clause 15 of the Letters Patent of the High Court.
In appeal to this Court it was contended on behalf of the appellant that since the trial Judge is governed by the procedure prescribed by the Code of Civil Procedure, by virtue of the provisions of section 104 read with Order 43 Rule (1) the impugned order is appealable to a larger Bench; (2) assuming that the Letters Patent was a special law, section 104 read with Order 43 is in no way inconsistent with clause 15 of the Letters Patent; (3) even if section 104 read with Order 43 Rule 1 does not apply an order refusing to appoint a receiver or to grant injunction has the attributes of finality and, therefore, amounts to a judgment ' within the meaning of Letters Patent.
Allowing the appeal ^ HELD: (per Fazal Ali and A. Varadarajan, JJ.) (Amarendra Nath Sen, J. concurring.) Since the Order of the trial Judge was one refusing appointment of a receiver and grant of ad interim injunction, it is a 'judgment ' within the meaning of the Letters Patent both because order 43 rule 1 applies to internal appeals in the High Court, and such an order even on merits contains the quality of finality and would be a judgment within the meaning of clause 15 of Letters Patent.
Hence an appeal is maintainable to the Division Bench.
The Division Bench was in error in dismissing the appeal without deciding it on merits.
[259 F G] 188 There is no inconsistency between section 104 read with Order 43 Rule 1, C.P.C. and appeals under Letters Patent.
There is nothing to show that Letters Patent in any way excludes or overrides the application of section 104 read with Order 43 Rule 1 or that these provisions do not apply to internal appeals within the High Court.
[237 E F] Code of Civil Procedure 1877, by sections 588 and 589, did not make any distinction between appeals to the High Court from the District Court and internal appeals to the High Court under Letters Patent.
Notwithstanding the clear enunciation of law by the Privy Council that section 588 did not affect nor was it inconsistent with the provisions of Letters Patent and that, therefore, orders of a trial Judge which fall beyond section 588 could be appealable to a larger bench under the Letters Patent if its orders amounted to a 'judgment ' within the meaning of clause 15 of the Letters Patent, there was a serious controversy among the High Courts on this question.
Section 104 of the C.P.C., 1908 made it clear that appeals against orders mentioned in Order 43 Rule 1 were not in any way inconsistent with the Letters Patent but merely provide additional remedy by allowing appeals against miscellaneous orders passed by the trial Judge to a larger bench.
[205 E G] In dealing with a suit the trial Judge has to follow the procedure prescribed by the Code.
It is indisputable that any final judgment passed by the trial Judge amounts to a decree and under the provisions of the Letters Patent an appeal lies to a larger bench.
Letters Patent itself does not define the term 'judgment ' and has advisedly not used the word 'decree ' in respect of a judgment given by the trial Judge.
[206 B D] Section 5 of the Code empowers the State Government to apply the provisions of the Code where any enactment is silent as to its applicability.
Section 5 makes clear that, excepting the Revenue Courts, all other Civil Courts would normally be governed by the provisions of the Code in the matter of procedure.[206H,207A] Section 4 of the Code which provides that in the absence of any specific provision to the contrary the provisions of the Code do not limit or affect any special or local law, is not applicable in the instant case because even if the Letters Patent is deemed to be a special law within the meaning of this section the provisions of section 104 do not seek to limit or affect the provisions of the Letters Patent.
[207 B C] By force of section 104 all appeals, as indicated in the various clauses of Order 43 Rule 1, would lie to the appellate court.
In short a combined reading of the various provisions of the Code leads to the conclusion that section 104 read with Order 43 Rule 1 clearly applies to proceedings before a trial Judge of the High Court.
[207 H; 209 B] In the instant case, therefore, section 104 read with Order 43 Rule 1 does not in any way abridge or interfere with or curb the powers conferred on the trial Judge by clause 15 of Letters Patent.
They only give an additional remedy by way of appeal from the orders of the trial Judge to a larger bench.
That being so there is no force in the respondent 's argument that these provisions do not apply to internal appeals in the High Court.
[209 D E] 189 Hurrish Chunder Chowdry vs Kali Sundari Debia, 10 I.A. 4, Mt. Sabitri Thakurain vs Savi & Anr.
A.I.R. 1921 P.C. 80, Union of India vs Mohindra Supply Co., ; and Shankarlal Aggarwal & Ors.
vs Shankarlal Poddar & Ors. , referred to.
A number of enactments, as for example, section 202 of the and section 39 of the Arbitration Act widen, rather than limit, the original jurisdiction of the High Court by conferring additional or supplementary remedy by way of appeal to a Division Bench from the judgment of a single Judge.
On a parity of reasoning, therefore, section 104 read with Order 43 Rule 1 expressly authorises and creates a forum for appeal against orders falling under the various clauses of Order 43 Rule 1 to a larger bench of the High Court without disturbing, interfering with or over riding the Letters Patent jurisdiction.
[211 B C] Dayabhai Jiwandas & Ors.
vs A.M.M. Murugappa Chettiar, I.L.R. 13 Rangoon 457, Sonbai vs Ahmedbhai Habibhai [1872] 9 Bom.
HC Reports.
398, Rajagopal & Ors.
(in Re. LPA 8 of Mad. 447, Ruldu Singh vs Sanwal Singh Lahore 188, Lea Badin vs Upendra Mohan Roy Chaudhary & Ors. , Mathura Sundari Dassi vs Haran Chandra Shaha & Ors.
A.I.R. 1916 Cal.
361 Abdul Samad & Ors.
vs The State of J & K. A.I.R. 1969 J&K 52, and Kumar Gangadhar Bagla vs Kanti Chunder Mukerjee & Anr., , approved.
Ram Sarup vs Kaniz Ummehani, ILR 1937 All.
386 over ruled.
Assuming that Order 43 Rule 1 does not apply to Letters Patent appeals the principles governing these provisions would apply by process of analogy.
The provisions of Order 43 Rule 1 possess the traits, trappings and qualities and characteristics of a final order.
Although the word 'judgment ' has not been defined in the Letters Patent but whatever test may be applied the order passed by the trial Judge appealed against must have the traits and trappings of finality.
The appealable orders indicated in the various clauses of Order 43 Rule 1 are matters of moment deciding valuable rights of the parties and are in the nature of final orders so as to fall within the definition of 'judgment '.
[237G; 225 E F] Radhey Shyam vs Shyam Behari Singh ; referred to.
Pandy Walad Dagadu Mahar & Anr.
vs Jamnadas Chotumal Marwadi, ; Vaman Ravi Kulkarni vs Nagesh Vishnu Joshi & Ors, A.I.R. 1940 Bom. 216; Vishnu Pratap & Ors.
vs Smt.
Revati Devi & Ors.
A.I.R. 1953 All.
647; Madhukar Trimbaklal vs Shri Sati Godawari Upasani Maharaj of Sakori & Ors. ; Ratanlal Jankidas Agarwal vs Gajadhar & Ors.; A.I.R. 1949 Nagpur 188; Beads Factory & Anr.
vs Shri Dhar & Ors.
A.I.R. 1960 All. 692; J. K. Chemicals Ltd. vs Kreba & Co.; A.I.R. 1967 Bom.
56, overruled.
Having regard to the nature of the orders contemplated in the various clauses of Order 43 Rule 1 which purport to decide valuable rights of the parties in the ancillary proceedings even though the suit is kept alive these orders possess the attributes or characteristics of finality so as to be judgments within the meaning of clause 15 of the Letters Patent.
They are therefore, appealable to a larger 190 bench.
The concept of the Letters Patent governing only the internal appeals in the High Courts and the Code of Civil Procedure having no application to such appeals is based on a serious misconception of the legal position.
[237H 238A B] The question to be decided in this case which is a vexed and controversial one is as to what is the real concept and purport of the word 'judgment ' used in the Letters Patent.
The meaning of the word 'judgment ' has been the subject matter of conflicting decisions of the various High Courts raging for almost a century and over which despite the length of time no unanimity had been reached and it is high time that this controversy should be settled once and for all as far as possible.
[238 E F] Out of the numerous authorities cited three leading judgments have spelt out certain tests for determining as to when an order passed by a trial Judge can be said to be a 'judgment ' within the meaning of clause 15 of the Letters Patent and we are inclined to agree generally with the tests laid down in these cases though some of the tests laid down are far too wide and may not be correct.
[238 G H] While the view taken in the Justices of the Peace for Calcutta vs The Oriental Gas Company (VIII Bengal L.R. 433) is much too strict, the one taken in T. V. Tuljaram Row vs M.K.R.V. Alagappa Chettiar (ILR 35 Madras 1) is much too wide.
The correct test seems to lie somewhere in between the tests laid down in these cases.
Similarly the full Bench decision in Manohar Damodar Bhoot vs Baliram Ganpat Bhoot (AIR 1952 Nagpur 357) pithily described the essential requisites and the exact meaning of the word 'judgment ' as used in the Letters Patent.
The pointed observations made in this case try to synthesize the conflicting views taken by the Calcutta and Madras High Courts.
They represent the true scope and import of the word 'judgment ' as used in the Letters Patent.
[The Court reviewed the entire case law on the subject laying down various tests to determine what a judgment is.] The test for determining as to when an order passed by a trial Judge can be said to be a 'judgment ' within the meaning of the Letters Patent are: (1) Where an order, which is the foundation of the jurisdiction of the Court or one which goes to the root of the action, is passed against a particular party, it amounts to a judgment.
[248 B C] Asrumati Debi vs Kumar Rupendra Deb Raikot ; (2) An order dismissing an application for review would be appealable under the Letters Patent being a judgment, though it is not made appealable under Order 43 rule 1.
[249 B] State of Uttar Pradesh vs Dr. Vijay Anand Maharaj ; (3) The which confers original jurisdiction on the trial Judge expressly makes an order passed by the trial Judge under section 202 appealable and, therefore, any order passed under that section would be appealable under the and is, therefore, a judgment.
[249 C D] 191 Shankarlal Aggarwal vs Shankerlal Poddar (4) Whenever a trial Judge decides a controversy which effects valuable rights of one of the parties it is a judgment within the meaning of the Letters Patent.
[249 H] Radhey Shyam vs Shyam Behari Singh ; (5) Where an order passed by the trial Judge allowing amendment of the plaint, takes away from the defendant the defence of immunity from any liability by reason of limitation, it is a judgment within the meaning of clause 15 of the Letters Patent.
[250 A B] Shanti Kumar R. Canji vs The Home Insurance Co. of New York ; (6) Clause 15 of the Letters Patent does not define the term 'judgment '.
The Letters Patent is a special law which carves out its own sphere and it would not be possible to project the definition of the word 'judgment ' as defined in the Code of Civil Procedure.
Letters Patent were drafted long before the Code of Civil Procedure of 1882 was enacted.
The word 'judgment ' used in the Letters Patent does not mean a 'judgment ' as defined in the Code.
At the same time it does not include every possible order final, preliminary or interlocutory passed by a Judge of the High Court.
[251 D E] Mt. Shahzadi Begum vs Alak Nath & Ors.
A.I.R. 1935 All 628.
Under the Code of Civil Procedure a judgment consists of reasons and grounds for a decree passed by a Court.
As a judgment constitutes the reasons for the decree, it follows as a matter of course that the judgment must be a formal adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy.
The concept of a judgment as defined in the Code seems to be rather narrow and the limitations engrafted by section 2(2) cannot be physically imported into the definition of the word 'judgment ' as used in clause 15 of the Letters Patent because the Letters Patent has advisedly not used the terms 'order ' or 'decree ' anywhere.
The intention of the givers of the Letters Patent was that the word 'judgment ' should receive a much wider and more liberal interpretation than the word 'judgment ' used in the Code of Civil Procedure.
