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Appeal No. 1230 of 1966.
Appeal by special leave from the judgment and order dated August 27, 1962 of the Bombay High Court in Income tax Re ference No. 18 of 1961.
section T. Desai, M. N. Shroff for 1.
N. Shroff, for the appellant.
R. M. Hazarnavis, Gopal Singh, section P. Nayyar for R. N. Sachthey, for the respondent.
239 The Judgment of the Court was delivered by Ramaswami J.
This appeal is brought, by special leave, from the judgment of the High Court of Bombay dated August 27, 1962 in Income Tax Reference No. 18 of 1961.
The appellant is an individual having income from House Property, Government Securities, Cinema Exhibition and financing film producers and distributors.
During the period from March 3, 1952 to November 5, 1952 the appellant advanced a sum of Rs. 40,000/ to a firm of film distributors known as Tarachand Pictures.
The appellant thereafter entered into an agreement dated January 5, 1953 with Tarachand Pictures under which the appellant advanced a further sum of Rs. 60,000/ in respect of the distribution, exploitation and exhibition of a picture called "Shabab".
According to cl. 2 of the agreement the distributors were to pay a lumpsum of Rs. 1,750/ by way of interest on the initial advance of Rs. 40,000/ .
Clause 3 of the agreement read as follows : "No interest will run henceforth on this sum of Rs. 40,000/ as also on the advances to be made as provided hereinabove but in lieu of interest it is agreed that the Distributors will share with the Financier profit and loss of the Distribution, Exploitation and Exhibition of the picture SHABAB in the Bombay Circuit, two third going to the Financier and one third to the Distributors.
" Clauses 4 and 5 were to the following effect "4.
The Distributors shall on or before the 15th of every month submit to the Financier a Statement of Account of the business done during the previous month in respect of the picture 'SHABAB ' in the territories of Bombay Circuit.
The Distributors shall keep the proper accounts of the business of the picture 'SHABAB ' and the same as well as all documents, reports and contracts will be available to the Financier or his agent for inspection.
" Clause 7 read as follows: "In case the picture is not released in Bombay within 15 months from the date hereof the Distributors shall be bound to immediately return all the moneys so far advanced to the Distributors by the Financier.
In that event the Distributors shall be bound to return all the moneys together with interest thereon @ 9% per annum.
" Clause 8 stated: "In case of any breach being committed by the Dis 240 tributors of any of the terms herein provided this agreement shall at once terminate and the moneys paid by the Financier shall be at once repaid by the Distributors to the Financier with interest @ 9% per annum." It appears that the distributors were not in a position to exhibit the film in Bombay within the stipulated time.
When the film was ultimately released for exhibition it proved to be unsuccessful.
The matter was taken to the City Civil Court and ultimately a consent decree was obtained in Suit No. 2061 of 1954 in the Bombay City Civil Court.
In the end the appellant found that there was a balance of Rs. 80,759/ which was irrecoverable and he accordingly wrote it off as a bad debt on December 31, 1955 in the ledger account.
For the assessment year 1956 57, the corresponding previous year being the calendar year 1955, the appellant claimed a loss of Rs. 80,759/ which he had written off as bad debt, under section 10(2)(xi) of the Income tax Act.
By his assessment order dated July 31, 1957, the Income tax Officer disallowed the claim on the ground that the moneys advanced by the appellant under the agreement could not be regarded as a dealing in the course of his financing business, but the true nature of the transaction, as evidenced by the agreement, was a venture in the nature of a trade.
The Income tax Officer accordingly held that the loss was a capital loss and it could not be allowed as a bad debt under section 10(2)(xi) of the Income tax Act.
The appellant took the matter in appeal to the Appellate Assistant Commissioner of Income tax who dismissed the appeal.
The appellant preferred a second appeal before the Income tax Appellate Tribunal which by its order dated February 19, 1960 rejected the appeal, holding that the loss of Rs. 80,759/ was a capital loss and not a loss of stock in trade.
The Tribunal took the view that the transaction was not a joint venture with the distributors or any partnership business and that it was also not a mere financing deal or a part of the money lending activities of the appellant.
According to the Appellate Tribunal, the true nature of the transaction was an investment of the capital for a return in the shape of share of profits, and the loss suffered by the appellant was therefore a capital loss and not a revenue loss.
As required by the appellant, the Tribunal stated a case to the High Court under section 66(1) of the Income tax Act on the following question of law: "Whether the aforesaid loss of Rs. 80,759/ is deductible under any of the provisions of the Act ?" By its judgment dated August 27, 1962, the High Court answered the Reference in the negative and against the appellant.
On behalf of the respondent it was submitted that the High Court was right in taking the view that the appellant had advanced 241 a sum of Rs. 1,00,000/ not with a view to earn interest thereon but with a view to making an investment in the business of Tarachand Pictures and get a return on the said investment by way of a share of profits in the said business.
It was contended that the money was not lent for any definite term and no rate of .interest had been fixed under cl. 3.
The argument was also, stressed that cl. 3 of the agreement stipulated that the appellant was to share with the distributors not only the profit but also the loss of the business, and in the case of no money lending transaction is there a covenant between the parties that the money lender will share the loss of the business for which the money is lent.
In other words, it was argued that no money lending transaction can have the attribute of the money lender sharing the risk of the loss of the business for which the money is lent, nor could it be a feature of any purely financial deal.
We are unable to accept the argument of the respondent that the transaction between the parties under the agreement dated January 5, 1953 was not a money lending transaction or a transaction in the nature of a financial deal in the course of the appellant 's business.
If cl. 3 of the agreement is taken in isolation there may be some force in the contention of the respondent that the term under which the appellant undertook to share the loss took the transaction out of the category of a money lending transaction and the loss suffered by the appellant was therefore a capital loss.
In the present case, however, cl. 3 of the agreement dated January 5, 1953 cannot be read in isolation but it must be construed in the context of cl. 7 which provides that in case the picture was not released in Bombay within 5 months from the date of the agreement, the distributors will return all the moneys so far advanced to them by the appellant together with interest thereon at 9% per annum.
It is the admitted position in the present case that the picture was not released by ,the distributors till the stipulated date, namely, April 4, 1954 but it was released on May 28, 1954 and cl. 7 of the agreement there fore came into operation.
The result therefore is that on and from April 4, 1954 there was a contract of loan between the parties in terms of cl. 7 of the agreement and the principal amount became repayable from that date to the appellant with interest thereon at 9% per annum.
It follows therefore that the appellant is entitled to claim the amount of Rs. 80,759/ as a bad debt under section 10(2) (xi) of the Income tax Act and the loss suffered by the appellant was not a loss of capital bat a revenue loss.
To find out whether an expenditure is on the capital account or on revenue account, one must consider the expenditure in relation to the business.
Since all payments reduce capital in the ultimate analysis, one is apt to consider a loss as amounting to a loss of capital.
But it is not true of all losses, because losses in the running of the business cannot be said to be of capital.
The distinc 242 tion is brought out for example, in Reid 's Brewery Co. Ltd. vs Male(1).
In that case, the brewery company carried on, in addition to the business of a brewery, a business of bankers and moneylenders making loans and advances to their customers.
This helped the customers in pushing sales of the product of the brewery company.
Certain sums bad to be written off and the amount was held to be deductible.
In the course of his judgment Pollock B. said : "Of course, if it be capital invested, then it comes within the express provision of the Income tax Act, that no deduction is to be made on that account." but held that : business can doubt that this is not capital invested.
What it is is this.
It is capital used by the Appellants but used only in the sense that all money which is laid out by persons who are traders, whether it be in the purchase of goods be they traders alone, whether it be in the purchase of raw material be they manufacturers, or in the case of money lenders, be they pawnbrokers or money lenders, whether it be money lent in the course of their trade, it is used and it comes out of capital, but it is not an investment in the ordinary sense of the word.
" In the present case, the conditions for the grant of the allowance under section 10(2)(xi) of the Income tax Act are satisfied.
In the first place, the debt is in respect of the business which is carried on by the appellant in the relevant accounting year and accounts of the business are admittedly kept on mercantile basis.
In the second place, the debt is in respect of and incidental to the business ,of the appellant.
It has also been found that the debt had become irrecoverable in the relevant accounting year and the amount had been actually written off as irrecoverable in the books of the appellant.
For these reasons, we hold that the judgment of the Bombay High Court dated August 27, 1962 should be set aside and the question referred to the High Court must be answered in the affirmative and in favour of the appellant.
We accordingly allow this appeal with costs here and in the High Court.
V.P.S. Appeal allowed.
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The appellant, who was carrying on the business of financing film producers and distributors, had advanced a sum of Rs. 1,00,000 to a firm of film distributors.
Clause 3 of the agreement between the parties provided that the appellant was not entitled to any interest but that he was to share with the distributors their profit and loss; and cl. 7 provided that in case the picture was not released within the stipulated time, the distributors would return to the appellant all the moneys advanced by him together with interest at 9% per annum.
There was delay in releasing the picture and a dispute arose between the appellant and the distributors, which was settled.
The appellant found that a sum of Rs. 80,759 was irrecoverable.
He accordingly wrote it off as a bad debt and claimed it as a revenue loss which should be deducted under section 10(2)(xi) of the Income tax Act, 1922.
The department, the Appellate Tribunal, and the High Court on reference, held against the appellant, on the basis of cl. 3 of the agreement, that the loss suffered by the appellant was a capital loss.
In appeal to this Court, HELD : Since all payments reduce capital one is apt to consider a loss as a capital loss.
But losses in the running of a business cannot be said to be of capital.
To find out whether an expenditure is on the capital account or on revenue account, one must consider the expenditure in relation to the business.
In the present case, the debt was in respect of and incidental to the business of the appellant in the relevant accounting year, and the accounts of his business were kept on mercantile basis.
If cls.
3 and 7 of the agreement are read together, the transaction would be a money lending transaction or a transaction in the nature of a financial deal in the course of the appellant 's business, resulting in a loan repayable with interest.
Therefore, the loss suffered was a revenue loss and the appellant was entitled to claim the deduction of the amount as a bad debt under section 10(2) (xi) of the Act.
[241H; 242E F] Reid 's Brewery Co. Ltd. vs Male, , applied.
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ivil Appeal No. 1483 of 1958.
Appeal by special leave from the judgment and order dated May 21, 1968 of the Allahabad High Court, Lucknow Bench in Civil Misc.
Applications Nos. 41 (E) and 42(E) of 1968 in Election Petition No. 7 of 1967.
C.B. Agarwala, V.P. Joshi and S.S. Khanduia, for the appellant.
G.N. Dikshit, R.N. Dikshit and O.P. Saini, for respondents Nos. 1 and 9.
The Judgment of the Court was delivered by Hegde, J.
This appeal by special leave is directed against the order made by Sahgal, J. on May 21, 1968, permitting the 1st respondent, an elector challenging the validity of the election of the appellant to Lok Sabh 'a from 15, Shahabad Parliamentary Constituency in the general election held in 1967, to inspect the packets of ballot papers containing the accepted as well as the rejected votes of the candidates.
In the election in question as many as 10 persons contested.
The appellant, the Jan Sangh nominee was the successful candidate.
The 9th respondent, Shri Nevatia Rameshwar Prasad, the Congress nominee was his nearest rival.
In the election petition, the petitioner not only wants the appellant 's election to.
be held void, he also wants that the 9th respondent should,, be declared elected.
The election of the appellant has been challenged on various grounds, with most of which we are not at present concerned.
We are only concerned with the allegations relating to the irregularity in the scrutinising and counting of votes.
The 854 averments relating thereto are, found in paragraphs 13 and 14 of the election petition.
They are as follows: (1) only one counting agent was permitted at each table whereas three persons were doing the counting work simultaneously and it was impossible for one man to look into and detect the wrong acts of three persons at the same time.
Under this head it was further mentioned that the counting staff was from amongst the government servants who had gone on two months strike before the election and during the elections they had adopted hostile attitude towards the congress candidates and had made efforts to bring about their defeat; (2) the bundles of votes of either candidates were neither properly made nor properly scrutinised; (3) about 5,000 votes of the congress candidates were improperly rejected ignoring the protests of Mr. Malhotra, the election agent of the congress nominee; (4) invalid votes were counted in favour of the returned candidate.
The votes of the congress candidates were counted for the returned candidate.
In Sch 'E ' certain figures showing the alleged improperly rejected as well as accepted votes pertaining to.
certain booths are mentioned.
It also shows the number of votes of the congress nominee counted as the votes of the returned candidate.
Neither the petition nor the Schedule discloses the basis for arriving at those figures.
The election petitioner is neither the candidate nor his election agent.
In the election petition, it was not stated that he was even the counting agent.
In the verification appended to the election petition, it was averred that the allegations contained in paragraphs 12 to 15 of the election petition were believed by the petitioner to be true on the basis of the information received from the workers of the congress nominee and others which means that the allegations made by him in_paragraphs 13 and 14 of the election petition were based on hearsay information.
He does not and he could not vouchsafe their accuracy though he claims to have believed the information given to him to be correct.
Similarly in the verification appended to Sch. 'E ', the election petitioner stated that he has given the information contained in that Schedule on the basis of the information received from the counting agents of the congress nominee.
Neither in the election petition nor in the Schedule he mentioned that the counting agents had given him the information in question on the basis of any record made by them.
855 In the affidavit filed by the petitioner in support of his application seeking permission to inspect the ballot papers, he went one step further.
Therein he averred that on one of the days when the counting was going on, he acted as one of the counting agents for the congress nominee.
Hence he claims to have personal knowledge of the rejection of some valid votes 'and the acceptance of some invalid votes.
No affidavit of either the congress nominee or his election agent or any of the persons who could have had personal knowledge of the matter was filed in support of that application.
No. oral evidence has been taken in the case till now.
The returned candidate has denied the allegations referred to earlier.
It is true that some of the defeated candidates in their written statements have lent support to the ,allegations made by the election petitioner.
The reason for the same is obvious.
But even they have not filed any affidavit in support of the concerned allegations.
Solely on the basis of the averments made in the election petition and the facts sworn to in the affidavit filed by the election petitioner in support of his application seeking scrutiny of the ballot papers, the trial court had issued the impugned direction.
Before proceeding to.
consider the material in support of the impugned order, it is necessary to mention that it is not the case of the election petitioner that any written objection had been filed during the counting either to the acceptance or to the rejection of any vote.
In the petition, it is averred that "the Returning Officer on being pointed out by the election 'agent of respondent No. 9, Shri P.C. Malhotra, said his decision was final and can be questioned through Election Petition".
Evidently this averment relates to the objections said to have been taken by Shri Malhotra in respect of the orders made by the returning officer as to the validity.
of some of the votes.
Apart from the fact that the allegation in question.
is very vague and lacking in details, not even an affidavit of Shri Malhotra has been filed in support of that allegation.
Admittedly no application was made to the returning officer for recounting the votes.
We have to examine the facts of this case bearing in mind these circumstances.
The importance of maintaining the secrecy of ballot papers and the circumstances under which that secrecy can be violated has been considered by this Court in several cases.
In particular we may refer to the decisions of this Court in Ram Sewak Yadav vs Hussain Kamil Kidwai and ors.
(1) and Dr. Jagjit Singh vs Giani Kartar Singh(2).
These and other decisions of this Court 'and of the High Courts have laid down certain basic requirements to be satisfied before an election tribunal can permit the inspection of ballot papers.
They are: (1) that the petition for setting aside the election must contain an adequate statement of the material facts on which the peti (1) (2) A.I.R. 1966 S.C. 773.
856 tioner relies in support of h/s case and (2) the tribunal must be prima facie satisfied that k1 order to decide the dispute and to do complete justice between the parties, inspection of the ballot papers is necessary.
The trial court was of the opinion that if an election petitioner in his election petition gives some figures 'as to the rejection of valid votes and acceptance of invalid votes, the same must be considered as an adequate statement of material facts.
In the instant case apart from giving certain figures whether true or imaginary, the petitioner has not disclosed in the petition the basis on which he arrived at those figures.
His bald assertion that he got those figures from the counting agents of the congress nominee cannot afford the necessary basis.
He did not say in the petition who those workers were and what is the basis of their information ? It is not his case that they maintained any notes or that he examined their notes, if there were any.
The material facts required to be stated are those facts which can be considered 'as materials supporting the allegations made.
In other words they must be such facts as to afford a basis for the allegations made in the petition.
The facts stated in paragraphs 13 and 14 of the election petition and in Schedule 'E ' are mere allegations and are not material facts supporting those allegations.
This Court in insisting that the election petitioner should state in the petition the material facts was referring to a point of substance and not of mere form.
Unfortunately the trial court has mistaken the form for the substance.
The material facts disclosed by the petitioner must afford an adequate basis for the allegations made.
The learned trial judge while deciding the point in issue overlooked certain important circumstances.
The election petition is silent as regards certain important aspects.
This omission has bearing on the point to be decided.
The allegation that the returning officer did not permit the appellant more than one counting 'agent for each counting table is an extremely vague allegation.
It is not the election petitioner 's case that the congress nominee had appointed more than one counting agent for any counting table but the returning officer did not accept their appointment.
Under section 47 of the Representation of People Act, 1951, a contesting candidate or his election agent may appoint in the prescribe manner one or more persons but not exceeding such number as may be prescribed by the rules, to be present as his counting agent or agents at the counting of votes and when any such 'appointment is made notice of the appointment shall be given in the prescribed manner to the returning officer.
Rules framed under that Act prescribe the number of counting agents that a candidate may appoint.
The form of the notice required to be given trader section 47 of the Act is given in the rules.
The appointment of the counting agents 857 is to be made in the prescribed forms in duplicate, one copy of which is to be forwarded to the returning officer while the other copy should be made over to.
the counting agent.
Rules also provide that no counting agent shall be admitted into the place fixed for counting unless he has delivered to the returning officer the second copy of the instrument of his appointment after duly completing and signing the declaration contained therein.
The petitioner did not state in the election petition that any of the counting agents appointed by the congress candidate or his election agent in accordance with the rules had been refused admission to the place of counting.
Hence the allegation that the returning officer did not permit enough number of counting agents to be appointed is not supported by any statement of facts necessary to be stated.
In other words the material facts relating to the allegations made have not been stated.
Now coming to the rejection of the votes polled in favour of the congress nominee, under the rules before a vote is rejected the agents of the candidates must be permitted to examine the concerned ballot paper.
Therefore it was quite easy for them to note down the serial number of the concerned ballot papers.
The election petition is silent as to the inspection of the ballot 'papers or whether the counting agents had noted down the serial numbers of those ballot papers or whether those agents raised any objection relating to the validity of those ballot papers; if so who those agents are and what are the serial numbers of the ballot papers to which each one of them advanced their objections.
These again are the material facts required to be stated.
As seen earlier the allegations made in the election petition are purported to have been rounded on the information given by others.
No one takes direct responsibility for those allegations.
No oral evidence was given in support of them, not even affidavits were filed in support of the allegations.
The scrutiny of ballot papers was sought on the basis of assertions which were neither accompanied by a statement of material facts nor supported by any evidence.
The trial court correctly came to the conclusion that before an order of inspection of the ballot papers can be made it must be prima facie satisfied that in order to decide the dispute and to do complete justice between the parties, inspection of the ballot papers is necessary.
It did say that it was so satisfied but it gave no reasons whatsoever as to how it came to be satisfied.
A judge can be satisfied only on the basis of proof and not on the basis of mere allegations.
There is absolutely no proof in this case to.
support the allegations on the basis of which the scrutiny of the ballot papers was prayed for.
The trial court did not mention in its order even a single reason in support of its satisfaction as to the need for 858 inspecting the ballot papers.
Every judicial order must be based on reasons and those reasons must be disclosed in the older itself.
Unfortunately the learned trial judge had overlooked the importance to be attached to the secrecy of the ballot papers.
We have earlier referred to the principles enunciated by this Court to be followed before ordering the scrutiny of ballot papers.
The legal position in England is the same as in this country.
In fact our election, law is patterned on the basis of the English Election Law.
In Halsbury 's Laws of England (Vol. 14 at page 310, paragraph 559), it is observed: "The usual practice is for an application for a recount to.
be made by summons to.
a judge on the rota for the trial of parliamentary election petitions before the trial on an affidavit showing the grounds on which the application is based.
A recount is not granted as of right, but on evidence of good grounds for believing that there has been a mistake on the part of the returning officer.
" In Rogers on Elections (Vol. II at p. 199) it is observed that an application for recount should be made by summons supported by affidavits showing grounds.
Fraser in his Law of Parliamentary Elections and Election Petitions observes at p. 222: "A strong case must be made on affidavit before an order can be obtained for inspection of ballot papers or counter foils".
Even before the Representation of the People Act, 1951 was enacted the law in this country relating to.
inspection of ballot papers was as stated earlier.
The election tribunals in this country have refused to permit the scrutiny of ballot papers unless there was prima facie evidence in support of the allegations made in the election petition see Tanjore, N.M.R. (Hammond 's Election Cases 673); Punjab North Case (Hammond 's Election.
Cases 569), Karnal Mohammadan Constituency Case (2 Doabia 235 );Karnal (South) General Constituency Case (2,Doabia 80); Chingleput Case (Hammond 's Election Cases 307); see also R. Swaminath 's Case ; Seshaiah vs Koti Reddi and Lakshumanayya vs Rajam Aiyar For the reasons mentioned above we allow this appeal and set aside the order made by the learned trial judge.
He with now proceed with the trial of the case in accordance with law.
The 1 st respondent, the election petitioner shall pay the costs of the appellant in this appeal.
V.P.S. Appeal allowed.
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The first respondent, an elector, challenged the election of the appellant to the Lok Sabha.
He alleged inter alia, in the election petition that: (1) only one counting agent of the defeated candidate was permitted at each table where three persons were counting simultaneously, and hence, it was impossible 'for the counting agent to detect the wrong acts of the counting staff who had adopted an attitude hostile to the defeated candidate; and (2) several votes of the defeated candidate were improperly rejected ignoring the protests of the election agent of that candidate, while invalid votes and votes of the defeated candidate were counted in favour of the appellant.
The Schedule to the petition gave some figures of such improper rejection and improper acceptance.
In the verification to the petition it was stated that the allegations were made on the basis of information 'received from the workers and the counting agents of the defeated candidate and that the election petitioner believed the information to be correct.
It was however not stated in the petition who the workers were and what was the basis of their information.
No written objection was flied during the counting, either to the acceptance or the rejection of any vote, nor was any such application made for a recount.
Before the trial of the election petition the election petitioner filed an application for permission to.
inspect the packets.
of ballot papers containing the accepted as well as rejected votes of the candidates.
In the affidavit in support of the petition he averred that on one of the days of counting.
he was the counting agent of the defeated candidate and had personal knowledge of Such improper rejection and acceptance.
No other affidavit of persons who could have had personal knowledge of the matter was flied.
The High Court allowed the application and permitted scrutiny solely on the basis of the allegations in the election petition and the affidavit in support of the application seeking scrutiny.
In appeal to this Court, HELD.
: In view of the importance of maintaining the secrecy of the ballot papers, scrutiny can only be ordered if the election petition contains an adequate statement of the material facts on which the petitioner relies, that is, the material facts disclosed must afford an adequate basis the allegations; and, the election tribunal must be prima facie satisfied that in order to decide the dispute and to do complete justice between the parties inspection of the ballot papers is necessary.
[855 G H; 856 A] In the present case, the High Court stated that it was so.
satisfied on the mere statement of 'some figures in the petition and affidavit.
It also did not give any reason in support of its satisfaction as to the need for inspection.
[857 G H] (1) The petitioner had not stated that any.
of the counting agents appointed by the defeated candidate or his election agent, in accordance 853 with the rules, had been refused admission to the place of counting.
Therefore, the allegation that enough number of counting agents were not permitted was not supported by any statement of material facts.
[857 B C] (2) Similarly, with regard to the rejection of the votes polled in favour of the defeated candidate, under the rules, before a vote is rejected the agents of the candidates must be permitted to examine the concerned ballot paper, and therefore, the serial numbers of the concerned ballot papers could have been noted.
The election petition, however, is silent as to the inspection and notes of the ballot papers and other material facts such as raising objections and asking for a 'recount.
[857 C E] Therefore, the scrutiny of the ballot papers was sought on the basis of mere assertions and allegations which were neither accompanied by a statement of material facts nor were they supported by any evidence; and hence, the High Court should have rejected the application for scrutiny.
[857 F] Ram Sewak Yadav vs Hussain Kamil Kidwai, [1964] 6 S.C.R. 238 and Dr. Jagjit Singh vs Giani Kartar Singh, A.I.R. 1966 S.C. 773, followed.
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2673.txt
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Civil Appeal No. 1985 of 1975.
Appeal by Special Leave from the Judgment and order dated the 28th November 1975 of the Andhra Pradesh High Court in Writ Appeal No. 1038 of 1973.
M. N. Phadke and B. Kantarao, for the Appellant.
V. section Desai K. R. Chaudhury, section L. Setia and Mrs. V. Khanna, for Respondent No. 1.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Counsel for the appellant a jolted transport operator has assertively argued for an untenable position, heedless of the true nature of 'transport permit ' jurisprudence.
The sole issue on which limited leave has been granted to him by this Court under article 136 lends itself to straight forward resolution, once we grasp the .
public character of the litigation and public purpose of the jurisdiction where per nits regulating the plying of stage carriages are awarded or refused.
The conscience of this branch of public law is justice to the public, although, in the process of adjudication, private claims to carry on transport business through permits are comparatively evaluated.
Public interest is the paramount consideration, while private rights, fundamental though, apparently constitute the quasi lis for decision.
The touchstone of better merit is solely the ability to serve the public, and the hierarchy of transport tribunals, bearing true faith and allegiance to section 47 of the Motor Vehicles Act, 1948 (for short, the Act) have the duty and, therefore, the power to consider as factors pertinent to the larger scheme of efficient public transport.
To equate and thereby hamstring this jurisdiction and processual law with what governs a civil proceeding under the Civil Procedure Code, is to miss the policing policy of the law and maim the amplitude of the power duty complete.
In other words, the duplex scheme of the statute is the holding of a public enquiry to determine who will serve public interest best but ordinarily activated into that enquiry by private applicants for permits.
The pro bono publico character of the hearing cannot be scuttled in the name of competitive individual rights and narrow procedural trappings.
The minimal facts.
The appellant and the 1st respondent, among others, applied for permits to ply a stage carriage on a specified route in the Krishna District, Andhra Pradesh.
Although there were two permits for issuance, one was given to R2 and that has become final.
We are now concerned only with the other permit which had been granted by the Regional Transport Authority (acronymically, RTA) to the appellant but was switched over to the 1st respondent by the 1034 State Transport Appellate Tribunal (STAT) or taking into consideration a fresh ground and supporting evidence to the effect that the appellant was guilty of a transport tax violation and had compounded that offence under section 60(3) of the Act.
The power in this behalf was stated to be based on section 15 of the Andhra Pradesh State Transports Appellate Tribunal Rules, 1971 (hereinafter referred to as the Appellate rules), which reads: "15.
Additional Evidence (i) The parties to the appeal 9 or application shall not be entitled to produce additional evidence whether oral or documentary before the Tribunal but, (a) if the authority from whose order the appeal or application is preferred has refused to admit evidence which ought to have been admitted, or (b) if the party seeking to adduce additional evidence satisfies the Tribunal that such evidence, notwithstanding the exercise of due diligence was not within his knowledge or could not be produced by him at or before the time when the order under appeal was passed; or (c) if the Tribunal requires any documents to be produced or any witnesses to be examined to enable it to pass just orders, or (d) for any other sufficient reason, the Tribunal may allow such evidence or documents to be produced or witnesses examined: Provided that where such evidence is received the other party shall be entitled, to produce rebutting evidence, if any.
(ii) If the Tribunal is of opinion that any witness should be examined in connection with any case before it, it may instead of examining him before itself, issue a commission to the concerned Regional Transport Authorities or the State Transport Authority as.
the case may be, or to an Advocate or such other suitable person as it may deem fit, in the circumstances of the case.
" The vires of this rule was challenged before us and we will examine the contention.
But, to continue the narrative" when the appellate authority deprived the appellant of his permit he attacked the order without avail, before the High Court at both tiers.
Undaunted he has carried the appeal to this Court where the controversy is confined to the validity of section 15, although we have heard arguments on a wider basis to appreciate the point made by counsel.
The argument of ultra vires urged before us rests on The scope of sections 57(4) and 64 of the Motor Vehicles Act and the fitment of section 15 into the purpose and text of these provisions.
Having heard counsel on both sides, we are disinclined to accede to the submission of Shri Phadke for the appellant.
Why ? We will proceed to answer.
1035 Rulings galore, of this Court and the High Courts, have focussed A on section 47 of the Act to emphasize that the quasi judicial bodies entrust ed with the work of issuing stage carriage permits must be conscious of the brooding presence of public interest, in the midst of the sparring contest of private applicants.
A casual perusal of that provision brings home this juristic under pinning of the jurisdiction.
Against this background, we may notice the meaning of the clauses which broaden the nature of the enquiry and mark it off from a traditional civil litigation.
Passengers ' associations, police officers, local authorities and existing operators who may have nothing directly to do with the rivalry for a permit have a place in the scheme and may make representations on a variety of matters.
So also, in an appeal, the RTA itself may be heard.
Thus, the considerations going into the judicial verdict are dominated by public interest; non parties who have only to present points germane to public interest are allowed to represent their point of view.
Why? Because the object of thus regulatory statute is to promote smooth public transport and subject to the weighty factors bearing thereon set down in section 47(1) of the Act and, indeed, with a view to serve the public the better, applicants are chosen in recognition of their fundamental right under article 19 canalised by reasonable restrictions in public interest.
To imprison such an enquiry into the familiar mould of a civil proceeding in ordinary courts is to be pathological, if one may say so.
A freer, healthier, approach is the prescription.
Of course, Shri Phadke is right in that any representation, ground or evidence presented by anyone prejudicing the right of an applicant has to be considered only subject to the canons of natural justice and in the discretion of quasi judicial authority.
Justice to the public and the parties can and must be harmonised.
Such is the simplistic statement of the law.
A few more facts and some more law are necessary.
As stated earlier, the appellant got the permit from the RTA although both the contestants before us were equally qualified, having obtained equal marks on the basis of the Andhra Pradesh Motor Vehicles Rules (for short, the MV rules).
The appellate result went against the appellant because another applicant who had filed an appeal before the STAT produced, at that stage, a certificate from the concerned authority to prove that the present appellant had used a contract carriage as a stage carriage on a trip to Tirupati and had compounded this offence by payment of a fee of Rs. 2,340/ .
This circumstance was regarded by the STAT as a blot on the history sheet of the appellant, although inadvertently omitted from the history sheet prepared officially for the consideration of the RTA.
It is admitted on all hands that this semi punishment had not been mentioned in the representations of any party under section 57(3) of the MV Act.
Therefore, an objection was raised before the STAT that this ground was new, although the episode which formed its basis existed prior to the disposal of the applications by the RTA.
It was further urged that such new grounds could not be heard from an objector who had not included it in his representation made within the time limited by section 57(4) of the Act.
However, the STAT over ruled these objections and proceeded on the footing that this was material information 1036 A relevant to section 47(1) and used it, after giving a fair opportunity to the affected appellant to meet it.
Consequentially, he upset the award of the permit to the appellant since this factor tilted the scales against the appellant.
We cannot, in this Court, and especially on a limited leave, look into the evaluation.
These foundational facts are common ground, but the divergence rises on the exercise of the power under s.15 of the Appellate Rules.
Shri Phadke contended that a representationist, under section 57(3) & (4), had to abide by the time limit discipline of the provision and could not transgress it by making an additional representation at the appellate stage beyond the time limited by section 57(4).
If section 15 permitted such a course, it violated the substantive provision of the Act.
Since a stream cannot rise above its source and rules cannot go beyond the sections of the Act, this Court must hold the said rule avoid.
Any way, if section 57(3) & (4) had a more spacious connotation than was attributed to it by Shri Phadke, section 15 could have full play and be accommodated within the parent provision in the Act regulating procedure.
This was the counter contention of Shri V. section Desai for the contesting respondent.
Before proceeding further, it is useful to extract section 57(3) and (4) and test whether the rule making power has exceeded the ambit of section 57 or gone counter to it in framing section 15 (earlier extracted): "57.
Procedure in applying for and granting permits. x x x x (3) on receipt of an application for stage carriage permit or a public carrier 's permit, the Regional Trans port Authority shall make the application available for inspection at the office of the authority and shall publish the application or the substance thereof in the prescribed manner together with a notice of the date before which representations in connect`ion therewith may be submitted and the date, not being less than thirty days from such publication, on which and the time and place at which, the application and any representations received, will be considered: Provided that, if the grant of any permit in accordance with the application or with modifications would have the effect of increasing the number of vehicles operating in the region, or in any area or on any route within the region, under the class of permits to which the applications relate, beyond the limit filed in that behalf under sub section (3) of Section 47 or sub section (2) of Section 55, as the case may be, the Regional Transport Authority may summarily refuse the application without following the procedure laid down in this sub section.
(4) No representation in connection with an application referred to in sub section (3) shall be considered 1037 by the Regional Transport Authority unless it is made in writing before the appointed date and unless a copy thereof is furnished simultaneously to the applicant by the person making such representation.
" We unhesitatingly agree with Shri Phadke that natural justice that J fine facet of judicial ethos must broadly inform exercise of power by administrative tribunals.
This obligates such bodies to give an 'a affected party a fair opportunity to meet any evidence obnoxious to his case if it is to be pressed into service against him.
In the pre sent instance, it is not disputed, as the High Court has noted, that the canons of natural justice have been conformed to.
The surviving issue therefore is as to whether there is any soundness in the submission that section 57(3) & (4) read with section 47 builds barricades against receiving any information by the STAT from any representator beyond the time filed in the above sub sections of section 57.
Administrative law a growing branch of Indian jurisprudence has a mission.
Where the trellis work of technical procedures and rules of evidence usually applicable to ordinary courts under the Code contains too many taboos regarding pleadings and too many prescriptions regarding trials, administrative bodies, manned by lay and legal men, charged with duties which are wider than decision of individual disputes between specific parties and operating quasi judicially at the public interest level, have to enjoy more liberal powers and less formal and more flexible processes if they are to fulfil the statutory behest efficaciously.
To over judicialize is to undermine.
In the construction of statutes establishing administrative agencies and r defining their powers, there is little scope for the deep rooted shibboleth that into the statute must be, read, by lawyer 's instinct, the requirements of the trial of a civil suit or the hearing of an appeal by the ordinary courts of the land.
This may result in defeating their obvious purpose.
We will therefore briefly examine the legislative goal of the statute under construction, the general policy of the legislature in enacting the relevant sections and the definition of the sources from which information or evidence may be sought by the tribunal working within the framework of the Act.
Mr Justice Frankfurter has aptly stated that 'the answers to the problem of an art are in its exercise ' and John Chipman had paid that the process of statutory construction is a practical art (See: Extrinsic Aid in the Construction of Statutes by V. section Deshpande Journal of Indian Law Institute Vol.
II, April June 1969, p. 123, 126).
Thus, the true test of the amplitude and correct interpretation of section 57(3) & (4) is to be found in a study of its area and its exercise, as intended by its makers.
The oft quoted saying of Mr. Justice Holmes that 'the meaning of a sentence it to be felt rather than to be proved ' also helps us to feel our way through the public law area sketched by section 57(3) & (4) understood in the background of section 47 and the conspectus of other provisions.
We have to shake off from our minds that the type of litigation contemplated by section 57 is the thrust and parry in a civil suit or appeal.
With these observations we may take a bird 's eye view of the relevant provisions of the Act to give us a hang of the subject and help us interpret adequately.
1038 Section 42 of the Act insists on a permit being taken by every transport operator.
Section 44 lays down how the RTA is to be constituted.
It has a mixed composition of lay aud judicially trained me, the reason being that the process of adjudication is not purely legal pugilis but a broader search taking note of public considerations which may not be brought to its notice by contenders for permits.
The nature of the enquiry is reflected in the very structure of the body.
Section 46 speaks of applications for stage carriage permits.
When we reach section 47, we have to take a close up of that provision.
Properly understood, section 47 enjoins upon the RTA to have regard to the presiding idea of public interest generally and in its ramifications as set out in section 47(1) (a) to (f).
In addition, the RTA shall also receive representations as mentioned therein and take them into the reckoning.
It is not as if the sole source of decision making materials consists of the representations made under section 57(3) within the time stipulated in section 57(4).
The primary channel, it , looks, is the information that the RTA may gather, bearing on matters touched upon in section 47(1) (a) to (f), supplemented by facts stated in representations referred to in section 57(3).
Once we grasp this essential truth, the resolution of the conflict raised in this case is easy.
The focus is not on who, as between A and B, has the title to the permit, but on who, as between A and B, should be preferred to better sene the public interest.
We may, as a result of the above discussion, set down the following five propositions: 1.
Stage carriage permits are granted for providing an F. efficient public transport system.
The adjudicatory content has dual elements public interest in the best stage carriage service and private title to better sene the public.
The procedure is flexible, free from the rigidly of court trials, and this flexibility flows from the duty of the tribunal charged with the task of picking out him who has the best plus points for playing a good bus service, to discharge it properly.
A people conscious power cannot be pared down in a self defeating manner.
An activist tribunal (RTA, and, in exceptional case, even the STAT) may even collect useful information bearing on considerations set out in section 47 and, after public exposure of such information at the hearing and reasonable opportunity to meet it, if anyone is adversely affected, put it into the crucible of judgment.
The antithesis is not between the right of representation within the time limited by section 57(4) and beyond it but between representations by statutorily authorised entities under sections 47 and 57 and receipt of relevant 1039 evidence or information from any source whatsoever at any stage whatsoever but subject to the wholesome rules of natural justice.
These fivefold guidelines squarely accommodate section 15 within the framework of sections 47, 57 and 54 of the Act and there is no spill over breaching the banks of the provisions.
The rule merely gives effect to what the sections intend and is not therefore ultra vires.
Here the certificate of payment of compounding fees was filed by one of the appellants before the STAT and was received not as a representation under section 57(4) but as some information the STAT regarded had a bearing on matters falling under section 47.
It is important to note that section 15 does not entitle parties to the appeal or application to produce additional evidence but clothes the tribunal with discretionary power to allow such evidence.
What is received is not qua representation under section 57(4) but qua evidence with public interest flavor.
The rule is good and covers familiar ground to enable just orders being passed.
A reference to order XLI, rule 27 C.P.C. and section 540 Crl.
P.C. proves this point.
Justice to the public is the keynote of sections 47, 57 and section 15.
We are not lobbying for unconventional procedures of quasi judicial tribunals but interpreting the relevant provisions according to well established canons.
We must listen to the signature tune of quasi judicial justice to appreciate the note.
We may also highlight the basic principle that subject to statutory regulations, each tribunal has its inherent power to device its own procedure.
Novelty, if it improves purposeful efficiency, is not anathema.
But caution must be exercised in going against time tried procedures lest processual law prove a charter for chaos.
Like wise, it is necessary to mention that while a 'representator ' under section 47, read with section 57, has a right to make representations and be heard, subject to the limitations written into those provisions, those who fall under it or outside it have no right to bring in evidence or urge grounds as and when they please or at all unless the tribunal, in its discretion, chooses to accept such extra information.