At the same time, it cannot be said that any order passed by a trial Judge would amount to a judgment; otherwise there will be no end to the number of orders which would be appealable under the Letters Patent.
The word 'judgment ' has a concept of finality in a broader and not a narrower sense.
[2 52 G H; 253 A C] A judgment can be of three kinds: (1) A final judgment: A judgment, which decides all the questions or issues in controversy so far as the trial Judge is concerned and leaves nothing else to be decided is a final judgment.
This would mean that by virtue of the judgment, the suit or action brought by the plaintiff is dismissed or decreed in part or in full.
Such an order passed by the trial Judge is a judgment within the 192 meaning of the Letters Patent and amounts to a decree so that an appeal would lie from such a judgment to a Division Bench.
[254 D E] (2) A preliminary judgment: A preliminary judgment may be of two forms: (i) where the trial Judge by an order dismisses the suit without going into the merits of the suit but only on a preliminary objection raised by the defendant or the party opposing on the ground that the suit is not maintainable.
Since the suit is finally decided one way or the other, the order passed by the trial judge would be a 'judgment ' finally deciding the cause so far as the trial Judge is concerned and, therefore, appealable to a larger bench; (ii) where the trial Judge passes an order after hearing the preliminary objections raised by the defendant relating to the maintainability of the suit as for example, bar of jurisdiction, res judicata, a manifest defect in the suit, absence of notice under section 80 and the like.
An order of the trial Judge rejecting these objections adversely affects a valuable right of the defendant who, if his objections were held to be valid, is entitled to get the suit dismissed on preliminary grounds.
Such an order, though it keeps the suit alive, decides an important aspect of the trial which affects a vital right of the defendant and must, therefore, be construed to be a judgment so as to be appealable to a larger bench.
[254 F H; 255 A B] (3) Intermediary or Interlocutory judgment: Most of the interlocutory orders which contain the quality of finality are clearly specified in clause (a) to (w) of Order 43 Rule 1.
They are judgments within the meaning of the Letters Patent and, therefore, appealable.
There may also be interlocutory orders not covered by Order 43 Rule 1 but possessing the characteristics and trappings of finality because they adversely affect a valuable right of the party or decide an important aspect of the trial in an ancillary proceeding.
Before such an order can be a judgment the adverse effect on the party concerned must be direct and immediate rather than indirect or remote.
Thus when an order vitally affects a valuable right of the defendant it will be a judgment within the meaning of Letters Patent so as to be appealable to a larger bench.
[255 C E; 256 A] Every interlocutory order cannot be regarded as a judgment but only those orders would be judgments which decide matters of moment or affect vital and valuable rights of the parties and which work serious injustice to the party concerned.
[256 H 257 A] The following considerations should prevail with the Court in deciding whether or not an order is a judgment: (1) The trial Judge being a senior court with vast experience of various branches of law occupying a very high status, should be trusted to pass discretionary or interlocutory orders with due regard to the well settled principles of civil justice.
Thus any discretion exercised or routine orders passed by the trial Judge in the course of the suit which may cause some inconvenience or, to some extent, prejudice one party or the other cannot be treated as a judgment.[258D E] (2) An interlocutory order, in order to be a judgment, must contain the traits and trappings of finality either when the order decides the question in controversy in ancillary proceeding or in the suit itself or in a part of the proceedings.
[258 G] 193 It is not the form of adjudication which has to be seen but its actual effects on the suit or proceedings.
[243 H] If irrespective of the form of the suit or proceeding, the order impugned puts an end to the suit or proceeding it doubtless amounts to a judgment.
[244A] If the effect of the order, if not complied with, is to terminate the proceedings, the said order would amount to a judgment.
[244 B] An order in an independent proceeding which is ancillary to the suit, (not being a step towards judgment) but is designed to render the judgment effectively can also be termed as judgment within the meaning of the Letters Patent.
[244C] An order may be a judgment even if it does not affect the merits of the suit or proceedings or does not determine any rights in question raised in the suit or proceedings.
[244 D E] An adjudication based on a refusal to exercise discretion, the effect of which is to dispose of the suit, so far as that particular adjudication is concerned, would amount to a judgment within the meaning of the Letters Patent.
[244 E F] Some illustrations of interlocutory orders which may be treated as judgments may be stated thus: (1) An order granting leave to amend the plaint by introducing a new cause of action which completely alters the nature of the suit and takes away a vested right of limitation or any other valuable right accrued to the defendant.
[258 B C] (2) An order rejecting the plaint.
[258 C] (3) An order refusing leave to defend the suit in an action under Order 37, Code of Civil Procedure.
[258 C] (4) An order rescinding leave to the trial Judge granted by him under clause 12 of the Letters Patent.
[258 D] (5) An order deciding a preliminary objection to the maintainability of the suit on the ground of limitation, absence of notice under section 80, bar against competency of the suit against the defendant even though the suit is kept alive.
[258 D E] (6) An order rejecting an application for a judgment on admission under Order 12 Rule 6.
[258 E F] (7) An order refusing to add necessary parties in a suit under section 92 of the Code of Civil Procedure.
[258 F] (8) An order varying or amending a decree.
[258 F G] (9) An order refusing leave to sue in forma pauperis.
[258 F G] (10) An order granting review.
[258 F G] 194 (11) An order allowing withdrawal of the suit with liberty to file a fresh one.
[258 G H] (12) An order holding that the defendants are not agriculturists within the meaning of the special law.
[258 G H] (13) An order staying or refusing to stay a suit under section 10 of the Code of Civil Procedure.
[258 H] (14) An order granting or refusing to stay execution of the decree.
[259A] (15) An order deciding payment of court fee against the plaintiff.
[259 B] (per Amarendra Nath Sen J concurring) On a plain reading and proper construction of the various provisions of the Code of Civil Procedure, section 104 of the Code applies to the original side of the High Court of Bombay and the impugned order of the single Judge is appealable to a Division Bench under this section read with Order 43 thereof.
[279 H; 280 A] The right of appeal under clause 15 of the Letters Patent is in no way curtailed or affected by section 104.
By virtue of the provisions of section 104(1) a litigant enjoys the right of preferring an appeal in respect of various orders mentioned therein, even though such orders may or may not be appealable under clause 15 of the Letters Patent as a judgment and the right of appeal under clause 15 remains clearly unimpaired.
[275 E G] The argument of the respondent, based mainly on the provisions of sections 3 and 4 of the Code of Civil Procedure that even if various other provisions of the Code apply to the Bombay High Court, including its original side, the provisions of section 104 read with Order 43 could not apply to the original side of a Chartered High Court because the jurisdiction conferred by clause 15 of the Letters Patent is a special jurisdiction is without force.
[267 B C] That by virtue of section 1 (which provides for territorial extent of the operation of the Code) the Civil Procedure Code applies to the State of Maharashtra cannot be disputed.
[268 E F] Section 3 which deals with subordination of Courts to the High Court has no bearing on the point in issue and does not create any bar to the competence and maintainability of an appeal from an order passed by a single Judge on the original side if the order is otherwise appealable.
While dealing with any matter on the original side of the High Court a single Judge is in no way subordinate to the High Court.
Nor again, could there be a question of his being a subordinate to the Division Bench which hears an appeal from his judgment.
If any order passed by him on the original side is a 'judgment ' within the meaning of clause 15 of the Letters Patent an appeal lies to a Division Bench.
[272 E G] Similarly there is no force in the argument that since section 104 and Order 43 of the Code affect the special jurisdiction conferred on the High Court under 195 clause 15 of Letters Patent these provisions are not applicable to the present case.
[273 C D] Section 4 of the Code cannot be said to be in conflict with the provisions of clause 15; nor can it be said that it limits or otherwise affects the power and jurisdiction of the High Court under clause 15.
[274 A B] Section 4 provides that nothing in the Code shall be deemed to limit or otherwise affect any special or local law in force or any special jurisdiction conferred by or under any law for the time being in force.
Clause 15 confers on the litigant a right to prefer an appeal from the court of original jurisdiction to the High Court in its appellate jurisdiction.
It confers a right of appeal from a judgment of any Judge on the original side to the High Court.
Though this clause is a special provision it cannot be said that it is intended to lay down that no appeal would lie from an order of a single Judge on the original side even if specific provision is made in any statute making the order appealable.
By virtue of this provision any order considered to be a judgment would be appealable.
If a statute confers on the litigant right of appeal, it cannot be said that such provision would affect the special provisions of clause 15.
This special power is in no way affected and is fully retained.
In addition, the High Court may be competent to entertain other appeals by virtue of specific statutory provisions.
[273 C H: 274 A] On the contrary, the Code contains specific provisions indicating cases in which its provisions are or are not applicable, as for example section 5, which makes specific provision regarding the nature and manner of applicability of the Code to revenue courts.
Sections 116 to 120 clearly indicate that section 104 and order 43 apply to the original side of the High Court.
Section 104 and Order 43 which is attracted by section 104, clearly provide that an appeal shall lie from the orders mentioned in rule 1 of Order 43.
The impugned order is one such order and is clearly appealable.
When the legislature conferred such a right on the litigant a Court would be slow to deprive him of the statutory right merely on the ground that the order had been passed by a single Judge on the original side of the High Court.
[274 B E] Section 104 recognises that, apart from the orders made appealable under the Code, there may be other orders appealable by any law for the time being in force.
It further provides that no appeal will lie from any orders other than orders expressly provided in the Code or by any other law in force.
The right of appeal against a judgment of a single Judge on the original side under clause 15 is a right conferred by "any other law in force".
[275 C E] Union of India vs Mohindra Supply Co. ; and Mt. Savitri Thakurain vs Savi and Anr.
referred to.
Mathura Sundari Dassi vs Haran Chandra Shaha, A.I.R. and Lea Badin vs Upendra Mohan Roy Choudhary, A.I.R. 1935 Cal.
35 approved.
Vaman Raoji Kulkarni vs Nagesh Vishnu Joshi, A.I.R. overruled.
Hurrish Chander Chowdhry vs Kali Sundari Debia, 10 I.A. 4, held in applicable.
196 Unless a right is conferred on him by law, a litigant does not have an inherent right of appeal.
An order appealable under the C.P.C. or any other statute becomes appealable because the concerned statute confers a right of appeal on the litigant.
But yet such an order may or may not be appealable as 'judgment ' under clause 15 of the Letters Patent.
An order appealable under clause 15 as a 'judgment ' becomes appealable because the Letters Patent confers the right of appeal against such order as 'judgment '.
Similarly an order appealable under the Letters Patent may or may not be appealable under the Code.
[281 C E] The Letters Patent, by clause 15, confers a right of appeal against a 'judgment ' and therefore an order which satisfies the requirements of 'judgment ' within the meaning of clause 15 becomes appealable.
What kind of order will constitute a 'judgment ' within the meaning of this clause and become appealable as such must necessarily depend on the facts and circumstances of each case and on the nature and character of the order passed.
[281 F G] A comprehensive definition of 'judgment ' contemplated by clause 15 cannot properly be given.
Letters Patent itself does not define 'judgment '.
The expression has necessarily to be construed and interpreted in each case.
But yet it is safe to say that if an order has the effect of finally determining any controversy forming the subject matter of the suit itself or any part thereto or the same affects the question of the Court 's jurisdiction or the question of limitation, it normally constitutes 'judgment ' within the meaning of clause 15 of Letters Patent.
[282 E G]
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4440.txt
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Civil Appeal Nos.
1685 1686 1971 Appeals by Special leave from the Judgment and Order dated 8.1.1971 & 14.11.1969 of the Punjab and Haryana High Court 374 in S.C. Appeal No. 96 of 1970 & First Appeal No. 59 of 1964.
M.N. Phadke and Harbans Singh for the Appellant.