The first is a right of the 'representator ' the second is the power of the tribunal.
F We are strengthened in our general approach and particular construction by a ruling of this Court in New Prakash Transport(l) and two rulings of the High Courts, one of a Full Bench of the Madras High Court (AIR 1965 Madras 79) and the other a Division Bench of the Patna High Court to which one of us (Untwalia, J.) was a party (AIR 1964 Patna 154).
In United Motor Works(2), the Patna Case, the Court observed: "It was also pointed out by the Supreme Court in that case that the Motor Vehicles Act and the rules framed thereunder do not contemplate anything like a regular hearing in a Court of Justice and no elaborate procedure has been prescribed as to how the parties interested have to be heard either before the Regional Transport Authority or 1040 before the Appellate Transport Authority.
The principle is well established that in the absence of any such prescribed procedure the appellate authority may adopt any procedure which it thinks best for hearing the appeal provide always that the rules of natural justice are observed.
The matter has been clearly put by Lord Loreburn in the course of his speech in Board of Education vs Rice as follows: "Comparatively recent statutes have extended, if they have not originated, the practice of imposing upon departments or officers of State the duty of deciding or determining questions of various kinds.
In the present instance, as in many others, what comes for determination is sometimes a matter to be settled by discretion, involving no law.
It will, I suppose, usually be of an administrative kind; but sometimes it will involve a matter of law as well as a matter of fact, or even depend upon matter of law alone.
In such cases the Board of Education will have to ascertain the law and also to ascertain the facts.
I need not add that ill doing either they must act in good faith and fairly listen to both sides, for that is a duty lying upon every one who decides anything.
But I do not think they are bound to treat such a question as though it were a trial.
They have no power to administer an oath, and need not examine witnesses.
They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradieting any relevant statement prejudicial to their view." Ramaswami C. J., (as he then was) also laid down: "It is.
manifest that the power of the appellate authority is co extensive with the power of the Regional ' Transport Authority in this respect, and there is no reason why the appellate authority should not take these matters into consideration in deciding the appeal under section 64 of the Act" It is trite that an appeal is a re hearing and ordinarily appellate power is as wide as original power.
The facts of the Patna case (supra) bear a close parallel to our case.
Another point with which we are not concerned and also decided in the Patna judgment (one of the two writ petitions heard together) was challenged in the Supreme Court and reversed.
That bears upon the interstate routes which does not arise in the instant appeal before us.
In Cumbum Roadways(1) Kailsam J. (as he then was), speaking for the Full Bench, stressed the same view.
The head note in the Report is sufficiently explicit and we quote: "The representator, who makes the representation other wise than under section 57(4) will not have a right to have his 1041 objection heard and considered, but there is no prohibition against the authority taking the information furnished by the objector and acting on it after giving an opportunity to the affected party, to prove that the information is false or that it should not be acted upon.
The jurisdiction of the Regional Transport Authority or the Appellate Tribunal to act upon any information, whether it was brought to its notice by the objector or by the Transport Authority cannot be questioned.
But it is within the discretion of the Regional Transport Authority or the Appellate Tribunal to accept the information taking into account the relevant circumstances under which the information was brought before it.
If the authority decides to accept, it is bound to ` give a reasonable opportunity to the affected person to show cause as to why the information should not be acted upon.
r When the authority is acting on the information, but not as a representation by the objector, the person affected can not object to the authority considering the information on the ground that it was brought to its notice by one of the objectors without including the information in the representation made by the objector.
The right of the representer as such is no doubt limited, for, he has no right to insist that any representation made otherwise than under section 57(4) should be considered in the manner prescribed under section 57(5).
But that does not in any way debar the authority under section 47(1) of the Act from taking the information into account for deciding to whom the permit should be given in the interests of the public.
" The decision of the Assam High Court (AIR 1959 Assam 183) brought to our notice by Shri Phadke does not really consider the issue from the position we have delineated and turns on approach which is not quite correct.
Our conclusion therefore is that section 15 is intra vires and, further that the said rule merely makes patent what is otherwise latent in the statutory provisions.
The appeal accordingly, fails and is dismissed with costs.
P.B.R Appeal dismissed.
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Tribunal If had power to admit evidence beyond the time limited by 57(4).
Rule 15 of the Andhra Pradesh State Transport Appellate Tribunal Rule 1971, states that parties to the appeal or application shall not be entitled to produce additional evidence, whether oral or documentary, before the Tribunal except in cases stated therein but it empowers the Tribunal to allow evidence or documents to be produced or witnesses to be examined for any other sufficient reason.
The Regional Transport Authority granted a stage carriage permit to the appellant.
Before the State Transport Appellate Tribunal another applicant produced certain information against the appellant which was not mentioned either in his history sheet or in the representations of any party under section 57(3) of the Act.
Rejecting the appellant 's objection that such new grounds could not be heard from an rejector at the stage of appeal, the State Transport Appellate Tribunal cancelled the appellant 's permit and gave it to respondent On appeal it was contended that a representation under section 57(4) could not be made at the appellate stage beyond the time limited by that section and if rule IS permitted it, it violated the substantive provisions of the Act.
Dismissing the appeal, ^ HELD: Rule 15 is intra vires and it merely makes patent what is otherwise latent in the statutory provisions.
Rule 15 does not entitle parries to the appeal or application to produce additional evidence but clothes the Tribunal with dn creationary power to allow such evidence.
What is received is not qua representation under 8.
57(4) but qua evidence with public interest flavor.
[1041F 1039C] United Motor Works, A.l.
R. 1964 Pat.
154 and Cumbum Roadways, A.I.R. 1965 Mad.
79, approved.
(a) Public interest is the paramount consideration in transport business while private rights apparently constitute a quasi lis for decision.
The touchstone of better merit is solely the ability to serve the public and the hierarchy of transport tribunals, bearing true faith and allegiance to section 47 of the Motor Vehicles Act.
1948 have the duty and, therefore, the power to consider all factors pertinent to the larger scheme of efficient public transport.
The duplex scheme of the statute is the holding of a public enquiry to determine who will serve public interest best but ordinarily activated into that enquiry by private applicants for permits.
The pro bono publico character of the hearing cannot be scuttled in the name of competitive individual rights and narrow procedural trappings.
[1033E G] (b) Section 47 enjoins upon the Regional Transport Authority to have regard to the presiding idea of public interest generally and in ib ramification as set out in section 47(1)(a) to (f).
In addition, the RTA shall also receive representations as mentioned therein and take them into the reckoning.
It is not as if the sole source of decision making materials consists of the representations made under section 57(3) within the time stipulated in section 57(4).
The primary channel the information that the RTA may gather bearing on matters touched upon in 47(1)(a) to (f) supplemented by facts stated in representation referred to In 1033 section 57(3).
Under section 47 passengers ' associations, police officers, local authorities and existing operators who may have nothing directly to do with the rivalry for A a permit have a place in the scheme and may make representation on a variety of matters.
So also, in an appeal, the RTA itself may be heard.
Thus the consideration going into the judicial verdict are dominated by public interest.
non parties who have Only to present points germane to public interest are allowed to represent their point of view.
[1038C; 1035B C]
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3495.txt
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AL JURISDICTION: Civil Appeal No. 1528 of 1968.
Appeal by special leave from the order of March 18, 1968 of the Gujart High Court in Special Civil Application No. 365 of 1968 and Civil Appeals Nos. 1900 and 2118 of 1968.
Appeals from the judgment and order dated May 14, 1968 of the Delhi High Court in Civil Writ Petitions Nos. 343 and 294 259 of 1968 and Petitions under article 32 of the Constitution of India for the enforcement of the fundamental rights.
I. N. Shroff, for the appellant (in C.A. No. 1528 of 1968).
A. section Bobde, G. L. Sanghi, V. K. Sanghi and section section Khanduja, for the appellant (in C.A. No. 1900 of 1968).
C. B. Agarwala, Virendra Kumar, section section Pareikh, Uma Mehta and section section Khanduja, for the appellant (in C.A. No. 211 '8 of 1968).
The petitioner appeared in person (in W.P. No. 109 of 1968).
The petitioner appeared in person (in W.P. No. 234 of 1968).
The petitioner appeared in person (in W.P. No. 402 of 1968).
C. B. Agarwala, B. N. Antani and R. K. Bhatt, for the petitioner (in W.P. No. 403 of 1968).
A. section Bobde and section section Khanduja, for the petitioner (in W.P. No. 409 of 1968).
C. K. Daphtary, B. Sen, R. H. Dhebar and section P. Nayar, for the Union of India (in C.A. Nos. 1528, 1900 and 2118 of 1968 and W.P. Nos. 234, 402 and 403 of 1968).
G. R. Rajagopal; R. H. Dhebar and section P. Nayar, for the Union of India (in.
W.P. No. 109 of 1968).
C. K. Daphtary, B. Sen, A. Sreedharan Nambiar, R. H. Dhebar and section P. Nayar, for the Union of India (in W.P. No. 409 of 1968).
R. H. Dhebar and section P. Nayar, for the State of Gujarat.
The Judgment of HIDAYATULLAH, C.J., RAMASWAMI, MITTER and GROVER, JJ. was delivered by HIDAYATULLAH, C.J. SHAH, J. delivered a separate Opinion.
Hidayatallah, C.J. These are five writ petitions under article 32 of the Constitution and three appeals against the decisions of, the ' High Courts of Gujarat and Delhi.
The writ petitions have been filed by Mr. Manikant Tiwari (W.P. No. 109/68), Mr. Shiv Kumar Sharma (W.P. No. 234/68), Mr. Madhu Limaye (W.P. No. 402/68), Mr. Gulabshankar Amritlal Dholakia (W.P. No. 403/68) and Mr. Node Sadi Rau (W.P. No. 409/68).
The appeals from the Delhi High Court 's common judgment, 14 May, 1968 on certificate are by Mr.
Shiv Kumar Sharma (C.A. No. 2118/68) and Major Ranjit Singh (C.A. 1900/68) and the appeal from the decision of the Gujarat High Court is in a writ petition filed by Mt. Maganbhai lshwarbhai Patel (C.A. No. 1528/68).
The Gujarat High Court, 18 March, 1968, dismissed 260 the petition summarily and the appeal is by special leave of this Court.
This judgment will dispose of all of them.
The several petitioners seek a writ of mandamus or any other appropriate writ or order or direction under Article 32 of the Constitution to restrain the Government of India from coding without the approval of Parliament the areas in the Rann of Kutch known as Kanjarkot, Chhadbet, Dharabanni, Priol Valo Kun and two inlets on either side of Tharparkar to Pakistan as awarded to ' it in the award, 19 February, 1968, of the Indo Pakistan Western Bombay case Tribunal.
Mr. 1.
N. Shroff (C.A. No. 1528/68), Mr. A. section Bobde (C.A. No. 1900/68) and Mr. C. B. Agarwal (W.P. No. 403/68) represented three such petitioners.
Mr. Shiv Kumar Sharma, Mr. Madhu Limaye and Mr. Manikant Tiwari argued their own matters.
The Union of India was represented by Mr. C. K. Daphtary, former Attorney General of India, who had also conducted the case for India before the Tribunal.
The Indian Independence Act of July 18, 1947, (an Act of the British Parliament) created from August 15, 1947 two domi nions known as India and Pakistan.
By the same statute the paramountcy of the British Crown over the States of Kutch Santalpur, Tharad, Suigam, Way and Jodhpur lapsed and they soon acceded to and merged with India.
The former British Indian Province of Sind was included in Pakistan while the Presidency of Bombay was part of India.
Between these two lies the Great Rann of Kutch, Sind shutting on the North and West and the Indian mainland on the South and East.
The Rann is a vast expanse of water and desert.
For part of the year even the desert is covered by water.
At other times it is either soft mud or land with grass.
No one ordinarily lives in that area which the onagers roam at large.
It appears that from July 1948 Diplomatic Notes were ex changed between the two Governments with regard to the boundary 'between the areas known as Gujarat and West Pakistan.
The difference led to open hostilities in April 1965.
On June 30, 1965 the two Governments reached an agreement which read "Constitution of the Tribunal, Proceedings.
On 30 June, 1965, the Government of India and the Government of Pakistan concluded an Agreement, reading as follows : Whereas both, the Governments of India and Pakistan have agreed to a cease fire and to restoration of the status quo as at 1 January, 1965, in the area of the Gujarat West Pakistan border in the confidence that this will also contribute to a reduction of the present tension along the entire Indo Pakistan border; 261 Whereas it is necessary that after the status quo has been established in the aforesaid Gujarat West Pakistan border area, arrangements should be made for determination and demarcation of the border in that area; NOW, THEREFORE, the two Governments agree that the following action shall be taken in regard to the said area Article 1: There shall be an immediate cease fire with effect from 0030 hours GMT on 1 July 1965.
Article 2 On the cease fire (i) All troops on both sides will immediately begin to withdraw; (ii) This process will be completed within seven days; (iii) Indian police may then, reoccupy the post at Chhad Bet in strength no greater than that employed at the post on 31 December 1964; (iv) Indian and Pakistan police may patrol on the tracks on which they were patrolling prior to 1 January 1965, provided that their patrolling win not exceed in intensity that which they were doing prior to 1 January 1965 and during the monsoon period will not exceed in intensity that done during the monsoon period of 1964; (v) If patrols of Indian and Pakistan police should come into contact they will not interfere with each other, and in particular will act in accordance with West Pakistan India border ground rules agreed to in January 1960; (vi) Officials of the two Governments will meet immediately after the cease fire and from time to time thereafter as may prove desirable in order to consider whether any problems arise in the implementation of the provisions of paragraphs (iii)to (v) above and to agree on the settle ment of any such problems.
262 Article 3 (i) In view of the fact that (a) India claims that there is no territorial dispute as there is a well established boundary running roughly along the northern edge of the Rann of Kutch as shown in the pre partition maps, which needs to be demarcated.on the ground.
(b) Pakistan claims that the border between India and Pakistan in the Rann of Kutch runs roughly along the 24th parallel as is clear from several pre partition and post partition documents and therefore the dispute involves some 3,500.
square miles of territory.
(c) At discussions in January 1960, it was agreed by Ministers of the two Governments that they would each collect further data regarding the Kutch Sind boundary and that further discussions would be held later, with a view to arriving at a settlement of this dispute; as soon as officials have finished the task referred to in article 2 (vi), which in any case will not be later than one month after the cease fire, Ministers of the two Governments will meet in order to agree on the determination of the border in the light of their respective claims, and the arrangements for its demarcation.
At this meeting and at any proceedings before the Tribunal referred to in article 3(ii) and (iv) below, each Government will be free to present and develop their case in full.
(ii) In the event of no agreement between the Ministers of the two Governments on the determination of the border being reached within two months of the cease fire, the.
two Governments shall, as contemplated, in the Joint Communique of 24 October, 1959, have recourse to the Tribunal referred to in (iii) below for determination of the border, in the light of their respective claims and evidence produced before it and the decision of the Tribunal shall be final and binding on both the parties.
(iii) For this purpose there shall be constituted, within four months of the cease fire a Tribunal consisting of three persons, none of whom would be a national of either India or Pakistan.
One member shall be nominated by each Govern and the third member, who will be the Chairman, shall be jointly selected by the two Governments.
In the event of the two Govern ments failing to agree on the selection of the Chairman within three months of the cease fire, they shall request the Secretary General of the United Nations to nominate the Chairman.
(iv) The decision of the Tribunal referred to in (iii)above shall be binding on both Govern ments and shall not be questioned on any ground whatsoever.
Both Governments undertake to implement the findings of the Tribunal in full as quickly as possible and shall refer to the Tribunal for decision any difficulties which may arise between them in the implementation of these findings.
For that purpose the Tribunal shall remain in being until its findings have been implemented in full.
The cease fire came into effect as provided in Article 1 of the Agreement.
As a result of this agreement the Government of India nomi nated Ambassador Ales Bebler, Judge of the Constitutional Court of Yugoslavia, the Government of Pakistan nominated ' Ambassador Nasrollah Entezam,of Iran and former President of the General Assembly of the United Nations.
The two Govern ments having failed to agree on the selection of the Chairman of the Tribunal, the Secretary General of the United Nations, under the power reserved by sub paragraph (iii) of Article 3 of the Agreement, nominated Judge Gunnar Lagergren, now President of the Court of Appeal for Western Sweden.
In the course of the hearing a compromise on the procedure for the demarcations of the boundary was settled.
Memorials, Counter Memorials and Final Memorials were submitted along with numerous Maps, and documents.
The oral hearings began on September 15, 1966 and continued with some breaks till July 14, 1967.
During the hearing about 10,000 pages of minutes and Verbatim Records were made and about 350 maps were exhibited.
At an early stage in the hearing Pakistan raised the ques tion that the dispute be decided ex aequo et bono which request was opposed by India.
The Tribunal did not find that the Agreement of June 30, 1965 authorised it 'clearly and beyond doubt to adjudicate ex aequo et bono '.
The parties did not confer this power by a Special Compromis even thereafter.
The case on the part of India was pro pounded with the aid of map A which was a mosaic of Indian Maps B 44, B 37, B 19, 264 and B 20.
Pakistan claimed the boundary as marked on Map B. The award has delineated the boundary in Map C. Maps A and B and C form part of the Award.
In describing the matter in dispute the Tribunal observed: India claimed that "the Tribunal determine the alignment of the entire boundary between West Pakistan and Gujarat from the point at which the blue dotted line meets the purple line in Indian Map B 44 in the west to the North Eastern Trijunction in the east as it appears in the Indian Maps B 44, B 37, B 19 and B 20 where the correct alignment is shown by appropriate boundary symbols." The Government of Pakistan claimed that "The Tribunal determine that the border between India and Pakistan is that which is marked with green yellow, thick broken line in the Pakistan Claim Map It is common ground that the Gujarat West "Pakistan boundary stretches from the, mouth of the Sir Creek in the west to a point on the Jodhpur boundary in the east.
The Parties agree that the Western Terminus of the boundary to be determined by the Tribunal is the point at which the blue dotted line meets the purple line as depicted in Indian Map B 44 and the Pakistan Resolution Map, and that the Eastern Terminus of the same boundary is a point situated 825.8 metres below pillar 920 on the Jodhpur boundary as depicted in Pakistan Map 137." "This agreement leaves out of the matters submitted to the Tribunal the portion of the boundary along the blue dotted line, as depicted in Indian Map B 44 and the Pakistan Resolution Map, as well as the boundary in the Sir Creek.
The blue dotted line is agreed by both Parties to form the boundary between India and Pakistan.
In view of the aforesaid agreement, the question concerning the Sir Creek part of the boundary is left out of consideration.
" The dispute thus remained with regard to the boundary outside these agreements.
The Tribunal described this dispute in the following words "From the Western Terminus, the boundary claimed by India takes off to the north and that claimed by 265 Pakistan to the south; and from the Eastern Terminus, the boundary claimed by India takes off to the south west while the boundry claimed by Pakistan turns south east.
Both parties agree that before Independence the boundaries between the Province of Sind, on the one hand, and one or more of the Indian States on the other hand, were conterminous.
Therefore, in the disputed region, apart from India and Pakistan there is no other State that does or could have sovereignty.
There is between India and Pakistan a conterminous boundary today, whether or not there was at all times a conterminous boundary between Sind and the Indian States.
Pakistan contends that, should the Tribunal find that the Province of Sind and the Indian States were not fully conterminous, then the area between Sind and these States would be an "undefined area", falling outside the scope of the Indian Independence Act, 1947.
In such an event, the conterminous boundary between India and Pakistan would have to be determined by the Tribunal on the basis of rules and principles applicable in such circumstances.
Pakistan adds that the evidence produced by it in this case is in support of its principal submission, although some of it could also be used in support of its alternative submission.
Both parties agree that the Rann was not a "tribal area" as defined in Section 311 of the Government of India Act, 1935.
Each party states that the boundary claimed by it is the traditional, well established and well recognised boundary.
" Pakistan thus claimed in addition to the establishment of a median line roughly along the 24th parallel, what it called the upper lands in dispute and the northwestern part of it which it called 'the jutting triangle '.
These included Dhara Banni, Chhadbet, Pirol Valo Kun, Kanjarkot, Vighokot and Sarifbela and these were said to be not part of the Rann.
India on the other hand stated that the Rann means the Rann lying to the east of the vertical line and to the south of the horizontal line as depicted in Map A. Pakistan maintained that the Rann lay to the east of what was once known as the Khori river and that the lands were part of Sind and referred to the same as 'the delta lands '.
L7sup.
CI/69 18 265 266 The above in brief is the, outline of the dispute as presented to the Tribunal.
Although the AWard of the Tribunal it before us it was necessary to make this brief mention because we are required t"o reach a decision whether this was a clear case of cession of territory following the, award, which it is claimed makes it incumbent for the executive authority in India to obtain the approval of Parliament by suitable amendment of our Constitution, before effectuating the Award.
The Tribunal was not unanimous in its decision.
Judge Ales Bebler accepted almost in its entirety the claim of India.
Ambassador Nosrollah Entezam upheld the Pakistani claim.
The Chairman then delivered his opinion.
On the propounding of his opinion Ambassador Entezam gave his opinion as follows Opinion of Mr. Entezam "In an early stage I considered that Pakistani had made out a clear title to the northern half of the am shown in the survey maps as Rann.
I have now had the advantage of reading the opinion of the learned Chairman, and in the light of it I concur in and endorse the judgment of the learned chairman.
The Tribunal thereupon ruled thus : " The alignment of the boundry described in the opinion of the chairman and endorsed by Mr. Entezam has obtained the required majority.
It is therefore the boundary determined by the Tribunal.
The Chairman prefaced his conclusions by observing "For the reasons now given, and with due regard to what is fair and reasonable as to details I conclude oft the great issue before me that the boundary between India and Pakistan lies as follows.
Reference is made here to the Award Map (Map C).
Because of the imprecise topographical features in the region and the impossibility of exactly delimiting many acts of State authority,, the boundary must sometimes be represented by approximate straight lines.
" The Chairman then indicated the exact location of the boun dary determined by him which was also delineated by him on the Map C.
The new boundary begins at the northern tip of the Khori Creek and after going straight up north reaches the mainland of Sind and then follows roughly the configuration of the land till it comes south of Rahim ke bazar.
It thus follows Erskines Survey.
Thereafter instead of following the mainland it dips to the South East just South of Sadariajagot and then 267 goes up North West to join the maintained and to follow the boundary symbols.
In the triangle, so formed is situated the Kanjarkot area which is the first limb of the disputed territory brought to the fore before us.
After following the line of the mainland and the existing boundary symbols the new boundary again dips to the 'South East to a point a little north of the 24th parallel and runs parallel to it thus embracing Dharabani and Chhadbet to Pakistan.
Thereafter it goes north to join the main land of Sind again and follows the boundary symbols which it follows till it reaches the Nagar Parkar area.
This is a kind of a peninsula jutting to the South.
On the West and East sides of Nagar Parkar there are two narrow but deep inlets.
The new boundary instead of running along the banks of the inlets jumps across the two inlets at their southern extremities, thus including them in Pakistan.
The inlets, therefore, are the fourth and fifth limbs of the disputed territory of India which the petitioners claim has been lost to India by the Award.
The new boundary thence proceeds along the mainland till it reaches the demarcated boundary at the Jodhpur and from where the boundary is not in dispute just as the boundary from Sit Creek to Khori Creek has not been, in dispute.
In drawing up the border the Tribunal based itself on much historical matter and old maps.
In the opinions of Judge Ales Bebler and the Chairman (Ambassador Entezam concurring with the Chairman) this historical material has been differently interpreted but we are not concerned with it.
The reference was also not decidedas a cartographic dispute.
It was settled by an ad hoc award.
No special reasons were given by the Chairman why he included 350 sq.
miles in pakistan when he dipped:the boundary to the South into the Rann of Kutch except when he came to consider the question of, the two inlets on the two sets of Nagar Parkar.
In this connection he observed: "The two deep inlets on either side of Naga Parkar will constitute the territory of Pakistan.
ready in.
1855, the Deputy Commissioner of Thar Parkar pointed out that if these inlets were to be considered Kutch territory.
(a)glance at the map will show that Parkar would be a peninsula almost entirely surrounded by Kutch territory.
The Kutch State could erect fortifications and establish Custom houses at places situated many miles within the district for instance close to Verrawah, or on some of the roads which, crossing inlets of the Rann, lead from one part of this district to another.
Doc. D. 9).
268 In my opinion it would be inequitable to recognise these inlets as foreign territory.
it would be conducive to friction and conflict.
The paramount consideration of promoting peace and stability in this region compels the recognition and confirmation that this territory, also be regarded as such.
The points, where the boundary will thus cut off the two inlets are these : At the westerns inlet, the boundary will leave the boundary symbols indicated on Indian Map B 34 at the point marked thereon as "26", more precisely where the cart track is indicated as departing from the edge of the Rann in a southeasterly direction.
This point is indicated as Point "L" on Map C. on the other side of the inlet, the point will be that where the camel track is indicated on Indian Map B 34 to reach the edge of the Rann; that point is indicated as point "M" on Map C. Between Points "L" and "M", the boundary shall be a straight line.
The boundary will cross the eastern inlet at its nar rowest point in a straight line between Points 'N" and "O" marked on Map C." In straightening the line to avoid a jagged boundary the Chairman gave the following reason "The boundary marked by symbols along the outer edges of the peninsula of Nagar Parkar and up to the Eastern Terminus is a jagged one.
As such it is unsuitable and impracticable as an international boundary.
The boundary shall accordingly lie in conformity with the depiction on Map C between the outer points on jutting out tongues of land from Point "M" and until the Eastern Terminus, marked as "ET" on Map C.
At no point.
between the two Terminii shall the alignment of the boundary as above described be such as to include in India territory not claimed by India, as defined by the depiction of India 's claim line on Map A.
It might be added that the boundary proposed by me for the greater part of its length roughly coincides with the boundary proposed by my learned colleague, Mr. Bebler.
" This in brief is the decision of the Tribunal.
We now pro ceed to the consideration of the 'Matters before us.
There are seven parties before us seeking to restrain the Government of India from making over the areas of Kanjarkot, 269 Dharabanni Chhadbet and the two inlets to Pakistan by sheer executive act and insist that the necessary change can only be effected by a constitutional amendment of the territories of India as indicated in the Constitution.
It may be Pointed Out that none of the petitioners contends that the Award should be rejected.
This is as it should be, India was voluntarily a party to an agreement pledging its honour to respect the Award.
According to J. H. Rolston (International Arbitrations from Athens to Locarno) pacific settlement of international disputes through a binding award on the basis of an undertaking voluntarily accepted is founded on the same principles as are to be found in the concept of Arbitrations in Municipal Law.
The history of such arbitrations begins in modem times from the Jay Treaty between Great Britain and the United States of America of November 19, 1794 to settle the boundary disputes after Independence in 1776) through Mixed Commissions.
The Commissions settled the exact position of the Sainte Croix River and the decision was regarded by both sides "as final and conclusive so that the same shall never thereafter be called in question or made the subject of dispute or difference between them.
" The rules of such arbitrations were settled by the Alabama Arbitrations in 1871 and the basis of the rules is the maxim Pacta Sunt Servanda.
Indeed the Hague Convention of 1907 (article 37) contained the rule "Recourse to arbitration implies an engagement to submit loyally to Awards.
" There have been innumerable arbitrations between nations.
Several books contain Surveys of these arbitrations and awards.
Stuyt lists 407 between 1794 and 1938 and writers like Moore, La Fontaine, Lapradelle, Darby etc.
have made other compilations, the most complete being by Moore.
Nantwi brings the list down to 1967 and also lists separately the awards which were not complied with.
An examination of such awards only reveals that generally an award is not accepted when the terms of submission are departed from or there are fatal omissions, contradictions or obscurities or the arbitrators substantially exceed their jurisdiction.
None of these factors obtains here.
Since the award has been accepted by our Government it is binding.
The parties also do not want that it be rejected.
The only question raised in these matters is how it is to be implemented.
Before we deal with the problem we wish to say something about the standing of the petitioners since it appears to us that most of them have no direct interest to question the action of Government or to raise any controversy regarding the implementation of the Award.
Before the hearing commenced we questioned each petitioner as to the foundation of his claim.
We discovered that ,most of the petitioners had no real or apparent stake in the areas 270 now declared to be Pakistan territory.
These persons claim that they had and still have the fundamental rights guaranteed to them by article 19 (1) (d) (e) and (f), that is to say, the right to travel, to reside or settle down, or to acquire, and hold property in these areas.
None of them has so far made any move in this direction but their apprehension is that they will be deprived of these rights in the future.
This our judgment, is too tenuous a right to be noticed by the court in administering the law and still less in enforcing fundamental rights.
When we communicated our view at an earlier hearing, some more petitioners came forward Mr. Madhu Limaye puts forward the supporting plea that he had attempted to penetrate this area to reconnoiter possibilities for settlement, but was turned back.
In this way he claims that he had attempted to exercise his fundamental rights and they were infringed.
Another party claims to have had a lease of grass lands some ten years ago in this area and he is now to be deprived of the right to obtain a similar lease.
Lastly one of the parties put forward the plea that he lives in the adjoining territory and thus has interest in the territories proposed to be ceded to Pakistan.
These petitioners too have very slender rights if at all.
The only person who can claim deprivation of fundamental rights isMr.
Madhu Limaye, although in his case also the connectionwas temporary and almost ephemeral.
However, Wedecided to hear him and as we were to decide the question we heard supplementary arguments from the others also to have as much assistance as possible.
But we are not to be taken as establishing a precedent for this Court which declines to issue a writ of mandamus except at the instance of a party whose fundamental rights are directly and substantially invaded or are in imminent danger of being so invaded.
From this point of view we would have been justified in dismissing all petitions except perhaps that of Mr. Madhu Limaye.
We may now proceed to the consideration of the rival contentions.
The petitioners attempt to establish that this territory is a part of India and has always been so from the establishment of the two dominions, that India has exercised effective administrative control over it and that.
giving up, a claim to it involves a cession of Indian territory which can only be effected by a constitutional amendment.
As to the details of the steps which, in the, petitioners ' view establish these facts, we shall come later.
This in very brief is the gist of the petitioners ' case.
The reply on behalf of the government of India is equally brief.
It is that no, cession of territory is involved, since the boundary was always uncertain owing to the shifting nature of the sea and sands and that the effective administrative control amounted to no more than establishing a police outpost with a personnel of 171 persons for watch and ward and that too after the exchange of 271 Diplomat Notes began and that the dispute concerns the settlement of boundary which was uncertain.
It is thus contended that the true areas of Pakistan and India have now been demarcated without cession of what may be called undisputed Indian territory.
According to the Government of India the Award itself is the operative treaty and after demarcation of the boundary it will only be necessary to exchange letters recognising the established border.
The case lies within this narrow compass.
Before we deal with the points in dispute and them relied upon by the rival parties in support thereof we wish to say a few words on the implementation of treaties in general and arbitration awards in boundary disputes in particular.
The practice of countries is different but the diverse possible approaches to the question appear from an examination of the practice obtaining in the United States, France, the United Kingdom and in British India.
An examination of these practices will enable us to see how the, matter is to be viewed in this case and in context of our Constitution and the existing rulings of court.
A treaty really concerns the political rather than the judicial wing of the State.
When a treaty or an award after arbitration comes into existence, it has to be implemented and this can only be if all the three branches of Government, to wit, the Legislature, the Executive and the Judiciary, or any of them, possess the power to implement it.
if there is any deficiency in the constitutional system it has to be removed and the State must equip itself with the, 'necessary power.
in some jurisdictions the treaty or the compromis read with the Award acquires fun effect auto matically in the, Municipal Law, the other body of Municipal Law notwithstanding.
Such treaties and awards are self exe cuting '.
Legislation may nevertheless be passed in aid of implementation but is usually not necessary.
In the United States of America a treaty concluded with a foreign State by the, President of the United States alone, without the consent of the Senate,, is not, according to their Constitution, binding upon the Nation and the foreign power derives no rights under it (See Mc Nair Law of Treaties p. 80 quoting from Crandall : Treaties, Making and Enforcement chapter XIV).
As Chief Justice Taft puts it : a treaty is the supreme law and a treaty may repeal a statute and vice versa.
It is only when the terms of a treaty require that a law must be passed that it has to be so passed : Foster vs Nielsen ; See also Dickinson : Law of Nations 1057.
The position regarding the United States is quite clear.
In other nations different practices exist.
In the French Constitution of the 4th October, 1958 (Title VI) Article 52 enables the 272 President to negotiate and ratify treaties and he is informed of the negotiation of any international agreement not subject to ratification.
Article 53 names the treaties that require ratification by law.
They, inter alia involve the cession, exchange or addition of territory.
They take effect only after having been ratified or approved.
No cession, exchange or addition of territory is valid without the consent of the populations concerned.
However it is not laid down how consent is to be obtained.
Treaties or agreements regularly ratified or approved have, from the time of publication, an authority superior to that of laws, provided, in the case of each agreement or treaty, that it is applied also by the other party (Article 55).
If the Constitutional Council consulted by the President of the Republic, the Prime Minister or the President of either assembly, has declared that an international obligation includes a clause contrary to the constitution, authorisation to ratify or approve it may be accorded only after revision of the Constitution (Article 54).
The Constitution thus makes provision for all contingencies.
Even though the Kings of France had power expressly conferred by the Constitutional Charter of 1830, the French Jurists denied the jurisdiction and power to the King to code territory.
The English practice, has like all other British Institutions, :grown with time.
Blackstone has the following remark : "Whatever contracts he (the sovereign) engages in, no other power in the kingdom can legally delay, resist or annul.
" Kent in his Commentaries (Vol. 1 p. 175, 10th Edn.) says "the power competent to bind the nation by treaty may alienate the public domain and property by treaty.
" Forsyth in his Opinions gives the reason that if the Nation has conferred upon its supreme executive without reserve the right of making treaties, the alienation is valid because it is then made by the reputed will of the Nation.
England, however,, soon began to make a distinction between territory ceded as a free gift in time of peace without a treaty and that ceded as a result of a war.
Forsyth asked the question whether the Crown had the ,power to alienate British territory by treaty, not following the dose of a war as for instance, by a commercial treaty and answered that the proposition seemed questionable.
He observed: "I should doubt very much whether the Crown, without the authority of Parliament, would have the legal power to cede by treaty the Channel Islands to France, there having been no war, and the cession not being made as part of the adjustment of a quarrel between the two countries." 273 Without a treaty the power to cede territory in time of peace was always denied.
Forsyth cites Grotius (de jure Belli et Pacis Vol.
11 c. 6.
sections 3 8) Puffendorf Vol.
viii C. 12, Vattel Vol. 1 C. 20 section 224, c. 21 section 260, Livy Vol.
IV c. 2 section 1 1 and Phillimore Part III c. 14 sections 261, 262.
At the, time of the cession of East Florida to Spain Lord Loughborough maintained that the Crown possessed no preroga tive to cede British Territory to a foreign State without authority of Parliament but Lord Thurlow (Lord Chancellor) said that this was based on 'the lucubrations and fancies ' of foreign writers which he rejected.
However Britain was then at war with Spain and the cession was under a treaty of peace.
In 1863 the House of Commons debated the transfer of Ionian Islands.
Lord Palmerston.
observed "But with regard to cases of territory acquired by conquest during war, and not ceded by treaty, and which are not therefore British freehold, and all possessions that have been ceded by treaty and held as possessions of British Crown, there is no question that the Crown may make a treaty alienating such possession without the consent of Parliament." Lord Palmerston cited the examples of Senegal, Minorce, Florida and Isles of Banca.
(See Hansard Part: Debates Vol.
CLXIX p. 230 231).
These were however cessions made by treaties of peace at the end of wars.
Lord Mc Nair gives the settled law of modem times.
Accord ing to him in the United Kingdom the concurrence of Parliament must always be obtained except in a very small number of cases.
He opines that if the courts are required to assist in the implementation, a law must obviously be found for courts act only in accordance with law.
If a law is obligatory obviously Parliament must have a say because no law can be passed except by Parliament.
However, even if a law be required, and yet the Crown enters into a treaty, the courts take the act as final unless a law stands in the way.
In other words unless there be a law conflicting with the treaty, the treaty must stand.
In this connection it is profitable to read what Lord Phillimore (then Sir Robert Phillimore) said in the Parliament Belge case(1).
That case was reversed on appeal in but on another point.
See also Walker vs Baird(2) .As was observed by Lord Atkin in Attorney General for Canada vs Attorney General for Ontario(3) the position may be summed up thus : there is a distinction between (1) the formation and(2) the performance of the obligation.
The first is an executive act the second a legal act if a law is required.
(1) (3) at 347.
(2) 274 The performance then has no force apart from a law that is to say unless Parliament assents to it and Parliament then accords its approval to the, first executive act.
The treaties created by executive action bind the, contracting parties and, therefore, means must be found for their implementation within the law.
This is illustrated by a few examples.
The Executive authority in the State cannot.acquire new rights against the citizens by making treaties with foreign powers.
Therefore whenever peace treaties involved municipal execution many statutes had to be passed.
Again new offences cannot be created by the, more fact of conventions on entered into with other powers.
Both principles obtain in India.
The Indian statute book contains numerous examples of conventions which have led to the passing of Municipal Laws.
The Civil Court Manual devotes many pages to such statutes, too numerous to be mentioned here and the penal law of India also affords examples One such is the law against obscenity in India which was the direct result of 4 convention.
In the United Kingdom there is almost a binding convention that cession of British territory requires approval of Parliament in the form of a statute but it must clearly have been the freehold of Britain.
But even here Parliamentary sanction is not required for cession or abandonment of territory acquired previously by conquest or cession or otherwise wrongly in British possession.
The cases of abandonment by the Crown of sovereignty over the various mandated territories are in point.
Many of them were given up without an Act of Parliament.
The protocol respecting the boundary between Tanganiyika territory and the Belgian mandated territory of Ruonda ulandi, on August 5, 1924 involving a small territory was never enacted as a law.
In 1925 it was ruled that cession of.
territory which never formed part of a self governing dominion was a royal prerogative although it was desirable that approval of Parliament be obtained.
A giving up of doubtful claims to territory is not considered to be of the same standing as a cession of territory known to be that of the Crown.
The tendency however is to have parliamentary sanction when British territory is ceded.
This is provided in the very treaty itself and it is made subject to Parliament 's ;approval.
The present practice of Crown is to obtain either prior sanction of Parliament or to seek ratification after it.
This is done by laying the treaty on the, table of both Houses for 21 days, after which time it is treated as ratified.
Although the practice since 1924 is to submit treaties to Parliament by laying them on the table of the two Houses (known as the Ponsonby rule), there have been in the past numerous instances of treaties implemented by the Crown without reference to Parliament.
These exceptions were connected with circumstances of convenience and public policy that is to say to avert a war, for consideration of territory or for rectification of boun 275 daries.
A few examples of such action in time of peace may be given.
In 1824 in treaty with Netherlands, Great Britain ceded Sumatra and the settlement of Bencollen.
In 1859 60 the Bay Islands were transferred to Honduras.
In 1867 in treaty with Netherlands an exchange of territory took place.
The Orange River Territory was transferred by an order in Council.
In 1697 by the Treaty of Reyswick Hudson Bay territory was given back to the French.
In 1813 by the Treaties of Stockholm the Island of Guadelope was ceded to Spain.
A cession of Mosquito Shore was made to Nicaragua.
All those were in time of peace and without Any reference to Parliament Hertslett 's Treaties.
In British India section 113 of the Indian Evidence Act of 1872 created a presumption in favour of such transfer which on the issue of a notification was to be held by courts to be valid.
In 1872 Scidia was given the pergannah of Broach.
In 1803 Pudokottah State was ceded the Districts of Kullanelly in Tanjore.
In 1806 Sambalpur was given to the Mahara a of Nagpur and in 1871 Scidia was given certain villages in Jhansi.
[See Aitchoson 's tre es Vol.
3 (p. 331), Vol. 4 (p. 214) and (99)].
All these were without intervention of Parliament.
It will thus appear that there is no settled practice.
The least that can be said is that cession in time of war in the United Kingdom can always be made by the Crown but in time of peace it can only be made by Parliamentary sanction whether obtained directly or under the Ponsonby rule.
In British India parliamentary sanction was not necessary.
In Damodar Gordhan vs Deoran Kanji(1) it was laid down that "the general and abstract doctrine laid down by the High Court at Bombay that it is beyond the power of the British Crown without the consent of the Imperial Parliament to make a cession of territory within the jurisdiction of any of the British Courts in India, in time of peace, to a foreign power, is erroneous.
" The question is one of domestic as well as International Law and we have been at pains to set down the practice of some countries and that obtaining in British India before dealing with this problem in the light of our Constitution and the facts obtaining here.
It will appear from the other analysis that the United States of America and the French Constitutions have a clear guidance on the subject.
In England, as no written Constitution exists, difference is made between treaties of peace when the Crown acts without, obtaining the approval of Parliament and cession in peace time when such approval must be had.
But even so a distinction is made in the case of British possessions abroad and the United Kingdom.
Again a difference is made in cases involving minor (1) [1876] 1 Appeal cases, 332.
276 changes where boundaries have to be ascertained and adjusted.
In British India advantage was taken of Section 113 of the Evidence Act in cases of cessions to Native States, Prince or Ruler.
That section is now obsolete and has been omitted in Burma and Ceylong but is still borne on our statute, although no longer required.
We may now pass on to the Indian Constitution and the facts of this case to see how it views this matter.
The Constitution did not include any clear direction about treaties such as is to be found in the United States of America and the French Constitutions.
Article I of the Constitution defined the territory of India.
It provides that India shall be a Union of States.
In the Constitution as originally enacted First Schedule classified States as A, B, C and D. After the Seventh Amendment in 1956 it is now provided that the States and the territories thereof shall be as specified in the First Schedule.
Clause (3) ,of the First Article was also amended by the Seventh Amendment but as the amendment is not material we may read here that clause as it is today.
It reads : "(3) The territory of India shall comprise (a) the territories of the States; (b) the Union territories specified in the First Schedule; and (c) such other territories as may be acquired. ' Article 3 enables Parliament by law to alter the boundaries of the existing States and it includes the power (b) to increase the area, of any State (c) diminish the area of any State or to alter the name of any State.
Then there are items Nos. 14 and 15 in the Seventh Schedule which provide as follows "14.
Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries.
War and peace.
" These entries enable laws to be enacted on these topics.
They are to be read with Article 253 which occurs in Part XI (Relations between the Union and the States) Chapter 1 (Legislative Relations) and is headed Distribution of Legislative Powers, it provides.
Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory ,of India for implementing any treaty, agreement or convention with any other country or countries or any 277 decision made at any international conference, association or other body." In point of fact it adds nothing to the legislative entries 14 and 15 above quoted but confers exclusive power of law making upon".
Parliament.
As the marginal note correctly represents the idea underlying the Article, it may be, read Legislation for giving effect to International agreements and the article only says that Parliament is the authority to make such laws.
In addition to these provisions we must also take into account Article 73(1) which lays down the Executive power of the Union.
It reads "73(1) Subject to the provisions of this Constitution, the executive power of the Union shall extend (a) to the matters with respect to which Parliament has power to make laws; and (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement Provided that the executive power referred to in subclause (a) shall not, save as expressly provided in this Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has also power to make laws.
" The question is if a law and or a constitutional amendments is necessary for implementing the Award.
Before we deal with the facts of the case before us and the.
arguments for and against executive act ion we may consider here a few cases of this Court in which a problem of cession of Indian, Territory had previously arisen because both side seek to apply those cases to the facts here.
It is convenient to view these cases in the order in which they were decided In Midnapore Zamindary Co. Ltd. vs Province of Bengal and others(1), this question was not directly in issue.
There were observations which are pertinent and must be borne in mind.
It was observed that disputes as to boundaries between two independent States cannot be the subject of inquiry of municipal courts exercising jurisdiction in either State.
The Federal Court relied upon the statement of the law by Oppenheim.
(International Law, 7th Edn., Vol. 1, p. 408) that "state territory is an object of the Law of Nations, because the latter recognises the supreme authority of every State within its territory".
The Federal Court quoted with approval the dictum of Farwell, J. in Foster vs Globe Venture Syndicate Ltd. (2) which reads: (1) [1949] P. R. 309.
(2) 278 "Sound Policy appears to, me to require that I should act in unison with the Government on such a point as that.
Assuming that the Foreign Office have already satisfied themselves that the territory in question is within the dominion of Morocco, and have applied.
to the Sultan of Morocco for redress in any given matter, it would surely be improver that 1, sitting here as a Judge of the High Court, should, in the face of that art of Her Majesty, hold as a matter of fact that the territory in question was not within the dominion of the Sultan of Morocco.
I should be contravening the act of Her Majesty acting as a Sovereign in a matter which is within the cognizance of Her Majesty 's Foreign Office.
" This statement of the law had the full approval of Viscount Finlay in Duff Development Co. vs Kalintan Government(1) where consultation between Court and Government was advocated.
This ,case does not help us to, solve the problem but it shows that Municipal Courts should be slow to interfere.
A similar question like the present arose In re : The Berubari Union and Exchange of Enclaves (2) on a reference by the President of India to this Court of certain questions concerning the Berubari Union and the exchange of certain enclaves.
As a result of the Radcliffe Award ' dated August 12, 1947 Berubari Union was included in West Bengal and was treated as such.
Certain boundary disputes, having arisen from interpretation of the Radcliffe award, the two Dominions referred the dispute to another Tribunal presided, over by Lord Justice Algot Bagge for decision.
The BaggeTribunal gave its award on 26 January, 1950.
Subsequently the question of Berubari Union was raised by Pakisthan in 1952 and on September 10 ' 1958 the Prime Ministers of India and Pakistan entered into an agreement between East and West Bengal, which involved transfer of Berubari Union to Pakistan,.
Simultaneously an agreement to exchange certain enclaves took place also.
This is known as the Indo Pakistan Agreement.
Section 290 of the Government of India Act 1935 had provided, that His Majesty could by Order in Council increase or diminish the area of any Province or alter the boundary of any Province and the Extra Provincial Jurisdiction Act of 1947 gave the necessary power in that behalf.
The question arose whether the inauguration of the Constitution had led to any change.
Three questions were referred to this Court by the President.
They were (1)Is any legislative action necessary for the implementation of the Agreement relating to Berubari Union ? (1) (2) 279 (2)If, so, is a law of Parliament relatable to article 3 of the Constitution sufficient for the purpose or is an amendment of the Constitution in accordance with article 368 of the Constitution necessary, in addition to or in the alternative ? "(3) Is a law of Parliament relatable to article 3 of, the Constitution sufficient for implementation of the agreement relating to Exchange of Enclaves or is an amendment of the Constitution in accordance with article 368 of the Constitution necessary for the purpose, in addition or in the alternative." This Court gave the following answers Q? 1.
(a) A law of Parliament relatable to article 3 (it the Constitution would be incompetent; (b) A law of Parliament relatable to article 368 of the Constitution is competent and necessary, (c)A law of Parliament relatable to both article 368 and article 3 would be necessary only if Parliament chooses first to pass a law amending article 3 as indicated above; in that case Parliament may have to pass a law on those finds under article 369 and then follow it up with a law relatable to the amended article 3 to implement the Q. 3.
Same as answers (a), (b), and (c) to Question 2.
" The contention on behalf of the Union was that the Indo Pakistan tan Agreement regarding Berubari Union only ascertained and delineated the exact boundary and did not involve alteration of territorial limits of India or alienation or cession of Indian territory.
The exchange of enclaves was also described as a part of the general and broader agreement about Berubari Union and incidental to it.
According to the Union Government the Indo Pakistan Agreement could be implemented by executive action alone without Parliamentary legislation whether with or without a constitutional amendment.
Reliance was placed on the obser vations of Mukherjee, C.J. in, Rai Sahib Ram Jawaya Kapur vs The State of Punjab (1) where dealing with the limits within which the Executive Government can function, the learned Chief Justice said "that the executive function comprised both the determination of the policy as well as the carrying it into execution.
This evidently includes the initiation of legisla (1) 7 280 tion, maintenance of order, the promotion of social and economic welfare, the, direction of foreign Policy, in fact the carrying on or supervision of the general administration of the State.
" The Court posed the question whether the Indo Pakistan Agreement had purported to settle, a boundary dispute or to divide the disputed territory half and half.
The Court found the latter as there was no attempt in the said Agreement to read or interpret the Awards previously given in that dispute.
This Court rejected the contention that it was a pure ascertainment of boundary between the two Countries.
On the other hand the Indo Pakistan Agreement ceded territory of India to Pakistan.
This conclusion was reached in respect of the Berubari Union as well as the en claves.
Since the Berubari Union was treated after the two Awards as part of India its cession would have altered the content of Entry 13 of the First Schedule to the Constitution and an amendment was held necessary.
Once the argument that this was a case of marking a boundary on the surface of the earth was rejected this Court considered the steps necessary to make cession of Indian territory.
As a result the 9th Amendment to the Constitution was enacted from December 28, 1960.
The matter came again in another form before this Court in Ramkishore Sen and Others vs Union of India(1) which is known popularly as the Berubari II case.
It was a writ petition filed in the Calcutta High Court and the appeal was brought to this Court.
It wag filed by six residents of the District of Jalpaiguri.
The complaint was that the village of Chilhati (among others) was being transferred to Pakistan as a result of the Agreement between India and Pakistan and the action was illegal.
The main point argued in the petition was that Chilhati was not covered either by the Indo Pakistan Agreement or the 9th Amendment.
According to those petitioners it was not competent to transfer Chilhati without first amending the Constitution.
The case before the High Court and in this Court was that a part of Chilhati village situated in Debiganj Police Station was a part of Chilhati in Jalpaiguri District.
This ' Court observed : "There is no doubt that if a small portion of land admeasuring about 512 acres which is being transferred to Pakistan is a part of Chilahati situated within the jurisdiction of Debiganj Thana, there can be no valid objection to the proposed transfer.
It is common ground that the village of Chilahati in the Debiganj Thana has been allotted to Pakistan; and it appears that through inadvertence, a part of it was not delivered to Pakistan on the occasion of the partition which followed (1) ; 281 the Radcliffe Award.
It is not surprising that in dividing territories under the Radcliffe Award, such a mistake should have occurred; but it is plain that what the res pondents now propose to do is to transfer to Pakistan the area in question which really belongs to her.
" It was then contended that even though that part ought to have been originally transferred to Pakistan under the Radcliffe Award, it having become part of India could not be ceded without the procedure laid down in Berubari I case.
As this portion was being administered as part of West Bengal under Entry 13 in the First Schedule it was part of the territory which immediately before the commencement of the Constitution was West Bengal.
This Court observed : "It is true that since this part of Chilahati was not transferred to Pakistan at the proper time, it has been regarded as part of West Bengal and administered as such.
But the question is : does this fact satisfy the requirement of Entry 13 on which the argument is, based? In other words, what is the meaning of the clause "the territories which were being administered as if they formed part of that Province '; what do the words "as if" indicate in the context ?" Explaining the phrase 'as if they formed part of that Province ' this Court looked into the history of this Province.
Clauses (a) and (b) of section 290 A of the Government of India Act 1935" may be reproduced "Administration of certain Acceding States as a Chief Commissioner 's Province or as part of a Governor 's or Chief Commissioner 's Province : (1)Where full exclusive authority, jurisdiction and powers for and in relation to governance of any Indian, State or any group of such States are for the time being exercisable by the Dominion Government, the Governor General may by order direct (2)that the State or the group of States shall be administered in all respects as if the State or the group of States were a Chief Commissioner 's Province; or (3)that the State or the group of States shall be administered in all respects as if the State or the group of States formed part of a Governor 's or a Chief 'Commissioner 's Province specified in the Order.
" The Court concluded thus : "In view of this constitutional background, the words "as if" have a special significance.
They refer to territories which originally did not belong to West 7Sup.
CI/69 19 7 Sup .CI/69 19 282 Bengal but which became a part of West Bengal by reason of merger agreements.
Therefore, it would be impossible to hold that a portion of Chilahati is a territory which was administered as if it was a part of West Bengal.
Chilahati may have been administered as a part of West Bengal; but the said administration cannot attract the provisions of Entry 13 in the First Schedule, because it was not administered as if it was a part of West Bengal within the meaning of that Entry.
The physical fact of administering the said area was not referable to any merger at all it was referable to the accidental circumstance that the said area had not been transferred to Pakistan as it should have been.
In other words, the clause "as if" is not intended to take in cases of territories which are administered with the full knowledge that they do not belong to West Bengal and had to be transferred in due course to Pakistan.
The said clause is clearly and specifically intended to refer to territories which merged with the adjoining States at the crucial time, and so, it cannot include a part of Chilahati that *as administered by West Bengal under the circumstance to which we have just referred.
That is why we think Mr. Mukerjee is not right in contending that by reason of the fact that about 512 acres of Chilahati were not transferred to Pakistan and continued to be admin istered by the West Bengal Government, that area 'became a part of West Bengal within the meaning of :Entry 13 Schedule 1.
The West Bengal Government ,knew all the time that it was an area which belonged to Pakistan and which had to be transferred to it.
That is, in fact, what the respondents are seeking to do; and so, it would be idle to contend that by virtue of the accidental fact that this area was administered by West Bengal, it has constitutionally and validly become a part of West Bengal itself.
That being so,there can be no ,question about the constitutional validity of the proposed transfer of this area to Pakistan.
What the respondents are seeking to do is to give to Pakistan what belongs under the Radcliffe Award.
" These two cases did not really decide the point we are called upon to decide.
The first Berubari Case dealt with transfer of territory which was de facto and de jure Indian territory and there fore as the extent of Indian territories as defined in article I read with the 1st Schedule was reduced a constitutional amendment was held necessary.
The second case concerned territory which ,was de facto under the administration by India but being de jure that of Pakistan, transfer of that territory which was not a part 283 of Indian territory was held not to require a constitutional amendment.
Neither case dealt with a boundary dispute although in the first case the case from Australia was distinguished on the ground that that case concerned the demarcation of boundaries pure and simple.
However it was not said that for adjustment of boundaries a constitutional amendment was not required.
Neither case adverted to the practice of Nations particularly Britain, nor attempted to interpret the relation of Articles 1,253 and 73 of the Constitution read with Items 14 and 15 of List I of Schedule 7.
The only thing that can be said is that this Court leaned in favour of a constitutional amendment in all cases where admitted territory of India was being ceded but not where the cession was of territory of a foreign power but de facto in possession of India.
On which side must a border dispute fall is the question for our decision.
The petitioners claim that this will fall in the dictum of the first Berubari Case.
The Union Government claims that it is analogous to the case of Chilahati in the second Berubari Case.
The question is one of authority.
Who in the State can be said to possess plenum dominion depends upon the Constitution and the nature of the adjustment.
As to the necessity of it, the Courts must assume it as a matter of law.
It is scarcely to be thought that the validity of the action can ever depend upon the judgment of a court.
Therefore all argument that the action of Government to go to arbitration was not proper must cease.
Unlike the United States of America where the Constitution is defined in ex press terms, we in our Country can only go by inferences from our Constitution, the circumstances and the precedents.
The precedents of this Court are clear only on one point, namely, that no cession of Indian territory can take place without a constitutional amendment.
Must a boundary dispute and its settlement by an arbitral tribunal be put on the same footing.
An agreement to refer the dispute regarding boundary involves the ascertainment and representation on the surface of the earth a boundary line dividing two neighbouring countries and the very fact of referring such a dispute implies that the executive may do such acts as are necessary for permanently fixing the boundary.
A settlement of a boundary dispute cannot, therefore, be held to be a cession of territory.
It contemplates a line of demarcation on the surface of the earth.
It only seeks to reproduce a line, a statutable boundary, and it is so fixed.
The case is one in which each contending state ex facie is uncertain of its own rights and therefore consents to the appointment of an I arbitral machinery.
Such a case is plainly distinguishable from a case of cession of territory known to be home territory.
The argument that if power to settle boundaries be conceded to the Executive, it might cede some vital part of India is to take an extreme view of things.
The same may even be said of Parliament itself but it is hardly to be imagined 28 4 that such gross abuse of power is ever likely.
Ordinarily an adjustment of a boundary which international Law regards as valid between two Nations, should be recognised by the Courts and the implementation thereof can always be with the Executive unless a clear case of cession is involved when Parliamentary intercession can be expected and should be had.
This has been the custom of Nations whose constitutions are not sufficiently elaborate on this subject.
The argument on behalf of the petitioners is intended to prove that the areas of Kanjarkot, Dharabanni and Chhadbet and two inlets on either side of Nagar Parkar are Indian territory.
From this it follows, that a constitutional amendment as was laid down in the first Berubari case is a condition precedent for the implementation of the Award.
The argument, therefore, follows closely the reasoning in that case.
It is contended that Article 1 read with the First Schedule to the Constitution made Kutch into a part C State and under the second paragraph of Part C itself its, territory comprised all territories which by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution, being administered as if they were a Chief Commissioner 's Province of the same name.
We have shown that the meaning of the phrase 'as if they were a Chief Commissioner 's Province of the same name ' must be understood as was, laid down in the second Berubari case.
Learned counsel attempted to challenge that decision but we consider ourselves bound by that decision.
The petitioners must establish that this area was a part of Kutch.
The petitioners, therefore, trace the history of Kutch.
Kutch is described in the White Paper on Indian States as follows : " 1 18.
Another important State which was taken over under Central administration was Kutch.
This State has an area of 17,249 Sq. miles of which 8,461 miles is inhabited by a population of a little over half a million.
The remaining area is occupied by what is known as the Rann of Kutch which is covered by water during most part of the year.
In view of the geographical situation of the State and the potentialities of this area, the development of which will require a considerable amount of money as well as technical assistance, which neither the State by itself nor the State of Saurashtra with which it was possible to integrate the State could provide, it was decided that the best solution for this State would be to treat it as a Centrally administered unit.
An Agreement (Appendix XXIX) was accordingly signed by the Ruler on 4th May, 1948 and the administration was taken over by a Chief Commissioner on behalf of the Dominion Government on 1st June, 1949. 285 This only gives the area but not the boundaries.
The Kutch Merger agreement is like any other merger agreement and was executed by the Maharao of Kutch on May 4, 1948.
It gives no clue to the boundaries and also leaves the matters at large.
Immediately after Kutch was taken over by Chief Commissioner on June 1, 1949.
On July, 29, 1949 the States Merger (Chief Commissioner 's Provinces) Order, 1949 was passed.
It provided inter alia : "2 (1) (c) the parts of States specified in the Second Schedule to this Order shall be administered in all respects as if they were a Chief Commissioner 's Province, and shall be known as the Chief Commissioner 's Province of 'Kutch." The parts of States comprising Kutch were given as follows "(i) The State of Kutch, excluding the area known as Kutchigar h situate in Okhamandal.
(ii)The part of the United State of Saurashtra which is comprised in the Adhoi Mahal of Morvi, consisting of the seven villages Adhoi, Dharna, Gamdan, Halara, Lakhpat, Rampur and Vasatava.
" Here again the boundaries are not mentioned.
All that we know of Kutch from these documents is that it had an area of 17,249 Sq. miles of which 8,788 Sq. miles were inhabited.
Obviously this is most inconclusive from our point of view since the White Paper is completely silent about boundaries.
The later history of Kutch is also not helpful.
On November 1, 1956 Kutch became a part of Bombay State.
The States Re organisation Act referred to 'the existing State of Kutch ' which did not advance matters any nearer certainly than before.
On May 1, 1960 the Bombay Reorganisation Act made the area known as Kutch a part of the State of Gujarat State.
Therefore none of these documents is of any help in determining boundaries or that the disputed areas were definitely a part of India.
There is also no evidence of administration in Dhara Banni and Chhadbet.
No revenue administration, establishment of Courts, offices, schools etc.
is proved.
The Chairman found some evidence of administrative control of Sind which contradicted the Indian case.
The evidence of leases was held to be contradicted by other evidence.
The 1957 elections show that a polling station was located at Chhadbet but the voters were the personnel of the Watch and Ward force.
Indeed the census of India (1961) shows the same 171 persons who belonged to the Watch and Ward personnel.
Kanjarkot had almost no evidence in its favour and Mr. Madhu Limaye frankly admitted this fact.
, The other petitioners gave.
no evidence about it.
Cl/69 20 286 No doubt, Pandit Jawaharlal Nehru on March 3, 1956 and Shri Lal Bahadur Shastri on May 11, 1965 asserted that the area belonged to India but that was only a statement and cannot be held to be of an evidentiary character.
We were bound to make such a statement if we were at all to lay claim to it.
After all the other side was making a similar claim and even a short skirmish also; took place.
This cannot be treated as definite evidence.
In support of the case the petitioners took us still further back into history.
The definition of boundaries of Sind in 1935 by the Surveyor General was in general terms.
It did not show whether Kanjarkot, Dhara Banni and Chhadbet were excluded from Sind altogether. 'Me Index Map prepared at the time was tot annexed to the order in Council.
This index map was relied upon by Ambassador Ales Bebler who gave opinion for us but was not accepted by the Chairman and Ambassador Nasrollah Entezam.
This was probably because the Mosaic Map which is map A on which India rested the claim did not show a continuous boundary along the entire length.
The statistical abstracts of India and Pakistan which were sought to supplement the Map before us only give areas and not boundaries and are, therefore, inconclusive.
The claim of Kutch State in 1914 when it attempted to enlarge the Rann of Kutch at the cost of Sind was not successful.
A compromise was the foundation of 'a friendly understanding ' and not the settlement of a boundary.
The Macdonald line that was then determined represents the uncontested portion of the boundary.
It was then attempted to get a confirmation of the 'Kutch Sind boundary but no boundary was settled.
It appears that the Rann itself was treated as excluded from Kutch.
Indeed the Government of Bombay continued to so regard it.
The fight before the Tribunal, therefore,, became a cartographic tussle.
Over 350 maps were exhibited by the parties and many of these maps conflicted.
Maps have been used in such cases but the source of information on which the map is based is always doubtful and maps are contradictory.
One cannot go by one set only.
In this view of the matter our reliance on Maps B32, 34,35, 36 and 37 became ineffective.
The disputed area was about 3,500 Sq. miles.
Out of this about 350 sq.
miles were included in Pakistan.
We are not sitting in appeal over the Award of the Tribunal.
Our interpretation of the Maps and facts of history is really not called for.
All that we can determine is whether there is concrete and solid evidence to establish that these areas belonged to India.
If we could reach this conclusion there may be something to be said applying the first Berubari case.
Otherwise we must hold that there was a disputed boundary and this was the occasion for marking out the final boundary on the surface of the earth.
in 287 our opinion this is what was done.
We cannot go entirely by what of the India pressed before the Tribunal.
That is only one art matter, The conditions existing prior to the Award were: (a) that there was a break of hostilities; (b) that then there was a cease fire because the dispute was to be decided by arbitration, (c) that both sides put forward their claims, (d) that there was no clear evidence of demarcation of a boundary acceptable to the parties now or in the past, (e) that the claim Map of India did not show a continuous boundary along all the border, (f) that the area is in different state at different seasons in the year, for part of.
the year it is water and for the remaining part it is land.
While it is the former it may be regarded as a part of the Rann and while it is land it may well be regarded as part of Sind.
Viewed from this angle the contention in this case comes to this : Does India cede undisputed Indian territory or is it the settlement of a disputed boundary? With regard to Kanjarkot which is to the south of Rahim ka Bazar no case was made out at all except assertions that it is Indian territory in which at least Mr. Madhu Limaye (who argued the case very fully and with considerable ability) did not join.
With regard to Mora Banni and Chhadbet it is 'clear that Map A (the claim map of India) does not show the border from Manjeet where the boundary determined by the Tribunal leaves the mainland to a point just west of the, point where the boundary determined by the Tribunal again joins the mainland.
To the south of this missing boundary lie Dhara Banni and Chhadbet.
It is, therefore, clear that at least in this part, India was not certain of the boundary.
No doubt some other maps show a continuous boundary even there but other negative it.
In other words the, exact location, of the boundary was an open question.
Dhara Banni and Chadbett are contiguous with the mainland in some seasons although they are, inundated at times and become indistinguishable from the Rann.
In these circumstances the location of the boundary at the southern fringe of Dhara Banni and Chhadbet was no more than fixing a trim boundary, according to the Tribunal.
It was well within the terms of reference and the decision being a true marking put of a disputed boundary does not amount to cession of these three areas so as to attract a constitutional amendment.
As regards the two inlets, their area is said to be less than 25 sq.
miles.
They are extremely narrow at their,southern extremities and really represent indentations in land.
At the narrow 288 points roads run 1 across them and they are Pakistan 's roads.
Treating the inlets as 'inland waters, the Tribunal determined the boundary in such away as to give them to Pakistan.
The reasons given by the Tribunal have been reproduced above by us.
We cannot say that this will mean a cession of Indian territory.
There, was a genuine dispute,regarding the title to these inlets whatever India may have thought about them.
The decision of the Tribunal is a decision on a disputed boundary and does not attract a constitutional amendment.
The only evidence was this area (which is other wise un inhabited) was in parts occupied by an Indian security force.
The existence of these Watch and Ward officers or the establishment of a polling booth for them at election time cannot connote administration such as would make them territory of India.
The Diplomatic Notes began soon after the establishment of the two Dominions and the occupation may have meant de facto control but there was no proof of de jure occupation or any other administration.
Sovereignty over an area is always a matter of inference.
As Judge Huber puts it in the Island of Palmas case "manifestations of territorial sovereignty assume, it is true, different forms, according to time and space. 'Although continuous in principle,.
sovereignty cannot be exercised in fact at every moment on every point of a. territory.
The intermittence and discontinuity compatible with the maintenance of the right necessarily differ according as inhabited or uninhabited regions are involved. . . (Award dated April 4, 1928 : 2 INT.ARB.
AWARDS 867) Garrisoning of an area (a point noted in the International Court of Justice in 1953 in, the Minquiers and Ecrehos case, 1.
C.J. Reports page 78) may be one kind of evidence.
But this applied 'to both sides.
Unless they displayed real existence of sovereignty over the area, none could be said to be in occupation de jure.
Hance the propounding of so so many maps and documents.
If we were sitting in appeal on the award, of the Tribunal we might have formed a different opinion of of the material but we are not.
The fact remains that India undertook to be bound by the award pledging, die national honour and we must implement the award.
The only question is as to the steps to be taken.
On the whole, therefore, we are of opinion that this reference began in a boundary dispute after open hostilities and was decided as such.
In which case it cannot be said that there will be a cession of Indian territory and the rule earlier laid down by us applies` if no ' constitutional amendment is required the. power of the Executive which extends to matters with respect to which 289 Parliament has power to make laws, can be exercised to correct boundaries now that they have been settled, The decision to implement the Award by exchange of letters, treating the Award as an operative treaty after the boundary has been marked in this area, is within the competence of the Executive wing of Government and no constitutional amendment is necessary.
The petitions and the appeals fail and will be dismissed but there will be no order about costs.
Shah, J. I agree with the learned Chief Justice.
The controversy raised in this group of writ petitions and appeals lies within a narrow compass whether the award, dated February 19, 1968 of the Indo Pakistan Western Boundary.
Case Tribunal may be implemented by a constitutional amendment and not otherwise.
The claimants I use that expression to refer compendiously to the appellants and the petitioners urge that the award may be implemented only by an amendment modifying the relevant provisions in Schedule 1 to the Constitution, because in giving effect to the award of the Tribunal, cession of Indian territory is involved, and.
the executive is incompetent to cede Indian territory without the authority of a constitutional amend ment.
The Union of India contends that the Award merely fixes or demarcates the boundary between the State of Gujarat in India and West Pakistan regarding which there were disputes and much friction, and by the Award no cession of Indian territory is contemplated, and for implementing it amendment of the Constitution is not needed.
The Great Rann of Kutch lies between the mainland of Sind (which is now part of Pakistan) and the mainland of Kutcha district of the State of Gujarat.
It has a peculiar surface : it is marshy land : for about four months in the year large parts of the Rann are covered with the waters of the Arabian Sea rushing through the Khori Creek.
It is however not fit for navigation.
During the rest of the year it is muddy or dry land, but not dry enough for farming.
From the very nature of the terrain, the boundaries of the Rann are shifting, its extent depending upon the violence of the natural elements in different years.
The northern boundary of the Rann has, on account of its inhospitable terrain and nomadic population on the fringe with no prospect of cultivation, remained ill defined.
Between 1816 and 1819 the Indian State of Kutch passed under the domination of the East India Company and the integrity of its territory was guaranteed by the East India Company by the treaty of 1819.
In 1843 Sir Charles Napier annexed the territory of Sind, and made it into a Governor 's ' Province, which was later turned into a Division of the Province of Bombay.
Kutch continued to be ruled by the 290 Maharao, the British authorities having posted a Political Agent at the capital of the, State.
In 1855 the Department of Survey of India commenced a revenue, and topographical survey of the Province of Sind.
The survey, called the Macdonald Survey, was completed in 1870, and survey maps were prepared and published in 1876.
It is not clear whether the southern boundaries of the Sind villages shown in the maps were village boundaries, or a boundary conterminous between the territory of Sind and Kutch State.
The next survey was undertaken under Major Pullan in 1879 and was completed in 1886.
Under this project survey of the State of Kutch was undertaken.
The northern boundary of Kutch State roughly tallied with the Macdonald alignment of the Sind boundary.
The relevant maps were published in 1882.
Another survey of a part of the boundary on the Sind side was undertaken in 1904 05 by C. F. Erskine.
The alignment of the boundary with a few corrections tallied with the Macdoland alignment.
This survey was intended to be a checking survey and related to the western region extending up to a point near Rahim ki Bazar.
About the year 1907 08 the Commissioner of Sind raised cer tain disputes relating to encroachments on the territory under his administration by the Maharao of Kutch.
The Government of India made an enquiry and a resolution, dated February 24, 1914, was.issued by the Government of the Province of Bombay, of which Sind was then a Division.
By the resolution the, disputed area was divided by a new alignment which was partly identical with the claim made by the Kutch State along the Sir Creek from its mouth to its extremity and then slightly departed from it.
In the other regions the alignment of the Macdonald Survey was adhered to.
To the resolution was annexed a map on which the rectified boundary was shown.
A Secretary in the Foreign Department of the Government of India recorded that "the Government of India observe with satisfaction that the dis pute between the Sind authorities and the Kutch Durbar has been settled by a compromise agreeable to both parties and are pleased to accord their sanction to the rectification of the, boundary line proposed in paras 9 and 10".
To the letter of the Secretary to the Government of Bombay, Political Department, consent to the rectification of the boundary was evidenced by a letter of the Maharao under his own signature.
Pursuant to this resolution in 1924, pillars were fixed up to a point known as the Badin Ja jato Rann tri junction.
In 1935 the new Province of Sind was constituted.
By the government(Constitution of Sind) Order, 1936, it 291 simply provided, therein that "In the Act and this Order, Sind means the territory known at the date of this Order, as the Division of Sind, and the boundaries of that Division shall be the boundaries of Sind.
" It was originally intended to set out by a Schedule to the Order the boundary of Sind, and an Index Map was prepared by the Surveyor General for that purpose.
By a communication from the Secretary of State for India in Council, it was recommended that a Schedule to the Order defining the boundary was not necessary and the Governor General accepted that suggestion.
The fourth survey called the Onmaston Survey was commenced in 1938 39 : it was intended to be a survey of the Eastern part of the Tharparkar District.
This survey adopted the alignment of the Macdonald Survey in that region showing a conterminous boundary between Sind and the States of Western India (now within the State of Gujarat).
With the enactment of the Indian Independence Act, 1947 (10 & 1 1 Geo.
VI c. 30) the paramountcy of the British power lapsed, and the two independent Dominions of India and Pakistan were carved out with effect from the appointed day.
By section 2(2) of the Act the territories of Pakistan were to be (b)the territories which, at the date of the passing of this Act, are included in the Province of Sind . and (c) On May 4, 1948, the State of Kutch merged with the Dominion of India and by Article 1 of the Agreement of Merger the Maharao ceded to the Dominion of India full and exclusive authority over the governance of the State.
On June 1, 1949, the administration was taken over by the Government of India , and the territory was constituted into a Chief Commissioner 's Province under section 2(1)(c) of the States Merger (Chief Commissioner 's Province) Order, 1949.
Under the Constitution the territory became a Part 'C ' State.
Its extent was determined by the 2nd paragraph in Part C to, Schedule 1 of the Constitution as "territories which by virtue of the order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution being administered, as if they were a Chief Commissioner 's Province of the same name.
" By section 8 (1) (e) of the States Reorganization.
Act, 1956, the, territory of the Part C State of Kutch was incorporated with the State of 292 Bombay, and by section 3 (a) of the Bombay reorganization Act, 1960, it was included in the newly formed State of Gujarat.
From July 1948 and onwards diplomatic notes were exchanged between the Governments of India and Pakistan concerning the boundary between the two countries in the Gujarat West Pakistan Sector.
The dispute led to great tension between India and Pakistan resulting in armed conflict in April 1965.
By an agreement dated June 30, 1965, the Government of India and the Government of Pakistan concluded an agreement For setting up machinery "for determination and demarcation of the border" in 'the area of Gujarat West Pakistan.
The agreement in so far as it is relevant provides article 1 "There shall be an immediate cease fire with effect from 0030 hours GMT on 1.
July 1965.
article 2 . article 3 (i) In view of the fact that (a) India claims that there is no territorial dispute as there is a well established boundary running roughly along the northern edge of the Rann of Kutch as shown in the pre partition maps, which needs to be demarcated on the ground.
(b) Pakistan claims that 'the border between India and Pakistan in the Rann of Kutch runs roughly along the 24th parallel as is clear from several pre partition and post partition documents and therefore the dispute involves some 3,500 square miles of territory.
(c) (ii)In the event of no agreement between the Ministers of the two Governments on the determination of the border being reached within two months of the cease fire, the two Governments shall, as contemplated in the Joint Communique of 24 October 1959, have recourse to the Tribunal referred to in (iii) below for determination of the border in the light of their respective claims and evidence produced before it and the decision of the Tribunal shall be final and binding on both the parties.
(iii)For this purpose there shall be constituted, within four months of the cease fire, a Tribunal consisting of three persons, none of whom would be a national of either India or Pakistan.
One member shall be nominated by each Government and the third mem 293 ber, who will be the Chairman, shall be jointly selected by the two Governments.
In the event of the two Governments failing to agree on the selection of the Chairman within three months of the cease fire, they shall request the Secretary General of the United Nations to nominate the Chairman.
(iv) The decision of the Tribunal referred to in, (iii) above shall be binding on both Governments, and shall not be questioned on any ground whatsoever.
Both Governments undertake to implement the findings of the Tribunal in full as quickly as possible and shall refer to the Tribunal for decision any difficulties which may arise between them in the implementation of these findings.
For that purpose the Tribunal shall remain in being until its findings have been implemented in full.
,, The Ministerial Conference contemplated to be held did not take place, and the two Governments decided to have recourse to the Tribunal to be constituted under article 3(iii) of the agreement.
A Tribunal of three members, one appointed by each State and the Chairman nominated by the Secretary General of the United Nations Organization was set up.
The agreement between the two States was reached purely as an executive act, and no legislative sanction was obtained by the Government of the Union of ' India to its implementation.
The respective claims before the Tribunal by India and Pakistan are set out in paragraph 3 (1 ) of the agreement and at pp. 7, 8 & 9 of the Introductory Part of the award which apparently had the concurrence of all the members of the Tribunal.
On behalf of the Government of India it was submitted that the boundary lay as detailed in Map 'A annexed to the award which is a mosaic of Indian Maps B 44, B 37, B 19 and B 79.
It was common ground between the two Governments that "the Gujarat West Pakistan boundary stretches from the mouth of the Sir Creek in the west to a point on the Jodhpur boundary in the each.
The Parties agree that the Western Terminus of the boundary to be determined by the Tribunal is the point at which the blue dotted line meets the purple line as depicted in Indian Map B 44 and the Pakistan Resolution Map, and that the Eastern Terminus of the same boundary is a point situated 825.8 metres below pillar 920 on the Jodhpur boundary as depicted in Pakistan Map 137.
This agreement leaves out of the matters submitted to the Tribunal the portion of the boundary along the blue dotted line, as depicted in Indian Map B 44 and the Pakistan Resolution Map, as well as the boundary in the Sir Creek.
The blue dotted line is agreed ' by both Parties to form the boundary between India and Pakistan. 294 In view of the aforesaid agreement, the question concerning the Sir creek part of the boundary is left out of consideration.
" It was also common ground that "before.
Independence the boundaries between the Province of Sind, on the one hand, and one or more of the Indian States which lay on the opposite side of the Great Rann, on the other hand, were conterminous.
Therefore, in the disputed region, apart from, India and Pakistan there is no other State that does or could have sovereignty.
There is between India and Pakistan a conterminous boundary today, whether or not there was at all times a conterminous boundary between Sind and the Indian States.
" The contention raised by Pakistan was "(a) that during and also before the British period, Sind extended to the south into the Great Rann up to its middle and at all relevant times exercised effective and exclusive control over the northern half of the, Great Rann; (b)that the Rann is A "marine feature" (used for want of a standard term to cover the, different aspects of the Rann).
It is a separating entity tying between the States abutting upon it.
It is governed by the prin ciples of the median line and of equitable distribution, the bets in the Rann being governed by the principle of the "nearness of shores"; (c)that the whole width of the Rann (without being a condominium) formed a broad belt of boundary between territories on opposite sides; that the question of reducing this wide boundary to a widthless line, though raised, has never been decided; that such widthless line would run through the middle of the Rann and that the Tribunal should determine the said tine.
" Pakistan accordingly claimed that the border of Sind extended up to the boundary shown by the thick green dotted line in Map 'B '.
It was agreed by both the Governments that "should the Tri bunal find that the evidence establishes that the disputed boundary between India and Pakistan lies along a line different from.
the claim lines of either party, the Tribunal is free to declare such a line to be the boundary.
The award to be made by the Tribunal was, it was agreed, to operate as a self executing arrangement : it was not only to declare the boundary, but to provide for fixing its location on site.
It was agreed between the Agents of India and Pakistan that 295 1. 'The basis of demarcation shall be the alignment of the boundary as delineated by the Tribunal on maps to be annexed to the Award.
Each Government should be supplied with two sets of these maps duly authenticated by the Tribunal.