Harbans Lal, Urmila Kapoor, Kamini Jaiswal, Nishi Puri, Shahsi Kiran and Tehal Singh Mangal for the Respondents.
The Judgment of the Court was delivered by DESAI, J.
Whether a religious and/or charitable institution situated in village Mahal Khurd, Tehsil Barnala of Sangrur District is a Sikh Gurdwara within the meaning of the expression in the Sikh Gurdwaras Act, 1925 ( 'Act ' for short) is the subject matter of controversy between the parties in this appeal by special leave.
About 56 persons residing in village Mahal Khurd and professing Sikh religion made an application to the Government of Punjab on December 23, 1960 requesting the Government to declare the institution more particularly described in the application as a Sikh Gurdwara.
This application was published in the Official Gazette whereupon Mahant Kirpa Ram respondent No. 1 ( 'respondent ' for short) filed objections under Sec. 8 of the Act contending that the institution was not a Sikh Gurdwara and that he was entitled to raise that contention because he was the holder of hereditary office of mahant of the institution.
The application was forwarded under Sec.
14 to the Sikh Gurdwara Tribunal set up under the Act.
Upon rival contentions the Tribunal framed two issues as under: "1.
Is the petitioner a hereditary office holder of the Gurdwara? 2.
Is the Gurdwara in dispute a Sikh Gurdwara?" The Tribunal by its judgment dated January 21,1964 answered Issue No. 1 in favour of the respondent holding that he was a hereditary holder of the office of mahant of the institution.
On Issue No. 2, the Tribunal held that the institution is a Sikh Gurdwara and is governed by the Act.
The respondent preferred F.A.O. No. 59 of 1964 in the High Court of Punjab and Haryana at Chandigrah.
A Division Bench of the High Court held that the institution upset was by Gulabdas for commemorating the memory of his Guru named Jad Guru.
The 375 High Court further held that the land on which the institution was set up with the grant of Muafi had been donated by a Muslim ruler named Rai Kala of Rai Kot in favour of Mahant Gulabdas.
It was also held that the succession to the office of mahant is from Guru to Chela.
After referring to various entries in the land records, it was held that way back in 1861 the institution was not only serving as a Gurdwara for the worship of Ganth Saheb but was also used as a Dera or lodging house for Sadhus or Faqirs of the Udasi Sect and that there was a duality of faiths in the institution.
After taking all the aspects into consideration the High Court concluded that the institution in question was catering to the religious views and beliefs of both the sects amongst the local population and that therefore, the Tribunal was in error in declaring that it was a Sikh Gurdwara which would permit one of the communities to appropriate the institution to its exclusive use and to deprive the other community or sect from the dual use to which the institution has been put ever since it was founded or established.
Accordingly, the High Court allowed the appeal and set aside the declaration made by the Tribunal.
Original applicants moved the High Court for a certificate under article 133(1) (a) and (c) of the Constitution which was numbered ss S.C.A. No. 96 of 1970.
The High Court on receipt of a report as a result of enquiry directed by it, by its order dated January 8, 1971 rejected the application for certificate both under article 133 (1) (a) and (c).
Thereupon the original applicants filed these two appeals by special leave; one against the decision of the High Court reversing the decision of the Tribunal and another against the order of the High Court rejecting the application for certificate.
Mr. M.N. Phadke, learned counsel who appeared for the appellant urged that if on evidence the appellants (original petitioners) are in a position to show that the institution was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs, before and at the time of the presentation of the petition under sub section (1) of Sec, 7.
the institution would be a Sikh Gurdwara as contemplated in Sec.
16(2) (iii) of the Act.
Proceeding along it was urged that there is evidence to show and even the High Court has not found to the contrary that the institution was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs before and at the time of the presentation of the petition under sub section (1) of Sec.
7 376 and therefore notwithstanding the fact that some other members belonging to some other faith or sect also venerate the institution it would not detract from the character of the institution nor would it be destructive of the character of the institution as Sikh Gurdwara.
16(2) (iii) of the Act provides that 'if the tribunal finds that the gurdwara was established for use by Sikhs for the purpose of public worship and was used for such worship by Sikhs, before and at the time of the presentation of the petition under sub sec.
(1) of Sec. 7, the tribunal shall decide that it should be declared to be a Sikh Gurdwara, and record an order accordingly. ' 'Sikh ' is defined in Sec.
2(9) of the Act to mean 'a person who professes the Sikh religion, or was known to be a Sikh during his lifetime. ' If a dispute arises as to whether any particular person is or is not a Sikh the outcome will depend upon his willingness to subscribe to a declaration as prescribed in the Act.
Amongst Sikhs, there can be Amritdhari Sikhs and Sahjdhari Sikhs.
One can be said to be a Patit if he being a Keshdhari Sikh trims or shaves his beard or keshas or who after taking amrit commits any one or more of the four kurahits.
The first question is: whether it has been satisfactorily established that the institution was set up by Sikhs for the purpose of public worship and was used for such worship by Sikhs.
The Tribunal found that the institution is an old one and no direct oral or documentary evidence regarding the purpose for which it was founded is available.
Reliance was placed on the copies of the revenue records, to show how the institution was described in Government land records.
On appraisal of the entries, it has been concurrently found that the institution was set up by Mahant Gulabdas upon a grant of land made to him.
It appears a Sanad was issued but it was lost when the Mahrattas over ran this part of the country.
The High Court then traced the origin of village Mahal Khurd and recorded a finding that the first settlers came to that area in the beginning of the 18th Century and amongst them were Bir Pal, Garib Dass and Bhoja.
They cleared the forest land and started cultivating the land.
The High Court then examined what area of land can be cultivated with the help of one pair of bullocks.
After asserting the probative value of Kafiat Dehi or Wajah Tasmias, Ext.
P 21, and P 22 the High Court concluded that the muafi i.e. exemption from payment of land revenue had been granted to the institution from the time village had first been founded about 200 years before the records were prepared, but these records.
377 do not help in asserting the purpose for which muafi was granted or the purpose for which the institution was established.
This conclusion was not commented upon and deserves to be accepted as reasonable inference from the evidence.
Mr. Phadke however invited as to examine jamabandi entries and on the strength of them attempted to urge that since remote past the entries describe the institution as gurdwara.
exhibit P 1 is a will dated May 10, 1958 executed by Mahant Rashi Ram by which the respondent was appointed as his chela with a right to succeed to the office of mahant of this institution.
This is a document of recent origin and is not of much assistance.
We may next turn to Ext.
P 2 dated the 25th Baisakh, 1927 corresponding to 1871 A.D.
It is a decision recorded in a muafi enquiry proceeding in respect of land admeasuring 206 Bighas and 16 Biswas then found to be in possession of the institution.
It recites that the land was given to Gulab Dass Faqir by Rai Kalha of Rai Kot real donee being his Guru known as Jad Guru who is the muafidar.
It was also found that entries in Inam register show that the land admeasuring 120 Bighas has been entered in the name of muafidar and that area of land remained muafi to the muafidar with the approval of Rai Nizam Sahib and the remaining land measuring 86 Bighas and 16 Biswas which was in excess of grant should be resumed to the Government after obtaining the approval of the Diwan Saheb.
Two things emerge from Ext.
P 2, that the original muafi grant was made by a Muslim ruler in favour of Mahant Gulab Dass Faquir of Udasi sect who appears to have set up the institution to commemorate the memory of his Guru, Jad Guru.
These earlier entries do not support the claim advanced on behalf of the appellants that the institution was set up by Sikhs for the purpose of public worship.
On the contrary, the institution appears to have been set up by Gulab Dass, a follower of Udasi sect and succession to the office of Mahant is by Guru to Chela.
Reference was next made to Exts.
P 7 and P 8 which appear to be statements of Lambardars and Patwaris in question answer form which show that they heard from their ancestors that the muafi had been granted by Rai Kalha to Baba Gulab Dass by way of Punarth for meeting the expenses of the Dera and Bal Bhog Parshad Granth Sahib.
Relying on these statements it was urged that at the time of recording the statements on April 19, 1872 Granth Sahib was being 378 venerated in the institution and the grant was for Bal Bhog Parsad of Granth Sahib.
There statements suffer from the vice of hearsay evidence in as much as the reference to the Granth Sahib for the first time appears in these statements not based on any personal knowledge but of what they had heard from their ancestors.
P 8 purports to be a statement of the then Mahant Ram Dass Muafidar Faqir Udasi of the year 1873.
It shows that the muafi land was granted by Rai Kalha of Rai Kot to Bawa Gulab Dass his great grand Guru for Bhog of Granth Sahib and for the expenses of the Dera and Faqirs.
Mr. Phadke urged that the Mahant himself has admitted that the grant was for Bal Bhog of Granth Sahib and that this admission concludes the point.
The High Court declined to treat this admission as conclusive on the ground that the admission was made more than a century after the original grant and establishment of the institution and three or four generations had intervened and the Mahant was talking about facts which had happened long before his birth.
These in our opinion, are relevant considerations for not treating the admission as conclusive more so because the earlier entries do not either refer to the institution as Gurdwara or make any mention of the worship of Granth Sahib therein.
Mr. Phadke then invited our attention to exhibit P 18 being on order of Ijlas I Khas Committee of the State of Patiala at the relevant time, according approval to the succession to the office of Mahant of the institution.
In this order dated June 10, 1937 the institution was described as: "Prem Das Mahant of Dera of Udasi Bhekh (Gurdwara Sahib) situate at Mahal Khurd Tehsil Barnala having died on 18.10.1982, the Administrative Committee recommends appointment of Rikhi Ram Chela of Narain Dass as Mahant on the condition set out in the order.
" This order was signed by Her Highness Maharani of Patiala, the then Prime Minister and Revenue Minister amongst others.
Mr. Phadke emphasised that the institution apart from being described as Dera of Udasi Bhekh is also described as Gurdwara Sahib and therefore, it would show that was back in 1937 the State authorities had accepted the institution to be a Gurdwara.
We are not impressed by the submission for the obvious reason that the expression 'Gurdwara ' is in the bracket and primarily the institution is described as Dera of Udasi Bhekh.
Conceding that the use of the expression 379 'Dera ' does not militate against the institution being a Sikh Gurdwara as held by this Court in the decision in Civil Appeal No. 446 of 1962 rendered on November 9, 1984 wherein Sarkar, J. speaking for the Court observed that 'Dera ' in many cases was synonymous with a 'Gurdwara ', a description of the institution as Dera of Udasi Bhekh would certainly have a distinct connotation showing that it was an Udasi institution as recognised by the highest State authorities.
The expression 'Gurdwara Sahib ' in the bracket may at best indicate that the Granth Sahib was also venerated in the institution.
Mr. Phadke never drew our attention to Ext.
P 23 being an extract from the register of mutations relating to Mauza Mahal Khurd dated September, 27 1984.
The entry under the column name of owner ' with description reads: "Shri Guru Granth Sahib situate in the Gurdwara of the village under the management of Rikhi Ram chela Partap Dass Faqir Udasi '.
In fact, these entries appear to have been made in implementation of the order of the Ijlas I Khas and has no independent probative value.
P 24 is a similar extract dated October 1,1959 and does not advance the case of the appellants any further.
Not much reliance was placed on the oral evidence led by the parties and therefore we refrain from referring to it.
On the evidence as herein discussed, the question is: whether the view taken by the High Court that the institution catered to worship by people belonging to two different faiths namely, Udasis and Sikhs is reasonable and proper or calls, for interference? In our opinion, the view of the High Court is reasonable, proper and just on the evidence placed on record.
There is evidence to show that Gulab Dass who founded the institution was an Udasi Faqir.
It is satisfactorily established that the succession to the office of Mahant is from Guru to Chela.