3.The Representatives of the two Governments shall meet at Delhi not later than two weeks after the Award is rendered to discuss and decide upon the following matters : (i) The strength of the team.
(It is not possible to give the exact number of personnel composing the team at this stage as the strength of the team will depend upon the alignment of the boundary and the quantum of work involved which can be ascertained only after the Award is rendered).
(ii)The design and specifications of the boundary pillars and traverse pillars, the number and spacing of pillars.
(The design and specifications of the boundary pillars will depend upon the alignment of the boundary and the nature of the terrain.
The pillars may be of cement concrete, stone or masonry according to the requirements (iii)Detailed operational instructions for the guidance of the field staff.
(Such operational instructions have to be necessarily finalised only after the nature of the alignment is known).
(iv)Any other matter which requires consideration for effective demarcation work.
If the Representatives of the two Governments do not agree upon any of the above matters either Government shall immediately report to the Tribunal the matters in difference for the decision of the Tribunal.
6.The first task of the demarcation team shall be to ascertain if any control points exist and are available, These control points should be supplemented, wherever necessary, in order to determine the pillar positions on the ground in accordance with the alignment of the boundary.
If control points do not exist or are not available, a fresh series of triangulation or traverse will be carried out and control points determined and the pillar position , located with the help of these points.
296 7.Simultaneously with the location of the pillar positions, pillars shall be emplaced at each position.
" The award was published by the Tribunal on February 19, 1968.
By the decision of the Chairman of the Tribunal (Judge Gunnar Lagergren) with whom Ambassador Nasrollah Entezam agreed and Ambassador Ales Babler disagreed in part, the boundary was aligned from point W T to E T in Map 'C '.
It is unnecessary to set out the detailed description of the boundary. " claim of the Government of India to the Rann was accepted.
The claim of the Government of Pakistan to approximately 3,500 square miles out of the Great Rann was rejected except as to 350 square miles, of which more than 325 square miles are found beyond the Rann or on which the Maharao had not exercised sovereign authority .
The Tribunal unanimously accepted the claim that the Great Rann of Kutch was part of the territory of the State of Kutch and is now Indian territory.
But the majority of the Tribunal accepted the claim of Pakistan, substantially to the following three sectors : (1)Marginal area south of Rahim ki Bazar, marked by B, C, D in Map 'C ', this may be called the Kanjarkot Sector; (2)The area marked in the Map 'C ' by letters E, F, G, H, K which may be called Dhara, Banni and Chhad Bet Sector; (3)Two inlets which practically encircle Nagar Parkar which have apparently characteristic features of the Rann but are still declared to be within the border of Pakistan by drawing straight lines from points L to M and N to 0 in Map 'C '.
The reasons for declaring the first two sectors as Pakistan territory are set out (at p. 152 of the printed award) by the Chairman Judge Gunnar Lagergren as follows "Reviewing and appraising the combined strength of the evidence relied upon by each side as proof or indication of the extent of its respective sovereignty in the region, and comparing the relative weight of such evidence, I conclude as follows.
In respect of those sectors of the Rann in relation to which no specific evidence in the way of display of Sind authority, or merely trivial or isolated evidence of such a character, supports Pakistan 's claim, I pronounce in favour of India.
These sectors comprise about ninety per cent of the disputed territory.
However, in respect of sectors where a continuous and for the region intensive Sind activity, meeting with no effective opposition from the Kutch side, is established, 1. am of 297 the opinion that Pakistan has made out a better and superior title.
This refers to a marginal area south of Rahim ki Bazar, including Pirol Valo Kun, as well as to Dhara Banni and Chhad Bet, which on most maps appear as an extension of the mainland of Sind." About Item (3) Judge Gunnar Lagergren was of the view that to prevent friction and conflict the inlets ,should not be declared Kutch territory.
The effect of an international treaty on the rights of citizens of the States concerned in the agreement is stated in Oppenheim 's International Law, 8th Edn., at p. 40 thus "Such treaties as affect private rights and, generally, as require for their enforcement by English courts a modification of common law or of a statute must receive parliamentary assent through an enabling Act of Parliament.
To that extent binding treaties which are part of International Law do not form part of the law of the land unless expressly made so by the legislature." and at p. 924 it is stated The binding force of a treaty concerns in principle the contracting States only, and not their subjects.
As International Law is prim arily a law between States only and exclusively, treaties can normally have effect upon States only.
This rule can, as has been pointed out by the Permanent Court of International Justice, be altered by the express or implied terms of the treaty, in which case its provisions become self executory.
Otherwise, if treaties contain provisions with regard to rights and duties of the subjects of the contracting States, their courts, officials, and the like, these States must take steps as are necessary according to their Municipal Law, to make these provisions binding upon their subjects, courts, officials, and the like.
" In Wade and Phillips ' Constitutional Law, 7th Edn., :It is stated at p. 274 : " At first sight the treaty making power appears to conflict with the constitutional principle that the Queen by prerogative cannot alter the law of the land, but the provisions of a treaty duly ratified do not by virtue of the treaty alone have the force of municipal law.
The assent of Parliament must be obtained and the necessary legislation passed before a court of law can enforce the treaty, should it conflict with the existing law.
" 298 On p. 275 it is stated that "treaties which, for their execution and application in the United Kingdom, require some addition to, or alteration of, the existing law" are treaties which involve legislation.
The statement made by Sir Robert Phillimore, Judge of the Admiralty Court in The Parlement Belge(1) (though the ultimate decision was revised by the Court of Appeal in another point [vide (1880) 5 P. D. 197] in dealing with the effect of a "Convention regulating Communications,by Post" signed and ratified in 1876 which purported to confer upon Belgian mail streamers.
immunity of foreign warships is appropriate : "If the Crown had power without the authority of parliament by this treaty to order that the Parlement Belge should be entitled to all the privileges of a ship of war, then the warrant, which is prayed for against her as a wrong doer on account of the collision, cannot issue, and the right of the subject, but for this order unquestionable, to recover damages for the injuries done to him by her is extinguished.
This is a use of the treaty making prerogative of the Crown which I believe to be without precedent, and in principle contrary to the laws of the Constitution.
" In Walker vs Baird(2) the Judicial Committee, affirming the decision of the Supreme Court of Newfoundland, observed that the plea of act of State raised in an action for trespass against the Captain of a British fishery vessel who was authorised by the Commissioners of the Admiralty to superintend the execution of an agreement between the British Crown and the Republic of France, which provided that no new lobster factory shall be established on a certain part of the coast of Newfoundland could not be upheld.
The Judicial Committee in Attorney General for Canada vs Attorney General for Ontario and Others(3) made some observations in the context of a rule applicable within the British Empire, which are pertinent : "It will be essential to keep in mind the distinction between (1) the formation, and (2) the performance, of the obligations constituted by a treaty, using that word as comprising any agreement between two or more sovereign States.
Within the British Empire there is a well established rule that the making of a treaty is an executive act, while the performance of its obligations, if they entail alteration of the existing domestic law, requires legislative action.
Unlike some other countries, (1) [1879] 4P.D.129.
(2) [1892] A.C.491.
(3) , 347.
299 the, stipulations of a treaty duly ratified do not within the Empire, by virtue of the treaty alone, have the force of law.
If the national executive, the Government of the day, decide to incur the obligations of a treaty which involve alteration of law they have to run the risk of obtaining the assent of Parliament to the necessary statute or statutes. .
Parliament, no, doubt, . has a constitutional control over the executive : but it cannot be disputed that the creation of the obligation. .
undertaken in treaties and the assent to their form and quality are the function of the executive alone.
Once they are created, while they bind the State as against the other contracting parties, Parliament may refuse to perform them and so leave the State in default.
" These observations are valid in the context of our constitutional set up.
By article 73, subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws.
Our Constitution makes no provision making legislation a condition of the entry into an international treaty in times either of war or peace.
The executive power of the Union is vested in the, President and is exercisable in accordance with the Constitution.
The executive is qua the State competent to represent the State in all matters international and may by agreement, convention or treaties incur obligations which in international law are binding upon the State.
But the obligations arising under the agreement or treaties are not by their own force binding upon Indian nationals.
The power to legislate in respect of treaties lies with the Parliament under Entries 10 and 14 of List I of the Seventh Schedule.
But making of law under that authority is necessary when the treaty or agreement operates to restrict the rights of citizens or others or modifies the laws of the State.
If the rights of the citizens or others which are justiciable are not affected, no legislative measure is needed to give effect to the agreement or treaty.
The argument raised at the Bar that power to make treaty or to implement a treaty, agreement or convention with a foreign State can only be exercised under authority of law, proceeds upon a misreading of article 253.
Article 253 occurs in Ch.
1 of Part XI of the Constitution which deals with legislative relations: Distinction of Legislative Powers.
By article 245 the territorial operation of legislative power of the Parliament and the State Legislatures is delimited, and article 246 distributes legislative power subject wise between the Parliament and the State Legislatures.
Articles 247, 249, 250, 252 and 253 enact some of the exceptions to the rule contained in article 246. 'Me effect of article 253 is that if a treaty, agreement or convention with a foreign State 300 deals with a subject within the competence of the State legislature, the Parliament alone has notwithstanding article 246(3), the power to make laws to implement the treaty, agreement or convention or any decision made at any international conference, association or other body.
In terms, the Article deals with legislative power thereby power is conferred upon the parliament which it may not otherwise possess.
But it does not seek to circumscribe the extent of the power conferred by article 73.
If, in consequence of the exercise of executive power, rights of the citizens or others are restricted or infringed, or laws are modified, the exercise of power must be supported by legislation: where there is no such restriction, infringement of the right or modification of the laws, the executive is competent to exercise the power.
It may be recalled that cl. 3 (iv) of the Agreement included a covenant that the decision of the Tribunal shall be binding on ,both the Governments.
The power of the executive to enter into that covenant cannot also be challenged, and was not challenged.
It was conceded that if the contention based on article 253 was not accepted, the award of the Tribunal by majority of two (Judge Gunnar Lagergren with whom Ambassador Nasrollah Entezam agreed) was binding upon the Government of India.
It was accepted that as an international agreement between the two States represented by their executive Governments it became binding between the two States as expressly undertaken.
No argument was urged that there exist any grounds which may justify the Union of India from declining to implement the agreement.
The award of the Tribunal has, it was conceded, to be implemented as an international obligation.
Counsel who represented the claimants, and claimants who argued their cases, before us: adopted an eminently fair attitude.
it was not urged that the award was not binding upon the Union of India : their plea urged with moderation was that insofar as the award affected the territorial limits of India, it required a constitutional amendment.
It was not suggested that apart from the claim to exercise rights to move freely throughout the territory of India under article 19(1) (d), and to reside and settle in any part of the territory of India under article 19 (1) (e) any other right of any individual citizens was likely to be infringed by the implementation of the award.
The nature of the terrain of the disputed territory precludes any other claim being made, There are no local residents, no private property and no agriculture.
For four months in the year it is mostly under water, for the rest of the year it is marshy land.
But it was claimed that every individual citizen of India is entitled to exercise the privileges under cls.
(d) and (e) of article 19(1) in respect of territory between the boundary shown in Map 'A annexed to the award, and the boundary delineated by Map 'C" which represents, in the view of the Tribunal, the 301 border between the two States, is Indian territory and deprivation of the rights of the citizens under article 19 (1) (d) & (e) can only be achieved if the cession of what is now part of the territory of India be ceded under the sanction of a constitutional amendment Mr. Limaye petitioner in Writ Petition No. 402 of 1968 claimed that he made an attempt to enter the territory which under the award falls 'within the Pakistan Border, and was prevented by the security police from entering that area.
The only question to be determined therefore is whether in implementing the award, the.
executive Government is ceding territory of India to Pakistan.
I have set out the terms of the agreement and the disputes raised by the two States in some detail.
A review of the terms of the agreement, the unanimous introductory part of the award and the terms of the agreement relating to the implementation of the award and of the final award, make it abundantly clear that the dispute related to the boundary between the two States : it was referred as a boundary dispute, the respective claims urged were about the location of the boundary line, and the operative part of the award declared the alignment of the boundary, which has under the terms of the agreement relating to the procedure for demarcation to be filed by pillars on the alignment.
Settlement of dispute which relates to the alignment of an undefined boundary between two States involves no cession of territory by either State.
In the advice rendered to the President in a reference made to this Court under article 143 in In Re : The Berubari Uninion and Exchange of Enclaves(1) this Court was called upon to determine the true nature of the agreement between the Prime Ministers of India and Pakistan each Prime Minister acting on behalf of his Government September 10, 1958, for a division of the Berubari Union in the State of West Bengal and exchange of certain enclaves and whether the agreement may be implemented otherwise than by a constitutional amendment.
This Court held that the agreement between the two Prime Ministers did not seek to interpret the Radcliffe Award or to determine the boundary between the two States.
It Was agreed by the two Prime Ministers that a part of the Berubari Union which was allotted to India under that Award and was in occupation of India was to be ceded to Pakistan, and enclaves within Pakistan but in occupation of India de lure were to be exchanged for similar enclaves of Pakistan within Indian territory.
This Court advised the President that the appellant could be implemented under the authority of a constitutional amendment only.
The Parliament then enacted the Constitution.
(Ninth Amendment) Act, 1960, assuming power to implement the agreement and the (1) 302 two other agreements dated October 23, 1959 and January 11, 1960.
Another matter arising out of those agreements between the two Prime Ministers was brought before this Court by an appeal from an order passed by the High Court of Calcutta in a writ petition : Ram Kishore Sen & Ors.
vs Union of India and Ors.(1).
It was proposed pursuant to the Constitution (Ninth Amendment) Act, 1960, to transfer, among other territory, a part of the village of Chilahati in the occupation of the State of West Bengal in India.
A petition filed in the High Court of Calcutta challenging the validity of the proposed transfer to Pakistan on the ground that village Chilahati which was part of the Indian territory could not be transferred by the Government of India.
The High Court of Calcutta rejected the petition.
In appeal to this Court it was urged, inter alia, that the disputed part of the village Chilahati though allotted to Pakistan was not delivered to Pakistan and had become part of the State of West Bengal, because it was being administered as if it formed part of the territory of West Bengal within the meaning of Entry 13 Part 'A Sch.
I as amended by the Constitution (Amendment of the First & Fourth Schedules) Order , 1950.
The Court held that the proposed transfer of a part of the village of Chilahati, which was allotted to Pakistan under the Radcliffe Award but was not delivered, and continued to remain administered as a part of the State of West Bengal,was not constitutionally invalid.
In In Re : The Berubari Union and Exchange of Enclaves(2) there was no question of demarcation of a disputed boundary : it was a case of pure cession of Indian territory.
Ram Kishore Sen & Ors ' case(1) which dealt, among others, with the cession of 500 acres of Chilahati village related to transfer of territory which though temporarily under.
Indian administration had never become Indian territory.
The principle of the First Berubari case has no application here and the principle of the Second Berubari case is against the contention raised by the claimants.
But the claimants urge that by the alignment of the boundary under the award, territory which is Indian is now declared foreign territory, and it cannot be implemented without the authority of an amendment modifying the boundary of the State of Gujarat in which is now included the Rann of Kutch.
Now the alignment of the boundary under the award deviates from the alignment claimed by the Government of India before the Tribunal in three in ran, respects which have already been set out.
The Tribunal was of the view, on ' a consideration of the maps produced, that there did not exist at any time relevant to the proceedings a historically recognized and well established (1)[1966] 1 S.C.R. 43O. (2) 30 3 boundary in the, three sectors.
About the Kanjarkot Sector the Chairman observed : "The evidence shows that Kutch did not make any appearance in this area until 1946, and then only abortive attempts were made by the sons of the lessee, Node Sadi Rau, to go there in order to collect Panchari.
They reported that they did not even dare to stay overnight in the place.
While no specific evidence has been submitted which proves any activities undertaken by Sind subjects in Pirol Valo Kun, the reports of the Kutch lessees establish that Sind inhabitants engaged in grazing there." and further observed at p. 151 "In a sector bounded to the south by the southern limit of Pirol Valo Kun, not only is there a total absence of effective Kutch activity, but there is a consistent exercise of sovereign rights and duties by Sind autho rities, and activities of residents of Sind, in one instance, taking the form of a permanent settlement at Shakur.
" The territory in this sector is contiguous to and in fact is an extension of the mainland of Sind, and apart from the survey maps there is no evidence that it is part of the Great Rann of Kutch.
No serious argument was advanced to establish that on Kanjarkot, the Kutch State at any time exercised sovereign authority.
About the Dhara Banni and Chhad Bet Sector Judge Gunnar Lagergren observed (at p. 141) ". .on the evidence on record it may be taken as positively established that, in this century, prior to independence, outside Dhara Banni and Chhad Bet (which will be treated presently), the police and criminal jurisdiction of Sind authorities over disputed territory extended, in the sector between the eastern loop and Dhara Banni, to Ding, Vighokot and Biar Bet.
There is, however, no evidence which affirmatively proves in a conclusive fashion that the jurisdiction of Sind police and Sind courts encompassed areas west of the eastern loop, or east of Chhad Bet.
Conversely, no proof is offered that Kutch either assumed or exercised such jurisdiction over any part of the disputed territory (leaving aside Dhara Banni and Chhad Bet).
" He again observed (at p. 144) : ". .I deem it established that, for well over one hundred years, the sole benefits which could be derived 304 from those areas are enjoyed by inhabitants of Sind.
It is not suggested that the grazing as such was subject to British taxation.
Such limited evidence as there is on record seems, however, to justify the assumption that the task of maintaining law and order was dis charged by the Sind authorities , it is not even suggested that the authorities of Kutch at any time viewed such a task as forming part of their duties. .
Whatever other Government functions were required with respect to these outlying grazing grounds, on which herds of cattle were from time to time shepherded, were apparently undertaken by Sind.
Thus, the births, deaths and epidemics occurring there were recorded by the taluka office in Diplo.
It is not shown that Kutch at any time established a thana on Chhad Bet.
" He finally observed (at p. 151) "The remaining sector within the area described above in which authority, in this instance exclusively for the protection of activities of private, individuals, is shown to have been displayed by Sind authorities in a manner which is not sporadic but consistent and effective, is Dhara Banni and Chhad Bet.
As stated earlier, the activities undertaken by Kutch in these areas cannot be characterised as continuous and effective exercise of jurisdiction.
By contrast 9 the presence of Sind in Dhara Banni and Chhad Bet partakes of characteristics which, having regard to the topography of the territory and the desolate character of the adjacent inhabited region, come as close to effective peaceful occupation and display of Government authority as may reasonably be expected in the circumstances.
Both the inhabitants of Sind who openly used the grazing grounds for over one hundred years and the Sind authorities must have acted on the basis that Dhara Banni and Chhad Bet were Sind territory.
" The claimants urged that the territory in this Sector belonged to the Kutch State and that claim was supported by survey maps, correspondence between the officials of Kutch State and the British Administration, assertions made in the Annual Administration Reports for 75 years before 1947, Statistical Abstracts relating to British India, Bombay Administration Reports Gazetteers, Memorandum on Indian States and a number of official publications, and by the Resolution of the Government of Bombay, dated 305 February 24, 1914.
It would be a fruitless exercise to enter upon this historical material.
The survey and other maps do not Jay down a uniform or consistent alignment.
Macdonald Survey appears to align the boundary of Sind towards the north even of Rahim ki Bazar which is admittedly on the mainland of Sind, and was never claimed as part of the Rann.
This lends support to the view that the Macdonald Survey report was rough, and was intended to be a topographical map.
The maps prepared at the later surveys follow, with some variations and rectifications, the Macdonald Survey alignment, but those survey maps also do not indicate an international boundary.
About Pullan 's Survey it may be observed that Pullan himself stated that he had "carefully abstained from laying down" or suggesting a boundary (vide Resolution of the Government of Bombay July 3 and August 7, 1885).
The attitude adopted by the Government of Bombay which is set out in the resolution was that they "did not desire" that any "question of boundaries in the Rann between the Province of Sind and Kutch" should beraised.
Erskines Survey also is open to the criticism that as anofficer of the Sind Government he made statements in his letter, dated November 23, 1905, disowning any intention to determine the boundary of the Rann, of Kutch.
The maps prepared in the Erskine Survey were not accepted as evidencing a boundary.
Even the Maharao of Kutch did not agree to accept the alignment.
By the resolution of 1914, it does appear that an attempt was made to resolve the dispute about certain disputed pockets, between the British authorities governing Sind and the Maharao of Kutch.
But a review of the correspondence of 1905, followed by erection of Pillars up to the western tri junction, and establishment of a customs line in 1934 appear to suggest that the boundary east of the trijunction was in a state of uncertainty.
Conflicting claims were made from time to time by the British authorities and the Maharao of Kutch; and about the exercise of sovereign rights over the areas now in dispute the evidence is very scrappy and discrepant.
An. attempt to determine how far general statements of claim and refusal thereof were applicable to the sector now in dispute would serve no useful purpose.
Different positions were adopted by the officers of the Government of India according as the exigencies of a particular situation demanded.
The statements or assertions do not evidence an existing state of affairs; they were only made to support or resist.
claims then made, or to serve some immediate purpose.
The claimants before us were unable to pinpoint any definite and reliable piece of evidence which established the exercise of sovereign authority by the Maharao of Kutch over the second sector.
It is true that the territory of the entire State of Kutch merged with the Dominion of India.
That territory was treated as Indian, 3 06 territory and was at first governed as a separate administrative unit.
But unless it be established that the disputed sectors were part of the Kutch State, no firm conclusion can be drawn from the agreement of merger.
Undoubtedly the Government of India claimed at all material times the territory in Sectors (1) and (2).
In respect of the Kanjarkot Sector there is no evidence of exercise of sovereign authority by the Maharao of Kutch at any point of time.
The sector is apparently contiguous to and an extension of the mainland of Sind.
It is not shown that it has the characteristics of the Rann terrain.
The Dhara Banni and Chhad Bet Sector is also apparently an extension of the mainland of Sind.
There is no reliable evidence about the enjoyment of the benefits of the land in the Sector by the inhabitants of Kutch.
Evidence of the exercise ,of suzerainty by the Maharao of Kutch over that Sector is also sadly lacking.
The sector has more pronounced features of the Rann terrain, but it appears also to be contiguous to the mainland of Sind.
Even granting that the evidence about the exercise of sovereign authority by the British authorities governing Sind since 1843 over the Rann of Kutch is inconclusive, the claim by Indian citizens to exercise fundamental rights in respect of the territory in that Sector may be entertained only if it be established that the territory is found to be originally governed by the Maharao of Kutch.
On that part of the claim, concrete evidence is wanting.
It was contended that the total area of Kutch according to the White Paper on Indian States was 17,249 square miles out of which the area of the Kutch mainland was 8,461 square miles and the balance was 8,788 square miles which consists of the Great and Little Ranns of Kutch.
In the Kutch Administration Report for 1910 11 and thereafter the area of Kutch was stated to be "7616 square miles" and it was stated that "the Rann also belongs to the.
Maharao".
In 1931 a correction was introduced that the area of the State was 8249.5 square miles 'exclusive of the Rann of Kutch which belongs to the Kutch State territory.
The Bombay Administration Reports from 1871 72 to 1923 24 give varying figures as the area of Kutch and make a general statement that the Rann of Kutch belongs to the State.
The statement in the Imperial Gazetteers of 1881, 1885, 1908, 1909 contain State ments about the areas which are so discrepant that no reliance can be placed upon them.
Similarly the recitals about the extent of the Rann, in the Gazetteers of the Bombay Presidency are also imprecise.
The only safe conclusion that can be drawn from these documents is that the Rann was part of Kutch State but do not lend any assistance in determining the northern boundary of the Rann.
30 7 It is stated in the affidavit of Mr. Dholakia that the area of the Kutch District was 16567.3 square miles inclusive of 9000 square miles of Rann territory.
But evidently the area of the Rann is a rough estimate.
In the Census of 1941 the area of Kutch was shown as 8,461 square miles and in 1951 Census as 16,724 square miles inclusive of Rann.
There is no evidence that the figures are based upon any precise survey in the context of an accepted boundary.
The Census of 1961 shows that there were 171 residents in the Chhad Bet.
But these consist exclusively of the Border Guards posted in that area.
It is conceded that there is no local population in Chhad Bet and Dhara Banni.
The inclusion of Chhad Bet in the area within a polling station for the 1967 General Elections also supports merely an assertion that it was claimed to be Indian territory.
It is not evidence of the fact that it was territory over which the Maharao of Kutch exercised sovereign rights and which by merger of the territory became Indian territory.
The evidence on which reliance was mainly placed in support of the claim was the conflicting alignments in the survey and other maps, the claims made by the Maharao of Kutch aid the Government of India which were not accepted.
Exercise of de facto authority over the territory in the sectors after the disputes took concrete form is evidence of an assertion merely and not evidence of pre existing sovereign rights.
The merger of the State of Kutch with the Dominion of India does not result in vesting of sovereign authority over the territory of the two sectors, unless the suzerainty of the State of Kutch is established.
The boundary between the two States was indefinite and by the award of the Tribunal the true boundary of India and Pakistan is determined: the award does not purport to, nor does it operate as giving rise to, an obligation to cede Indian territory.
The two inlets which practically encircle Nagar Parkar are declared to be within Pakistan Border on the ground that it would be inequitable to recognise those inlets as foreign territory.
It was said by the Chairman of the Tribunal that the existence of such foreign territory may be "conducive to friction and conflict".
Regarding the two inlets the position is different since the ultimate decision of the Tribunal is founded on considerations of expediency and not on strict determination of rights.
We have no power to sit in appeal over the decision of the Tribunal.
The ground on which the award is made against the claim made by the Government of India does not strengthen the rights of the claimants to relief.
Unless there is evidence to show that the inlets were territory over which the Maharao of Kutch had sovereign rights, acceptance of the award is not required to be implemented by a constitutional amendment.
The total area of the inlets, we are 308 informed by counsel on both sides, does not exceed 25 square miles.
In the turbulent times which preceded the occupation of Sind by the East India Company in 1843 or even thereafter it is unlikely that any authority was exercised by the Maharao of Kutch over these inlets.
It appears from some of the maps that at the extremities the inlets are very narrow : and roads cross these inlets from Nagar Parkar, which is of the shape of a penninsula into the mainland of Sind.
It is difficult to accept that at any time effective sovereign authority could have been exercised over these inlets by the Maharao of Kutch.
There is no evidence of exercise of any such right, before or after the occupation of Sind.
There being no evidence of exercise of sovereign authority by the Maharao of Kutch, this Court cannot treat it as part of Indian territory.
On the view the claim made by the claimants that in imple menting the award of the International Tribunal an attempt is made to cede any part of the territory which formed part of the State of Kutch before 1948, or was in de facto occupation and in respect of which sovereign authority was exercised by the Maharao of Kutch.
The award does no more than define on the surface of the earth a boundary which has at all material times remained indefinite, because of the nature of the terrain, the shifting nature of the border of what was called Rann, the highly discrepant and conflicting claims made from time to time by the British authorities as well as the Kutch State authorities before the State merged with the Dominion of India in 1948, and the persistent refusal of the British authorities, though there were several occasions to demarcate the boundary between Sind and the Rann of Kutch.
The appeal and the writs are dismissed.
There will be no order as to costs in the appeals and the writ petitions.
R.K.P.S. L7Sup.
CI/69 2,500 27 2 70 GIPF.
R.K.P.S. Appeals and petitions dismissed.
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The Constitution of India, article 1 defines the "territory of India" as including the territories of the States; and the States and 'the territories thereof are as specified in the First Schedule.
Article 3 enables Parliament by law to alter the boundaries of the existing States and it includes the power to increase the area of any State or diminish the area of any State.
The power to legislate in respect of treaties lies with the Parliament by virtue of entries 10 and 14 of List I of Seventh Schedule, namely, "Foreign affairs; all matters which bring the Union into relation with any foreign country" and "entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries".
Article 253 provides that Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body.
Article 73 lays down that the executive power of the Union 'shall extend to "the matters with respect to which Parliament has power to make laws ' and to "the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue 'of any treaty or agreement".
With the enactment of the Indian Independence Act, 1947, and the lapse of Paramountcy of the Crown the State of Kutch merged with the Dominion of India.
The territory was constituted into a Chief Commissioner 's Province and under the Constitution the territory became a Part C State.
Its extent was determined by Part C to Sch. 1 of the Con stitution as "territories which by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before the commencement of the Constitution being administered as if they were a Chief Commissioner Province, of the same name".
Kutch was incorporated in the State of Bombay by the and was included in the new 'State of Gujarat by the Bombay Reorganisation Act, 1960.
The Great Rann of Kutch lies between the mainland of Sind (now part of Pakistan) and the mainland of Kutch, For four months in the year it is mostly under water, for the rest of the year it is marshy land.
From the very nature of the terrain the boundaries of the Rann are shifting, its extent depending on the violence of natural elements in different years.
The northern boundary of the Rann, therefore, always remained ill defined.
From 1948 onwards diplomatic notes were exchanged between the Governments of India and Pakistan concerning the boundary between the two countries in the Gujrat West Pakistan Sector.
The dispute led 'to great tension between the two countries resulting in armed conflict in 255 1965.
In June 1965 the Governments of India and Pakistan concluded ,an agreement for setting up a Tribunal "for determination and demarcation of the border" in the area of Gujarat West Pakistan. 'Both Governments undertook to implement the findings of the Tribunal.
The award to be made by the Tribunal was, it was agreed, to operate as a self executing arrangement; it, was not only to declare the boundary but also to provide for fixing its location on site.
By award dated February 19, 1968, the Tribunal accepted the claim of Pakistan to three sectors and two inlets in the Rann of Kutch.
The petitioners, who claimed infringement of the fundamental rights guaranteed under article 19(1)(d)(e) and (f) of the Constitution, moved this Court under article 32 to restrain the Government of India from ceding to Pakistan the territories in the Rann of Kutch awarded by the Tribunal.
None of the petitioners claimed that the award bad to be rejected.
They contended that the territories were part of India and had always beep so from the establishment of the two Dominions, that India had exercised effective administrative control over them and that giving up a claim :to those territories involved cession of Indian territory which could only be affected by an amendment of the First Schedule to the Constitution.
The Union of India, on the other hand, contended that no cession of territory was involved since the dispute concerned the settlement of boundary which was uncertain, that the award itself was the operative treaty and after demarcation of boundary it was only necessary to exchange letters recognising the established border.
HELD : The Award does not purport to nor does it operate as giving rise to an obligation to cede Indian territory and therefore no constitutional amendment is necessary.
The decision to implement the Award by exchange of letters, treating the award as an operative treaty after the boundary has been marked, is within the competence of the executive wing of the Government.
[288 H 289 B] (Per Hidayatullah, C.J., Hamaswami, Mitter and Grover, JJ.) The Award has been accepted by the Government of India and therefore it is binding.
An examination of International Arbitration Awards only reveals that generally an Award is not accepted when the terms of submission are departed from or there are fatal missions,contradictions obscurities or the arbitrators substantially exceeded their jurisdiction.
None of these factors obtains here and the petitioners have rightly refrained from challenging the binding nature of the Award.
[269 F] (ii) When a treaty or an Award after arbitration comes into existence it has to be implemented and this can only be if all the three branches of Government, to wit, the legislature the executive and the judiciary, or any of them, possesses the power to implement it.
The practice of nations is different in the matter of ': implementation of treaties and arbitration awards in boundary disputes in particular.
The question is one of domestic as well as International Law.
In the United States of America a treaty is the Supreme Law and it is only when the terms of a treaty require that a law must be passed that it has to be so passed.
Under the French Constitution treaties that require ratification by law include treaties of cession, exchange or addition of territory.
In England, as no written constitution exists, difference is made between treaties of peace when the Crown acts without obtaining the approval of Parliament and session in peace time when such approval must be had.
But even so a distinction is made in the case of British possessions abroad and the United Kingdom.
Again a difference is made in cases involving minor changes where boundaries have to be ascertained and adjusted.
[275 G] 256 Foster vs Neilson ; ; Dickinson Law of Nations, Blackstone 's Commentaries, Forsyth Hansard vol.
CLXIX p: 230, 231; The Parlement Belge, ; Walker vs Baird and Attorney General for Canada vs Attorney General for Ontario, it 347, referred to.
In British India Parliamentary sanction was not necessary for cession of territory.
The Constitution of India does not contain any clear direction about treaties such as is to be found in the United States and French Constitutions.
Therefore in our country we can only go by inferences from our Constitution, the circumstances and precedents.
The legislative entries which enable Parliament to enact laws in respect of treaties are to be read with article 253.
The Article adds nothing to the legislative entries but confers exclusive power of law making upon Parliament.
[276 B, C; 277 A B] The precedents of this Court are clear only on one point, namely, that no cession of Indian territory can take place without a constitutional amendment.
The first Berubari case dealt with transfer of territory which was de facto and de jure Indian territory and therefore as the extent Indian territories as defined in article 1 read with the 1st Schedule was reduced a constitutional amendment was held necessary.
The second Berubari case concerned territory which was de facto under administration by India but being de jure that of Pakistan, transfer of that territory which was not a part of Indian territory was held not to require a constitutional amendment.
Neither case dealt with a boundary dispute.
[282 G283 C] In re : The Berubari Union and Exchange of Enclaves (The First Berubari case), and Ram Kishore Sen vs Union of India (The second Berubari 'case); , , explained.
The question on which side a disputed border falls is one of authority.
Who in the State can be said to possess Plenum dominium depends upon the Constitution and the nature of adjustment.
As to the necessity of it courts must assume it as a matter of law.
It is scarcely to be thought that the validity of the action can ever depend upon the judgment of a court.
A boundary dispute and its settlement by an arbitral.
tribunal cannot be put on the same footing as cession of territory.
An agreement to refer the dispute regarding boundary involves the ascertainment and representation on the surface of the earth a boundary line dividing the neighbouring countries and the very fact of referring such a dispute implies that the executive may do such acts as are necessary, for permanently fixing the boundary.
Ordinarily, an adjustment of a boundary, which International Law regards as valid between two nations, should be recognised by the courts and the implementation thereof can always be with the executive unless a clear case of cession is involved when parliamentary intercession can be expected and should be had.
This has been the custom of nations whose constitutions are not sufficiently elaborate on this subject.
[283 D284 B] (iii)The petitioners have not established that the territories ceded to Pakistan was a part of Kutch.
The phrase "as if they were a Chief Commissioner 's Province of the same name" in Part C, to first Schedule of the Constitution must be understood as was laid down by this Court in the second Berubari case where the word "as if" was held to refer to "territories which originally did not belong to West Bengal but which became a part of West Bengal by reason of merger agreements.
" The history of Kutch does not establish that the territories were part of Kutch.
The White Paper on Indian States only gives the area of Kutch not the boundaries.
The Kutch merger agreement gives no clue to the boundaries 257 and also leaves the matter at large.
Also, in the States Merger (Chief Commissioner 's) Province Order, 1949, in the and in the Bombay Reorganisation Act, 1960 the boundaries of Kutch are not mentioned.
Therefore, none of these documents is of any help in determining boundaries or that the disputed area was definitely a part of India.
The assertion of the Prime Minister of India in 1956 and later in 1965 that the area belonged to India was only a statement and cannot be held to he of an evidentiary character.
The claim map and other evidence produced by India before the Tribunal show that there has never been clear demarcation of boundary in this area.
[281 H, 286 AB] (iv) There is no evidence of administration 'of the disputed area by India.
The existence of Watch and Ward Officers or the establishment of a polling booth for them at election time cannot connote administration such as would make them territory of India.
The diplomatic notes began soon after the establishment of the two dominions and the occupation may have meant de facto control but there was no proof of de jure occupation or any other administration.
Sovereignty over an area is a matter of inference and unless real existence of sovereignty over this area is proved India cannot be in de jure occupation.
(Per Shah J.) : (i) The Constitution of India makes no provision making legislation a condition of the entry into an international treaty in times of war or peace.
The executive is qua the State competent to represent the State in all matters international and may incur obligations which in International Law are binding upon the State.
There is a distinction between the formation and the performance of the obligations constituted by a treaty.
Under the Constitution the obligations arising under the agreement or treaties are not by their own force binding upon Indian nationals or others.
The power to legislate in respect of treaties lies with the Parliament and making of law under that authority is necessary when the treaty or agreement operates to restrict the rights of citizens or others or modifies the laws of the State.
If the rights of the citizens and others which are justiciable are not affected, no legislative measure is needed to, give effect to.
the agreement or treaty.
[299 D F] The Parlement Belge, , Walker vs Baird, and Attorney General for Canada vs Attorney General for Ontario, , referred to.
The argument that power to make or implement a treaty agreement or convention can only be exercised under authority of law proceeds upon a misreading of article 253.
The effect of article 253 is that if a treaty agreement or convention with a foreign State deals with a subject matter within the competence of the State Legislature, the Parliament alone has,.
notwithstanding article 246(3) the power to make, laws to implement the treaty agreement or convention.
In terms the Article deals with legislative power; thereby power is conferred upon the Parliament which it may not otherwise possess.
But it does not seek to circumscribe the extent of the executive power conferred by article, 73; the exercise of this power must be supported by legislation only if in consequence of the exercise of the power, rights of citizens or others are restricted or infringed or laws are modified.
[299 G 300 C] (ii) In implementing the Award there is no cession of the territory of India to Pakistan.
A review of the terms of the agreement, the unanimous introductory part of the Award and the terms of the agreement relating to the implementation of the Award and the final Award, make it abundantly clear that the dispute relates to the boundary between the two. 2 58 States, settlement of dispute which relates to the alignment of an undefined boundary between two States involves no cession of territory by either State.
In the First Berubari case this Court advised that the Indo Pakistan agreement could be implemented under the authority of a constitutional amendment only, because, there was no question of demarca tion of a disputed boundary; it was a case of pure cession of territory.
Therefore the principle of the first Berubari case has no application to the facts of the present case.
The second Berubari case related to transfer of territory which though temporarily under Indian administration had never become Indian territory.
The principle of this case is against the contention raised by the petitioners.
[301 C 302 F] In re : The Berubari Union and Exchange of Enclaves (the first Berubari case),, and Ram Kishore Sen V. Union of India, (the second Berubari case); ,, explained.
There is no definite and reliable piece of evidence which establishes ;that the disputed seam were part of the State of Kutch and, therefore, part of the territory of India.
Conflicting claims were made from time to time by the British authorities and the Maharao of Kutch; and about the exercise of sovereign rights over the areas now in dispute the evidence in scrappy and discrepant.
Different positions were adopted by the officers of the Government of India according as the exigencies of a particular situation demanded.
These statements or assertions do not evidence an existing state of affairs; they were only made to support or resist claims then made, or to serve some immediate purpose.
[305 F H] Regarding the two inlets the ultimate decision of the Tribunal is founded on considerations of expediency and not on strict determination of rights.
But the ground on which the Award is made against the claim made by the Government of India, does not strengthen the rights of the claimants for relief.
There being no evidence of exercise of sovereign authority over the inlets by the Maharao of Kutch this Court cannot treat them as part of Indian territory.
Exercise of de facto authority over the territory in the ' sectors after the disputes took concrete form is evidence of an assertion merely and not evidence of pre existing sovereign rights.
,The merger of the State of Kutch with the Dominion of India does not result in vesting of sovereign authority over the territory unless the suzerainty of the State of Kutch is established.