It appears that the expression 'Gurdwara ' qualifying the Dera of Udasis Bhekh in the Government records at a much later date.
It is established that the original grant was by a Muslim ruler in favour of a Faqir and Sadhu of Udasi sect.
On this evidence atleast a negative conclusion would satisfactorily emerge that the appellants have failed to prove that it was an institution set up for use by Sikhs for the purpose of public worship.
It must be conceded that nearly a century after the setting up of the institution, Granth Sahib was venerated and read in this 380 institution.
Does it provide conclusive evidence that the institution was set up and used for public worship by Sikhs? In order to bring the case under Sec.
16(2) (iii) it must not only be established that the institution was established for use by Sikhs for the purpose of public worship but was used for such worship by the Sikhs before and at the time of the presentation of the petition.
The use of the conjunctive `and ' clearly imports that in order to attract Sec.
16(2) (iii), both the conditions must be cumulatively satisfied.
Not was only that it must satisfactorily established that the institution was established for `use ' by Sikhs for the purpose of public worship but was used for such worship by the Sikhs before and at the time of the presentation of the petition.
It was so held in Gurmukh Singh vs
Risaldar Deva Singh & Ors.(1) and it our opinion that represents the correct interpretation of Sec.
16(2) (iii).
In this case there is no evidence to show that the institution was established for use by Sikhs for the purpose of public worship.
It must be conceded that the institution may be established by anyone, may be a Sikh or follower of any other faith, but it must be established for use by Sikhs for the purpose of worship.
One can therefore, ignore the fact that the original grantor was a Muslim ruler Rai Kalha but there is nothing to show that when Gulab Dass Faquir of Udasi sect established the institution, he did it for use by Sikhs for the purpose of public worship.
Later on as the majority of the population of the village was follower of Shikh religion and as Udasis also Venerate Granth Sahib, reading of Granth Sahib may have commenced and therefore, generally speaking people may describe and revenue record may show it to be Gurdwara but that would neither be decisive of the character of the institution nor sufficient to bring the institution within Sec.
16(2)(iii) of the Act.
It is at this stage necessary to point out the distinction between Sikhs and Udasis.
In the past it was attempted to be urged that Udasis are a mere order of Shikh preachers and that there is no difference between two faiths.
In fact it was urged that they are not two separate faiths but two separate interpretations of the same faith.
Repelling this contention way back in Hem Singh & Ors.
vs Basant Das and Anr.(2) It was observed as under : 381 "Indeed the Udasis do not appear to their Lordships to have been a mere order of mendicant preachers among the Sikhs.
Nor can it be held proved that they were merely Sikhs who had lapsed into Hindu practices.
On the contrary, they appear to have a long and independent history as a separate sect or persuasion occupying a position somewhere between the Sikhs and the orthodox Hindus.
The differences in belief as well as in practice between Sikhs and Udasis deserve to be described as serious, extensive and inveterate and some were outwardly striking.
" At another stage it was observed that since the time of Siri Chand, the founder of Udasi sect there came into existence a sect of Udasis who while using the same sacred writings as the Sikhs, kept up much more of the old Hindu practices, followed asceticism, were given to the veneration of Samadhs and tombs and continued the Hindu, rites concerning birth, marriage and Shradh.
It was also observed that the Udasis so far as the matter can be decided by beliefs and practices, are, from the point of view of Sikhs, schismatics who separated in the earliest days of the movement and never merged thereafter.
It would thus appear that Udasis form an independent sect.
They do venerate Sikh scriptures.
There fore, in an institution of Udasis sect, one can visualise reading of Granth Sahib or veneration of Sikh scriptures.
That itself is not decisive of the character of the institution.
On the contrary, if the succession was from Guru to Chela and those Gurus were followers of Udasis faith and the institution was known as Dera of Udasi Bhekh and they followed some of the practices of Hindu traditional religion that would be completely destructive of the character of the institution as Sikh Gurdwara.
In a very recent decision of this Court in Pritam Dass Mahant vs Shiromani Gurdwara Prabhandhak Committee(1) it has been held that mere reading of Granth Sahib or veneration of Sikh scriptures is not decisive of the character of the institution because Udasis are midway between Sikhs on the one hand and Hindus on the other and that the Udasis also venerate Granth Sahib.
Earlier also this view has been consistently taken by this Court as will appear from the decision of this Court in Mahant Dharam Dass etc.
vs The State of Punjab and Ors:(2) 382 "They do not subscribe to idol worship and polytheism, nor do they have any Samadhi in their shrines.
The teaching of Sikhs was against asceticism.
They believe in Guru Granth Sahib, which is a Rosary of sacred poems, exhortations etc.
During the time of the Sikh Gurus, the Gurdwaras were under their direct supervision and control or under their Masends or missionary agents.
After the death of Guru Gobind Singh the Panth is recognised as the corporate representative of the Guru on earth and thereafter they were managed by the Panth through their Granthis and other sewadars who were under direct supervision of the local Sangat or congregation.
During Mahraja Ranjit Singh 's time Sikhism became the religion of the State and large estates and Jagirs were granted to the Gurdwaras apart from the Jagirs which had been earlier granted during the Mughal period.
The position of the Gurdwaras changed during British regime.
The Mahants who were in charge of the Sikh Gurdwaras could either be a Sikh Mahant or Udasi Mahant.
" It thus clearly appears that the appraisal of the evidence by the High Court is correct and unexceptional and weight of the evidence discloses that the institution in question was not shown to have been established for use by Sikhs for the purpose of public worship and therefore one of the material conditions for attracting Sec.
16(2)(iii) of the Act is not established.
It is immaterial that at the time of presentation of the petition it was, along with the follower of Udasi sect used for worship of Granth Sahib by the Sikhs.
We broadly agree with the view taken by the High Court Therefore these appeals fail and are dismissed with costs.
Hearing fee in one set.
N.V.K. Appeals dismissed.
|
A group of persons residing in a village and professing the Sikh religion made an application to the State Government to declare the religious and charitable institution described in the application as a Sikh Gurdwara.
This application was published in the Officer Gazette and respondent No. 1 filed objections under section 8 of the Sikh Gurdwaras Act, 1925 contending that the institution was not a Sikh Gurdwara and that he was entitled to raise the said contention because he was the holder of the hereditary office of mahant of the institution.
The application was forwarded by the State Government under section 14 to the Sikh Gurdwara Tribunal which held that the respondent was the hereditary holder of the office of mahant of the institution and that the institution was a Sikh Gurdwara and was governed by the Act.
The respondent thereupon filed an appeal in the High Court which held that the institution was set up by a mahant for commemorating the memory of his Guru and that the land on which the institution was set up with the grant of Muafi had been donated by a Muslim ruler.
After considering of the entries in the land records, the High Court further held that institution was not only serving as a Gurdwara for the worship of Granth Saheb but was also used as a Dera or lodging house or Sadhus or Faqirs of the Udasi Sect and that there was a duality of faiths in the institution.
The High Court concluded that the institution was catering to the religious views and beliefs of both the sects amongst the local population and that the Tribunal was in error in declaring that the institution was a Sikh Gudrwara which would permit one of the communities to appropriate the institution to its exclusive use and to deprive the other community or sect from the dual use to which the institution has been put ever since it was founded or established.
The High Court, consequently allowed the appeal and set aside the declaration made by the Tribunal.
Dismissing the further appeals to this Court 373 ^ HELD: 1.
The appraisal of the evidence by the High Court is correct and unexceptional.
The evidence discloses that the institution in question was not shown to have been established for use by Sikhs for the purpose of public worship and therefore one of the material conditions for attracting section 16(2)(iii) of the Sikh Gurdwara Act, 1925 was not established.
It is immaterial that at the time of presentation of the petition it was along with the followers of Udasi Sect used for worship of Granth Sahib by the Sikhs.
[382E F] 2.
In order to bring a case under section 16(2)(iii) of the Act it must not only be established that the institution was established by Sikhs for the purpose of public worship but was used for such worship by Sikhs before and at the time of the presentation of the petition.
The use of the conjunctive 'and ' clearly imports that in order to attract Section 16(2)(iii) both the conditions must be cumulatively satisfied.
[380A B] Gurmukh Singh vs Risaldar Deva Singh & Ors., AIR 1937 Lahore 577, allowed.
Udasis form an independent sect : They do venerate Sikh Scriptures.
Therefore, in an institution of Udasis sect, one can visualise reading of Granth Sahib or veneration of Sikh scriptures.
That itself is not decisive of the character of the institution.
If the succession was from Guru to Chela and those Gurus were followers of Udasi faith and the institution was known as Dera of Udasi Bhekh and they followed some of the practices of Hindu traditional religion that would be completely destructive of the character of the institution as Sikh Gurdwara.
[381E F] Mahant Daram Dass etc.
vs The State of Punjab & Ors. ; Hem Singh & Ors.
vs Basant Das and Anr.
, AIR 1936 PC 93 at 100 and Pritam Dass Mahant vs Shiromani Gurdwara Prabhandak Committee, C.A. No. 1983 of 1970 dated 16.2.84 referred to.
In the instant case, there is no evidence to show that the institution was established for use by Sikhs for the purpose of public worship.
Though the institution may be established by anyone may be a Sikh or follower of any other faith, but it must be established for use by Sikhs for the purpose of public worship.
The original grantor was a Muslim ruler but there is nothing to show that when Gulab Das Faqir of Udasi Sect established the institution, he did it for use by Sikhs for the purpose of public worship.
Later on as the majority of the population of the village were followers of Sikh religion and as Udasis also venerate Granth Sahib, reading of Granth Sahib may have commenced and therefore, generally speaking people may describe, and revenue record may show it to be Gurdwara, but that would neither be decisive of the character of the institution nor sufficient to bring the institution within Section 16(2)(iii) of the Act.
[380D F]
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4787.txt
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Appeal No. 1336 of 1967.
Appeal by special leave from the judgment and order dated October 7, 1966 of the Andhra Pradesh High Court in Writ Petition No. 1268 of 1966.
P. Ram Reddy and A. V. V. Nair, for the appellants.
K.Narayana Rao and G. Narayana Rao, for the intervener.
The Judgment of the Court was delivered by Shah, J.
Against the order passed by the High Court of Andhra Pradesh declaring invalid the "reservation for backward classes under Rule 4A and 5A respectively of the Telangana and the Andhra Rules, and the directions in respect of the President 's Scouts and.
Guides", under Government orders Nos.
1135 & 1136 Health, Housing & Municipal Administration Department dated June 16, 1966, as modified by G.O. M.S. 1880 dated July 29, 1966 for the Telangana region, and by G.O.M.S. 1786 dated August 2, 1966 for the Andhra Region, the State of Andhra Pradesh has appealed to this Court with special leave.
The State of Andhra Pradesh is divided into two areas Telan gana and Andhra areas.
In the Telangana area there are two Medical Colleges having in the aggregate 270 seats for entrants to the medical degree course.
In Andhra area there are four Medical Colleges having in the aggregate 550 seats for new entrants.
In admitting candidates for the medical degree course by Government orders Nos.
1135 & 1136 Health, Housing and Municipal Administration Department dated June 16, 1966, seats were reserved for Central Government nominees, for N.C.C., A.C.C President 's Scouts & Guides, for candidates with sports and extracurricular proficiency, for children of ex Service army personnel, for children of displaced goldsmiths, for candidates from Scheduled Castes and Tribes, for women candidates, for candidates appearing from H.S.C. Multipurpose I.S.C. & P.U.C. Examinations, 597 and for candidates who had secured the M.Sc. & B.Sc. de grees.
By Government order No. 1880 dated July 29, 1966, twenty per cent.
of the total number of seats were reserved for backward classes in each area, and pursuant thereto the Telangana Rules were amended by G.O. M.S. No. 1784 Health and the Andhra Rules were amended by G.O. M.S. No. 1783 Health dated August 2, 1966.
The Validity of the Government orders Nos.
1135 & 1136 was challenged on the ground that they infringed the fundamental freedoms guaranteed under articles 15(4), 16(4) and 29(2) of the Constitution.
The High Court held that in reserving seats for nominees of the Central Government and from other States, for cultural scholars, for women, for graduates and for students from H.S.C. & P.U.C. Courses, no fundamental rights were infringed, but the reservations for members of the backward classes described in the list prepared by the Government of Andhra Pradesh were invalid.
By article 15 of the Constitution, as originally enacted, it was provided that "(1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
(2). . . . . . (3)Nothing in this article shall prevent the State from making my special provisions for women and children.
" Article 29(2) provided that "No citizen 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.
By article 46, which occurs in Ch.
IV relating to Directive Principles of State Policy, the State was enjoined to promote the educational and economic interests of the weaker sections of the people, but articles ' 15 and 29 as originally framed prohibited the making of,any discrimination against any citizen on grounds only of religion,, race, caste, sex, place, of birth or any of them.
In the State of Madras vs Shrimati Champakam Dorairajan(1) an order issued by the Government of the State of Madras fixing the number of seats for particular communities for selection of candidates for admission to the Engineering and Medical Colleges in the State was challenged on the ground that it violated the guarantee against d crimination under article 25(2) of the"Constitution.
This Court held that the Government order constituted a violation of the (1) ; 598 fundamental right guaranteed to the citizens of India by article 29(2) of the Constitution, notwithstanding the directive principles of State policy laid down in Part IV of the Constitution.
The Part thereafter added cl.
(4) in article 15, by the Constitution (First Amendment) Act, 1951, providing that: "Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes.
" On July 31, 1962, the State of Mysore, in supersession of all previous orders made under article I 5(4) divided backward classes into two categories : backward classes and more backward classes, and reserved 68% of the seats in the Engineering and Medical Colleges and other technical institutions for the educationally and socially backward classes and the Scheduled Castes and Scheduled Tribes, and left 32% seats for the merit pool.
That order was challenged by a group of writ petitions under article 32 of the Constitution before this Court.
This Court in M. R. Balaji & others vs State of 'Mysore(1) held that the order passed by the State of Mysore "was a fraud on the constitutional power conferred on the State by article 15(4)" and was liable to be quashed, because the order categorised, contrary to the plain intendment of article 15(4), the backward classes on the sole basis of caste.
A similar order G.O. M.S. No. 1880 Health issued by the State of Andhra Pradesh on June 21, 1963, notifying a list of castes for the purpose of selecting candidates from the backward classes in the Medical Colleges in the State of Andhra Pradesh was declared invalid by the High Court of Andhra Pradesh on the ground that the order which classified the backward classes solely on the basis of caste subverted the object of article 15(4) of the Constitution : see P. Sukhadev and others vs The Government of Andhra Pradesh (2).
On February 3, 1964, the.
previous order issued by the State of Andhra Pradesh was cancelled.
Thereafter it is claimed by the ' State of Andhra Pradesh that it took steps to prepare a fresh list of backward classes consistently with the provisions of the Constitution.
The Chief Secretary of the Government of Andhra Pradesh has sworn in his affidavit that the Council of Ministers appointed a Sub Committee to draw up a list of backward classes, inter alia, for the purpose of admission of students to professional Colleges.
The Committee invited the Law Secretary and the Director of Social Welfare to attend the meetings of the Sub Committe, and letters were written to the other States calling for information about the criteria adopted by those States for determining backward classes for purposes of Am.
15(4) and 16(4) of the (1) [1963] Supp. 1 S.C.R. 439.
(2) (1966) 1 Andbra W.R. 294.
599 Constitution, that after considering the replies received from the Chief Secretaries of the various States it was resolved 'that the existing list of backward classes pertaining to Andhra and Telangana areas he scrutinised with a view to selecting from that list those castes or communities which are "considered backward on account of the low standard of living, education, poverty, places of habitation, inferiority of occupations followed etc "; that at another meeting it was resolved that the, list of 146 backward communities prepared by the Director be rearranged in "the order of priority in consultation with the Law Secretary, taking into consideration the criteria given by Law Secretary in his note to the Cabinet Sub Committee and that in doing so such of the criteria as capable of being practically possible for consideration may be taken into account", and accordingly the Law Secretary and the Director of Social Welfare considered the representations made by certain communities to the Government from time to time and "drew up a list of the order of priority as called for by the Cabinet Sub Committee", that thereafter the Cabinet Sub Committee made its recommendations which were considered by the Council of Ministers on July 4, 1966, and that the Council of Ministers considered the social, educational and economic conditions of the backward classes named in the lists submitted to them, and dealt with each individual class and deleted certain items or classes in the lists, changed the denomination of certain classes "for the more premise effectuation of concessions to those classes only who really need them", and consolidated the backward classes into one list, ruling out the priorities suggested by the Director of Social Welfare in accordance with the opinion of the Cabinet Sub Committee, and thereafter published resolution No. G.O. 1880 pursuant to which the rules were amended reserving 20% of the seats for the backward classes mentioned in the list prepared by the Cabinet of the State.
The list prepared on the basis of reservations for socially and educationally backward classes is indisputably a list community wise.
On behalf of the petitioners it was contended in the High Court that the Government of Andhra Pradesh had adopted the same list of backward classes which was struck down by the High Court in P. Sukhadev 's caw() with some slight modifications and the new list also having made a reservation in favour of castes and not classes, it infringed the guarantee Under article 15(1).
On behalf of the State it was urged that caste is one of the relevant tests in determining backwardness, and cannot be ignored in determining the socially and educationally backward classes: if a group has been classified as backward on other relevant considerations, the classification is not liable to be changed as invalid on the ground that for the purpose of classifying,the designation of caste 'is given.
The High Court held that the earlier G.O. was struck down (1) (1966) 1 Andhra W.R. 294.
600 in P. Cukhadev 's case( ') on the ground that it was based on caste alone, and since the G.O. under challenge was again prepared on the same basis it could not be sustained as falling within,the exception provided in article 15(4).
Counsel for the State contends that the High Court erred in holding that the impugned rules reserving seats for backward classes made caste the determining factor.
In the context in which it occurs the expression "class" means a homogeneous section of the people grouped together because of certain likenesses or common traits and who are identifiable by some common attributes such as status, rank, occupation, residence .in a locality, race, religion and the like.
In determining whether a particular section forms a class, caste cannot be excluded altogether.
But in the determination of a class a test solely based upon the caste or community cannot also be accepted.
By cl.
(1), article 15 prohibits the State from discriminating against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
By cl.
(3) of article, 15 the State is, notwithstanding the provision contained in cl.
(1), permitted to make special pro,vision for women and children.
By cl.
(4) a special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes is outside the purview of cl.
But cl.
(4) is an exception to cl.
Being an exception, it cannot be extended so as in effect to destroy the Guarantee of cl.
The Parliament has by enacting cl.
(4) attempted to balance as against the right of equality of citizens the special necessities of the weaker sections of the people by allowing a provision to be made for their advancement.
In order that effect may be given to cl.
(4), it must a pear that the beneficiaries of the special provision are classes which are backward socially and educationally and they are other than the Sche duled Castes and Scheduled Tribes, and that the provision made .is for their advancement.
Reservation may be adopted to advance the interests of weaker sections of society, but in doing so, care must be taken to see that deserving and qualified candidates are not excluded from admission, to higher educational institutions.
The criterion for determining the backwardness Must not be based solely on religion, race, caste, sex, or place of birth, and, the backwardness being social, and educational must be similar to the backwardness from which the Scheduled Castes and the Scheduled Tribes suffer.
These are the principles which have been enunciated in the decision of this Court in.
M. R. Balaji 's case(3) and R. Chitralekha & Another vs State of Mysore.and.
others(2).
In R. Chitralekha 's case (2), Subba Rao, J., speaking for the majority of the Court observed at p. 388 (1) (1963) Supp.1 S.C.R.439. (2) (1964) 6 S.C.R.368 601 .lm15 "The important factor to be noticed in article 15(4) is that it does not speak of castes, but only speaks of classes.
If the makers of the Constitution intended to take castes also as units of social and educational backwardness, they would have said so as they have said in the case of the Scheduled Castes and the Scheduled Tribes.
Though it may be suggested that the wider expression "cLasses" is used in cl.
(4) of article 15 as there are communities without castes, if the intention was to equate classes with castes, nothing prevented the makers of the constitution from using the expression "backward classes or castes '.
The juxtaposition of the expression "backward classes" and "Scheduled Castes" in article 15(4) also leads to a reasonable inference that the expression "classes" is not synonymous with castes.
It may be that for ascertaining whether a particular citizen or a group of citizens belong to a backward class or not, his or their caste may have some relevance, but it cannot be either the sole or the dominant criterion for ascertaining the class to which he or they belong.
" In a recent judgment of this Court P. Rajendran & Ors.
vs The State of Madras and others( '), Wanchoo, C.J., speaking for the Court observed : ".
if the reservation in question had been based only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1).
But it must not be forgotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward reservation can be made in favour of such a caste on the ground that it is a socially and educationally backward class of citizens within, the meaning of article 15(4).
It is true that in the present cases the list of socially and educationally backward classes has been specified by caste.
But that does not necessarily mean that caste was the sole consideration and that persons belonging to these castes are also not a class of socially and educationally backward citizens.
" That case makes no departure from the rule enunciated in the earlier cases.
The list dated June 21, 1963, of castes prepared by the Andhra Pradesh Government to determine backward classes for the purpose of article 15(4) was declared invalid by the High Court of ' Andhra Pradesh in P. Sukhadev 's case( ').
A fresh list was published under the amended rules with some modifications, but the (1) ; (2) [1966] 1 Andhra W.R. 294.
602 basic scheme of the list was apparently not altered.
It is true that the affidavits filed by the Chief Secretary in the High Court and the Director of Social Welfare in this Court have set out the steps taken for preparing the Est of backward classes.
It is also stated in the affidavit of the Director of Social Welfare that he considered the representations made to him, consulted the Law Secretary and certain publications relating to the study of backward classes e.g. Thurston 's "Caste and Tribes" and Sirajul Hasan 's "Castes and Tribes", and made his recommendations which were modified by the Sub Committee appointed by the Council of Ministers and ultimately the Council of Ministers prepared a final list of backward classes.
But before the High Court the materials which the Cabinet Sub Committee or the Council of Ministers considered were not placed, nor was any evidence led about the criteria adopted by them for the purpose of determining the backward classes.
The High Court observed : "A perusal of this affidavit (Chief Secretary 's affidavit) as well as that of the Director of Social Welfare,.
.which are filed on behalf of the Government do not say what was the material placed before the Cabinet Sub Committee or the Council of Ministers, from which we could conclude that the criteria laid down by their Lordships of the Supreme Court have been applied in preparing the list of backward classes.
After referring to the opinion of the Law Secretary and the views ,of the Director of Social Welfare they observed: ".
We are not able to ascertain whether any material, and if so, what material was placed before the Cabinet Sub Committee, upon which the list of backward classes was drawn.
On the other hand, it is stated that the Law Secretary and the Director of Social Welfare sat together and drew up a list, the former specifying the legal requirements and the latter as an expert advising on the social and educational backwardness of class or classes.
" It was urged before the High Court that expert knowledge of the Director of Social Welfare and of the Law Secretary was brought to bear upon the consideration of the relevant materials in the preparation of the list and they were satisfied that the correct tests were applied in the determination of backward classes and on that account the list should be accepted by the High Court.