The Award does no more than define on the surface of the earth a boundary which has at all material times remained indefinite because of the nature of the terrain, the shifting nature of the border of what was called Rann, the highly discrepant and 'conflicting claims made from time to time by the British authorities as well as the Kutch State authorities before the State merged with the Dominion of India in 1948 and the persistent refusal of the British authorities, though there were several occasions, to demarcate the boundary between Sind and the Rann of Kutch.
[307 G; 208 D E]
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2571.txt
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riminal Appeals Nos. 22 and 23 of 1957.
Appeals by special leave from the judgment and order dated August 7, 1956, of the Punjab High Court at Chandigarh in Criminal Appeals Nos. 253 and 250 of 1956 and Murder Reference No. 38 of 1956 arising out of the judgment and order dated May 21, 1956, of the Court of Additional Sessions Judge at Ludhiana in Trial No. 17 of 1956 and Case No. 9 of 1956.
Gyan Chand Mathur, for the appellant in Criminal Appeal No. 22 of 1957.
R. L. Kohli, for the appellant in Criminal Appeal No. 23 of 1957.
Gopal Singh and T. M. Sen, for the respondent in both the appeals.
April 10.
The Judgment of the Court was delivered by J.
GAJENDRAGADKAR J. Harbans Singh, Gurdial Singh and Sarwan Singh were charged in the court of the learned Additional Sessions Judge at Ludhiana with having committed an offence of murder punishable under section 302 of the Indian Penal Code.
The case against them was that they, along with Banta Singh, the approver, had intentionally caused the death of Gurdev Singh by inflicting injuries on his person with kirpan, toki and dang on November 23, 1955, within the limits of the village Sohian, police station Jagraon.
The learned trial judge held that the charge framed against all the three accused had been proved beyond a reasonable doubt.
That is why he convicted them of the offence charged and sentenced each one of them to death.
On appeal to the High Court of Punjab, the order of conviction and sentence imposed against Harbans Singh and Sarwan Singh was confirmed whereas the order of conviction and sentence against Gurdial Singh was set aside and he was ordered to be acquitted and discharged.
Accused No. 1, Harbans 955 Singh, and accused No. 3, Sarwan Singh, have come to this Court in appeal by special leave.
It would be convenient to state the prosecution case very briefly at the outset.
Gurdev Singh, the victim of the assault, was the brother of accused No. 1.
It appears that the father of the two brothers had left the Ga village some years ago and is apparently no longer alive.
Harbans Singh was a shirker and a waster and that made Gurdev Singh impatient.
When Gurdev Singh tried to improve Harbans Singh, Harbans Singh resented Gurdev Singh 's efforts and his irritation and annoyance had reached such a stage and extent that he began to plan his murder.
According to the story of the prosecution, Harbans Singh got in touch with his friends Sarwan Singh and Gurdial Singh and requested them to assist him in his plan to get rid of his brother.
It appears that Gurdial Singh himself was on inimical terms with Gurdev Singh because he was angry with Gurdev Singh for having cut jokes with his sister.
A few days before the commission of the offence, Harbans Singh and Sarwan Singh were sitting on a canal bank near their village enjoying their drink when Banta Singh joined them.
He was also asked to partake of the liquor and was told about the plan to murder Gurdev Singh.
A few days later there was another meeting between these three men and it was agreed that an attempt should be made to procure arms for the purpose of carrying out the plan Rakha was accordingly approached and as a result of the negotiations he sold a country made pistol and a cart ridge for Rs. 40 to Sarwan Singh.
Rakha was also requested to join the conspiracy.
He was however unwilling to respond and though he did not openly say 'no ' to the proposal, at the material time he refused to join the conspirators.
On the day of the offence itself, Sarwan Singh, Gurdial Singh and Banta Singh went by a bus together and got down near the road which leads to the village Sohian.
Then they proceeded on foot until they met Harbans Singh near the canal minor.
Harbans Singh then advised his co conspirators to hide themselves in the bushes.
He then fetched a bottle of liquor and all the four drank from it, This 956 took them to sunset time, when Harbans Singh left the place and promised his friends that he would send his brother to the place where they would lie concealed.
He also told them that he would give a signal as soon as his brother would approach the place of their concealment by clapping his hands.
In accordance with this plan Harbans Singh persuaded his brother to go ahead.
Sarwan Singh then coughDed and this raised an apprehension in the mind of Gurdev Singh that people for him.
So he some may be lying in wait called out to his brother Harbans Singh and said that he suspected that there were some people there.
Harbans Singh assured him that he would soon join.
Meanwhile, according to plan, the three assailants emerged from their place of concealment and attacked Gurdev Singh.
Harbans Singh also arrived on the scene and joined them in the assault.
The prosecution case is that Harbans Singh was armed with a kirpan, Gurdial Singh with a lathi, the approver Banta Singh with a toki and Sarwan Singh used a kirpan.
The attack was undoubtedly brutal and callous and it resulted in as many as 69 incised wounds and two contused injuries which had been caused with a blunt weapon.
Having assaulted (Gurdev Singh in this brutal manner his assailants ran away.
Harbans Singh returned to his village and raised a hue and cry.
He complained that his brother had been carried away by a number of persons and he pretended that his brother 's assailants were Darshan Singh, Jagat Singh, Gurnam Singh and Banta Singh of the village Pona.
The villagers , however, found that Harbans Singh was not keen on joining them in rendering help to the victim or in pursuing his assailants.
Finally, however, he was persuaded to accompany the villagers and the villagers in the company of Harbans Singh reached the stop where Gurdev Singh 's body was found in a pool of blood.
Thereafter Harbans Singh went to the police station and made a report of the occurrence at about 10 30 p.m.
He alleged in his report that his brother had been murdered by the aforesaid four persons of the village of Pona.
Purporting to act on this report, the police 957 reached the spot in the early hours of the next morning and so the investigation commenced.
It is clear that the police had their own doubts about the truth of the report made by Harbans Singh from the start and they suspected that it was Harbans Singh and his friends who were concerned with the commission of this foul offence.
Sarwan Singh, Gurdial Singh and Banta Singh were arrested on November 25 and Harbans Singh on November 26.
The investigating officer recovered from the person of Sarwan Singh a blood stained shirt and chadar and obtained from Sarwan Singh 's house a pistol and an empty cartridge on information given by him from the person of Gurdial Singh a blood stained turban was recovered and the information given by him led to the discovery of a stick or lathi.
This lathi was blood stained.
From Banta Singh 's person a blood stained chadar was recovered and the information given by him led to the discovery of a kirpan and a toki from a well in which they were thrown after the commission of the offence.
The prosecution also alleges that, on the information given by Harbans Singh, some blood stained clothes were recovered from Gurdev Kaur sister of Gurdial Singh.
It appears that, on November 30, Sarwan Singh offered to make a confessional statement and the confession was in fact recorded on the same day.
On December 2, Banta Singh was given pardon and made an approver.
That in brief is the prosecution case.
All the three accused deny any connection with the commission of the offence.
The learned Sessions Judge held that Banta Singh was a reliable witness.
Since Banta Singh is, however, an approver the learned Judge considered whether his evidence had received the requisite corroboration in material particulars and he held that it did.
The learned Judge also found that the confession made by Sarwan Singh was voluntary and true and in his opinion the evidence of Rakha and the other circumstantial evidence with regard to the blood stained clothes of the respective accused persons and the recovery of the weapons afforded sufficient corroboration in material particulars.
That is how he reached the conclusion that the charge of murder has 958 been proved against all the three accused.
On appeal it has been held by the learned Judges of the High Court of Punjab that the evidence given by the approver, Banta Singh, against accused Gurdial Singh was very discrepant and therefore unreliable and so they found that the case against Gurdial Singh had not been proved beyond a reasonable doubt.
In the result Gurdial Singh was acquitted; but the view taken by the learned Judges in respect of the prosecution case against Harbans Singh and Sarwan Singh was that the approver 's evidence supplied the basis for the prosecution case against them and since it was corroborated by circumstantial evidence to which reference has already been made and by the confession of Sarwan Singh, there was no difficulty in confirming the order of conviction and sentence passed against these two accused persons.
It is this view which is challenged before us by the two appellants in the present appeals.
Since the present appeals have been filed by special leave under article 136 of the Constitution, it would normally not be open to the appellants to raise questions of fact before us.
Prima facie the orders of conviction and sentence passed against the appellants are based on concurrent findings of fact and we would be slow to interfere with such findings unless we are satisfied that the said findings are vitiated by errors of law or that the conclusions reached by the courts below are so patently opposed to well established principles of judicial approach, that they can be characterised as wholly unjustified and even perverse.
On behalf of Harbans Singh, it has been urged.
before us by Mr. Kohli that the judgment of the High Court of Punjab suffers from a serious infirmity in that, in dealing with the evidence of the approver, the learned Judges do not appear to have addressed themselves to the preliminary question as to whether the approver is a reliable witness or not.
The problem posed by the evidence given by an.
approver has been considered by the Privy Council and courts in India on several occasions.
It is hardly necessary to deal at length with the true legal position in this matter.
An accomplice is undoubtedly a competent witness under 959 the Indian Evidence Act.
There can be, however, no doubt that the very fact that he has participated in ,the commission of the offence introduces a serious stain in his evidence and courts are naturally reluctant to act on such tainted evidence unless it is corroborated in material particulars by other independent evidence.
It would not be right to expect that such independent corroboration should cover the whole of the prosecution story or even all the material particulars.
If such a view is adopted it would render the evidence of the accomplice wholly superfluous.
On the other hand, it would not be safe to act upon such evidence merely because it is corroborated in minor particulars or incidental details because, in such a case, corroboration does not afford the necessary assurance that the main story disclosed by the approver can be reasonably and safely accepted as true.
But it must never be forgotten that before the court reaches the stage of considering the question of corroboration and its adequacy or otherwise, the first initial and essential question to consider is whether even as an accomplice the approver is a reliable witness.
If the answer to this question is against the approver then there is an end of the matter, and no question as to whether his evidence is corroborated or not falls to be considered.
In other words, the appreciation of an approver 's evidence has to satisfy a double test.
His evidence must show that he is a reliable witness 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.
Mr. Kohli 's contention is that since the learned Judges of the High Court of Punjab have failed to address themselves to this initial question, their appreciation of the approver 's evidence suffers from a serious infirmity.
In our opinion, this contention is well founded.
We have carefully read the judgment delivered by the High Court but we find no indication in the whole of the judgment that the learned Judges considered the character of the approver 's evidence and reached the 960 conclusion that it was the evidence given by a reliable witness.
The only statement which we find in the judgment dealing with this topic is that " since the main evidence in the case consists of the testimony of the approver it is necessary to consider the case of each J. appellant individually.
" With respect, this observation is open to the criticism which has been made against it by Mr. Kohli.
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 will 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 finding itself should inevitably have led the court to scrutinise his evidence in respect of the other accused persons with greater caution.
Besides, it is somewhat unfortunate that the attention of the learned Judges of the High Court was presumably not drawn to the still more serious discrepancies in the evidence of the approver in regard to the part assigned to Harbans Singh in the commission of the offence.
In the evidence ' given by the approver before the trial court, he has definitely and unequivocally implicated Harbans Singh in the commission of the offence.
It has been brought out in the cross examination that in the very first statement made by the approver before the investigating officer on November 25 he had made statements about Harbans Singh which are wholly inconsistent with the subsequent story.
In this statement, the 961 approver had definitely stated that only the three of them were concerned with the commission of the offence, himself, Sarwan Singh and Gurdial Singh.
He had also stated clearly in the said statement that Harbans Singh did not join in murdering Gurdev Singh.
It is remarkable that in regard to almost every material particular about the part played by Harbans Singh in the commission of the offence the story disclosed by the approver at the trial is inconsistent with his first statement before the police.
In his statement at the trial, the approver assigns Gurdial Singh the possession of lathi and according to him Gurdial Singh subsequently took up the kirpan from Sarwan Singh and murdered Gurdev Singh after which Harbans Singh himself gave a blow with it at the neck of the victim.
In his statement before the police, the approver had said that Gurdial Singh had carried a kirpan.
We are deliberately not referring to the several other minor discrepancies which have been brought out in the evidence of the approver in his cross examination.
In our opinion, the discrepancies brought out in the evidence of the approver qua the prosecution case against Gurdial Singh coupled with the more serious discrepancies in his evidence in the prosecution case against Harbans Singh lead to only one conclusion and that is that the approver has no regard for truth.
It is true that in his second statement recorded on November 29, the approver substantially changed his first story and involved Harbans Singh in the commission of the offence, and in that sense, his second statement can be said to be consistent with his evidence at the trial.
But we cannot lose sight of the fact that, within three days after the recording of his second statement, he was granted pardon and his statement was recorded under section 164 of the Code of Criminal Procedure on the same day.
Therefore it would be legitimate for the accused to contend that the additions made by the approver in his subsequent statement may be the result of promise held out to him that he would be granted pardon.
Apart from this consideration, in view of the positive statements made by the approver in his first recorded statement, there can be no doubt 124 962 that the subsequent allegations against Harbans Singh are improvements and are the result of his decision to involve Harbans Singh in the commission of the offence.
If this was a case where the statements made by the approver on subsequent occasions merely added details which were not included in the first statement, it may perhaps have been a different matter.
It is true that omissions have not always the same significance as contradictions; but in the present case it is patent that the two sets of statements are wholly inconsistent and irreconcilable and that obviously leads to a very serious infirmity in the character of the witness.
It is indeed to be regretted that the attention of the learned Judges of the High Court was not drawn to this aspect of the matter and they were not invited to consider the initial question as to whether the approver, Banta Singh, was a reliable witness at all.
Every person who is a competent witness is not a reliable witness and the test of reliability has to be satisfied by an approver all the more before the question of corroboration of his evidence is considered by criminal courts.
If the evidence of the approver is discarded as being unreliable the case against Harbans Singh must inevitably fail.
No doubt there are some circumstances against him on which the prosecution relies.
The evidence of Rakha (P.W.8) would show that Harbans Singh and the other accused persons were concerned with the purchase of a pistol from Rakha.
Incidentally this pistol has not been used in the commission of the offence at all and that, in the circumstances, it is difficult to explain.
However, the purchase of a pistol from Rakha may merely raise a suspicion against Harbans Singh but suspicions, however strong, cannot take the place of proof.
Harbans Singh had injuries on his person and the conduct of Harbans Singh soon after the commission of the offence was very suspicious.
That again may raise a suspicion against Harbans Singh but without the basis of the approver 's evidence the suspicious circumstances can play no effective part in a criminal trial.
The discovery of clothes alleged to have been made at 963 the place of Gurdev Kaur cannot be pressed into service against Harbans Singh because Gurdev Kaur herself has not been examined and the importance of the recovery of a kirpan and a red scabbard from the spot cannot obviously be exaggerated.
In our opinion, there is no doubt whatever that, if the approver 's evidence is rejected as unreliable, the other evidence on which the prosecution relied against Harbans Singh cannot possibly sustain his conviction of the offence of murder.
We must, therefore, hold that the finding of the learned Judges of the High Court that the offence of murder has been proved against Harbans Singh is vitiated by a serious infirmity to which we have just referred and must be reversed.
If the learned Judges have failed to address themselves to the initial question of law before dealing with the merits of the approver and if, in dealing with his evidence, they have failed to take into account the glaring and obvious inconsistencies in the account given by the approver, it is open to the appellant to challenge the validity of their conclusion.
In the result, the appeal preferred by Harbans Singh must be allowed, the order of conviction and sentence passed against him must be set aside and he must be acquitted and discharged.
That takes us to the case of accused No. 3, Sarwan Singh.
We have already pointed out that the order of conviction passed against Sarwan Singh is in the words of the judgment of the High Court based on the fact that " there is the evidence of the approver and it is corroborated in every particular by his own confessional statement ".
Besides, there is other circumstantial evidence to which reference has already been made in narrating the prosecution story at the beginning of this judgment.
It would at once be noticed that, if we come to the conclusion that the approver is an unreliable witness, the basis of the evidence of the approver on which the learned Judges of the High Court proceeded even while dealing with the case against Sarwan Singh has been shaken.
If, in our opinion, the approver is unworthy of credit, then it would not be possible to consider the question 964 of the corroboration that his evidence receives from the confessional statement made by Sarwan Singh himself.
It is, however, true that Sarwan Singh has made a confession and in law it would be open to the court to convict him on this confession itself though he has retracted his confession at a later stage.
Nevertheless usually courts require some corroboration to the confessional statement before convicting an accused person on such a statement.
What amount of corroboration would be necessary in such a case would always be a question of fact to be determined in the light of the circumstances of each case.
In the present case, the learned Sessions Judge has considered the question about the voluntary character of the confession made by Sarwan Singh and has found in favour of the prosecution.
The judgment of the High Court shows that the learned Judges agreed with the view of the learned trial Judge mainly because the evidence of the Magistrate who recorded the confession appeared to the learned Judges to show that the confession was voluntary.
It is this view which is seriously challenged before us by Mr. Mathur on behalf of Sarwan Singh.
Prima facie whether or not the confession is voluntary would be a question of fact and we would be reluctant to interfere with a finding on such a question of fact unless we are satisfied that the impugned finding has been reached without applying the true and relevant legal tests in the matter.
As in the case of the evidence given by the approver, so too unfortunately in the case of the confession of Sarwan Singh the attention of the learned Judges below does not appear to have been drawn to some salient and grave features which have a material bearing on the question about the voluntary character of the confession.
Sarwan Singh was arrested on November 25.
His clothes were found blood stained and he is alleged to have been inclined to help the prosecution by making the statement which led to the discovery of incriminating articles.
All this happened on the 25th itself and yet, without any ostensible explanation or justification, Sarwan Singh was kept in police custody until November 30.
That is one fact 965 which is to be borne in mind in dealing with the voluntary character of his confession.
What happened on November 30 is still more significant.
On this day he was sent to the Magistrate to record his confessional statement.
The evidence of the Magistrate Mr. Grover shows that the accused was produced before him at about 2 30 p.m.
He was given about half an hour to( think about the statement which he was going to make and soon thereafter the confessional statement was recorded.
It is true that the Magistrate did put to the accused the questions prescribed by the circulars issued by the High Court of Punjab.
Even so, when the learned Magistrate was asked why he did not give more time to the accused before his confessional statement was recorded, his reply was frank and honest.
He said that the accused seemed to insist upon making a statement straightaway.
The Police Sub Inspector who had taken the accused to the Magistrate was apparently standing in the verandah outside in the Magistrate 's office.
The doors of the office were closed but the fact still remains that the Sub Inspector was standing outside.
The evidence of the Magistrate also shows that, soon after the statement was finished, the Sub Inspector went to the Magistrate 's room again.
The person of the accused showed some injuries and.
yet the learned Magistrate did not enquire how the accused came to be injured.
It is in the light of these circumstances that the question falls to be considered whether the confession made by the accused can be regarded as voluntary.
It is hardly necessary to emphasize that the act of recording confessions under section 164 of the Code of Criminal Procedure is a very solemn act and, in discharging his duties under the said section, the Magistrate must take care to see that the requirements of sub section
(3) of section 164 are fully satisfied.
It would of course be necessary in every case to put the questions prescribed by the High Court circulars but the questions intended to be put under sub section (3) of section 164 should not be allowed to become a matter of a mere mechanical enquiry.
No element of casualness should be allowed to creep in and the Magistrate should be fully satisfied that the confessional statement which the accused 966 wants to make is in fact and in substance voluntary.
Incidentally, we may invite the attention of the High Court of Punjab to the fact that the circulars issued by the High Court of Punjab in the matter of the procedure to be followed, and questions to be put to the accused, by Magistrates recording confessions under section 164 may be revised and suitable amendments and additions made in the said circulars in the light of similar circulars issued by the High Courts of Uttar Pradesh, Bombay and Madras.
The whole object of putting questions to an accused person who offers to confess is to obtain an assurance of the fact that the confession is not caused by any inducement, threat or promise having reference to the charge against the accused person as mentioned in section 24 of the Indian Evidence Act.
There can be no doubt that, when an accused person is produced before the Magistrate by the investigating officer, it is of utmost importance that the mind of the accused person should be completely freed from any possible influence of the police and the effective way of securing such freedom from fear to the accused person is to send him to jail custody and give him adequate time to consider whether he should make a confession at all.
It would naturally be difficult to lay down any hard and fast rule as to the time which should be allowed to an accused person in any given case.
However, speaking generally, it would, we think, be reasonable to insist upon giving an accused person at least 24 hours to decide whether or not he should make a confession.
Where there may be reason to suspect that the accused has been persuaded or coerced to make a confession, even longer period may have to be given to him before his statement is recorded.
In our opinion, in the circumstances of this case it is impossible to accept the view that enough time was given to the accused to think over the matter.
Indeed, any Magistrate with enough criminal experience would have immediately decided to give longer time to Sarwan Singh in the present case for the obvious reason that Sarwan Singh appeared to the learned Magistrate to be keen on making a confession straightaway.
The learned Magistrate himself has fairly stated that he would 967 have given him longer time but for his insistence to make a confession without delay.
This insistence on the part of Sarwan Singh to make a confession immediately should have put the learned Magistrate on his guard because it obviously bore, traces of police pressure or inducement.
Unfortunately, the effect of the failure of the learned Magistrate to ' grant enough time to the accused to consider the matter has not been considered by the learned Sessions Judge and has been wholly ignored by the learned Judges of the High Court.
Besides, in neither court below has any attention been paid to the fact that Sarwan Singh appeared to have been kept in police custody without any justification between November 26 and November 30.
We have carefully considered all the relevant facts bearing on this question and we see no escape from the conclusion that the failure of the learned Judges of the High Court to take into account these material facts has introduced a serious legal infirmity in their conclusion that the confession made by Sarwan Singh is voluntary.
That is why we think we must reverse this conclusion.
There is, besides, another fact which is equally fatal to the. prosecution case.
Even if the confession is held to be voluntary, it must also be established that the confession is true and for the purpose of dealing with this question it would be necessary to examine the confession and compare it with the rest of the prosecution evidence and the probabilities in the case.
In our opinion, some material points mentioned in the confessional statement are not shown to be true.
Sarwan Singh says that when Gurdev Singh was assaulted he and his brother Harbans Singh were walking together.
On the other hand the prosecution story is that Harbans Singh had first contacted his accomplices and had told them that he would send Gurdev Singh towards the spot where the accomplices would lie in wait for him.
The story further is that when Gurdev Singh suspected that there were some people near about he shouted to Harbans Singh and before Harbans Singh came on the spot assault had begun.
This part of the prosecution story as deposed to by the 968 approver is inconsistent with the material statement in the confession.
According to the confession, Dial Singh gave a Dang blow to Gurdev Singh on the head from the front.
This statement is not borne out by medical evidence.
There does not appear to be a corresponding injury on the head of the victim.
Sarwan Singh says that he took the kirpan which was first used by Harbans Singh and gave two blows to Gurdev Singh on his thigh.
This statement again is not borne out by the medical evidence about the injuries on the body of the victim.
Similarly, the statement of Sarwan Singh that the handle of the kirpan was broken and he got his finger injured with it is not easily reconcilable with the medical evidence about the injury itself.
Unfortunately these discrepancies between the confessional statement and the main prosecution evidence given by the approver have not been noticed by the learned Judges of the High Court.
Indeed, after having found that the confession was voluntary,it appears to have been assumed by the learned Judges that the confession was true and that, in our opinion, is another infirmity in the conclusion reached by the High Court.
That leaves the other circumstances which have been proved against Sarwan Singh to be considered.
There were injuries on his person.
They are thus described by the doctor: " 1.
A superficial incised wound with a scab, 3/8" x 1/12" on the left side of the face, just above the left moustache.
2.An abrasion with a scab 1/2" x 1/4" on the outer surface of the middle digit of the left ring finger.
An abrasion with a scab 1/8" x 1/8" on the outer surface of the middle digit of the left little finger.
4.An abrasion with a scab 1/4" x 1/4" on the outer surface of the terminal inter digital joint of the left little finger.
All the injuries were simple and of about two days duration.
Injury No. 1 was caused by sharpedged weapon and the rest by some blunt weapon.
" 969 In his cross examination Dr. Singh admitted that injury No. I could have been caused by razor blade as suggested by the counsel for Sarwan Singh and injuries Nos. 2 to 4 could have been caused by rubbing against some hard substance.
In other words, on medical evidence it is difficult to reject the explanation of the accused as unreasonable or palpably untrue.
Then we have the evidence of blood stains on the shirt and chadar worn by Sarwan Singh.
If the explanation given by Sarwan Singh about his injuries is not unreasonable then the presence of blood stains on his dress cannot be seriously pressed against him.
The evidence of Rakha about the negotiations and purchase of a pistol from him and about the part of Sarwan Singh in that transaction no doubt may suggest that Sarwan Singh was associated with the criminals but that is very far from proving the charge of murder against him.
Incidentally, as we have already observed, if the pistol was purchased it is difficult to understand why it was not used.
Then we have the evidence of the shoes which were found on the spot.
The evidence of the shoe maker Santa Singh suggests that he had identified the pair of shoes as belonging to Sarwan Singh that very night.
According to him, he has been manufacturing shoes like this pair though not on a large scale ' Unfortunately, in his examination under section 342 of the Code, no question had been put to Sarwan Singh about these shoes.
It is not unlikely that Sarwan Singh may have offered to demonstrate that the shoes did not fit in with his feet.
In any event, failure to give him an opportunity to explain the circumstances by putting an appropriate question to him under section 342 justifies his argument that this circumstance should not be used against him.
Besides, like the evidence given by Rakha, the identity of the shoes would also be a very minor circumstance in relation to the charge of murder for which Sarwan Singh is being tried.
The result is that, if the approver 's evidence is discarded as unworthy of credit and his own retracted confession is excluded from consideration as not being voluntary or true, whatever circumstantial evidence remains is obviously insufficient to 125 970 bring home to Sarwan Singh the charge framed against him.
If that be the true position, we must hold that the learned Judges of the High Court were in error in convicting Sarwan Singh of the offence of murder.
It is no doubt a matter of regret that a foul cold blooded and cruel murder like the present should go unpunished.
It may be as Mr. Gopal Singh strenuously urged before us that there is an element of truth in the prosecution story against both the appellants.
Mr. Gopal Singh contended that considered as a whole, the prosecution story may be true; but between 'may be true ' and 'must be true ' there is inevitably a long distance to travel and the whole of this distance must be covered by legal, reliable and unimpeachable evidence.
We have carefully considered all the arguments which Mr. Gopal Singh urged before us; but we do not think it would be possible to regard the approver as a reliable witness or to hold that the confession of Sarwan Singh is voluntary or true.
In the result, the appeal preferred by Sarwan Singh must be allowed, the order of conviction and sentence passed against him must be set aside and he must be acquitted and discharged.
Apppeals allowed.
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The appellants and G were convicted of the offence of murder by the Sessions Court on the basis of the evidence of the approver, which it considered reliable, and the confession made by the first appellant which it found to be voluntary and true.
The High Court held that the evidence of the approver as against G was very discrepant and.
unreliable and set aside his conviction but, nevertheless, confirmed the conviction of the appellants.
The appellants appealed to the Supreme Court.
It was found (1) that the statement originally made by the approver as against the second appellant was wholly inconsistent and irreconcilable with the evidence given by him in Court and that the High Court did not consider the question as to whether the approver was a reliable witness at all, (2) that the Magistrate who recorded the confession did not fully comply with the procedure to be adopted to ensure that it was voluntary, (3) that the prosecution story as deposed to by the approver was inconsistent with the material statement in the confession, and (4) that the High Court while deciding whether the confession was voluntary assumed that it was true.
Held, that the conviction of the appellants must be set aside.
The appreciation of an approver 's evidence has to satisfy a double test.
It must show that be is a reliable witness and that his evidence receives sufficient corroboration.
The act of recording confessions under section 164 of the Code of Criminal Procedure is a solemn one and in discharging his duties under the said section the Magistrate must take care to see that the requirements of sub section
(3) Of section 164 are fully satisfied.
When an accused person is produced before the Magistrate by the investigating officer, it is of the utmost importance that the mind of the accused person should be completely freed from any possible influence of the police and he must be sent to jail custody and given adequate time to consider whether he should make a confession at all.
Ordinarily, he should be given at least 24 hours to decide.
Even if a confession is voluntary, it must also be established that it is true and, for that purpose, it is necessary to examine it 123 954 and compare it with the rest of the prosecution evidence and the probabilities of the case.
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Civil Appeal No. 8244 of 1983.
From the Judgment and Order dated 22.7.1980 of the Kerala High Court in Second Appeal No. 171 of 1976.
E.M.S. Anam of the Appellants N. Sudhakaran for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Whether a junior member of the Tarwad, in Kerala, who redeems the mortgage and is in possession for more than 50 years is a `mortgagee holding the land comprised in a mortgage ' so as to acquire rights of tenant of tenant under Section 4(A) of the Kerala Land Reforms Act, is the legal issue that arises for consideration in this appeal, by successors of other members of the Tarwad who suit for partition was dismissed in second appeal by the High Court.
In the year 1045 (1870) a mortgage was executed by the Karnavan (akin to Manager) of the Tarwad, (somewhat like a joint family).
Two junior members, of the Tarwad, paid the amount in the year 1061 (1886), got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other member of the Tarwad, in whose favour equity of redemption, of the land in suit, was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under Section 4(1)(a) of the Land Reforms Act.
Since there was no dispute on basic facts, namely, redemption of mortgage by two junior members and their continuance in possession for more than fifty years on the date Section 4(1)(a) was added to the Land Reforms Act the rights of parties were decided, more, as a matter of law.
According to the trial court and first appellate court the junior members, as a result of getting the property released, were holder of special right under Marumakkathayam Law.
They could not be held to be mortgagee, therefore, they did not acquire any right under the Land Reforms Act.
But the High Court held otherwise, mainly because in 1962 when the Tarwad was partitioned the property was treated as under mortgage since equity of redemption for the same was given to the plaintiff appellant.
It was found that, even, in the plaint it was averred that in consequence of release the mortgagee right vested in the predecessor of defendants who were junior members of the Tarwad.
The High Court, therefore, held that the defendants being assignee of mortgage in possession for fifty years, on the date the Land Reforms Act was amended and Section 4(1)(a) was added by Act XXXV of 1969, were entitled to rights as tenants.
The High Court, thus, accepted the claim of defendants because the member of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
This, apart, it was held that junior member of the Tarwad paying off the debt of Tarwad becomes a mortgagee of the excess share in his own right.
But this enunciation, of law, was not accepted, as correct by a division bench of the Kerala High Court itself in Raghavan Nair vs Anandavally Amma, The question, therefore, is if a junior member of the Tarwad who redeems the properly, and gets release, is holder of special right only or he steps into the shoes of mortgagee.
Nature of right of a junior member in the Tarwad, a family corporation, in which every member male or female possesses equal right has been explained by this Court in Kochuni vs States of Madras & Kerala, ; at 1099, thus: " The incidents of a tarwad are so well settled that it is not necessary to consider the case law, but it would be enough if the relevant passages from the book "Malabar and Aliyasanthana Law" by Sundara Aiyar are cited.
The learned author says at p.7 thus: "The joint family in a Marumakkathayam Nayar tarwad consists of a mother and her male and female children, and the children of those female children, and so on.
The issue of the male children do not belong to their tarwad but to the tarwad of their consorts.
The property belonging to the tarwad is the property of all the males and females that compose it.
Its affairs are administered by one of those persons, usually the eldest male, called the karnavan.
The individual members are not entitled to enforce partition, but a partition may be effected by common consent.
The rights of the junior members are stated to be (1) if males, to succeed to management in their turn, (2) to be maintained at the family house, (3) to object to an improper alienation or administration of the family property, (4) to see that the property is duly conserved, (5) to bar an adoption, and (6) to get a share at any partition that may take place.
These are what may be called effective rights.
Otherwise everyone is a proprietor and has equal rights.
" One of the rights according to this decision which vests in the junior member is to see that the property is duly conserved.
Such a right, obviously, includes a right to redeem the property by paying the debts outstanding against the Tarwad.
It is an incidence of co ownership or co proprietorship which flows from the nature of Tarwad.
But whether the person who thus conserves the property steps into shoes of mortgagee and holds the same rights and interests or he is a surety holding the property on behalf of the Tarwad subject to right of contribution has to be decided on general principles of mortgage as the customary law of Tarwad does not throw any light on it.
Mortgage has been defined in Section 58 of the as transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced.
The definition brings out clearly the nature of mortgage.
It was understood and followed in same sense, even, before the Act came into force.
In Gopal vs Parsotam 1883 5 All. 121.
137 F.B. it was observed : "Mortgage as understood in this country cannot be defined better than by the definition adopted by the Legislature in section 58 of the (IV of 1882).
That definition has not in any way altered the law, but, on the contrary, has only formulated in clear language the notions of mortgage as understood by all the writers of text books on Indian mortgages.
Every word of the definition is borne out by the decisions of lndian Courts of Justice.
" It was not different where customary law prevailed.
Even in customary Marumakkathayam Law, governing section of people inhabiting the West Coast, the law of mortgage was understood in no different sense.
Since the transfer in a mortgage is, only, of interest and not of the entire right and title, as takes place in sale, the mortgagor and the mortgagee can transfer or assign their interest.
A mortgagor may assign or transfer the equity of redemption or may even create second mortgage.
Similarly a mortgagee may assign his interest or create another mortgage.
What happens when a mortgagee assigns his interest in favour of another person? Since an assignor can pass interest that he has, the assignee becomes holder of the same interest that a mortgagee has.
In other words, he steps into the shoes of the mortgagee.
Can the same be said where a co mortgagor or anyone on behalf of mortgagor authorised under law, pays the amount and brings to an end the interest the mortgagee had? Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption the mortgage comes to an end by operation of law.
Consequently the relationship of mortgagor and mortgagee cannot subsist.
What then is the status of a person paying off debt to secure the property either with consent of others or on own volition? In law he becomes the owner, entitled to hold and possess the property.
But in equity the right is to hold the property till he is reimbursed.
In other words, he may hold the property in surety or he may bring the claim for contribution.
In Ganeshi Lal vs Joti Pershad, ; , it was held; ".
Equity insists on the ultimate payment of a debt by one who in justice and good conscience is bound to pay it and it is well recognised that where there are several joint debtors, the person making the payment is a principal debtor as regards the part of the liability he is to discharge and a surety in respect of the shares of the rest of the debtors. " Similarly the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
In Valliamma Champaka Pillay vs Sivathanu Pillay & Ors., [1980] I SCR 354 the principle was explained thus: "From what has been said above it was clear that where the is not in force and a mortgage with possession is made by two persons, one of whom only redeems discharging the whole of the common mortgage debt, he will, in equity, have two distinct rights: Firstly, to be subrogated to the rights of the mortgagee discharged, vis a vis the non redeeming co mortgagor, including the right to get into possession of the latters portion or share of the hypotheca.
Secondly, to recover contribution towards the excess paid by him on the security of that portion or share of the hypotheca, which belonged not to him but to the other co mortgagor.
It follows that where one co mortgagor gets the right to contribution against the other co mortgagor by paying off the entire mortgage debt, a co related right also accrues to the latter to redeem his share of the property and get its possession on payment of his share of the liability to the former.
This corresponding right of the ' non redeeming ' co mortgagor, to pay his share of the liability and get possession of his property from the redeeming co mortgagor, subsists as long as the latter 's right to contribution subsists " But these rights in equity, either in favour of the person 2who discharges the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
Even under subrogation, a legal concept, meaning substitution, applied, on English Law principle, even earlier, inserted now as Section 92 in since 1929, the rights that are created in favour of a co mortgagor as a result of discharge of debt are 'so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems '.
What is the meaning of expression 'right as mortgagee '? Does a person who, in equity, gets subrogated becomes mortgagee? Or his rights are confined to foreclosure or sale? A plain reading of the section does not warrant a construction that the substitutee becomes a mortgagee.
The expression is, 'right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, 'as ' according to Black 's Legal Dictionary means, 'in the manner prescribed '.
Thus a co mortgagor in possession, of excess share redeemed by him, can enforce his claim against non redeeming mortgagor by exercising rights of foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
Therefore, a co mortgagor or a Junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reforms Act.
Legal position explained above does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgage subsisted.
None of these actions could effect the operation of law.
In the result this appeal succeeds and is allowed.
The judgment and order of the High Court is set aside and the order of the trial court decreeing the suit for partition is restored.
Parties shall bear their own costs.
N.P.V. Appeals allowed.
STATE bank of india and anr.
vs V. PARTHASARATHY ETC.
NOVEMBER 9, 1992 [KULDIP SINGH AND P.B. SAWANT, JJ.] Civil Services: State Bank of India Promotion to the post of Head Clerk Circular No. 42 Clause Three options Outside the city within city and within the same office Debarment on refusal of third and final offer Local Head Office and five other offfices to be considered as one Unit Final offer made in one such office Whether valid and debars the optees permanently on refusal to accept.
The appellant Bank issued Circular No. 42 containing an understanding reached with the Staff union laying down the policy for promotion of clerks to the post of Head Clerks.
As per clause 1(d) of the Circular the employees who decline to accept Head Clerk s post at a branch office outside the city in which they work, will have a further option when a vacancy arises at any one of the Bank 's offices within that city.
However, this was subject to the condition that at the material time there was no other senior employee who had similarly declined the post outside his branch office, in which case the senior most would have the first choice.
It was further provided that if an employee declines to accept the post of Head Clerk at an office within the same city, his case would be considered only when a vacancy arises at his office.
This was also subject to the condition that there was no senior employee similarly situated at the material time.
If the third and final offer is declined, there would be a permanent debarment of promotion.
Since there were six offices at the Madras Local Head Office, a common seniority was maintained and all the six offices were considered as one office, viz. local Head Office of which the other five offices were only parts.
The Respondents declined their first, second and final offers, though indisputably the final offer was made to them for being posted in an office forming part of the local Head Office.
Both the Respondents moved the High Court by way of Writ Petitions and the High Court took the view that the final offer made was not in the same office and so they were entitled to be posted as Head Clerks in the same office.
Being aggrieved by the said two decisions of the High Court, the appellant Bank preferred the present appeals.
On the question of interpretation of clause 1(d) of the circular in question: Allowing the appeals, this Court, HELD :1.
The High Court 's interpretation of cl. 1(d) of the Circular that the third offer made was not in the office where the Respondents were working and therefore their refusal to accept the post did not exhaust the third option and they were entitled to be posted as Head Clerks in the Office where they were working is incorrect in view of the fact that the local Head Office was split into six different offices which together constituted one unit.
By refusing to accept the third and final offer, the Respondents had clearly exhausted all the three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
[366 E G] 2.
This Court does not intend to interfere with the appointment of the respondents to the post of Head Clerk in the Regional Office in the facts and circumstances of these matters which show that in one case a fortuitous appointment had arisen due to death of an employee within almost a month of the Respondent 's refusal to accept the offer, and in the other case, the Respondent has already been accommodated in the post of Head Clerk in the Regional Office itself.
However, this would not be treated as a precedent and this would not affect the interpretation of clause 1(d) of the Circular, placed by this Court.
[366 H; 367 A] CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
4799 4800 of 1992.
From the Judgments dated 4.3.1992 and 8.4.1992 in Madras High Court in W.P. No. 246/92 and W.A. No. 349 of 1992.