The High Court in dealing with the argument observed: ". the impugned backward classes list cannot be and has not been sustained by the Government as 603 coming within the exception provided in article 15(4) on any material placed before this Court.
In fact, there is a total absence of any material, from which we can say that the Government applied the criteria enunciated by their Lordships of the Supreme Court in the above referred cases, in preparing the list of backward classes.
We cannot accept the contention of the learned Advocate General that "once there is proof that the Government bona fide considered the matter it is sufficient".
Acceptance of this argument would make for arbitrariness, absolving the party on whom the burden of proof to bring it within the exception rests, from proving it.
The mere fact that the act is bona fide and that there was total absence of mala fides, is not relevant.
" Article 15 guarantees by the first clause a fundamental right of far reaching importance to the public generally.
Within certain defined limits an exception has been engrafted upon the guarantee of the freedom in cl.
(1), but being in the nature of an exception, the conditions which justify departure must be strictly shown to exist.
When a dispute is raised before a Court that a particular law which is inconsistent with the Guarantee against discrimination is valid on the plea that it is permitted under cl.
(4) of article 15, the assertion by the State that the officers of the State had taken into consideration the criteria which had been adopted by the Courts for determining who the socially and educationally backward classes of the Society are, or that the authorities had acted in good faith in, determining the socially and educationally, backward classes of citizens, would not be sufficient to sustain the validity of the claim.
The Courts of the country are invested with the power to determine the validity of the law which infringes the fundamental rights of citizens and others and when a question arises whether a law which prima facie infringes a guaranteed fundamental right is within an exception, the validity of that law has to be determined by the Courts on materials placed before them.
By merely asserting that the law was made after full consideration of the relevant evidence and criteria which have a bearing thereon, and was within the exception, the jurisdiction of the .Courts to determine whether by making the law a fundamental right has been infringed is not excluded.
The High Court has repeatedly observed in the course of their judgment that no materials at all were placed on the record to enable them to decide whether the criteria laid down by this Court for determining that the list prepared by the Government conformed to the requirements of cl.
(4) of article 15 were followed.
On behalf of the State it was merely asserted that an enquiry was in fact made with the aid of expert officers and the Law Secretary and the question was examined from all points of view by the L7Sup.
C.I/68 14 604 officers of the State, by the Cabinet Sub Committee and by the Cabinet.
But whether in that examination the correct criteria were applied is not a matter on which any assumption could be made especially when the list prepared is exfacie based on castes or communities and in substantially the list which was struck down by the High Court in P. Sukhadev 's case(1) Honesty of purpose of those who prepared and published the list was not and is not challenged, but the validity of a law which apparently infringes the fundamental rights of citizens cannot be upheld merely because the law maker was satisfied that what he did was right or that he believes that he acted in manner consistent with the constitutional guarantees of the citizen.
The test of the validity of a law alleged to infringe the fundamental rights of a citizen or any.
act done in execution of that law lies not in the belief of the maker of the law or of the person executing the law, but in the demonstration by evidence and argument before the Courts that the guaranteed right is not infringed.
The appeal therefore fails and is dismissed.
, R.K.P.S. Appeal dismissed.
(1) [1966] 1 Andhra W.R. 294.
|
By an order of the State Government, Andhra Pradesh, issued on July 29, 1966, 20% of the total number of seats for admission to medical colleges in the State were reserved, for members of the backward classes described in a list prepared by the Government.
This order and the list were challenged in writ petitions before the High Court on the, ground that another list published by the State Government on June 21, 1963 determining backward classes for the purpose of article 15(4) of the Constitution had been declared invalid by the High Court in an earlier case as being violative of article 15(1); it was contended that the State Government had adopted substantially the same list of backward classes with slight modifications and as the new list also made the reservation in favour of castes and not classes, it infringed the guarantee under article 15(1).
On behalf of the State Government it was urged that caste is one of the relevant tests in determining backwardness, and cannot be ignored in determining socially and educationally backward classes and if a group has been classified as backward on other relevent considerations, the classification is not liable to be challenged as invalid on the ground that for the purpose of classifying, the designation of caste is given.
It was stated in an affidavit on behalf of the State that the new list had been prepared by a Cabinet sub committee and 'approved by the Cabinet after a detailed enquiry of the conditions of the castes in question and on expert advice of the Director of Social Welfare as well as under the guidance of the Law Secretary; and that they were both satisfied that the correct tests were applied in the determination of the backward classes.
The High Court held that the reservations of seats for the members of the backward classes described in the list prepared by the Government were in , Aid.
The State appealed to this Court by special leave.
HELD:dismissing the appeal, The impugned list prepared by the State was ex facie based on castes or communities and wag substantially the same list which bad been struck down by the High Court as invalid in the earlier case.
No materials were placed on the record to enable the Court to decide whether the criteria laid down for determining that the list prepared by the Government conformed to the requirements of cf.
(4) or article 15 were followed.
Article 15 guarantees by the first clause a fundamental right of farreaching importance.
Clause (4) is an exception engrafted upon the guarantee in cl.
(1), but being id the nature of an exemption conditions which justify departure must be strictly shown to exist.
When a dispute is raised before a Court that a particular.
law which is inconsistent with the guarantee against discrimination is valid on the plea that it is permitted 596 under cl.
(4) of article 15, the mere assertion by the State that the officers of the State had taken into consideration the criteria which had been adopted by the courts for determining who the socially and educationally backward classes of the Society are, or that the authorities had acted in good faith in determining the socially and educationally backward classes of citizens, would not be sufficient to sustain the validity of the claim.
If a question arises whether a law which prima facie infringes a fundamental right is within an exception, the validity of that law has to he determined by the courts on materials placed before them.
By merely asserting that the law was made after full consideration of the relevant evidence and criteria which have a bearing thereon, and was within the exception, the jurisdiction of the courts to determine whether by makinig the law a fundamental right has been infringed is not excluded.
[603 C G].
Case law referred to.
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2382.txt
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Appeal No. 2394 of 1966.
Appeal by special leave from the judgment and decree dated June 26, 1964 of the Calcutta High Court in Appeal from Appellate Decree No. 1011 of 1962.
section V. Gupte and D. N. Mukherjee, for the appellants. 667 Bishan Narain and P. K. Ghosh, for respondents Nos. 1, 2(c), 2 (d), 2 (f ) and 2 (g).
The Judgment of the Court was delivered by Mitter, J.
The main question in this appeal is, whether the defendants appellants perfected their title to the property in respect of which partition was claimed by the plaintiffs by adverse, possession for the prescriptive period of twelve years or more.
The relevant facts are as follows.
The parties are all descendants of one Durgadas Mukherjee who died many years back, leaving six sons and inter alia the property which is the subject matter of this litigation, recorded as Dag No. 444 Khatian No. 72 in Mauja Barasat, District 24 Parganas during the last Cadastral survey.
Of the two plaintiffs the first Saradindu is a great grandson of the said Durgadas Mukherjee of the branch of the youngest son, his co plaintiff being a grandson in another branch.
The defendants belong to other branches of the said family.
The first plaintiff based his title on several conveyances from other members of the family as also purchase at an execution sale of a fractional interest of the members of the branch of Bama Charan, the second son of Durgadas.
The second plaintiff claims by inheritance.
The property consists of 34 acres together with two structures thereon which are quite separate from each other.
One portion of the structures i.e. that to the east, popularly known as Bamacharan Babu 's ' Bati is a fairly commodious building with a separate municipal number.
The other structure in the western portion known as Baitakhana Bati was and is admittedly the joint property of the descendants of Durgadas with a municipal number of its own.
The plaintiffs claim that the land and the two buildings are joint property while the whom are appellants before this the said eastern building with the case of the appellants was that the contesting defendants, some of Court, claim exclusive title to land on which it stands.
The eastern structure was constructed, by Bama Charan with his own money and that.
the co sharers of Bama Charan, by ekramamas, gave up their interest in the land on which the same stood.
The High Court agreeing with the finding of the first appellate court found that there was no, evidence on record to show that Bama Charan had put up the said building with his own money or that he was the exclusive owner of the said two storeyed building or that the other co sharers gave up their ownership of the subjacent soil and rejected the exclusive title sought to be set up with regard thereto.
This is a conclusion of fact which does not require further scrutiny.
The High Court also agreed with the lower appellate court in rejecting the story of permissive possession of the defendants over the said building set up by the plaintiffs and came to the conclu 13 918 Sup.
C.I./71 668 sion that "at all material times the heirs in the line of Bama Charan including the appellants were in separate possession of the eastern two storeyed building.
" The point for consideration before the High Court was and before us is, whether by such exclusive possession the heirs in the line of Bama Charan including the appellants acquired title by adverse possession to the eastern portion i.e. Bama charan Babu 's Bati.
With regard to the Baitakhana Bati there is no dispute about its jointness.
No question can be raised about the 'first plaintiff 's having become a co sharer with the heirs in the line of Bama Charan.in the year 1941 by private treaties and the auction purchase of the shares of three of his sons in execution of an award under a Co operative Societies Act.
By the kobalas the first plaintiff acquired fractional interest in the shares of some of the descendants of Bama Charan as also of the descend ants of his brother Shyama Charan.
In the sale certificate following the ;auction purchase there is a reference to "Dalan 3 Privy 2" but there is no express reference to these in the koabalas (exhibit 6 series).
In the courts below the defendants appellants contended that the eastern two storeyed building was neither intended to be nor was conveyed under Ex.6 series kobalas and exhibit 9 a), the sale certificate.
Both the trial court and the first a ale court :held that the kobalas and sale certificate were sufficiently comprehensive so as to include all or any structures which stood on the aforesaid plot of land at the material time and that there was, nothing express or implied in the kobalas to show that the two storeyed building on the eastern side was intended to be excluded from their operation.
The High Court also found that so far as the sale certificate was concerned the first plaintiff had acquired the interest of three sons of Baba Charan.
The point as to adverse possession canvassed by the appel lants arises in the following manner.
Their contention is that although the sale certificate was obtained in 1941 inasmuch as the suit for partition was filed in 1955 the requisite period of 12 years under article 144 of the Limitation Act of 1908 had elapsed in the meanwhile resulting in the perfection of their title by exclusive separate possession of the property.
To this the plaintiffs ' rejoinder was that the two storeyed building in the eastern wing had indisputably been in the occupation of the military authorities by requisition under the Defence of India Act and the Rules, 1939 for four years from 1942 to 1946.
It was argued that there was thus a break in the claim to the prescriptive title set up and adverse possession, if any, was limited to the period between 1946 and 1955.
This was sought to be repelled by the plea that the military authorities had taken possession of the property from the defendants and had restored possession W them in 1946 and 669 that their possession was really under or on behalf of the defendants without causing a break in the continuity of their possession.
An attempt was made to substantiate this by reference to several documents which form part of the record.
The order of requisition dated May 28, 1942 made under rule 75 A of the Defence of India Rules issued by the Collector of the District of 24 Parganas ' shows that the building together with fixtures, fittings etc.
was to be placed at the disposal and under the control of Brigadier Commander 36 Indian Infantry Brigade, Barrackpore on and from 8 2 1942 until six months after the termination of the war unless relinquished earlier.
A copy of the notice was served on Prakash Chandra Mukherjee of Barasat described as "the owner/occupier" of the said property. ' The notice of an award under section 19 of the Defence of India Act 1939 addressed to Prokash Chandra Mukherjee, another descendant of Bama Charan shows that compensation had been adjudged and awarded in respect of the property at Rs. 125.
A third notice dated June 24, 1946 sent out from the office of the Land Acquisition Collector addressed to Pankaj Kumar Mukherjee and others shows that possession of Cadastral survey plot No. 444 Mouza Barasat requisitioned under rule 75 A would be restored to, the addressee on July 2, 1946.
exhibit D, a memo forwarding a cheque for Rs. 2,100 was addressed to Prokash Chandra Mukherjee.
and others by way of rent for terminal compensation in respect of the premises which had been requisitioned.