G. Ramaswamy Attorney General, K. Sankaran, A. Rangananthan and A.V. Rangam for the Appellants.
M.K. Ramamurthi, M.A. Krishnmoorthy, M.A. Chinnaswamy, H. Subramaniam and Ms. C. Ramamurthi for the Respondents.
Rajendra Sachhar, Ambrish Kumar and M.D. Pandey for the Inter vener.
The Order of the Court was delivered: Intervention application is allowed.
Leave granted.
Civil Appeal No. 4799 of 1992.
The controversy in this case is in a narrow compass.
The appellant Bank issued Staff Circular No. 42 containing an understanding reached with the Bank staff union laying down the policy for promotion of clerks to the post of Head Clerks.
Clause 1(d) of the said circular states as follows: Employees who decline to accept Head Clerk 's post at a Branch Office outside their place of service, i.e., outside their city, will again be offered the appointment only when a vacancy arises at any one of the offices within that city, provided that at the material time there is no other senior employees at that office who had earlier declined a posting outside his Branch, as a Head Clerk in which case the senior most employee will first be offered the appointment.
Also, if an employee declines to accept the post of a Head Clerk at an office within the same city, his case for appointment as Head Clerk will be considered only when a vacancy arises at his office, in the order of his seniority.
His case cannot be considered for a vacancy at any of the other offices in the city.
It will be apparent from the above provision of the said clause that those employees who decline to accept the Head Clerk 's post at a branch office which is outside the city in which they work will have a further option.
Such employees would be offered the post of Head Clerk again but only when a vacancy arises at any one of the Bank 's offices within that city.
This is of course subject to the condition that at the material time, there is no other senior employee who had similarly declined the post outside his branch office, in which case, the senior most would have the first choice.
The further provision of this rule and with which we are concerned in the present case is as follows.
If an employee declines to accept the post of Head Clerk at an office within the same city his case for appointment as Head Clerk would be considered only when a vacancy arises at his office.
This is also subject to the condition that there is no senior employee similarly situated at the material time.
If the third and the final offer for the post of Head Clerk is declined, there is a permanent debarment of the promotion.
One more thing necessary to be stated before we come to the facts of the present case is that the appellant Bank has a local Head Office at Madras.
In 1972, it was split into two the local Head Office and Madras Main Branch.
In 1976 77, there was a further splitting up of the local Head Office and the Main Branch and ultimately in 1979, the Madras Local Head Office was divided into following six offices as part of the same Head Office: "(i) Local Head Office (ii) Madras Main Branch (iii) Overseas Branch (iv) Regional Office, which is called Zonal Office (v) The Commercial Branch (vi) Siruthozhil Branch" 4.
There is no dispute that as far as the Clerks and the Head Clerks in all the six parts of the same local Head Office are concerned, a common seniority list is maintained.
The effect of the aforesaid arrangements for the purposes of the clause 1(d) is that "the employees" in the said clause means the employees in all the said six parts of the local Head Office.
In other words, if a vacancy for a Head Clerk occurred at any of the said six offices, it was considered to be a vacancy in one office, viz.
,the local Head Office of which the other five offices were only parts.
It appears that respondent Parthasarathy was working as a clerk in the Madras Regional Office (now called Zonal Office) which is, as will be clear from above, a part of the Local Head Office itself.
On 21st August, 1973, he was offered the post of Head Clerk at Deva Kottain which is outside Madras city.
This offer was declined by him.
On 1st July, 1980, he was offered the post of Head Clerk in the Sowkarpet branch office in the same city which was less than 2 kms, from his Regional office where he was working.
He declined the said offer too.
He was then entitled to be considered for posting as Head Clerk only in his office which meant in any of the six parts of the local Head Office, that being the third and the final offer that could be made to him.
The third offer was made to him for the post of Head Clerk at the Overseas branch, and that being part of the same local Head Office, he was bound to accept it.
However, he declined the third and the final offer also, and issued a lawyer 's notice to the Bank contending that the Overseas branch was different from the Regional office where he was working and, therefore, the offer given to him was contrary to the said clause 1(d).
The allegations made in the notice were of course denied by the bank.
On 6th September, 1983, one A. Nizamuddin who was working as Head Clerk in the Regional office passed away and that post became vacant.
On 24th September, 1983, the respondent filed a writ petition before the High Court for quashing the third and the final offer made to him on 4th August 1983, and for a direction for posting him in the Regional office where the vacancy had occurred.
The High Court took the view that the third offer made was not for the post of the Head Clerk in the same office where the respondent was working and, therefore, his refusal to accept the post did not exhaust the third option and he was entitled to the vacancy created by Nizamuddin 's death in the Regional office where the respondent was working.
We are afraid this interpretation is incorrect in view of the position explained above with regard to the local Head Office which was split into six different offices which together constituted one unit.
The respondent, when he was offered the third option in the Overseas branch, was offered the post in the same office where he was working, the Regional office being as much a part of the Head Office as the Overseas branch.
By refusing to accept the said third and the final offer, the respondent had clearly exhausted all his three options and had become permanently debarred from seeking promotion to the post of Head Clerk.
We, however, do not interfere with the appointment of the respondent to the post of Head Clerk in the Regional office in the facts and circumstances of the case which show that a fortuitous appointment had arisen within almost a month of his refusal to accept the offer.
This, however, will not be treated as a precedent nor does it affect the interpretation that we have placed on the clause 1(d) as above.
Civil Appeal No. 4800 of 1992 In this case also, the respondent Sampath was working as a Clerk in Madras Regional Office.
The first offer of the post of Head Clerk was made to him on 6th August, 1973 at Mudukulathur branch which is in Madras city.
This was declined by him.
On 12th May, 1980, he was given the second offer for the post of Head Clerk at Air Force Station branch, Tambaram which was in Madras city.
The third and final offer was made to him on 4th August, 1983 to the post of Head Clerk in the Stationery department of the Madras Local Head Office.
There is no dispute that Stationery department of the Local Head Offfice and the Regional Office form part of one unit, viz., Madras Local Head Office.
The respondent declined this offer as well, and on 23rd January, 1984 filed a writ petition in the High Court for quashing the third offer and for posting him in his office, viz., Regional Office as the Head Clerk.
The learned Single Judge of the High Court quashed the order making the third offer and allowed the petition following the earlier decision in Parthasarathy 's case with which we have dealt with earlier.
The Division Bench of the High Court also confirmed the order.
For the reasons we have given in C.A.No. 4799 of 1992, we are unable to accept the interpretation given by the High Court on clause 1(d) of Staff Circular No. 42.
However, if in the present case, the respondent has already been accommodated in the post of Head Clerk in the Regional Office itself, we do not intend to interfere with the same.
It is nonetheless made clear that it is the interpretation that we have placed on the said clause that will prevail and not the interpretation placed by the High Court.
With these observations, the appeals are allowed only to the extent that the interpretation placed by the appellant Bank on clause l(d) of the Staff Circular No. 42 is correct and the decision of the High Court on the point is incorrect.
There will be no order as to costs.
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Two junior member of a Tarwad (somewhat like a joint family) redeemed a mortgage executed in 1870 by the Karnavan (akin to Manager) of the Tarwad.
They paid the amount in 1886, got the property released, obtained possession and they or their descendants continued in possession as such.
In 1967 a suit for partition was filed by sucessors, of other members of the Tarwad, in whose favour equity of redemption, of the suit land was transferred in a family partition in 1962.
The suit was resisted amongst others on acquisition of right of tenant under section 4A(1)(a) of the Kerala Land Reforms Act, 1964.
The trial court and first appellate court held that the junior members, as a result of getting the property released, were holders of special right under Marumakkathayam Law and they could not be held to be mortgages and, therefore, they did not acquire any right under the Land Reform Act.
The High Court, however, held that the junior member being assignee of mortgage in possession for fifty years, on the date the Kerala Land Reform Act, 1964, was amended and Section 4(1)(a) was added by Amendment Act of 1969, were entitled to rights as tenants, and thus, accepted the claim of junior members, because the members of the Tarwad treated the mortgage to be continuing on the date the suit was filed.
It also held that a junior member of the Tarwad, paying off the debt of Tarwad, became a mortgagee of the excess share in his own right.
Allowing the appeals of the sucessors of other members of Tarwad, this Court, HELD: 1.
A co mortgagor or a junior member of the Tarwad who continued in possession over the excess share, got redeemed by him, could not be deemed to be mortgagee so as to acquire right under Section 4A(1)(a) of the Kerala Land Reform Act, 1964.
This position does not alter either because during partition equity of redemption in respect of property redeemed by junior members was transferred or because in the plaint it was claimed that mortgages subsisted.
None of these actions could affect the operation of law.
[425 D E] 2.1 Mortgage is creation of an interest in the property for payment of debt.
Once the mortgage debt is discharged by a person beneficially interested in equity of redemption, the mortgage comes to an end by operation of law.
Consequently, the relationship of mortgagor and mortgagee cannot subsist.
[423 E, F] 2.2 In law, the status of a person paying off debt to secure the property either with consent of others or on own volition is that the becomes the owner, entitle to hold and possess the property.
But, in equity the right is to hold the property till he is reimbursed.
In other words, the may hold the property in surety or he may bring the claim for contribution.
Similarly, the co mortgagor whose share has been got redeemed is entitled, in equity, to get possession over his share of property on payment of the amount of his share.
But these rights in equity, either in favour of the person who discharge the debt or the person whose debt has been discharged, do not result in resumption of relationship of mortgagor and mortgagee.
[423 F, G; 424 B] 2.3 A plain reading of Section 92 of the does not warrant a construction that the substitutee become a mortgagee.
The expression is `right as the mortgagee ' and not right of mortgagee.
The legislative purpose was statutory recognition of the equitable right to hold the property till the co mortgagor was reimbursed.
And not to create relationship of mortgagor and mortgagee.
The section confers certain rights on co mortgagor and provides for the manner of its exercise as well.
The rights are of redemption, foreclosure and sale.
And the manner of exercise is as mortgagee.
The word, `as ' means, `in the manner prescribed '.
[425 B C] 2.4 A co mortgagor in possession of excess share redeemed by him can thus enforce his claim against non redeeming mortgagor by exercising rights or foreclosure or sale as is exercised by mortgagee under section 67 of the .
But that does not make him mortgagee.
[426 C D] Raghavan Nair vs Anandavally Amma, , approved.
Kochuni vs State of Madras Kerala, A.I.R. 1960 S.C. 1080; Ganeshi Lal vs Joti Pershad, ; and Valliamma Champaka Pillay vs Sivathanu Pillay & Ors.
, ; , referred to .
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6978.txt
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minal Appeals 233 to 235 of 1966, and 9 to 11 of 1967.
Appeals from the judgment and order dated April 13, 1966 of the Madras High Court in Writ Petitions Nos.
390 of 1965 etc.
933 M.C. Chagla, Amjad Nainar and R. Gopalakrishnan, for the appellant (in Cr.
Nos. 233 to 235 of 1966) and respondent No. 1 (in Cr.
Nos. 9 to 11 of 1967).
section Govind Swaminathan, Advocate General for the State of Tamil Nadu, A. V. Rangam, K. section Ramaswami Thevar, N. section Sivan, for the respondents (in Cr.
Nos. 233 to 235 of 1966) and the appellants (in Cr.
Nos. 9 to 11 of 1967).
The Judgment of the Court was delivered by Mitter, J.
These six appeals arise out of certificates granted by the High Court of Madras arising out of two Writ Petitions and a petition under sections 435 and 439 of the Code of Criminal Procedure filed in that court by P. Sirajuddin, the appellant in the first set of appeals.
It is not necessary to give an outline of these Petitions as the salient features thereof appear sufficiently from the judgment of the High Court and the substance thereof is dealt with hereafter.
The facts are as follows.
The appellant was the Chief Engineer, Highways and Rural Works, Madras having risen from the status of a District Board Engineer in which capacity he joined service in the year 1935.
He attained the age of 55 years on March 14, 1964 on which date he was asked to hand over charge of his office to one Shiv Shankar Mudaliar, Superintending Engineer, Madras.
He expected to be retained in service up to the age of 58, a privilege said to be normally accorded to persons physically and otherwise fit for public service.
It appears that on March 1, 1964 a copy of a petition concerning him and dated February 28, 1964 addressed to the Minister, Public Works by one Rangaswami Nadar was received by the Chief Minister of the State.
It is said that apart therefrom allegations about want of rectitude of the appellant had already reached the Government.
The Chief Minister asked the Director of Vigilance and Anti Corruption to make confidential enquiries.
On March 10, 1964 Government received a note from the said officer which cast serious aspersions on the appellant 's reputation and mentioned quite a few instances of his lack of probity.
The endorsement of the Chief Minister on the note read: Secretary, P.W.D.
I had this (petition already mentioned) from the Director of Vigilance.
This may be immediately looked into.
I have asked the Director to pursue the investigation further.
" Thereupon the Chief Secretary orally ordered a full fledged enquiry in the matter and the Deputy Superintendent of Police, Vigilance and Anti Corruption one G. _K. Ranganathan, was asked to make a personal enquiry and report under the supervision of 93 4 R. N. Krishnaswamy.
The Director of Vigilance registered an enquiry numbering 8/HD/64 on 15th April, 1964.
That the enquiry was taken up with great keenness appears from a note of Ranganathan to the effect he would require the assistance of two Inspectors to assist him.
There can be no doubt that the enquiry launched by the Vigilance and Anti Corruption Department was a very thorough and searching one.
A very large number of persons were examined by the Vigilance and Anti Corruption officers including 18 public servants who spoke to matters touching the allegations against the appellant.
Statements in writing signed by the makers were taken from no less than nine public servants regarding the above and two of them, namely, section Sivasubrahmanyam and section Chidambaram were given certificates assuring them immunity from prosecution for the part played by them.
in rendering aid to the appellant in the commission of his malpractices.
These two persons occupied the position of an Assistant Engineer and a Junior Engineer and were subordinates of the appellant.
On June 27, 1964 a first information report was lodged in the Directorate of Vigilance and Anti Corruption, Madras and the case recorded as 3/AC/64.
The offences to be investigated into were under sections 161 and 165 of the Indian Penal Code and section 5 (1) (a) and (d) of the Prevention of Corruption Act.
The complaint was made by Ranganathan, Deputy Superintendent of Police, Vigilance and Anti Corruption Department to the Additional Superintendent of Police in the same department.
It is pertinent to note that the Directorate of Vigilance and Anti Corruption which had been set up under a Government order dated 8th April 1964 was declared to be a 'police station ' under clause (s) of sub section (1) of section 4 of the Code of Criminal Procedure by a notification dated May 25.
1964 and by another notification of the same date the Governor of Madras conferred upon the Director and the Superintendents of Police of the said Directorate all the ordinary powers of a Magistrate of the First Class under section 5 A of the Prevention of Corruption Act within the limits of the whole of .he
State of Madras except the Presidency Town.
The complaint by Ranganathan to the Additional Superintendent of Police, Vigilance and Anti Corruption, gave details of various malpractices with which the appellant was charged.
He was inter alia said to have obtained various articles of furniture with the help of Sivasubrahmanyam and Chidambaram mentioned above by paying only a small fraction of the cost and asking them to adjust the balance by manipulations of the muster rolls claims.
He was also said to have got his residence whitewashed in a similar manner.
It was also alleged against him that he had constructed a bungalow by diverting building materials allotted for the construction of 'the Cauveri bridge at Tiruchinapalli.
The complaint wound up with a paragraph to the effect that a criminal case would be registered against him as a regular investigation alone would facilitate the collection 9 3 5 of additional evidence by way of recovery of valuable things which he had obtained from his subordinates by various illegal means and in addition more incriminating evidence was likely to be ,forthcoming during the investigation.
Sanction to prosecute the appellant was obtained on September 27, 1964 and a charge sheet was filed against the appellant in the court of the Special Judge, Madras on October 5, 1964 numbered as C.C. No. 10 of 1964.
No less than 47 witnesses had been examined during the investigation following the first information report and at least nine of them had been previously examined at what was termed as a "preliminary or detailed enquiry".
No less than 19 malpractices were alleged against him in different paragraphs of the charge sheet and the appellant was charged with having obtained for himself or for members of his family various valuable things from his subordinates by corrupt and illegal means and by abusing his position as a public servant.
charges were for offences already mentioned.
In the enquiry the appellant was supplied with copies of re cords on which the prosecution proposed to rely including the statements recorded by the investigating officer which according 'IO the appellant showed prima facie that a number of public servants who had given the statements were themselves responsible for commission of various offences including falsification of accounts and forgery of public records.
Before the Special Judge the appellant moved an application for discharge under section 251 A of the Code of Criminal Procedure on the ground that the charges against him were groundless.
In that application he also complained : (a) that the instances alleged against him related mostly to his personal matters unconnected with his official functions; (b) that none of the items referred to in the charge had been handed over to or delivered to him for the purpose of securing an advantage in order to attract section 5(1)(d) read with section 5(2) of the Prevention of Corruption Act, and (c) that on the admitted statements of the public servants they were liable to be charged with various offences and he had been greatly prejudiced by discriminatory treatment.
While holding that there was no basis of charging thee appellant under section 165 I.P.C. or under section 5(2) read with section 5(1)(b) of the Prevention of Corruption Act, the Judge held that a charge could be framed against him under section 5(2) read with section 5(1)(d) of the Act.
He observed that the "investigating officers evidently felt that ,if they arraigned the subordinate officers along with the appellant the case may fail for lack of evidence.
" 9 3 6 Against that order dated January 16, 1965 the Public Pro secutor Preferred Cr.
R.C. 294 of 1965 and the appellant preferred Cr.
M.P. 934 of 1965 under section 561 A of the Code, for quashing the proceedings and discharging him as the charge was groundless.
The appellant filed.
two writ petitions before the High Court, namely, one for a writ of mandamus directing the forbearing from prosecution of C.C. No. 10 of 1964 and a second for a writ of certicrari to quash the order of the Special Judge mentioned above.
There was a petition under sections 435/439 of the Criminal Procedure Code for revision of the order of the Special Judge and one under section 561 A of the Code for quashing his said order.
The High Court dealt with all the Writ Petitions and the different allied matters together.
Broadly speaking, it was urged before the High Court: 1.There had been such a violent departure from the provisions of the Code in the matter of investigation and cognizance of offences as to amount to denial of justice and to call for interference by the issue of prerogative writs.
The investigation and prosecution were wholly mala fide and had been set afoot by his immediate junior officer , one Sivasankar Mudaliar, Superintending Engineer, Madras who was related to the Chief Minister of the State.
The appellant 's case was being discriminated from those of others who though equally guilty according to the prosecution case were not only not being proceeded against but were promised absolution from all evil consequences of their misdeeds because of their aid to the prosecution.
In his petition for the issue of a writ of mandamus 'by the High , Court the appellant stated that it was only by perusing copies of the statements furnished to him under section 173(4) Cr.
P.C. that he found that 18 public servants had stated having given him valuables without any or adequate consideration and that it was at his instance that they had committed offences of criminal conspiracy under section 120 B I.P.C. and criminal breach of trust of Government moneys under section 409 I.P.C. besides falsification of accounts etc.
His positive case was that the Director of Vigilance and Anti Corruption had obtained signed statements which were confessional and self incriminatory from persons who were going to be called .as witnesses by giving them assurances of immunity.
These assurances were not only directed towards immunising them from prosecutions but ;Also any departmental action likely to affect adversely the makers of the statements.
The case of discrimination was based mainly on the above averments that the Directorate had single him out leaving others who were equally guilty.
According 93 7 to the appellant this also showed mala fides and malice directed towards him.
Another main argument which ' was canvassed before the High Court related to the applicability of sections 162 and 163 of the Criminal Procedure Code and the effect of the violation thereof, if any.
For the appellant, it was argued that the taking of signed statements from persons who were eventually going to be examined in the criminal proceedings by giving them assurances of immunity and thereafter relying on their subsequent unsigned statements those under section 161(3) of the Code for the purpose of section 173 amounted to a fraud on the procedure established by law.
It was contended that as the statements recorded under section 161 were the material on which the Special Judge had to consider whether the charge was groundless under section 251 A of the Code, the illegality "corroding the foundation vitiated the enquiry and necessitated the discharge of the appellant.
" The High Court examined the case made out in the affidavits of the appellant and the counter affidavits on behalf of the State.
It expressed great dissatisfaction at the variance in the attitude of the State in the different affidavits in that whereas in the first counter affidavit there was no contradiction of the appellant 's averment that assurances of immunity had been given to all the 18 persons examined before the lodging of the first information report, the plea put forward in a subsequent affidavit was that such assurance had been given only to two persons, namely, the two subordinates of the appellant and only after signed statements had been given by them.
The Court was however not satisfied that a direction was called for for the prosecution of the subordinate officers also.
Further the High Court was not impressed with the plea of hostile discrimination against the appellant observing that although the "policy of not securing judicial pardon to accomplices by bringing them as approvers but retaining them at the sole discretion of the prosecution might be open to question" "that cannot by itself invalidate the arraignment of the persons actually put up for trial" specially where the person charged was in a position to wield influence and power over those asked by him to aid him in commission of misconduct.
Although not of the view that the record before it established a case of mala fide or hostile discrimination against the appellant which called for the quashing of the proceedings, the High Court took the view that the investigation of the case under Chapter XIV of the Code should be held to have commenced when Ranganathan, the Deputy Superintendent of Police, started the enquiry on 15th April 1964 on the reasoning that though "an enquiry may start with shadowy beginnings and vague rumours, once a police officer forms a definite opinion that there are grounds for investigating a L1OSup.
CI(NP)70 15 938 crime, an investigation under the Code has started".
According to the High Court (a) "substantial information and evidence had been gathered before the so called first information report was registered".
(b) the police officer who had conducted the enquiry prior to 27th June 1964 was a person competent to enter upon investigation; (c) admittedly there had been an earlier probe by the, Vigilance Department prior to 10th March 1964 on the basis whereof he was not re employed; (d) there was definite information to the Government contained in the report dated 13th March 1964 relating to corrupt activities of the appellant; and (e) the "delay on the part of the investigating officer in registering the first information report may be an irregularity, but certainly the statements recorded subsequent to the receipt of definite information of the commission of an offence in gathering evidence of the offence would nonetheless be statements recorded during investigation and hit by section 162 of the Criminal Procedure Code.
" With regard to the disregard of the provisions of sections 162 and 163 of the Code, the High Court observed that the result of taking his signature to a statement would be to tie a witness down to the statement or at least to give him the impression that he would not be free to make a different statement at the trial but the statement of a witness at the trial would not become inadmissible by reason of his having signed a statement before going into the witness box.
Reference was made to several decisions bearing on section 162 of the Code and in particular to Zahiruddin vs King Emperor(1) that the evidence of a witness who had previously signed a statement in writing did not become inadmissible or vitiate the whole proceeding although the value of the evidence would be seriously impaired thereby.
The court seems to have been of the view that it was the duty of the Magistrate or the presiding Judge on discovering that a witness had while giving evidence, made material use of a statement given by him to the police to disregard the evidence of that witness as inadmissible.
The High Court 's definite conclusion was that there had been a deliberate violation of the provisions of the Code (1) 74 I.A. 65, 74.
939 and a departure from a recognised and lawful procedure, for investigation.
With regard to the propriety of taking self incriminatory statements even when there had been no assurance of immunity from prosecution, the High Court observed that as the learned Advocate General for the State had stated that the record of manipulations in the muster rolls by the subordinate officers of the appellant had to be disregarded as not proper material for consideration as the "Special Judge had not considered these vitiating features in regard to the documents placed before him while ordering the framing of charges against the appellant" it was unnecessary to examine the question at length.
The High Court found partly in favour of the appellant and held that the order of the Special Judge directing the framing of a charge on consideration of the statements before him under section 173(4) of the Code without reference to the illegalities in the investigation should be quashed.
The High Court further directed the Special Judge to take up the matter once again and consider the case excluding from consideration all statements recorded under sections 161(3) and 164 which were found vitiated in the light of the observations made by it.
A direction was also given to exclude portions of the statements which were self incriminatory and confessional in character of the maker even if the same did not otherwise violate the provisions of sections 162 and 163 of the Code.
In our view the procedure adopted against the appellant be fore the laying of the first information report though not in terms forbidden by law, was so unprecedented and outrageous as to shock one 's sense of justice and fairplay.
No doubt when allegations about dishonesty of a person of the appellant 's rank were brought to the notice of the Chief Minister it was his duty to direct an enquiry into the matter.
The Chief Minister in our view pursued the right course.
The High Court was not impressed by the allegation of the appellant that the Chief Minister was moved to take an initiative at the instance of a person who was going to benefit by the retirement of the appellant and who was said to be a relation of the Chief Minister.
The High Court rightly held that the relationship between the said person and the Chief Minister, if any, was so distant that it could not possibly have influenced him and we are of the same view.
Before a public servant, whatever be his status, is publicly charged with acts, of dishonesty which amount to serious misdemeanour or misconduct of the type alleged in this case and a first information is lodged against him, there must be some suitable preliminary enquiry into the allegations by a responsible officer.
The lodging of such a report against a person, specially one who like the appellant occupied the top position in a department, even if baseless, would do incalculable 940 harm not only to the officer in particular but to the department he belonged to, in general.
If the, Government had set up a Vigilance and Anti Corruption Department as was done in the State of Madras and the said department was entrusted with enquiries of this kind, no exception can be taken to an enquiry by officers of this department but any such enquiry must proceed in a fair and reasonable manner.
the enquiring officer must not act under any preconceived idea of guilt of the person whose conduct was being enquired into or pursue the enquiry in such a manner as to lead to an inference that he was bent upon securing the conviction of the said person by adopting measures which are of doubtful validity or sanction.
The means adopted no less than the end to be achieved must be impeccable.
In ordinary depart mental proceedings against a Government servant charged with delinquency, the normal practice before the issue of a charge sheet is for some one in authority to take down statements of persons involved in the matter and to examine documents which have a bearing on the issue involved.
It is only thereafter that a charged sheet is submitted and a full scale enquiry is launched.
When the enquiry is to be held for the purpose of finding out whether criminal proceedings are to be resorted to the scope thereof must be limited to the examination of persons who have knowledge of the affairs of the delinquent officer and documents bearing on the same to find out whether there is prima facie evi dence of guilt of the officer.
Thereafter the ordinary law of the land must take its course and further inquiry be proceeded with in terms of the Code of Criminal Procedure by lodging a first information report.
The Code of Criminal Procedure is an enactment designed inter alia to ensure a fair investigation 'of the allegations against a person charged with criminal misconduct.
Chapter XIV of the Code gives special powers to the police to investigate into cases whether cognizable or non cognizable in the manner provided therein.
Section 160 empowers a police officer making an investigation to require the attendance before himself of any person who appears to be acquainted with the circumstances of the case.
Section 161 (1 ) gives him the right to examine orally any person supposed to be acquainted with the facts and circumstances of the case.
Although bound to answer question put to him sub section
(2) of the section exempts a person from answering any question which would have a tendency to expose him to a penal charge or to a penalty for forfeiture.
Under sub s.(3) the police officer is empowered to reduce into writing any statement made to him in the course of such examination.
Section 162(1) expressly lays down that such a statement made in the course of an investigation if reduced into writing is not to be signed by the maker thereof and no part of such statement except as expressly provided is to be used 941 for any purpose at any enquiry or trial in respect of any, such offence under investigation at the time when the statement was made.
The only exceptions to these are cases when the statement falls under section 32 cl.(1) of the Evidence Act and to statements which are covered by section 27 of that Act.
The obvious idea behind this provision is that an over zealous police officer may not misuse his position by getting a statement in writing signed by the maker which would tend to pin him down to the statement but leave him free to speak out freely when called to give evidence in court.
In order that statements made in the course of such investigations be recorded without any pressure or inducement by an investigating officer section, 163(1) lays down an embargo on the investigating authorities using any inducement, threat or promise to the maker which might influence his mind and lead him to suppose that thereby he would gain any advantage or avoid any evil in reference to his conduct as disclosed in the proceedings.
It is to be noted that whereas the other sections hereinbefore referred to contain guidelines for the police officers in making investigation, this section expressly provides that any person in authority even if he is not a police officer must guide himself accordingly, in case where a crime is.
being investigated under this Chapter of the Code.
All this is however subject to the provisions of sub s.(2) which allows a person to make any statement against his own interest by way of confession if he does so of his own free will.
Even then the law enjoins by section 164 that such a statement or con fession can only be recorded by a Magistrate of the Class mentioned therein and even such a Magistrate must explain to the person making the confession before recording the same, that he is not bound to make it and if he does so it may be used as evidence against him.
Further the Magistrate must make sure that the person was making the confession voluntarily and not acting under any pressure from an outside source.
All the above provisions of the Code are aimed at securing a fair investigation into the facts and circumstances of the criminal case : however serious the crime and howsoever incriminating the circumstances may be against a person supposed to be guilty of a crime the Code of Criminal Procedure aims at securing a conviction if it can be had by the use of utmost fairness on the part of the officers investigating into the 'crime before the lodging of a charge sheet.
Clearly the idea is that no one should be put to the harassment of a criminal trial unless there are good and substantial reasons for holding it.
Section 169 of the Code empowers a notice officer making investigation to release an accused person from custody if there is no sufficient evidence or reasonable ground of suspicion to justify the forwarding of him to a Magistrate by taking a bond from him with or without sureties, Section 173 enjoins upon a police officer 942 to complete the investigation without unnecessary delay a IInd forward to a Magistrate empowered to take cognizance of the offence a report in the form prescribed by Government setting forth inter alia the names of the parties, the nature of the information and the names of the persons who appear to be acquainted with the circumstances of the case and to communicate to the State Government the action taken by him to the person, if any, by whom information relating to the commission of the offence was first given.
When a report has been made under this section it is the duty of the officer in charge of the police station to furnish to the accused before the commencement of the enquiry or trial a copy of the report above mentioned and of the first information report under section 154 and of all other documents or relevant extracts on which the prosecution proposes to rely including the statements and confessions, if any, recorded under section 164 and the statements recorded under sub s.(3) of section 161 of all persons whom the prosecution proposes to examine as its witnesses.
In our view the enquiring officer pursued the investigation with such zeal and vigour that he even enquired into and took down statements of persons who were supposed to have provided the appellant with articles of food worth trifling sums of money long before the launching of the enquiry.
The whole course of investigation as disclosed in the affidavits is suggestive of some predetermination of the guilt of the appellant.
The enquiring Officer was a high ranking police officer ' and it is surprising that simply because he was technically not exercising powers under Chapter XIV of the Criminal Procedure Code in that a formal first information report had not been lodged he overlooked or deliberately overstepped the limits of investigation contained in the said Chapter.
He recorded self incriminating ' statements of a number of persons and not only secured their signatures thereto obviously with the idea of pinning them down to those but went to the length of providing certificates of immunity to at least two of them from the evil effects of their own misdeeds as recorded.
It was said that the certificates were given after the statements had been signed.
It is difficult to believe that the statements could have been made before the grant of oral assurances regarding the issue of written certificates.
There can be very little doubt that the persons who were given such immunity had made the statements incriminating themselves and the appellant under inducement, threat or promise as mentioned in section 24 of the Indian Evidence Act.
It is no doubt the duty of the State to track down and punish all delinquent officers but it is certainly not in accordance with justice and fairplay that their conviction should be sought for by such questionable means.
943 The office of the Directorate of Vigilance and Anti Corrup tion Department, Madras became a police station for the purpose of the Criminal Procedure Code under sub cl.
(s) of sub section
(1) of section 4 of the Code by a notification dated 25th May, 1.964.
Prior to that it was only functioning under a Memorandum No. 1356/ 64 2 dated 8th April 1964 when it was set up to ensure the maintenance of the highest standard of integrity and probity in public servants.
If the investigation had been taken up after May 25, 1964 it would have been one under Chapter XIV of the Code without any doubt.
Although we are not disposed to concur with the view that the investigation under Chapter XIV of the Code started as early as 15th April 1964 we are of opinion that there was no warrant for the Vigilance and Anti Corruption Department which was in the charge of one of the highest police officers of the State to disregard the provisions of sections 162 and 163 of the Code of Criminal Procedure.
The investigation was of a type more I thorough and elaborate than is usually 'to be found : as noticed already it was in charge of a senior police officer who had the I assistance of two police inspectors in the matter.
No blame attaches to them for making enquiries of a large number of persons but the whole course of investigation is suggestive of guidance by someone who was intimately familiar with the affairs of the appellant and his department 'and throwing out scents which the investigating officers were only too keen to pick up and follow.
The appellant may have been guilty of all the charges levelled against him but we cannot approve of the manner in which the investigation against him was conducted and an attempt made to lay a guideline for the persons who were to be cited as prosecution witnesses in their evidence at the trial.
To say the least it would be surprising to find so many persons giving confessional and self incriminatory statements unless they had been assured of immunity from the evil effects thereof whether oral or in writing.
There can be no excuse for the Directorate of Vigilance and Anti Corruption for proceeding in the manner adopted in the Preliminary enquiry before the lodging of the first information report.
As soon as it became clear to them and according to the High Court it was before March 13, 1964 in which we concur that the appellant appeared to be guilty of serious misconduct.
it was their duty to lodge such a report and proceed further in the investigation according to Chapter XIV of the Code.
Their omission to do so cannot but Prejudice the appellant and the State ought not to be allowed to take shelter behind the, plea that although the steps taken in the preliminary enquiry were grossly irregular and unfair, the accused cannot complain because there was no infraction of the rules of the 'Evidence Act or the provisions of the Code, 944 In our view the granting of amnesty to two persons who are sure to be examined as witnesses for the prosecution was highly irregular and unfortunate.
It was rightly pointed out by the High Court "Neither the Criminal Procedure Code nor the Prevention of Corruption Act recognises the immunity from prosecution given under these assurances and that the grant of pardon was not in the discretion of police authorities.
" We are not impressed by the argument that the appellant was singled out from a number of persons who had aided the appellant in the commission of various acts of misconduct and that they were really in the position of accomplices.
It was pointed out by the High Court that the prosecution may have felt that "if the subordinate officers were joined along with the appellant as accused the whole case may fall for lack of evidence".
In our view, if it be a fact that it was the appellant who was the head of the department actively responsible for directing the commission of offences by his subordinates in a particular manner, he cannot be allowed to take the plea that unless the subordinates were also joined as co accused with him the case should not be allowed to proceed.
It was contended before us by the learned Advocate General for the State of Madras that both the High Court and the Special Judge had gone wrong in the interpretation of s.5(1)(b) of the Prevention of Corruption Act.
Having heard counsel on both sides, we find ourselves unable to sustain the view of the High Court on this point.
Omitting the portions of the section which are not relevant it reads : "5(1) A public servant is said to commit the offence of criminal misconduct (a) . . (b) if he habitually accepts or obtains. for himself . any valuable thing without consideration or for a consideration which he knows to be inadequate, from any person (whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him,or) having any connection with the official functions of himself, or The portion of the sub section within brackets in our view qualifies,, 94 5 the expression "any person" in the same way as the portion reading "having any connection with the official function of himself".
So read ,,any person having any connection with the official functions of himself" would include any subordinate of the person who accepts the valuable thing.
The words "of himself" do not refer to the person in the expression "any person" but refers to the pronoun "he" at the beginning of the sub section.
A subordinate of the public servant would have connection with his official fun ctions.
In our view the sub section aims at folding within its ambit not only outsiders "who are likely to be concerned in any proceeding or business transacted or about to be transacted" by the public officer but also any subordinate or any other person who is connected with the official functions of the public servant.
In the result all the appeals are dismissed.
Although we do not endorse the view of the High Court with regard to the date of the commencement of the investigation so far as Chapter XIV of the Code of Criminal Procedure is concerned, we do hold that serious irregularities were committed in the so called "full fledged enquiry" to the prejudice of the appellant.
We do not however feel that there is any need to modify the directions given by the High Court to the Special Judge who will follow the directions of the High Court in addition to the modification indicated by us.
V.P.S. Appeal 's dismissed.
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On March 1, 1964, the Chief Minister of the State received a petition containing allegations of corruption against the appellant (a Superintending Engineer) and the Chief Minister asked the Director of Vigilance and Anti Corruption to make enquiries.
On March 10, 1964, the Director submitted a note containing serious aspersions on the appellant and the Chief Minister ordered further investigation.
The Director of Vigilance registered an inquiry on 15th April, 1964, and a Deputy Superintendent of Police of the Vigilance Department was asked to make the inquiry.
The Deputy Superintendent of Police made a thorough and searching inquiry.
He examined a large number of persons including 18 public servants and even enquired into and took down statements of persons who were supposed to have provided the appellant with articles of food worth trifling sums of money, a long time before.
He recorded self incriminating statements of a number of persons and secured their signatures thereto.
With respect to two officers, who were the subordinates of the appellant, he even gave certificates of immunity from any action that might be taken against them for the part played by them in aiding the appellant.
On June 27, 1964, he lodged a first information report, with respect to offences under sections 161 and 165 I.P.C., and section 5(1)(a) and (d) of the Prevention of Corruption Act, 1947.
He investigated into the offences there after, and filed the charge sheet before the Special Judge.
The appellant made an application for discharge under section 251 A, Cr.
P.C., on the grounds of discrimination between him and other officers who were given pardon and, gross irregularities in the investigation.
The Special Judge held, that though there was no basis for charging the appellant under section 165, I.P.C., or under section 5(2), read with section 5(1)(b).
of the Prevention of Corruption Act, a charge could be framed against him under section 5(2) read with section 5(1)(d).
The appellant thereafter moved the High Court, The High Court held : (1) that the investigation started on 15th April 1964 when the Director of Vigilance registered an inquiry (2) that the taking of signed and self incriminating statements from various witnesses was in violation of sections 161 to 164 Cr.
P.C.; (3) that the Special Judge erred in directing the framing of the charge without excluding those statements from consideration; and (4) that the Special Judge should take up the matter once again after excluding from consideration those statements.
In appeal to this Court, HELD : (1) Though technically investigation did not commence on 15th April 1964 but started only after the formal first information report was lodged on,.
June 27, 1964, there were serious irregularities during the 93 2 inquiry and investigation which caused prejudice to the appellant.
The directions given by the High Court were, however, sufficient in the circumstances of the case.
[945 D] The Directorate of Vigilance and Anti Corruption became a police station for the purposes of the Criminal Procedure Code only by a notification dated 25th May 1964.
Therefore, the inquiry before that date was not an investigation under Ch.
XIV of the Code, but there was no warrant for the Vigilance Department, which was in the charge of a senior police officer, to disregard the provisions of sections 162 and 163 of the Code.
Under s.161(3) of the Code a police officer is empowered to reduce into writing any statement made to him in the course of investigation and section 162(1) lays down that such a statement is not to be signed by the maker thereof.
Section 163(1) lays an embargo on the investigating authority using any inducement, threat or promise to the maker.
The reason for these provisions is to secure a fair investigation into the facts and circumstances of the case and to see that an of calous police officer may not misuse his position by getting a statement signed by the maker in order to pin him down to it.
Also, immunity from prosecution and the grant of a pardon were not in the discretion of police authorities.
1940 A H; 941 A B, D, F] In the present case.
the officers who were given immunity must have made the self incriminating statements because an oral assurance of immunity was given before they made the statements, that is, the statements were given as a result of an inducement.
There can be no excuse for the Vigilance Department for proceeding in the manner adopted merely because the first information ',report had not been lodged.
As soon as it became clear to them on March 10, 1964, that the appellant appeared to be guilty of serious misconduct, it was their duty to lodge such a report and,proceed further in the investigation according to Ch.
XIV of the Code.
Their omission to do so cannot but prejudice the appellant and the State ought not to be allowed to take shelter behind the plea that although the, steps taken in the enquiry before the first information was lodged were.
grossly irregular and unfair, the appellant could not complain, because.
there was no infraction of the rules after lodging the first information report.
[942 D G; 943 C H] (2) If it be a fact that it was the appellant, who as the head of the department, was actively responsible for directing the commission of offences by his subordinates in a particular manner, he cannot be allowed to take the plea that the subordinates should also be joined as co accused with him.
[944D] (3) Under section 5 (1) (b), a public servant would be guilty of the offence of criminal misconduct if he habitually accepts any valuable thing for inadequate consideration not only from outsiders who are likely to be concerned in any proceeding or business, transacted or about to be transacted by the public officer but also from any subordinate or any other person who is connected with the official functions of the public servant.
Therefore, in this case, a charge could also be framed under section 5(1)(b), if there was material.
[945 A C]
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2876.txt
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Civil Appeal NOS.
64 65 of 1969.
(From the Judgment and Decree dated 1 12 61 of the Madhya Pradesh High Court in Misc.
First Appeal No. 43 of 1959).
section K. Gambhir for the appellant in CA 64 and Respondent in CA 65/69.
L. Sanghi, K. John and J. Sinha for the respondent in CA 64 and appellant in CA 65/69.
The Judgment of Jaswant Singh and R. section Pathak, JJ. was delivered by Jaswant Singh, J. A. P. Sen, J. gave a dissenting opinion.
JASWANT SINGH, J.
These two cross appeals by certificates of fitness granted by the High Court of Madhya Pradesh at Jabalpur are directed against the judgment and decree dated December l, 1961 of the said High Court dismissing the Misc.
(First) Appeal No. 42 of 1959 preferred by the appellant from the Award dated December 20, 1958 of the II Additional District Judge, Raigarh in Miscellaneous Judicial Case No. 59 of 1958 being a reference under section 18 of the Land Acquisition Act, made at the instance of the appellant in 13 817SCI/78 186 respect of the Award dated August 23, 1957 of the Land Acquisition officer, Raigarh.
The facts giving rise to these appeals are: on an undertaking given by him to pay full compensation with interest from the date of possession to the date of payment of compensation as provided in the Land Acquisition Act, 1894 (hereinafter referred to as 'the Act ') the District Engineer, South Eastern Railway, Raigarh, took advance possession on January 17, 1957 of five plots of agricultural land admeasuring 3.38 acres and another plot of agricultural land admeasuring 0.14 acres adjoining the railway track situate in village Darogamuda, Tehsil and District Raigarh, a suburb of Raigarh belonging to respondents I and 2 respectively for doubling the railway line between Rourkela and Durg in the South Eastern Railway.
Subsequently Notification dated February 8, 1957 under section 4(1) of the Act for acquisition of the aforesaid plots of land was issued and published in the Government Gazette dated February 15, 1957.
This was followed on March 21, 1957 by a notification under section 6 of the, Act.
Although in the r statements filed by them under section 9(2) of the Act the respondents claimed compensation at the rate of Rs. 32,670/ per acre i.e. at the rate of /12/ per square foot on the ground that the plots of land in question had a great potential value as a building site and Rs. 500/ for improvements and Rs. 100/ as the value of one tree, the Special Land Acuisition officer, Raigarh by his award dated August 23, 1957 awarded compensation at the rate of Rs. 3,327/14/ per acre which roughly worked out at /1/6 per square foot on the basis of the statement of sales furnished by A.S.L.R. (L.A.) prepared by Jujhar Singh N.A.W.I. Not satisfied with the quantum of compensation, the respondents made an application to the Special Land Acquisition officer requesting him to refer the matter to the court under section 18 of the ;1 Act.
According to the request of the respondents, the Special Land .
Acquisition officer made the aforesaid references to the II Additional District Judge, Raigarh, who by his award dated December 20, 1958 enhanced the rate of compensation to /4/ per square foot and awarded Rs. 36,808/4/ and Rs. 1,524/8/ to respondents l and 2 respectively as compensation.
The Additional District Judge also allowed the solatium at the rate of 15% amounting to Rs. 5.521/4/ and Rs. 228/12/ to respondents 1 and 2 respectively.
Aggrieved by the said , Award of the II Additional District Judge, the appellant preferred an appeal to the High Court of Madhya Pradesh at Jabalpur which was registered as Miscellaneous (First) Appeal No. 43 of 1959.
In the said appeal, the respondents filed cross objections claiming enhancement of compensation by Rs. 84,518.39 P.
The High Court by its 187 judgment dated December 1, 1961 dismissed the aforesaid appeal preferred by the appellant but allowed the cross objections filed by the respondents holding the reasonable rate of compensation to be /8/per square foot.
Consequently respondent No. 1 was held entitled to Rs. 73,616 8 O as compensation and Rs. 11,042 8 0 as solatium and respondent No. 2 was held entitled to Rs. 3,049 0 0 as compensation and Rs. 457 8 O as solatium.
It is against this judgment of the High Court that the present appeals are directed.
Appearing for the appellant, Mr. Gambhir while admitting that in an appeal under Article 136 of the Constitution, the Court is only concerned with finding out whether the principles on the basis of which compensation has been computed for acquisition of land under the Act have been rightly applied or not and cannot re appraise the evidence, has urged that the Additional District Judge and the High Court have erred in treating the land in question which was primarily an agricultural land as abadi land overlooking that it had not been declared as such.
Mr. Sanghi has on the other hand urged that even according to the findings of the Additional District Judge, who made the spot inspection, as also of the High Court, it is abundantly clear that the land in question was Abadi land and has been rightly treated as such.
Mr. Sanghi has further urged that the said site has great potentialities as building site.
The question as to whether a land has potential value of a building site or not is primarily one of fact depending upon several factors such as its condition and situation, the user to which it is put or is reasonably capable of being put, its suitability for building purposes, its proximity to residential, commercial and industrial areas and educational, cultural or medical institutions, existing amenities like water, electricity and drainage and the possibility of their future extension, whether the nearby town is a developing, or a prospering town with prospects of development schemes and the presence or absence of pressure of building activity towards the land acquired or in the neighbourhood thereof.
the instant case, the fact that the land in question has a great potential value as a building site is evident not only from the observations made by the Special Land Acquisition officer himself in his aforesaid award to the effect that the land has assumed semi abadi site hut also from the following observations made in his judgment dated December 20, 1958 by the Additional District Judge who had the advantage of inspecting the site: "The land abuts Raigarh town.
It is within Municipal limits and the nazul perimeter extends upto it.
To the east of 188 the plot there are some kutcha buildings inhabited by respectable persons.
To the North is a Municipal road leading to the railway quarters to the west.
To the west beyond the railway quarters, there is further habitation` and the locality is called "Banglapara" within Municipal limits.
The plot did have a potential value as a building site and it is further supported by the fact that the plot has been used by the Railway authorities for construction of staff quarters thereon though the land was acquired for doubling the rail way line.
" It is also not disputed that the Special Land Acquisition officer did not lead any evidence worth the name to show the price of the comparable sites in question and remained content with the production only of the sale statement made by Jujhar Singh, N.A.W.I.
Now the sale statement consisted mostly of sales relating to the year 1951 which is not relevant for the question in hand.
Moreover, the sale statement by it self without examining either the vendors or the vendees or the persons attesting the sale deeds is not admissible in evidence and can not be relied upon.
The sale deed dated December 14, 1956 in favour of Dr. Das for 4,800 square feet of land out of contigious Khasra No. 256 in lieu of Rs. 2,000/ i.e., at approximately 6 1/2 annas per square foot (which has been relied upon by the Additional District Judge and the High Court) could be taken as a safe guide for determine nation of the compensation.
From the material adduced in the case, it appears that Raigarh is a growing town, that instead of utilising the land for doubling the railway track, the railway has built staff quarters thereon, that on three sides of the acquired land, there already existed pucca buildings and on the fourth side, there is a metalled road.
It is also in evidence that some lawyers have put up some constructions near the sites in question.
Taking all the facts into consideration.
it cannot be said that the basis on which the Additional District Judge and the High Court proceeded is wrong or that the quantum of compensation awarded by the High Court is in any way excessive or exorbitant.
As neither the interest nor compensation on account of severance was claimed in the High Court either by Dr. Harisingh Thakur or by Tikam Singh Thakur, we do not think they can justifiably put up claims in that behalf.
Mr. Sanghi appearing on their behalf has fairly stated that he would not like to press his cross appeal.
In the result, we do not find any merit in either of the aforesaid appeals.
W. would accordingly dismiss them with costs.
SEN J. I have had the advantage of reading the judgment by my learned brother Jaswant Singh.
Since the appeal involves an important 189 question affecting valuation which has been overlooked by the High Court, I would like to say a few words of my own.
Normally, this Court does not interfere in appeal with the valuation by the High Court in land acquisition cases, unless the judgment cannot be supported, as it stands, either by reason of a wrong application of principles or because some important point in evidence has been overlooked or mis applied: The Special Land Acquisition officer, Bangalore vs Adinarayan Setty(1).
With respect, I venture to say that the judgment of the High Court cannot be supported by reason of a wrong application of principles.
It overlooked the fact that there was no discernible basis on which the Additional District Judge could have changed the mode of valuation adopted by the Special Land Acquisition officer treating the land acquired to be agricultural land and in awarding compensation upon the basis as if it were a building site.
Indeed, there was no atempt on their part to determine the ' 'intrinsic character of the land", namely, whether the land acquired should be classified as agricultural land or not.
In the present case, the High Court obviously fell into an error in overlooking the, fact that the acquired land situate in village Darogamuda, admeasuring 3.52 acres, was, on the 8th February, 1957 i.e. On the date of the issue of the notification under section 4(1) of the Act, agricultural land.
It was recorded as a raiyati land belonging to the two claimants, Dr. Harisingh Thakur and his brother Vikram Singh Thakur who were ex gaontiyas of village Darogamuda.
The land was not recorded as abadi as wrongly assumed by the High Court.
Perhaps it was misled by the mis description of the land as abadi in the reference made by the Collector under section 18(1).
This is an admitted position between the parties.
In response to the notice of admissions and denials of documents served by the claimants, the Collector admitted panchsala khasra for the years 1952 53 to 1953 54 and kistbandi khatouni for the years 1952 53 and 1953 54.
The claimant Dr. Harisingh Thakur, AW1 admits during his crossexamination that till the month of December 1956, the lands were actually under his cultivation and he had reaped the crops before delivering possession of the same on the 17th January, 1957 to the District Engineer, South Eastern Railway.
He further admits that throughout the land was under cultivation i.e. from the time, of his forefathers.
In fact, Jujhar Singh NAW1, Assistant Superintendent Land Records, who was at the relevant time a Revenue Inspector, states that the,. land (1) [1959] Supp.
(1) S.C.R. 404.
190 acquired was a paddy field and was surrounded by agricultural lands.
That being so, the District Judge, was clearly wrong in treating the land to be abadi and calculating compensation on the footing of its being a building site.
In awarding compensation at a flat rate of Rs. 3,327.87 P. per acre, the Special Land Acquisition officer took notice of the fact that the land is situate in village Darogamuda, a suburb of Raigarh, which is a town of great commercial importance, though beyond its nazul perimeter.
He also took notice of the fact that the land abuts the railway track and there were agricultural fields on two sides.
On the other two sides, there existed kutcha hutments of backward classes and a few railway buildings.
The award of compensation at the rate of Rs. 3,327.87 P. per acre was based on average of sales of lands in recent years as prepared by Jujhar Singh, Revenue Inspector NAW 1.
The Special Land Acquisition officer accordingly observed: "The average value based on the above noted sales comes to Rs. 3,327/14/ per acre and in my opinion it truly re presents the average market value of lands in this predominantly agricultural locality which has assumed semi abadi site value due to the constructions of houses mostly by low class people besides a few buildings of Railway Department.
It is for this reason that the average value per acre comes to as much as Rs. 3,327/14/ per acre else the lands in question would have fetched lower price, available in respect of agricultural lands to which class they really belong and stand assessed as such till today.
" While it is no doubt true, as my learned brother Jaswant Singh has rightly observed, that the statement of average of sales, prepared by Jujhar Singh NAW 1, was not admissible in evidence unless the Collector proved the transactions in question, upon which it was based, there is no denying the fact that the acquired land was nothing but agricultural land and the mode of valuation had necessarily to be upon that basis.
Now, if the purpose for which the land was acquired, i.e., for the construction of staff quarters in connection with the doubling of the railway line by the South Eastern Railway, has no bearing on the question of valuation, the future possibilities of the land, which admittedly was agricultural land, lying in the vicinity of Raigarh if applied to the most lucrative use, having regard to its the then condition, was very little as a building site.
The land was lying undeveloped and undiverted.
Unless there was a development scheme, the land could not 191 be valued as a building site.
The land could, however, be put to that use if there was such development scheme.
At the time of the notification under section 4(1), there was no recent building activity near about the land, which was either under cultivation or lying desolate.
But as l have already said, the land could be put to a better use provided it was fully developed as a building site.
The claimants were, therefore, entitled to the evaluation of the land as agricultural land with an additional allowance being made for its future potentiality as a building site.
I just cannot imagine what could be the utility of the acquired land on a building site, looking to its proximity to the railway track.
It would, indeed, be very little.
In a reference under 9. 18 of the Act, the burden of proving that the amount of compensation awarded by the Collector is inadequate lies upon the claimant, and he must show affirmatively that the Collector had proceeded upon a wrong basis.
The nature and the burden of establishing that he was wrong, depend on the nature of the enquiry held by him.
When the proceedings before the Collector disclose that the award was not reasonably supported by the material before him, or when the basis was the application of a 'multiple ' which could not be justified on any rational ground, the burden can be discharged by a slight evidence.
But that is not the case here.
The claimants have led no trustworthy evidence.
It is equally well settled that where the claimant leads no evidence to show that the conclusions reached in the award were inadequate, or, that it offered unsatisfactory compensation, the award has to be confirmed.
Upon a compulsory acquisition of property, the owner is entitled to the value of the property in its actual condition, at the time of expropriation, with all its advantages and with all its possibilities, excluding any advantage due to the carrying out of the claim for the purpose for which the property is acquired.
In Vyricharla Narayana Gajapatjiraju vs Revenue Divisional Officer Vizagapatnam(1) the Privy Council state: "For the land is not to be valued merely by reference to the use to which it is being put at the time at which the value has to be determined. but also by reference to the uses to which it is reasonably capable of being put in the future.
It is possibilities of the land and not its realized possibilities that must be taken into consideration.
" The value of the acquired property, with all its possibilities has to be ll adjudged on the material on record.
(1) 66.
I.A. 104.
192 The market price must be fixed with reference to the date of the.
notification under section 4 irrespective of any trend, if any, for an increase in the value thereof.
The basis for determination of the market value of tel land within section 23 (1) (i) of the Act is the value of the land to the owner.
Only such transactions would be relevant which can fairly be said to afford a fair criterion of the value of the property as at the date of the notification.
That test is clearly not fulfilled in the present case.
Clause fifthly in section 24 interdicts the court from considering any prospective increase in value due to acquisition.
Market value of the land acquired has to be fixed with reference to the date of notification under section 4 (1) .
In Vyricharla Narayana Gajapatiraju vs Revenue Divisional Officer, Vizagapatam (supra) the Privy Council observed that where the owner is a person who could turn the potentiality of the land into account, it is immaterial that the utilization of the same potentiality is also the purpose for which the land is acquired.
The Underlying principle is that a speculative rise in price of land due to acquisition should not be an element which should enter into computation.
Sometimes the prices shown in sale deeds executed subsequent in point of time are not the actual prices paid.
The sales may be.
unreal and may not reflect the true value of the land.
There always elapses a certain interval between the time when the intention to acquire Ea certain land first becomes known and the actual notification under section 4(1) is issued.
Here though the notification under section 4(1) was issued on 8th February, 1957, but the claimants had, in fact, delivered the possession to the District Engineer, South Eastern Railway on the 17th January, 1957, and were indeed, as it appears from the evidence, aware of the fact that the land was being acquired by the South Eastern Railway much earlier, i.e., in December, 1956.
In view of this, the prospective rise in value, if any, has to be kept out of consideration.
the principles to determine the quantum of compensation are contained in section 23(1) of the Act.
The court in fixing the amount has to take into consideration the prevailing market value of the land at The date of the notification under section 4(1) and the said market value has to be determined by reference to the price which a willing seller might have reasonably expected for similar property from a willing purchaser.
The underlying principle of fixing the market value with reference to comparable sales is to reduce the element of speculation.
In a comparable sale, the features are: (i) it must be within a reasonable time of the date of notification under section 4.(1); (ii) it should be a bona fide transaction; (iii) it should be a sale of the land acquired or of the land adjacent to the acquired; and (iv) it should possess 193 similar advantages.
Before such instances of sales can be considered there must be material evidence either by the production of the sale deeds or by examining the parties to the deeds or persons having knowledge of the sales, to prove that the transactions are genuine.
In the light of these principles, the three sale deeds relied upon by the High Court, Ext.
P 14, Ext.
P 15 and Ext.
P 17, pertaining to the small portions of the acquired land executed by the claimants, could not obviously be the basis for the determination of the market value of the land.
These sale deeds had clearly been brought into existence by the claimants in quick succession, in an attempt to inflate the price of the land, after they became aware of the proposed acquisition.
Of these, the land covered by the sale deed Ext.
P 14, dated 14th December, 1956 executed by Tikam Singh Thakur, i.e., just a month before the delivery of the possession, shows a sale of a plot measuring 4,800 sq.ft.
to Dr. Dhirendra Chandra Das, AW 2, for a price of Rs. 2,000/ .
The rate works out to about 42P per sq.
It evidently could not afford a fair criterion of the value of the property on the date of the notification under section 4(1).
Dr. Das admits that he is in Railway service and when he purchased the land he knew that it was being acquired by the South Eastern Railway.
No doubt Dr. Das is a willing friend of Dr. Harisingh Thakur prepared to lend a helping hand but, by no stretch of imagination, could he be treated to be a willing purchaser.
in the true sense of the term.
Though Dr. Das asserts that he had purchased the land for building a house, he admits that he did not construct upon it because he would have been required to invest considerable money for levelling the land making it fit to be utilised as a building site.
This transaction indubitably does not appear to be a real sale and could not furnish any guide for determination of the true market value.
I am afraid, the other two sale deeds, Ext.
P 15 dated 19th December, 1956 and Ext.
P 17 dated 21st February, 1957 executed by Dr. Harisingh Thakur, by which he sold 300 sq.
Of the acquired land to Jhallu Dani, AW 13 for Rs. 150/ and 280 sq.
ft to Baido, AW 15, for Rs. 200/ were, in fact, fictitious sales effected by him after delivery of possession to the South Eastern Railway.
The transactions speak for themselves.
Indeed, Ext.
P 17 was executed by him after issue of the notification under s.4(1).
The first sale was effected by the claimants to show the price of the land to be 50P per sq.
They were evidently not satisfied by this and, therefore, brought the other sale deed into existence, a few days after the notification, showing the rate to be about 72P per sq.
It is needless to stress that such fictitious and unreal transactions which are but 194 speculative in nature could not be taken into account by the High Court at all.
In Raghubans Narain Singh vs The Uttar Pradesh Government (1) this Court quoted with approval the following passage from one of its earlier decision in N. B. Jeajabhoy vs The District Collector, Thana,(2) where it was said: "the question therefore turns upon the facts of each case.
In the context of building potentiality many questions will have to be asked and answered: whether there is pres sure on the land for building activity, whether the acquired land is suitable for building purpose, whether the extension of the said activity is towards the land acquired, what is the pace of the progress and how far the said activity has ex tended and within what time, whether buildings have been put up on the lands purchased for building purposes, what is the distance between the built in land and the land acquired and similar other questions will have to be answered.
It is the overall picture drawn on the said relevant circumstances that affords the solution.
" In Raghubans Narain Singh 's case (supra) there was evidence to the effect that there was a school building near the acquired land, that the land abutted on the road and that some houses had been built on the opposite side of the road.
It was nevertheless held by this Court that all this did not constitute evidence of building potentiality.
It was pointed out that there should be evidence, on the record, 'of building activity of a substantial nature, being carried on in the neighbourhood of the acquired land, at about the time when the notification was issued '.
There is complete absence of such evidence in this case.
It is beyond doubt that the acquired land was agricultural land, and had not been diverted for non agricultural purposes.
Indeed, the claimant, Dr. Harisingh Thakur had himself admitted the land to be agricultural land.
The land is on the outskirts of Raigarh town but that itself does not show that the land had a potential value for building purposes.
It was for the claimants to show that at the relevant time there was a tendency of the town to develop in that direction and that prior to the acquisition new buildings had been constructed in the neighbourhood.
Topography of the acquired land which abuts the railway track is given by Jujhar Singh, NAW 1, the then Revenue Inspector, who states that actually paddy used to be grown on the land.
To the north of this land, there was cultivation.
Beyond it, there was a 10 ft.
(1) [1967] I S.C.R. 489.
(2) C.A. Nos. 313 to 315 of 1965 decided on August 30, 1965.
195 broad pucca road.
About three furlongs way from the land was the house of Ambalal.
About one and a quarter miles away there was a skin godown.
In the east, there were small huts.
Beyond them, in the east, at a distance of about half a furlong, there was the house of Jairamvalji.
In the west, about a furlong away, there was an old bungalow.
At about the same distance, there is the burial ground.
In between and all around, there were agricultural fields.
That is the total evidence of the case.
On this evidence it cannot be said that valuation should be made on the basis of the potentiality of the land as building site.
In the absence of comparable sales, the only other alternative to adopt is the capitalised value.
Compensation in respect of the agricultural land should be allowed on the basis of 20 years ' purchase.
The capitalisation basis cannot, however, be accepted in a case where, as in the instant case there is no evidence of the profits yielded from the land.
I would, therefore, for these reasons allow the appeal of the State of Madhya Pradesh.
It is with reluctance that I have written this separate opinion.
There has never been a public undertaking in this country Governmental, Municipal, city or industrial, but that the land holder has generally secured anything from four to forty times as much for the land as its agricultural price, i.e., many times its real value.
This result unfortunately springs from a general tendency of District Judges in hearing a reference under s.18 of the Land Acquisition Act, 1894, to assume that purely agricultural lands, merely by their proximity to a city or town, become endowed with 'special adaptability ' as a building site.
While it is not suggested that unfairly low value should be offered, on the other hand the temptation to over generosity must be equally resisted.
Such generosity at the public expense reacts against the development and against the prosperity of the country and imposes an unnecessary burden on the taxpayer.
Per Curiam In accordance with the opinion of the majority, the appeals are dismissed with casts.
N.V.K. Appeals dismissed.
|
Agricultural land belonging to the respondents was acquired by the railways for doubling the railway line, compensation payable for the acquired land was fixed at Re. 1/6 per sq.
But the respondent claimed Re. /12/ per sq.
On the ground that the land had a great potential value as a building site.
On reference the Additional District Judge enhanced the rate of compensation to Re. /41 per sq.
and allowed solatium at 15%.
On appeal the High Court enhanced the compensation to Re.
/8/ per sq.
on further appeal to this Court it was contended on behalf of the appellants that the courts below had erred in treating the land, which was primarily agricultural land, as abadi land overlooking that it had not been declared as such.
[Per Jaswant Singh & Pathak, J. Sen, J. dissenting] Dismissing the appeals.
^ HELD: (1) Taking all the facts into consideration it cannot be said that the basis on which the Additional District Judge and the High Court proceeded was wrong or that the quantum of compensation awarded by the High Court was in any way excessive or exorbitant.
[188 F] (2) The question as to whether a land has potential value as a building site or not is primarily one of fact depending upon several factors such as its condition and situation, the user to which it is put or is reasonably capable of being put, its suitability for building purposes, its proximity to residential, commercial and industrial areas and educational, cultural or medical institutions, existing amenities like water, electricity and drainage and the possibility of their future extension, whether the nearby town is a developing or a prospering town with prospects of development schemes and the presence or absence of pressure of building activity towards the land acquired or in the neighbourhood thereof.
[ 87F F] (3) In the instant case it was clear from the observations of the Special Land Acquisition officer and the Addl.
District Judge that the land had great potential value as a building site.
Moreover the Spl.
Land Acquisition officer did not lead any evidence worth the name to show the price of comparable sites but remained content with the production only of the sale statement prepared by the Revenue Inspector.
The sale statement consisted mostly of sales relating to the year 1951 which is not relevant to the question on hand.
Without examining the vendors or vendees, the sale statement was not admissible in evidence and could not be relied upon.
From the material on record it was clear that Raigarh was a growing town.
Instead of utilising the land for doubling the railway track 184 the railway had built staff quarters.
On three sides of the land there were pucca buildings and on the fourth side there was a metalled road.
[187G H 188C D. [Per Sen, J.(dissenting)] 1.
Upon compulsory acquisition of property, the owner is entitled to the value of the property in its actual condition at the time of expropriation with all its advantages and with all its possibilities, excluding any advantage due to the carrying out of the claim for the purpose for which the property is acquired.
The value of the acquired property with all its possibilities had to be adjudged on the material on record.
[191 F, H] Vyricharla Narayana Gajapatiraju vs Revenue Divisional officer, Vizagapatnam, 66 IA 104, followed.
The market price must be fixed with reference to the date of the notification under section 4 irrespective of any trend, for an increase to the value thereof.
The basis for determination of the market value of the land within section 23(1)(i) of the Act is the value of the land to the owner.
Only such transactions would be relevant which can fairly be said to afford a fair criterion of the value of the ,, property as at the date of the notification.
That test is clearly not fulfilled in l? the present case[192A B] 3.
In a reference under section 18 of the Act the burden of providing that the amount of compensation awarded by the Collector is inadequate lies upon the claimant, and he must show affirmatively that the Collector had proceeded upon a wrong basis.
The nature and the burden of establishing that he was wrong, depend on the nature of the enquiry held by him.
When the proceedings before the Collector disclose that the award was not reasonably supported by the material before him or when the basis was the application of a "multiple" which could not be justified on any rational ground, the burden can be discharged by a slight evidence.
But that is not the case here.
[191C D] 4.
In the present case the High Court fell into an error in overlooking the fact that the acquired land was agricultural land.
It was recorded as a raiyati land.
The land was not recorded as abadi as wrongly assumed by the High Court.
The claimants admitted that the land was actually under cultivation.
The Revenue Inspector stated that the land was a paddy field and was surrounded by agricultural lands.
That being so the District Judge was clearly wrong in treating the land to be abadi and calculating compensation on the footing of its being a building site.
[189E 190A] 5.
Secondly, the land was lying undeveloped and undiverted.
Unless there was a development scheme the land could not be valued as a building site.
At the time of the notification under section 4(1) there was no recent building activity near about the land.
The land could be put to better use provided it was fully developed as a building site.
The claimants were therefore entitled to the valuation of the land as agricultural land with an additional allowance for its future potentiality as a building site.
[190H 191B] 6.
In fixing the amount of compensation the court has to take into consideration the prevailing market value of the land at the date of the notification unders.
4(1) and such market value has to be determined by reference to the price which a willing seller might have reasonably expected for similar property from 1 a willing purchaser.
In a comparable sale the features are: (1) it must be 185 within a reasonable time of the date of notification under section 4(1), (2) it should be a bona fide transaction; (3) it should be a sale of the land acquired or of the land adjacent to the land acquired and (4) it should possess similar advantages.
[92G 193A] 7.
In the instant case the sale deeds relied upon by the High Court could not obviously be the basis for the determination of the market value of the land.
These sale deeds had clearly been brought into existence by the claimants in quick succession in an attempt to inflate.
the price of the land after they became aware of the proposed acquisition.
The transactions which were examined by the High Court were apparently fictitious and unreal and are speculative in nature and could not be taken into account at all.
[193B C, 193H 194A] 8.
On the evidence produced it could not be said that valuation should be made on the basis of potentiality of the land as building site.
There is complete absence of evidence of building activity of a substantial nature being carried on in the neighbourhood of the acquired land at about the time when the notification was issued.
The claimants themselves did admit that the land was agricultural land.
[195B, 194F C] Raghubans Narain Singh vs The U.P. Govt.
, ; N. B. Jeejabhoy vs The District Collector, Thana, C.A. Nos. 313 to 315 of 1965 decided on Aug 1965: referred to.
In the absence of comparable sales, the only other alternative to adopt is the capitalised value.
Compensation in respect of the agricultural land should be allowed on the basis of 20 years ' purchases.
The capitalisation basis cannot, however, be accepted in a case where there is no evidence of the profits yielded from the land.
[195C]
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minal Appeal No. 176 of 1969.
Appeal from the Judgment and order dated November 12, 1968 of the Assam and Nagaland High Court in Criminal Revission No. 73 of 1968.
K. P. Gupta, for the appellant V. A. Setyid Mahmud and section K. Nandy, for the respondent.
The Judgment of the Court was delivered by Shelat, J.
Prior to August 15, 1947, the respondent was in the service of the Government of Assam as, an unarmed Police Constable bearing No. 407, serial No. 29.
On partition, he opted for service in Pakistan.
Consequent on his exercising such option, the Assam Government passed an order No. 2155, dated December. 31, 1947, releasing him ' from service 'and directing him to report to the Inspector General of Police, Dacca for service there.
The respondent thereafter went to the then East Pakistan and joined Pakistan Government service as a peon in the sub registrar 's office at Fenchugani, District Sylhet.
He entered India on December 23, 1953 on the strength of a Pakistani passport, dated September 10, 1953 and an Indian visa dated November 11, 1953.
He appears to have returned,to Pakistan on April 25, 1954.
, On January 27, 1955, he again applied for and obtained an Indian visa which was valid upto January 26, 1955.
On the strength of that visa, he entered India on April 4, 1955.
Instead of returning to Pakistan, he overstayed 'beyond January 26, 1955 until he was detected on October 9, 1964 in the village Niargram, Salchar Sub Division in the house of one Tozamul Ali Majumdar.
He had at that time no permit as required by cl. 7 of the Foreigners Order, 1948, as amended in 1959.
He was consequently arrested and prosecuted under sec.
14 of the read with cl. 7 of the Foreigners Order, 1948.
The Additional District Magistrate, Silchar convicted him under cl. 7 of the Foreigners Order read with section 14 of the and sentenced him to rigorous imprisonment for a period of six months and directed that he should to deported from India after he had served out the sentence.
On appeal by the respondent against the said order of conviction and sentence, the Sessions Judge, Silchar upheld the said order of conviction and sentence.
In the revision application filed by him in the High Court of Assam and Nagaland, the High Court, relying pip Fidea Hussain vs U.P.(1), reversed the said order of conviction and sentence and (1) ; 687 accepting the revision acquitted him.
The reasoning adopted by the High Court was that as in the case of Fida Hussain(1) the respondent was a natural born British subject, that being so he was at 'the date of his entry in India in April 1955 a citizen of India under article 5 of the Constitution and that he was governed by the definition of a foreigner in the before that Act was amended in 1957.
Before the said amendment, a foreigner as defined by section 2(a) meant a person who: (i) is not a natural born British subject as defined in sub sections (1) and (2) of sec.
I of the British Nationality and Status of Aliens Act, 1914, or (ii) has not been granted a certificate of naturalization as a British subject under any law for the time being in force in India, or (iii) is not a citizen of India.
The High Court felt that the respondent fell under cl.
(i) of the said definition and therefore was not a foreigner when he entered India in April 1955 (i.e., before the definition was amended in 1957) and was not, therefore ' required to obtain a permit under cl. 7 of the Foreigners Order, 1948.
According to the High Court, if the amended definition applied to the respondent it would be the Central Government and not a court of law which could under the be the appropriate authority to deal with such questions.
In our view the reasoning adopted by the High Court, of which the basis was the decision in Fida Hussain 's case(1) was not valid as the High Court omitted to take into account the fact of the respondent having left India for Pakistan in August 1947 after he has opted for service in Pakistan.
The defence of the respondent was that he was born in India, that he owned a house and lands in India and was therefore a citizen of India within the meaning of article 5 of the Constitution.
There is, however, the fact established by the record in this case that in 1947 he opted for Pakistani service, and that he left India for Pakistan where he obtained service as a peon and that he lived there from 1947 to 1953 when he came to India on a short visit on the strength of a Pakistani passport and a visa and then returned to Pakistan.
Under article 7, notwithstanding anything in article 5, a person, who has after the first day of March 1947, migrated from the territory of India to the territory included in Pakistan shall not be deemed to 'be a citizen of India.
If article 7 applied to this case (1) ; 688 the respondent would not be deemed to be a citizen of India notwithstanding his complying with the conditions of article 5.
It is quite clear from H.P. vs Pear Mohammad(1) that it would be article 7 and not the which would apply to a case where a person has migrated to Pakistan between March 1, 1947 and January 26, 1950 when the Constitution came into force.
If article 7 were to apply it is clear that the court and not the Central Government or its delegate which would have jurisdiction to deal with the question whether the person concerned is a foreigner to be dealt with under the .
The crucial point in the case, therefore, was whether the respondent had migrated to Pakistan between March 1, 1947 and January 26, 1950.
If he did, then notwithstanding his complying with the requirements of article 5, his case would fall under article 7 and he would be deemed not to be a citizen even on the date of his entry in India on April 4, 1955.
What then is the connotation of the word 'migrated ' within the meaning of article 7 in Kulathil Mammu vs Kerala(1), this Court interpreted article 7 and held that the word 'migrated ' was capable of two meanings.
In its narrower connotation it meant going from one place to another with the intention of residing permanently in the latter place; in its wider connotation it simply meant going from one place to another whether or not with the intention of permanent residence in the latter place.
in article 7 the word was used in its wider sense though it did not take in movement which was in voluntary or for a specific purpose and for a short and limited period.
Considering the facts of the present case, viz., the option exercised by the respondent for Pakistan service, his having secured release from Indian service as a constable, his going to Pakistan and obtaining service there as a peon in the sub registrar 's office, his staying there thereafter for a long period, his obtaining Pakistani passport and visas declaring therein that he had acquired Pakistani citizenship and domicile, there can be no doubt that he had gone to Pakistan permanently.
His movement to Pakistan thus was neither involuntary nor for a short or limited period, but was clearly with the definite intention of having a permanent place of abode there.
His case thus fell within article 7 and therefore on his entry in India on April 4, 1955 he was a person who wag deemed not to be a citizen of India.
In Fida Hussain vs U.P. (3), the question of the applicability of article 7 did not arise and was not considered presumably because it was not contended that Fida Hussain had migrated to the territory which fell within Pakistan between March 1, 1947 and January 26, 1950.
The Court, therefore, considered only cl.
(1) of section 2(1) of the Foreigners Act, 1945 and not its cl.
(3) as it (1) [1963] Supp. 1 S.C.R. 429 (3) ; (2) ; 689 stood before its amendment in 1957.
It appears that the only date available there was the date of his entry in 1953, when the unmended definition prevailed.
It could not, therefore, be said there that he had migrated from India between March 1, 1947 and January 26, 1950, and that therefore, he would be deemed not to be a citizen of India under article 7.
In our view, the High Court could not have relied on Fida Hussain 's case (supra) for its conclusion that the respondent was not a foreigner in April 1955, and that therefore, Cl. 7 of the Foreigners ' Order could not apply to him.
Cl. 7 of the Foreigners ' Order 1948 by its sub cl.
(1) requires every foreigner who enters India on the authority of a visa to obtain a permit from the relevant authority indicating the period during which he is authorised 'to remain in India.
The visa obtained by the respondent permitted him to stay in India till January 26, 1956.
If he wanted to stay beyond that period, it was incumbent on him as provided by sub cl.
(3) of cl. 7 to obtain from the relevant authority thereunder an extension of the period mentioned in the visa.
In the absence of such an extension he was bound to depart from India on January 26, 1956.
Admittedly he did not, but on the contrary continued to remain in India, until he was detected in 1964.
Dr. Mahmood, however, relied on the Registration of Foreigners (Exemption) Order, 1957.
But whether the respon dent was exempted under that order or not is entirely irrelevant for the purposes of cl. 7 of the Foreigners Order, 1948, whose purpose clearly is to see that a foreigner entering India under a visa does not overstay 'beyond the period for which the visa permits him to stay in this country.
By overstaying here without the required extension the respondent clearly violated the provisions of cl.
7(1) and (3) of the Foreigners ' Order, 1948 in view of our conclusion that he was a person who was deemed not to be a citizen of this country, and therefore, a foreigner even under the definition of a foreigner in sec.
2 of, the Foreigners Act before it was amended in 1957.
The decision in State vs Ibrahim Nabiji(1) referred to by counsel also does not assist as it did not have to deal with the point arising in the present appeal, that is with regard to a person who, notwithstanding article 5, is to be deemed not to be a citizen under article 7, and therefore, a foreigner within the meaning of sec.
2(a) of the Foreigners Act as it stood in 1955.
The State vs Akub (2 ) another decision relied on by Dr. Mahmood, merely laid down that persons who are sought to be brought within the scope and ambit of cl. 7 of the Foreigners ' Order, 1948 are (1) A.I.R. 1959.
(2) A.I.R. 1961 All.
690 persons who are.
not citizens of India, and that clause did not apply to those who were not foreigners at the date of their entry although they may become foreigners after, their entry by reason of the amendment of the definition in.
This decision again cannot assist the respondent in, view of our concluSion with regard to article 7 by reason of which the respondent even at the date of his entry in 1955 was deemed not to be a citizen of India.
In our view the respondent was a foreigner when he entered India in April 1955 as the definition of foreigner then stood, and by overstaying beyond the period permissible under the visa on the strength of which he had entered India he clearly committed breach of cl. 7 of the Foreigners ' Order, 1948 and was liable to be punished under section 14 of the .
He was, therefore, rightly convicted and sentenced by the Trial Magistrate.
The High Court, in our view, erred in setting aside that order of conviction and sentence.
The appeal by the State is, therefore, allowed and the order of the Trial Court is restored.
S.C. Appeal allowed.
|
Prior to 1947, the respondent was in the service of the Government of Assam as an unarmed Police constable and on partition, he opted for service Pakistan.
The respondent went to the then East Pakistan and joined Pakistan Government service as a peon.
He entered India in 1953 on the strength of a Pakistani passport but returned to Pakistan in 1954.
Again in 1955, he obtained an Indian visa which was valid upto January 26, 1955.
On the strength of that visa, he entered India but instead of returning to Pakistan, he over stayed until he was detected and arrested.
He was then prosecuted under section 14 of the read with Clause 7 of the Foreigners Order, 1948.
The Additional District Magistrate Convicted and sentenced him and the Sessions Judge also upheld the said order of conviction and sentence.
In a revision application, the High Court, relying on Fida Hussain vs U.P., ; , reversed the said order of conviction and sentence and acquitted him on the ground that he was not a 'foreigner ' under section 2(a) of the , but was a citizen of India under article 5 of the Constitution; when he entered India in 1955 (before the said definition was amended in 1957.