In our view possession by Government or the military autho rities of immovable property under rule 75 A of the Defence of India Rules 1939 cannot be said to be in the character of an agent or by virtue of any implied permission from the true owner or occupier.
section 2 of the Act of 1939 under which rules were made and in particular cl.
(xxiv) of sub section
(2) of that section empowered the authorities mentioned to make orders providing for the requisitioning of any property, movable or immovable, including the taking possession thereof 'and the issue of any orders in respect thereof.
section 19 (1) of the Act only enjoined upon the Government to pay compensation in every case of such requisition and under section 19 B(1) Government was under an obligation, whenever any property requisitioned under any rule was to be released therefrom, to make such enquiry, if any, as was considered necessary and specify by order in writing the person to whom possession was to be given.
Sub section
(2) of this section clearly shows that delivery of possession of the property to the person specified in an order under sub section
(1) was to operate as full discharge to the Government from all liabilities in respect of the property, but was not to prejudice any rights in respect thereof which any other person might be entitled by due process of law to enforce against the person to whom possession of the pro 670 perty was given.
Rule 75 A enabled the Central Government of the Provincial Government to requisition any property, movable.
or immovable, subject to certain exceptions mentioned therein.
The net result of the Act and the Rules and the effect of orders of requisition and relinquishment of possession and or payment ' of Compensation must be taken to be that possession was taken by virtue of the powers under the Act and the rules irrespective of any consideration as to the rights of the true, owner or the occupier who could only make a claim to compensation.
It is further clear that even if possession was taken from A but was made over to B after relinquishment, A could have no cause of action against Government if relinquishment was in terms of cl.
(2) of section 19 B(1).
In other words possession of Government was neither by permission nor in the character of, an agent.
If possession under the requisition had been taken from a trespasser but had been restored to the lawful owner after the end of the period of requisition, the trespasser could not contend that he was wrongfully deprived of possession or that the, period of Government 's occupation should be added to the period of his preceding trespass to enable him to claim a prescriptive right by adverse possession.
The High Court relied on the decision of the Judicial Com mittee of the Privy Council in Karan Singh vs Bakar Ali Khan(1) in coming to the conclusion that such requisition put an end to the claim for adverse possession, if any, which might have started from an anterior date.
The Judicial Committee held that possession of the defendants since 1863 when the Collector had relinquished possession was not, 12 years ' possession but it was contended on behalf of the defendant that he was justified in tacking to his possession the possession of the Collector from 1861.
The Board found that pending a dispute between the parties the Collector, in order to secure the Government revenue had attached and taken possession of the property and retained possession of it from 1861 until October 1863 when in consequence of the decree of the civil court he delivered possession to the defendant and paid over to him the surplus profits of the estate after deducting the Government revenue and expenses.
As the suit was brought in the year 1874 the period of 12 years had to commence some time in 1862.
The Board observed that it must be assumed that "the Collector properly took possession for the purpose of protecting the Government revenue.
It was the duty of the Collector whi1st in possession under the attachment, to collect the rents from the ryots, and having paid the Government revenue and the expenses of collection to pay over the surplus to the real owner.
If the defendant was the real owner the surplus belonged (1) 9 I.A. 99. 671 to him; but if, on the other hand, the infants were the right owners, then the surplus belonged to them.
The Collector, by paying over the money to Karan Singh, did not give Karan Singh a title.
" Accordingly it was held that the suit was not barred by limitation.
Mr. Gupte on behalf of the appellants relied on Halsbury 's Laws of England (Third Edition, Vol.
24) article 484 at P.253 in support of his contention that the exclusive possession of s client was not disturbed by the requisition.
The article relied on reads "The mere fact that land is taken under the Lands Clauses Consolidation Act, 1845, for the purposes of a public undertaking, and is not superfluous land, does not prevent a person, who has exclusive possession of such land for the statutory period, from acquiring title under the statute;" The decision relied on by Mr. Gupte is that of Bobett vs The South Eastern Railway Co. (1).
In our view neither the above passage nor this judgment helps the appellants in any way.
One of the points raised in Bobett 's case was, whether the plaintiff in an action of trespass and to recover possession of land could be allowed to set up a plea that inasmuch as he had been let into possession by the defendants or that he had been in possession to the exclusion of the defendants without any tenancy at all during the time required by the Statute of Limitation for the acquisition of a prescriptive title, he was absolutely entitled to the land when ousted by the defendants.
It was argued on behalf of the defendants that even if the plaintiff was a tenant at will for the requisite period and in exclusive possession of the land the Statute of Limitation did not apply to the case, for the land in question was inalienable by the company under section 127 of the Lands Clauses Act and therefore could, by the mere aches of its officers have vested in the plaintiff contrary to the intention of the Legislature which only allowed the company to take possession of the land for the purposes of the undertaking and subject to the provisions of its Acts and not give it up to others.
There on a consideration of section 7 of 3 and 4 wm. 4, c. 27 and other statutory provisions Denman, J. arrived at the conclusion: ". .that the mere fact that the property in question was land taken for the purposes of the undertaking and not superfluous land, would not prevent the plaintiff if he had exclusive possession since 1863, either as a (1) 672 wrongdoer or as tenant at will in the first instance from being entitled to the land by virtue of the Statute of Limitations.
" Put simply the dictum only meant that the Statute of Limitation would be applicable to possession of a trespasser notwithstanding the provisions of the Lands Clauses Act, 1845.
The question before us is altogether of a different character.
If the defendants appellants could have established that an order under r. 75 A of the Defence of India Rules merely enabled the military authorities to take possession of the land for the period of their need by their permission or in the character of agents, they would have probably been on firm ground.
But, as already observed by us, the nature of the order of requisition under r. 75 A is altogether different and such possession cannot enure for the benefit of the person who was in possession before for the purpose of acquisition of a prescriptive, title.
The only other decision to which our attention was drawn is that of Dagdu vs Kalu(1).
In this case it was found that the plaintiff had been admittedly out of possession of the lands since 1881 and the defendant had been in adverse possession of them from that time until the date of suit October 2, 1895, with the exception of a period of three years during which period he had been dispossessed by one Barsu who wrongly alleged that he was a donee of the plaintiffs.
On that allegation the donee obtained possession of the land under the decree of the court of first instance but it was reversed by the High Court and the land was as a reversal restored by the court to the defendant on 9th April 1895.
It was observed by the High Court that (p. 736) : "The erroneous action of the Court of first instance cannot, we think, prejudice the defendant, or put him in a worse position that he would have occupied, had the erroneous decree not been made.
" This decision too, in our opinion, does not help the appellants.
The possession of the defendants was disturbed by a wrong order of the court which was ultimately put right and the court no doubt acted on the maxim that a litigant is not to be prejudiced by any wrong order of the court.
A faint attempt was made to re agitate the question that the auction sale of 1941 did not include the eastern portion.
This in our opinion is concluded by the finding of the High Court already noted.
(1) 22 Bombay 733.
673 The last, point put forward was that the plaintiffs had not asked for possession in their plaint.
This can be rejected summarily.
The prayers in the plaint not only include one, for preliminary decree for partition but for the appointment of a commissioner for effecting partition of the property by separating the shares of the plaintiffs from those of the defendants in the suit property.
Clearly the plaintiffs were asking for demarcation of ' the portion of the property which should be theirs as a result of the partition.
Imbedded in this prayer is a claim for possession.
In the result the appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
|
The plaintiff became a co sharer with the defendant in the suit property in the year 1941 as a result of some conveyances by members of the defendants ' family.
The property was in the occupation of military authorities by requisition under the Defence of India Act, 1939, and the Rules made thereunder, for four years from 1942 to 1946.
The defendants were in exclusive possession thereafter from 1946 to 1955 when the plaintiff filed a suit for partition and possession of his share.
On the question whether the suit was barred by limitation under article 144 of Limitation Act, 1908, on the plea that as the military authorities had taken possession of the property from the defendants and had restored the possession to them in 1946 the possession of the said authorities was really under or on behalf of the defendants without causing any break in the continuity of their possession, HELD : The possession of the Government was neither by permission of the defendants nor in the character of an agent of the defendants.
The orders of requisition, relinquishment of possession and payment, of compensation under the Defence of India Act read with Act and the Rules how that the possession was taken by Virtue of the powers under the Act and the Rules irrespective of any consideration as to the rights of the true owner or the occupier who could make a claim to compensation.
Therefore, possession of Government by requisition under rule 75 A can not enure for the benefit of the person who was in possession before, for the purpose of enabling such person to acquire a prescriptive title.
[669 E F; 670 B D] Karan Singh vs Bakar Ali Khan, 9 I.A. 99, applied.
Bobett vs South Eastern Railway Co. and Dagdu vs Kalu, 22 Bombay 733, explained.
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2926.txt
|
l Appeals Nos.
15 to 19 of 1962.
Appeal from the Judgment and order dated October 10, 1958, of the Bombay High Court in Income tax Reference No. 22 of 1 958.
H. N. Sanyal,, Additional Solicitor General of India, N. D. Karkhanis and R. N. Sachthey, for the appellant.
701 A. V. Viswanatha Sastri, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents.
October, 23.
The judgment of the Court was delivered by KAPUR, J.
These a peals pursuant to a certificate of the High Court of Bombay raise the question of interpretation of section 24B of the Income tax Act in an Income tax Reference.
The question referred was answered in the negative and against the Commissioner of Income tax who is the appellant in these appeals, the respondents being the heirs and legal representatives of one Amarchand N. Shroff deceased.
The appeals relate to the assessment years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55.
Shortly stated the facts of the case are these Amarchand N. Shroff, Mangaldas and Hiralal were partners in a firm of solicitors.
Amarchand died on July 7, 1949.
Thereafter the partnership was carried on by Mangaldas and Hiralal up to November 30, 1949, and on December 1, 1949, Ramesh son of Amarchand who had by then qualified as a solicitor joined the firm as the third partner.
After the death of Amarchand the arrangement between the various partners in regard to the realisations of the old outstandings was that in respect of the work done up to the death of Amarchand the realisations were to be divided amongst Amarchand, Mangaldas and Hiralal, in respect of the work between July 8, 1949, and November 30, 1919, the realisations were to be divided between Mangaldas and Hiralal 'and in respect of work done after December 1, 1949, the realisations were to be divided amongst Mangaldas, Hiralal and Ramesh.
The firm kept its accounts on cash basis.
For the five assessment years 1950 51 to 1954 55 the following amounts were received : Rs. 37,847/ , As.
43,162/ , Rs. 34,899/ , Rs. 13,402/ and 702 Rs. 32,523/ by the heirs and legal representatives of Amarchand out of the outstandings.
The Income tax Officer sought to tax these realisations.
For the assessment years 1950 51 and 1951 52 he assessed the amounts in the hands of the heirs and legal representatives of Amarchand as a Hindu undivided family.
Against that order an appeal was taken to the Appellate Assistant Commissioner and then to the Appellate Tribunal.
The two members of the Tribunal agreed in holding, though for different reasons, that the amounts were not the income of the Hindu undivided family but merely represented inheritance or realisations of the assets of Amarchand.
The matter was not pursued further by the Revenue but sometime later proceedings were started by the Income tax Officer under section 34 in respect of the same income in the hands of "Amarchand N. Shroff by his heirs and legal representatives".
The status of that entity was taken to be that of an individual and not Hindu undivided family.
The various amounts were assessed to income tax in the hands of the respondents under section 34(1) (b) read with section 24B of the Income tax Act.
The assessments so made were for the assessment years 1950 51, 1951 52, 1952 53, 1953 54 and 1954 55: On appeal the Appellate Assistant Commissioner held that.
the notice under section 34 could validly be served only for the assessment years 1950 51 and notices for the subsequent years were invalid.
The assessments for 1951 52 to 1954 55 were therefore quashed.
The Commissioner of Income tax took an appeal to the Appellate Tribunal and the Tribunal held that assessment could not be made on Amarchand and that section 24B had no application to the income received after the death of Amarchand and that it was capital receipt and not revenue receipt.
The order of the Appellate Assistant Commissioner was therefore upheld, On the application of the Commissioner of 703 Income tax the following question of law was referred to the High Court : "Whether on the facts and in the circumstances of the case, the sums of Rs. 37,847/ , Rs. 43,162/ , Rs. 34,899/ , Rs. 13,402,/ and Rs. 32,523/ were assessable to income tax in the hands of the assessee "Amarchand N. Shroff by his legal heirs and representatives" in the five respective years under reference ?".
The High Court answered the question in the negative.
It held that apart from section 24E of the Income tax Act the amounts were not taxable and that the section had no application to the case.
It was argued by counsel for the Commissioner of Income tax that on a correct interpretation of section 24B the amounts which were received by the heirs and legal representatives of Amarchand after his death should be deemed by the fiction incorporated in sub section
(1) to be income received by Amarchand and liable to tax under section 24B (1) of the Income tax Act.
In other words the respondents as heirs and legal representatives of the deceased Amarchand were liable to pay out of the estate of the deceased Amarchand on those amounts to the extent of the estate as the estate was liable for tax on the amounts received by the heirs and legal representatives just as the deceased Amarchand would have been had he not died.
The emphasis was on words in section 24B (1) "or any tax which would have been payable by him under this Act if he had not died".
Section 24B is as follows : section 24B 11,Tax of deceased person payable by represen tative (1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to Which the estate 704 is capable of meeting the charge the tax assessed as payable by such person or any tax which would have been payable by him under this Act if he had not died.
(2) Where a person dies before the publication of the notice referred to in sub section (1) of section 22 or before he is served with a notice under sub section (2) of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under sub section (2) of section 22 or under section 34, as the case may be, comply therewith and the Income tax Officer may proceed to assess the total income of the deceased person as if such executor, ad ministrator or other legal representative were the assessee.
(3) Where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22, or having furnished a return which the Income tax Officer has reason to believe to be incorrect or incomplete, the Income tax Officer may make an assessment of the total income of such person and determine the tax payable by him on the basis of such assessment, and for this purpose may by the issue of the,, appropriate notice which would have had to be served upon the deceased person had he survived require any accounts, documents or other evidence which he might under the provisions of sections 22 and 23 have required from the deceased person.
" Sub section (1) provides that where a person dies his heirs and legal representatives are liable to pay out 705 of the estate of the deceased the tax assessed as payable by the deceased or any tax which would have been payable under the Act by the deceased if he had not died.
According to the 'submission of counsel for the Commissioner of Income tax the words of sub section
(1) "or any tax which would have been payable by him under this Act if he had not died" mean that irrespective of the date of ' receipt of income receivable by a person, if the income is received by his heirs and legal representatives after his death, they are liable for payment of the tax just as the deceased would have been liable when the income was received had he been living.
But this interpretation is not in accord with the language used in s.24B. All the sub sections have to be read together.
Sub section (1) can be divided into two parts; (1) where the income of the deceased was assessed before his death and (2) where the income was not so assessed but it would have been liable to tax had he not died.
The second part or the words above quoted when read with sub sections (2) and (3) show that they are confined to cases therein mentioned.
They show that those words also have to be restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives but in the previous" year and which had not been assessed but would have been assessed as income received by him if death had not taken place.
See Allen vs Trehearne(1) where the words "if he had not died" were interpreted.
Sub section (2) provides that if a person dies before the publication of the public notice under s.22 (1) or before a notice is served on him under sub sections 2 of section 22 or section 34 then the Income tax Officer may proceed to compute or assess the total income of the deceased person as if the heirs and legal representatives were the assessees Sub section (3) provides that when a person dies before a return is furnished by him under the provisions of section 22 or dies after having furnished the return which the (1) (1938) 22 Tax.
15, 706 Income tax Officer finds incorrect or incomplete then the Income tax Officer can make assessment on the total income of the deceased person and certain other consequences follow but in all the cases enumerated above the language used in sub sections 1, 2 and 3 of s.24B contemplates that the heirs and legal representatives of a deceased person are liable to pay income tax out of his estate (1) where assessment had already been made and (2) where he dies before the assessment but the income was received before his death or by his heirs and legal representatives after his death which occurs during the previous year.
If he dies before the publication of the notice under S.22(1) or before the service under s.22(2) or after the service but before he has furnished a return or filed an incorrect or incomplete return then the Income tax Officer should make an assessment of the total income of such deceased person and determine the tax payable thereupon.
Section 24B does not authorise levy of tax on receipts by the legal representatives of a deceased person in the years of assessment succeeding the year of account being the previous year in which such person died.
Income tax is exigible in reference to a person 's total income of the previous year.
The question before us is whether the income which was received subsequent to the previous year in which Amarchand died is liable to be assessed to income tax under section 24B as his income in the hands of his heirs and legal representatives.
In the present case the accounts were kept on cash basis.
The assessee under the Act has ordinarily to be a living person and cannot be a dead person because his legal personality ceases on his death.
By section 24B the Legal personality of a deceased assessee is extended for the duration of the entire previous year in the course of which he died and therefore the income received by him before his death and that received by his heirs and legal representatives after his death but in that previous 707 year becomes assessable to income tax in the relevant assessment year.
The section was enacted by the Legislature to bring to tax, after his death, income received during his lifetime, and fill up the lacuna which was pointed out by the High Court in Ellis C. Reid vs Commissioner of Income tax, Bombay(1).
Any income received in the year subsequent to the previous or the account year cannot be called income received by the person deceased.
The provisions of section 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies.
In support of his contention counsel for the Commissioner of Income tax relied upon the scheme of the Act as given in Additional Income tax Officer vs E. Alfred(2).
There is nothing said in that case which supports the contention raised by the Commissioner of Income tax.
Reliance was next placed on certain observations in a judgment of the Bombay High Court in re.
B. M. Kamdar(3).
Those observations also are of no assistance to the Commissioner of Income tax, Kania, J., as he then was) there observed that the question whether a particular amount was income or not had nothing to do with the time of its receipt and the question of receipt was material.
only for the purpose of determining whether on that amount tax was to be levied under the Act in the year of assessment.
That was a case where a consulting engineer discontinued his practice as such from February 15, 1938, and he received a sum of money representing the outstanding 'professional fees earned by him prior to the discontinuance of his practice but realised by him during the Calendar year which was the previous year.
The assessee was keeping is accounts on cash basis and he contended that as he had discontinued his profession in the previous year the source had come to an nd and the amounts received by him were not liable to income tax.
It was held that the income was assessable.
The assessee in that case was still alive when the income (1) (2) , 445. (3) [1946] 14 l.
T.R. 10.
708 was received by him and section 24B had no application to the facts of the case.
Counsel also relied on the observations of Derbyshire, C.J., in re Sreemati Usharani Shoudhurani(1).
In that case the managing agent of a limited company died on May 12, 1938.
At the time of his death there was a credit with the company of a sum of money on account of commission earned by him and due to him prior to the date of his death.
This sum was paid after his death in the previous year 1938 39 and was sought to be taxed under section 24B of the Income tax Act.
It was held that this income was taxable.
Derbyshire, C.J., said at p. 205 that the assessee who was the widow had received the salary due to her husband; that the Income tax Officer was entitled to assess the total income of the deceased person as if the legal representatives were the assessees and the amount was liable to tax under section 24B (1), but in that case also the amount was received by the widow in the previous year and it was earned by the deceased during the previous year.
The correct position is that apart from s.24B no assessment can be made in respect of the income of a person after his death.
See Ellis C. Reid vs Commissioner of Income tax, Bombay(2).
In that case, and that was a case before section 24B was enacted, a person was served with a notice under section 22(2) of the Income tax Act but no return was made within the period specified and he died.
It was held that no assessment could be made under section 23(4) of the Act after his death.
At p.106 it was observed : "The is to be noticed that there is through the Act no reference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional It must have (1) (2) 709 been present to the mind of the legislature that whatever privileges the payment of income tax may confer, the privilege of immortality is not amongst them.
Every person liable to pay tax must necessary die and, in practically every case, before the last instalment has been collected, and the legislature has not chosen to make any provisions expressly dealing with assessment of, or recovering payment from the estate of a deceased person".
The individual assessee has ordinarily to be a living person and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the previous year and not a charge in respect of the income of the year of assessment as measured by the income of the previous year.
Wallace Brothers & Co. Ltd. v Commissioner of Income tax, Bombay City(2).
By section 24B the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction cannot be extended beyond the object for which it was enacted.
As was observed by this Court in Bengal Immunity Co. Ltd. vs The State of Bihar(2) legal fictions are only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond that legitimate: field.
In the present case the fiction is limited to the cases provided in the three subsections of section 24B and cannot be extended further than the liability for the income received in the previous year.
In the present case the amounts which are sought to be taxed and which have been held not to be liable to tax are those which were not received in the previous year and are therefore not liable to tax in the several years of assessment.
It cannot be said that they were income which may be deemed by fiction to have been received by the dead person and therefore they are not liable to be taxed as income (1) , 244.
(2) , 664.
710 of the deceased Amarchand and are not liable to be taxed in the hands of the heirs and legal representatives who cannot be deemed to be assessees for the purpose of assessment in regard to those years.
In our view the High Court rightly answered the question in the negative and against the Commissioner of Income tax.
The appeals therefore fail and are dismissed with costs.
Appeals dismissed.
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Sub section (1) of section 24B of the Indian Income tax Act, 1922, provided that where a person dies his heirs and legal representatives ate liable to pay out of the estate of the deceased the tax assessed as payable by the deceased or any tax which would have been payable under the Art by the deceased if he had not died.
A who, was one of the three partners in a firm of solicitors died.
on July 7,1949, and thereafter the partnership was carried on by the other two partners till December 1, 1949.
when R, son of A, joined the firm as the third partner.
After the death of A the arrangement between the various partners in regard to the ' realisations of the old out standings was that in respect of the work done up to the death of A the realisations were to be divided between A and the other two partners.
The firm 700 kept its accounts on cash basis For each of the five assessment years, 1950 1955, certain amounts were received by the heirs and legal representatives of A out of the out standings.
Proceedings were started by the Income tax Officer under section 34 of the Indian Income tax Act, 1922, in respect of the aforesaid.
income, and the various amounts were assessed to income tax in the hands of the respondents, the heirs and legal representatives of A, under section 34 (1) (b) read with section 24B of the Act, for the five respective assessment years, on the footing that the amounts which were received by the heirs and legal representatives of A after his death should be deemed by virtue of the words in sub section
(1) of section 24B to be income received by A and liable to tax under that sub section.
Held, that the words "or any tax which would have been payable by him under this Act if he had not died" under section 24B(1) of the Indian Income tax Act, 1922, are restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives in the "previous year" and which had not been assessed but would have been assessed as income received by him, if death had not taken place.
The provisions of section 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies.
Apart from section 24B no assessment can be made in respect of the income of a person after his death.
Held, that as the income was received after the expiry of the previous year in which A died it was not liable to be taxed as the income of A in the hands of his legal representatives in the several years of assessment.
Allen vs Trehearne, , Ellis C Reid vs Commissioner of Income tax Bombay, and Wallace Brother & Co. Ltd. vs Commissioner of Income tax, Bombay City, [1948] 16 , referred to.
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