Allowing the appeal, Held :(1) The respondent was a foreigner when he entered India in 1955 as the definition of 'foreigner ' then stood and by overstaying beyond the period permissible under the visa, he clearly committed breach of Clause 7 of the Foreigners Order, 1948 and was liable to be convicted under section 14 of the .
(690B C] The crucial point in the present case, was whether the Respondent had migrated to Pakistan between 1947 and 1950.
If he did, then notwithstanding his complying with the requirement of article 5, his case would fall under article 7 and he would be deemed not to be a citizen even, on the date of his entry in India in 1955.
Considering the facts of the present case, viz., the option exercised by the respondent for Pakistan service, his having secured release from Indian service, as a constable, his going to Pakistan and obtaining service there as a peon, his staying there for a long period; his obtaining Pakistani passport and visas declaring therein that he had acquired Pakistani citizenship and domicile etc; there could be no doubt that he had gone to Pakistan permanently.
His case thus fell within article 7 and therefore, at his entry in India in 1955 he was a person who was deemed not to be a citizen of India.
[688C G] H. P. vs Peer Mohammad, , Kulathil Mammu vs Kerala, ; , State vs Ibrahim Nabiji, A.I.R. 1959 Bom.
526 and State vs Akub, A.I.R. 1961 All. 428, referred to. 686
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Appeal No. 1437 of 1971.
(Appeal by Special Leave from the Judgment and order dated 28 4 1970 of the Delhi High Court in Income Tax Refer ence No. 50/ 65) V.S. Desai, Mrs, Leila Seth and Parveen Kumar for the Appellantt.
S.T. Desai & M.N. Shroff, for the Respondent.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave is directed against the judgment of the Delhi High Court dated April 28, 1970 in a reference made by the Income tax Appellate Tribu nal (Delhi Bench A) under section (36(1) of the Income tax Act, 1922, hereinafter referred to as the Act.
in respect of the following question, "Whether on the facts and circumstances of the case the sum of Rs. 7 lakhs received from M/s Orissa Cement Ltd. was pursuant to an adventure in the nature of trade and as such tanable under the Indian Income tax Act, 1922 ?" The High Court has answered the question in the affirmative.
We shall refer to the facts giving rise to the controversy in some detail when we state them in a chronological order.
It may be mentioned, mean while, that the Dalmia Cement Ltd., hereinafter called the appellant, owned certain cement facto ries and it placed an order for the supply of four complete units of cement manufacturing machinery with M/s F.L. Smidth and Co., Copenhagen, on February 7, 1946.
to increase the production in the following factories, , 1.
Shantinagar, 2.
Dandot, 3.
Dalmianagar, 4.
Dalmiapuram.
Since the factory in Dandot fell within the territory of Pakistan on constitution with effect from August 15, 1947, the appellant transferred the machinery which was meant for the Dandot factory (hereinafter referred as the Dandot machinery), to a new company known as Orissa Cement Ltd. some time in 1950 51, and charged only the invoice price which it had paid to M/s F.L. Smidth and Co. The appellant thereafter asked for a higher price and after some negotia tions the Orissa Cement Ltd. agreed on December 4, 1951, to pay a further sum of Rs. 7 lakhs, in lieu of which 70,000 fully paid up ordinary shares of Rs. 10/ each.
were given to the appellant in that company.
The Income tax Officer treated that amount as income earned by the appellant pursu ant to an adventure in the nature of trade in 1952 53 as sessment year, and taxed it as such.
On appeal, the Assistant 4 1234SCI/76 556 Appellate Commissioner also held in his order dated Septem ber 16, 1958 that the transfer of the Dandot machinery was an adventure in the nature of trade and the payment of Rs. 7 lakhs was a revenue receipt which was rightly taxed by the Income tax Officer.
The matter went up in appeal to the Income tax Appellate Tribunal (Delhi Bench) which remanded the case to the Income tax Officer by its order dated Sep tember 13, 1960, for report on certain specific points.
On receipt of the Income tax Officer 's report, the Tribunal held that the transaction in question was "certainly an adventure in the nature of trade" and dismissed the appeal.
It however drew up a statement of the case, and that is how the aforesaid question of law was referred to the High Court under section 66(1) of the Act.
The High Court held that by the time the appellant placed the despatch order with M/s Smidth & Co., "its intention was to purchase it with an idea to resell" and that the fact that it was a single and iso lated transaction did not materially affect the case.
In reaching that conclusion the High Court took the subsequent developments into consideration, and rejected the contention that the machinery was purchased by way of an "investment".
The present appeal has been filed against that judgment of the High Court dated April 28, 1970.
Under section 10 of the Act, income tax is payable by ,m assessee under the head "Profits and gains of business, profession or vocation", inter alia, in respect of the profits and gains of any "business" carried on by him, and the controversy in this case is whether the receipt of the additional sum of Rs. 7 lakhs, over and above the cost of the Bandot machinery, could be said to arise out of any "business" of the appellant.
The term "business" has been defined as follows in clause (4) of section 2 of the Act, "(4) "business" includes any trade, commerce, or manufacureor any adventure or concern in the nature of trade, commerce or manufacture.
" The question in this case is whether the transaction was an "adveuture" in the "nature of trade" within the meaning of the definition ? Some decisions have been rendered by this Court on the point, and our attention has been invited to the decisions in Narain Swadeshi Weaving Mills vs Commis sioner of Excess Profits Tax, (1) Kishan Prasad and Co. Ltd. vs Commissioner of Income tax Punjab,(") G. Venkattaswami Naidu & Co. vs The Commissioner of Income tax,(3) Soroj Kumar Mazurndar vs The Commissioner of Income tax West Bengal Calcutta, (4) and Janki Ram Bahadur Ram vs Commissioner of Income tax, Calcutta(5).
Even so, on gener al principle can, for obvious reasons, be laid down to cover.
all cases of this kind because of their varied na ture, so that each case has to be decided on the basis of its own facts and circumstances.
It is however well settled that even a single and isolated transaction can be held to be capable of falling within the definition if it bears clear indicia of trade (vide Natgin (1) (2) (3) [1959] Supp.
(1) S.C.R. 646.
(4) (1959) Supp. (2) S.C.R. 846.
(5) ; 557 Swadeshi Weaving Mills vs Commissioner of Excess Profits, G. Venkataswami Naidu & Co. vs The Commissioner of Income tax, and Sarol Kumar Mazumdar vs The Commissioner of Income tax, West Bengal, Calcutta (supra)).
It is equally well settled that the fact that the transaction is not in the way or business of the assessee does not in any way alter the character of the transaction (vide G. Venkataswatni Naidu & Co. vs The Commissioner of Income tax, and Saroj Kumar Mazumdar vs The Commissioner of InCome tax, West Bengal, Calcutta (supra).
It would not therefore help the appel lant 's case merely to urge either of these points for the answer to the question will depend on a consideration of all the facts and circumstances.
The question under consideration is essentially a mixed question of fact and law.
It will therefore be desirable, in the first instance, to re state the relevant facts in a chronological order; As has been stated, the appellant owned some cement factories in various parts of India including the one in Dandot.
It placed an order with M/s. Smidth & Co., Copenha gen, for the supply of four complete units of machinery for the manufacture of cement, to increase the production of its factory at Dandot and three other factories.
A firm order for all the four units was placed on February 7, 1946.
It was confirmed by M/s. F.L. Smidth & Company on August 6, 1947 and the appellant was informed that the supply of the Dandot machinery would be made in various months from Febru ary 1948 to October 1948.
India was partitioned, and Paki stan came into existence on August 15, 1947.
Dandot fell in the territory of Pakistan.
The appellant, which was an Indian Company, did not however cancel the order in respect of the Dandot machinery.
On the other hand, a Director of the appellant informed the Orissa Government in his letter dated November 25, 1947 that it had "got a cement plant for which it had placed order a couple of years back", of which early delivery was expected, and that it would be willing to put it in Orissa on "suitable terms." The appellant 's General Manager held discussions with the Orissa Government on January 8, 1948 for the setting up of a cement factory in Orissa.
It was recorded in the note of the proceedings of that meeting that the appellant had ordered machinery for replacing its cement plant, the said machinery was expected to be shipped at an early date and parts of it would start arriving in March 1949.
It was further stated that the complete supply of the plant was estimated to take about six months, and if the negotiations were fruitful the first lot of cement would be produced by the beginning of 1950.
The appellant 's representative insisted that a final decision might be taken at an early date so that the machinery which had to be chipped from abroad could be diverted, depending upon the decision, to the Calcutta or Bombay port.
The appellant thereafter wrote a letter to M/s. F.L. Smidth and Co. (Bombay) Ltd. on September 9, 1948 directing that the plant meant for the Dandot works might be diverted to Oris sa.
It was specially stated in the letter as follows, "There are certain equipments in the specifications of the plants for extension No. 3 and 4, which were peculiar to the layout and design for the extension at Dandot and Shanti 558 nagar and they will not now fit in exactly in the same manner in our proposed new factories.
As such, it is essen tial that the whole specifications are carefully scrutinised and manufacture of the items which are peculiar to the lay out of Dandot and Shantinagar Works only should be kept in abeyance in order to suit the local conditions.
" The plants were expected to arrive from March 1949 onwards, but this would not have been possible without an import licence.
The appellant obtained the licence from the Gov ernment of India and intimated to M/s. F.L. Smidth and Co. in its letter dated August 2, 1948 that it had been permit ted to import in the Indian Dominion the two plants meant for Dandot and Shantinagar.
The suppliers were accordingly requested to intimate the dates upto which extension was required for the import of the machinery.
A formal agree ment was made between the appellant and the Orissa Govern ment on December 23, 1948.
The Dandot machinery arrived in due course.
It was delivered by the appellant to Orissa Cement Ltd. and its actual cost was debited to it.
Quite some time thereafter, on April 7, 1970, a Director of the appellant wrote a letter to the Industries Minister of the Orissa Government that the machinery supplied to the orissa Cement Ltd. should be revalued and the appellant allowed a higher price than the invoice price due to a rise in the cost of the cement .plant at the time of supply as compared with the price at the time when it was originally ordered by the appellant.
The name of one F.B. Mogensen was suggested for the revaluation of the machinery.
This was agreed to by the State Government on June 4, 1950.
Mogensen reported that the Orissa Cement Ltd, had benefited to the extent of almost Rs. 21 lakhs in the bargain.
The Orissa Government passed a resolution dated December 4, 1951 allowing a fur ther sum of Rs. 7 lakhs to the appellant and, in lieu of cash payment, allotted 70,000 fully paid up ordinary shares of Rs. 10/ each of the Orissa Cement Ltd. to the appellant.
The above facts clearly establish that, (i) Even though the appellant initially placed an order on February 7, 1948 for the purchase of the Dandot Machinery for improving the production in the Dandot factory, and the supply was not to commence until February.
1948, it did not make any effort to cancel that order even after Dandot was included in the territory of Pakistan with effect from August 15, 1947.
(ii) On the other hand, in pursuance of an enquiry by the Government of Orissa whether the appellant would be interested in putting up a cement plant in the State, one of the appellant 's Directors informed the State Government on November 25, 1947 that it had got a cement plant for which it had placed an Order a couple of years ago and that it could be put up in Orissa on suitable terms.
The appellant 's General Manager in fact met the State Government authorities in January, 1948 where it was reiterated 559 that the machinery ordered by the appellant was expected to start arriving in March 1949 and could be diverted to Calcutta and that if the appellant 's negotiations with the State Government were suc cessful, the first lot of cement could be supplied by the beginning of 1950.
(iii) The negotiations with the Orissa Govern ment proved successful and the appellant wrote a letter to M/s. F.L. Smidth and Co. on August 2, 1948 informing it that it had obtained the permis sion of the Government of India to import the Dandot machinery in India.
The appellant also informed the suppliers on September 9, 1948 that it should divert the Dandot machinery to Orissa and supply the same according to the revised specifica tions to suit the local conditions.
(iv) A formal agreement was executed by the appellant and the Orissa Government on December 23, 1948 for the setting up of a cement factory in Orissa.
(v) The Dandot machinery arrived and was sup plied by the appellant to the Orissa factory against cost price, which was debited to the Orissa Cement Company.
It would thus appear that, long before the Dandot machinery was due, the appellant knew that it could not be used in Dandot.
It has been found that after the partition of the country the appellant could have cancelled the order for the import of the machinery but it did not do so and decided to import it with a view to supplying it to Orissa on suitable terms.
It therefore resold it to the Orissa factory in accordance with the terms and conditions of its negotiations with the State Government.
The intention of resale was therefore there almost from the beginning, and was really the dominant intention in importing the machinery after the partition of the country.
It is also quite clear that the appellant was not inclined to make it a gratuitous sale, but agreed to it only when it was able to secure a suitable agreement with the State Government for the setting up of a factory in Orissa.
It was in fact.
the appellant 's own case that the price of the Dandot machinery had gone up substan tially.
Even so, the appellant did not care to utilise it for any of its own plants, but sold it to Orissa Cement Ltd. The appellant therefore did not only have the dominant intention of selling the Dandot machinery to its own advan tage but, in doing so, it acted with the set purpose of taking an advantage of its position as the owner of the imported machinery of which the price had on the appellant 's own showing, gone up much higher.
It was therefore a real transaction by way of an adventure in the nature of trade and was as such a business transaction within the meaning of section 2(4)of the Act.
It does not matter if the appel lant did not earn a profit immediately on delivering the machinery, and sold it without any profit in the first instance, for there can be no denying the fact that even if the appellant had not earned any profit whatsoever at the time of the sale or even thereafter, the transaction in the facts and circumstances of the case, would nonetheIess have been adventure in the 560 "nature of trade" and no other.) We are fortified in this view by the decisions in Narain Swadeshi Weaving Mills vs Commissioner Excess Profits Tax (supra) and G. Venkataswami Naidu and Co. vs The Commissioner of Income tax (supra).
It is true that the question of asking for payment in excess of the cost price was raised by the appellant some time later, but its subsequent course of conduct in bringing about a substantial profit is a clear pointer to the real intention behind the sale.
It was for that reason that the appellant 's Director addressed a letter to the Minister of Inustries of the Orissa Government on April 7, 1950 stating that the Dandot machinery should be revalued and the appel lant allowed a higher price due to the rise in its price at the time of the supply.
The entire correspondence in that respect has not been placed on record by the appellant, but it appears that the appellant was able to secure a further sum of Rs. 7 lakhs, under an agreement dated December 4, 1951 in lieu of which it was able to secure 70,000 fully paid up shares of Rs. 10/ .
The appellant succeeded in doing so merely because it was able to substantiate its claim for a higher price, or profit, on the sole ground that it was entitled to it because of the increase in the price at the time of the sale.
There is therefore nothing wrong in the view which has prevailed with the High Court that it was an adventure in the nature of trade.
It has been argued by Mr. V.S. Desai, for the appellant that as it was a single and isolated transaction of purchase and sale,, the onus of proving that it was a transaction in the nature of trade lay on the department.
This is a correct proposition of law and, .as would appear from what has been stated above, we have examined the controversy on the assumption that the burden of proving that the transac tion was an adventure in the nature of trade lay on the department.
The ancillary argument of Mr. V.S. Desai that a question like the present has to be examined with reference to the indicia or characteristics of the trade, is also quite correct, but counsel has not been able to contend, in the face of the facts and circumstances mentioned above, which indicia or characteristics could be said to be lacking to take it out of the category of an adventure in the nature of trade.
All that Mr. V.S. Desai has pointed out is that there was no intention to make a profit when the Dandot machinery was sold to the Orissa Cement Ltd., and it has been urged that would be sufficient to take it out of the category of an adventure in the nature of trade.
Reference in this connection has been made to the decisions in Kishan Prasad & Co. Ltd. vs Commissioner of Income tax, Punjab (supra), G. Venkataswami Naidu and Co. vs The Commissioner of Income tax (supra), Saroj Kumar Mazurndar vs The Commissioner of In come tax, West Bengal, Calcutta (supra), and Ajax Products Ltd. vs Commissioner of Income tax, Madras(1).
We have given our reasons for the contrary view that the transaction would be an adventure in the nature of trade even if the question of profit was left out of consideration, and that the appellant in fact acted with the set purpose of resell ing the (1) 561 Dandot machinery to its advantage and not by way of a favour or a gratuitous act.
We have also shown how the appellant ultimately claimed and succeeded in securing a higher price merely on the ground that there was an appreciable increase in the price after the purchase of the Dandot machinery.
Lastly, it has been argued by Mr. V.S. Desai that in purchasing the machinery the appellant made a capital in vestment so that it was merely a capital asset.
This argu ment is also futile for, as has been shown, the appellant made the purchase with the dominant intention of reselling the machinery to advantage and made the resale only when it was able to enter into an agreement with the Orissa Govern ment lot the setting of a cement factory in that state on terms and conditions which were suitable from its point of view.
It may also be stated that even in its own profit and loss account and balance sheet, the appellant treated the sale price as a revenue receipt and not as a capital invest ment.
It was therefore an after thought to Claim that the initial purchase was by way of an investment and was a capital asset.
The facts of Kishan Prasad and Co. Ltd. vs The Commis sioner of Income tax, Punjab (supra), Saroj Kumar Mazumdar vs The Commissioner of Income tax, West Bengal, Calcutta (supra) and Janki Ram Bahadur Ram vs Commissioner of Income tax, Calcutta (supra) referred to by Mr. V.S. Desai were different.
In the case of Kishan Prasad and Co. Ltd. (supra) there was agreement to give the managing agency to the assessee on the erection of the mill because it had subscribed to shares worth Rs. 2 lakhs.
The mill was not erected and the assessees sold the shares.
There was there fore justification for holding that the purchase of the shares was an investment to acquire the managing agency and was not an adventure in the nature of trade.
In Saroj Kumar Mazumdar 's case (supra) there was a single transaction of sale of rights for the purchase of land measuring 3/4 acres by the assessee who was an Engineer by profession.
His construction activities declined and that was why he sold his rights in the land for Rs. 74,000 odd in excess of the amount paid by him.
The Incometax department however failed to prove that the assessees dominant intention was to embark on a venture in the nature of trade as distin guished from capital investment.
That was also therefore a different case.
In the case of Janki Ram Bahadur Ram (supra) the assessee was a dealer in iron scrap and hard ware.
He agreed to purchase all rights of a company in a jute pressing factory, but sold it at a profit.
It was held that as the property purchased by the assessee was not such that an inference that a venture in the nature of trade must have been intended could be raised, the profit was not liable to tax.
It was held that a person purchasing a jute press might intend to start his own business or he might let it out on favourable terms.
The property was in fact let out by the earlier owner before the date of sate.
That was also therefore quite a different case and cannot avail the appellant.
In the remaining case of Ajax Products Ltd. (supra) it was held that on the facts the assessee company having acquired the sick mill to open new line of business, the purchase was, really in the nature of an investment and the purchase and sale did not amount to an adventure in the nature of trade.
That was therefore also quite a different case.
562 It would thus appear that in spite of the fact that the appellant withheld some of the correspondence bearing on the controversy, the Department has succeeded in proving that the transaction of sale in question was an adventure in the nature of trade and fail within the definition of "business" in clause (4) of section 2 of the Act.
The High Court has rightly answered the question in the affirmative, and as we find no merit in this appeal, it is dismissed with costs.
M.R. Appeal dismissed.
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In 1946, the appellant ordered cement manufacturing machinery from a in Denmark, for its factory in Dandot, but long before the machinery was due, the Country was parti tioned and Dandot went to Pakistan.
Instead of cancelling his order, the appellant imported the machinery.
It was found that the appellant did so with the intention of sell ing it at a profit, to the Orissa State.
At the time of the sale, the appellant charged only the invoice price initially paid by it, but later, obtained a profit.
The Income Tax Officer treated the profit as income earned pursuant to an adventure in the nature of trade, and taxed it as such.
The appellant 's appeals were rejected by the Appellate Taxation Authorities.
The matter was then referred to the High Court section 66 (1 ) of the income Tax Act, but was dismissed.
The appellant contended that making a profit was not its intention at the time of sale, and that being a single and isolated transaction of purchase and sale, it was not an adventure in the nature of trade within the meaning of section 2(4) of the Act, and that the onus of proving anything to the contrary, lay upon the Department.
Dismissing the appeal, the Court HELD: (i) It is well settled that even a single and isolated transaction can be held to be capable of failing within the definition of "business" if it bears clear indi cia of trade.
The fact that the transaction is not in the way of business of the assessee does not in any way alter the character of the transaction.
[556H, 557A] Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax (251` I.T.R 765), G. Venkataswami Naidu .
& Co. vs The Commissioner of Income Tax [1959] Supp.
(1) S.C.R. 646, Sarol Kumar Mazumdar vs The Commissioner of Income Tax, West Bengal, Calcutta [1959] Supp.
(2) S.C.R. 846 followed.
(2) It is a correct proposition of law that as it was a single and isolated transaction of purchase and sale, the onus of proving that it was a transaction in the nature of trade lay on the department [560 D E] (3) The appellant had the dominant intention of selling the Dandot machinery to its own advantage, and acted with the set purpose of taking an advantage of its position as the owner of the imported machinery Even if the appellant had not earned any profit whatsoever at the time of the sale or very soon thereafter, the transaction, in the facts and circumstances of this case, would nonetheless have been an adventure in the "nature of trade", and a business transac tion within the meaning of Section 2(4) of the Act.
[560H, 561B, 562A B] Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax (Supra).
and G. Venkataswami Naidu & Co. vs The Commissioner of Income Tax (Supra) followed.
Kishan prasad & Co. Ltd. vs Commissioner of Income Tax, Punjab Saroj Kumar Mazumdar vs The Commis sioner of Income Tax.
West Bengal, Calcutta (Supra).
janki Ram Bahadur Ram vs Commissioner of Income Tax., Calcutta ; and Ajax products Ltd. vs Commissioner of IncomeTax, Madras distinguished.
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3575.txt
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Civil Appeal No. 2295 of 1968.
From the Judgment and order dated 3 2 1967 of the Madhya Pradesh High Court in Misc.
Petition No. 26 of 1966.
Harbans Singh for the Appellant.
Raghunath Singh and Manojswarup for Respondent No.1.
S.K. Gambhir for Respondents 3 5 and 7.
U. P. Lalit,B.P.Muheshwari and Suresh Sethi for Respondent No. 6.
The Judgment of the Court was delivered by UNTWALTA, J.
In this appeal by certificate granted by the Madhya Pradesh High Court the question of law which Lalls for our determination is whether conferral of Bhumiswalnli rights on Shri Khushi Lal respondent No. 1 in respect of the lands in question in accordance with Section 190 of the Madhya Pradesh Land Revenue Code, 1959, hereinafter referred to as the M.P. Code of 1959, by the Revenue Authorities is correct and sustainable.
Maulana Shamsuddin, the sole appellant in this appeal, was a Muafidar in the erstwhile State of Bhopal of the disputed lands in accordance with the Bhopal State Land Revenue Act, 1932 (for brevity, the Bhopal Act of 1932) .
The first respondent claimed to be a Shikmi of the appellant in respect of the lands in question.
His case was that the appellant was the occupant of the lands within the meaning of the Bhopal Act of 1932.
On the coming into force of the M.P. Code of 1959.
the appellant became a Bhumiswami under clause (c) of section 158 and the respondent became an occupancy tenant under section 185 (1)(i)(iv)(b).Thus he became entitled to conferment of Bhumiswami rights under Section 490.
He applied before the Tahsildar, Huzur, respondent No. 5 for mutation of his name as a Bhumiswami in the Revenue records.
The Tahsildar by his order dated the 24th June, 1963 directed Khushi Lal to deposit compensation equivalent to 15 times of the land revenue on the payment of which his name was to be recorded as a Bhumiswami of the holdings.
It appears his name was so recorded on the deposit of the compensation money.
The appellant filed an appeal before the Sub Divisional officers Huzur, respondent No. 4 from the order of the Tahsildar.
His appeal was dismissed by the Sub Divisional officer on the 12th of December, 1963.
The appellant failed before the Additional Commissioner, Bhopal, respondent No. 3 on the dismissal of his second appeal on the 25th August 1996.
He went in revision before the Board of Revenue, (respondent No. 2 ) .
The revision was allowed on the 6th of July, 1965.
The 584 Board held that the appellant was not an occupant within the meaning of Section 2(15) of the Bhopal Act of 1932 and consequently the first respondent was not a Shikmi under the said Act.
He did not become an occupancy tenant under the M.P. Code of 1959 and, therefore, conferral of Bhumiswami rights on him was erroneous in law.
The first respondent filed a Writ Petition in the High Court and succeeded there.
The High Court held that the Board was not right in its view of the law.
The appellant was an occupant and the respondent No. 1 was a sub tenant (Shikmi) under the Bhopal Act of 1932.
Conscquently he became an occupancy tenant entitled to conferment of Bhumiswami rights under the M.P. Code of 1959.
The appellant has preferred this appeal in this Court to challenge the decision of the High Court and for restoration of the order of the Board of Revenue.
Mr. Harbans Singh, appearing for the appellant, Advanced a very fair and able argument to advocate his cause.
He could now and did not dispute that if the appellant was an occupant, the first respondent was a Shikmi under the Bhopal Act of l932 and if that be so then the order of the High Court is unassailable.
But he vehemently contended that the appellant was not an occupant.
Learned counsel for the respondents controverted his argument.
Prima facie the argument, as presented, for the appellant appeared to have substance and force but on a close scrutiny we had no difficulty in rejecting it.
Section 2 of the Bhopal Act of 1932 is the definition section and as usual at the outset it uses the phrase "in this Act, unless there is nothing repugnant in the subject or context,".
Sub section (5) defines "Alienated land" to mean "land in respect of which, pursuant to a grant made by His Highness the Ruler, Government has, in whole or in part, assigned or relinquished its right to receive land revenue, and includes such village waste and forest as are mentioned in the sanad of the grant " Thereafter the sub section says: "If the land revenue is assigned the person to whom such assignment is made is called a "Jagirdar".
If the land revenue is relinquished the person in whose favour such relinquishment is made is called "Muafidar";".
Subsection ( l S) provides: " "occupant" means a person who holds land direct from the Government or would do so but for the right of collecting land revenue having been assigned or relinquished.
" It would thus be seen that if pursuant to the grant made by His Highness the Ruler of Bhopal, Government 's right to receive land revenue was assigned to the grantee then he was called a Jagirdar and 585 it was relinquished then the person in whose favour such relinquishment was made was called Muafidar.
Under the first part of the definition of "occupant" given in sub section (IS) a person who holds land direct from Government would be an occupant and being not a person in whose favour the right to receive land revenue has either been assigned or relinquished will be required to pay to the Government land revenue or rent.
We are using both the words revenue ' and 'rent ' on the assumption that such an occupant being neither a Jagirdar nor a Muafidar would be required to pay some money to the Government for being in occupation of the land.
Under the second part of the definition a Jagirdar or a Muafidar would also be holding land direct from Government but because the right of collecting land revenue has either been assigned or relinquished, strictly speaking, he does not hold land direct from the Government in the sense of paying any land revenue or rent to it because the Government has parted with the right to collect land revenue from him.
We are of the opinion, in agreement with the High Court, that on a careful analysis of the definition of the term "occupant" in section 2(15), it is legitimate to conclude that even a Jagirdar or a Muafidar is an occupant.
He holds land under the Government; on the resumption of the Jagir or the Muafirights by the Government the land reverts back to it.
Payment of land revenue or rent for holding land under the Government was not a sine qua non for making the holder of the land an occupant.
"Rent" is defined in sub section (19) of Section 2 of the Bhopal Act of 1932 to mean "whatever is payable to an occupant in money, kind or service by a shikmi for the right to use land.
" This would show that strictly speaking a person holding the land direct from the Government within the meaning of the first part of the definition in sub section (IS) is not to pay any money to the Government in the shape of rent but what he will be required to pay would be the land revenue.
But a Jagirdar or a Muafidar holding the land under the Government is not required to pay any land revenue.
sub section (21) defines "Shikmi" to mean "a person who holds land from an occupant and is, or but for a contract, would be liable to pay rent for such land to that occupant, but does not include a mortgagee or a person holding land directly from Government.
" Respondent No. 1 was inducted upon the land by the appellant in the year 1958.
Since then he had been cultivating the land.
He could not but be a Shikmi within the meaning of sub section (21 ) .
Mr. Harbans Singh was not right in saying that he was a mere cultivator and was cultivating the land not as a sub tenant or a Shikmi but must be doing so under some special arrangement of cultivating the land as a servant of the appellant or the like.
There is no warrant for such a contention.
586 Section 46 of the Bhopal Act of 1932 runs thus .
"(l) All land to whatever purpose applied and wherever situate, is liable to the payment of revenue to the Government, except such land as has been wholly exempted from such liability by a special grant on His Highness the Ruler or by a contract with the Government, or under the provisions of any law or rule for the time being in force.
(2) Such revenue is called "Land Revenue"; and that term includes moneys payable to the Government for land, notwithstanding that such moneys may be described as premium, rent, quit rent, or in any other manner in any enactment, rule, contract or deed." This section lends support to the view which we have expressed above that a person holding land directly under the Government and not being a Jagirdar or a Muafidar will be liable to pay land revenue to the Government in whatever name the payment of money may be described such as premium, rent, quit rent etc.
The High Court in its judgment has adverted to some sections contained in Chapter VI of the Bhopal Act of 1932.
Section 51 provided for disposal of unoccupied land.
Sub section (1) of section 52 says that a person acquiring the right to occupy land under section 51 will be called an occupant of such land and under sub section (2) all persons who, prior to the commencement of this Act, had been entered in settlement records as responsible for the payment of land revenue to the Government, or who, but for a special arrangement, would have been to responsible, would be deemed to be occupants within the meaning of Section 52.
In our opinion this special arrangement mentioned in sub section (2) cannot be squarely equated with the assignment or relinquishment of the right to receive land revenue envisaged by the Bhopal Act of 1932.
We do not feel inclined to agree with the High Court that the appellant became occupant under section 52(2) of the Bhopal Act of 1932 because he was a person who was entered into settlementt records prior to the coming into force of that Act.
Firstly it is not clear whether the facts so stated in the judgment of the High Court are (quite correct, and, secondly, it is admitted on all hands that the appellant was a Muafidar and, therefore, in our opinion he was an occupant within the meaning of Section 2(15).
Section 54 provided that the rights of an occupant, meaning thereby the occupant as mentioned.
in Section 52, were to be permanent, transferable and heritable.
Ordinarily and generally the rights of a Jagirdar 587 or a Muafidar being occupants within the meaning of Section 2(15) A read with Section 167 were neither transferable nor heritable and in that sense the rights were not permanent.
In our opinion, therefore, the type of occupant who is dealt with in Chapter VI of the Bhopal Act of 1932 is not the type of occupant having the same kind of incidence as defincd in Section 2(15).
As we have already indicated it is a well established principle of law that a particular term defined in the definition section is subject to anything repugnant in the contact of the other provisions of the Statute.
The provisions of Chapter VI being at variance with the definition clause cannot make the occupant described in that Chapter the same occupant as defined in Section 2(15).
Our attention was drawn by the learned counsel for the appellant to Section 167 of the Bhopal Act of 1932 dealing With the restriction ill the rights of the Jagirdars and Muafidar to transfer such rights or create encumbrances on them.
According to the said Section no Jagirdar or Muafidar could "transfer his rights as Jagirdar or muafidar, or, except for such period as he is in possession of his jagir or muafi create an encumbrance on the income thereof." But inducting a person as Shikmi on the land was not prohibited under Section 167.
On the other hand, Section 194 provide(l that all occupant could make a lease of his holding and under certain circumstances it could n(lt be for a term of more than 12 years.
It was then argued that the right of a Muafidar being in the nature of a life grant was valid only for the Life time of the Muafidar.
So the Muafidar could not induct a person as Shikmi who ultimately could become an occupancy tenant entitled to conferment of Bhumisavami rights later on.
This argument has to be staled merely to be rejected.
It may well be that the right of a Shikmi would not have lasted beyond the duration of the right of the Muafidar.
But then, his rights were enlarged by operation or the welfare legislation enacted by the State Legislature for the benefit of the cultivators of the soil in the year 1959.
Section 185(1)(iv)(b) of the M.P. Code of 1959 says: "(1) Every person who at the coming into force of this Code holds (iv) in the Bhopal region (b) any land as a shikmi from an occupant as defined in the Bhopal State Land Revenue Act, 1932 (IV of 1932): 588 shall be called an occupancy tenant and shall have all the rights and be subject to all the liabilities conferred or imposed upon an occupancy tenant by or under this Code.
" As held by us above the appellant was an occupant as defined in the Bhopal Act of 1932 and thus under clause (c) of Section 158 on the coming into force of the Code he became a Bhumiswami.
But his Bhumiswami rights were liable to be conferred, under certain conditions, on the occupancy tenant under Section 190.
As a matter of fact in accordance with the said provision the Bhumiswami rights were conferred on respondent No. 1 on payment of compensation being in the amount of 15 times of the land revenue for payment to the appellant.
Our attention was drawn to a recital of facts in the Statement of the case of some of the respondents that the appellant had withdrawn the said amount of compensation.
But we are not resting our judgment on that ground as in our opinion, whether he has withdrawn the amount of compensation or not, he cannot challenge the conferment of his Bhumiswami rights on respondent No. l. which have been validly and legally conferred.
We may now briefly deal with a few more short submissions of the appellant.
In section 185(1)(iv)(a) of the M.P. Code of 1959 it is provided that if a person who at the time of coming into force of tba said Code was holding any land as a sub tenant as defined in the Bhopal State Sub tenants Protection Act, 1952 shall also be called an occupancy tenant.
A copy of this Act could not be made available for our perusal.
But what we get from the order of the Board of Revenue is that a Sub tenant as defined in the Bhopal Act of 1952 means a person who holds a parcel of khud kasta land from a Jagirdar.
Along with this our attention was also drawn to the Bhopal State Sub Tenants (of occupants) Protection Act.
In this Act, section 2(b) runs thus: "The expression "occupant" shall have the same meaning as in the Bhopal State Land Revenue Act, 1932 (IV of 1932) and, for the purposes of this Act, it should also include a muafidar, as defined in Bhopal State Land Revenue Act, 1932 (IV of 1932)".
In other sections of the said Act protection against ejectment was given to the Shikmis.
The argument was that protection to the sub tenants of Jagirdars was given in the Bhopal Act of 1952 and protection to such persons was given in case of sub tenants of Muafidar under the Bhopal Act of 1954 by including Muafidar in the expression 'occupant ' occurring in the said Act.
Counsel, therefore, submitted that if the 589 term 'occupant ' in the Bhopal Act of 1932 had included a Muafidar then there was no necessity of expressly and separately including a Muafidar in the definition of the said expression.
in the Act of 1954.
In our opinion this argument has no substance.
It may be by way of abundant precaution or for putting the matter beyond any shadow of doubt that the expression 'occupant ' was defined in a comprehensive manner in the Bhopal Act of 1954.
Section 3 of the said Act shows that even a Muafidar could sub let a land to a person and induct hi as a Shikmi prior to the coming into force of this Act.
Such a Shikmi got the protection against ejectment by operation of law engrafted in the Bhopal Act of 1954.
After the passing of this Act? he no longer could be said to be a Shikmi only during the life time of the Muafidar but was so even beyond it.
The counsel for the appellant called our attention to a decision of this Court in Begum Suriya Rashid and others vs Stale of Andhra Pradesh(l).
In this case it was held that the muafi grants to the predecessor in interest of the appellants before the Supreme Court were not hereditary or perpetual and the appellants could not claim title as Muafidars even though some contradictory arabic expressions had keen used in the document of grant.
This decision does not advance the case of the appellant any further.
For the reasons stated above, we dismiss this appeal but make no order as to costs.
M.R. Appeal dismissed.
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The appellant was a Muafidar of the disputed land, in the erstwhile Bhopal State, while the first respondent cultivated the said lands as his tenant.
When the M. P. L. R. Code, 1959, came into force, the first respondent claimed that the appellant, as the occupant of the lands within the meaning of S.2 (15) of the Bhopal State Revenue Act, 1932, had become a Bhumiswami u/s 158(C) of the Code of l959, while he himself had become an occupancy tenant u/s 185(1)(iv)(b) and as such, was entitled to conferment of Bhumiswami rights u/s 190 of the same Code.
He ' applied to the Tahsildar, Huzur, for mutation of his name as a Bhumiswarni in the Revenue records.
and was directed to deposit compensation equivalent to 15 times of the land revenue.
Thereafter his name was recorded as a Bhumiswami of the holdings, on the deposit of the compensation money.
The Muafidar appellant 's appeal to the sub Divisional officer, against the Tahsildar 's order, and a second appeal to the additional Commissioner.
were dismissed, but the Board of Revenue allowed his revision application holding that he was not an occupant within the meaning of section 2(15) of the Bop Act of ]932.
and that consequently the first respondent was neither a Chime, nor did he become an occupancy tenant under the M.P. Code of 1959, and therefore conferment of Bhumiswami rights on him was erroneous in law.
, The first respondent filed a writ petition against the Revenue Board 's order, which was allowed by the High Court.
Dismissing the appeal by certificate, the Court ^ HELD: 1.
Under section 2(15) of the Bhopal State Land Revenue Act 1932, a person who holds and direct under the Government would be an ` 'occupant", in whatever name the payment of money may be described such as premium, rent, quit rent etc.
On a careful analysis of the definition, it is legitimate to conclude that a Jagirdar or Muafidar is an occupant.
He holds lands under the Government.
On the resumption of the Jagir or the Muafi rights by the Government, the land reverts back to it.
Payment of land revenue or rent for holding land under the Government was not a sine qua non for making the holder of the land an revenue.
[585 A D, 586 D] Begum Suriya Rashid and Ors.
vs State of Madhya Pradesh [19691] 1 SCR 869 held inapplicable.
The rights of Shikmis were enlarged by operation of tile Madhya Pradesh Land Revenue Code.
Under section 185(l)(iv)(b) a Shikmi became an occupancy tenant, while u/s 190, as an occupancy tenant, he became entitled, under certain conditions, to conferment of Bhumiswami rights of the occupant of he holdings.
A B] 583
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3872.txt
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o. 1574 of 1971.
Appeal by special leave from the judgment and order dated July 6/7, 1971 of the Bombay High Court in Special Civil Application No. 619 of 1971.
section V. Gupte and P. N. Tiwari, for the appellants.
K. section Chawla, section N. Mishra and section section Jauhar, for the respondents.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judgment and order of the Bombay High Court in a Special Civil Application from a decision.
of the Court of Small Causes Bombay in exercise of its revisionary jurisdiction.
The revisional court had reversed the decision of the trial court and remanded the matter for disposal ,of the issues other than issues 2 to 8 tried as preliminary issues and decided in favour of the plaintiffs before the Court of Small Causes.
The facts are as follows.
Respondent No. 1 was the owner of a flat on the second floor of Block No. 8 'Shyam Niwas ', Warden Road, I Bombay.
She was a member of a Co operative Housing Society and had acquired the flat from the said society.
In 1959 she had put the appellant Sabharwal Brothers in possession of the flat for a period of 11 months on payment of Rs. 510/ per month.
There was an agreement in writing which purported to show that the possession was to be on leave and licence basis.
This agreement was signed by a partner of Sabharwal Brothers who also became member of the said Co operative Society.
There were repeated renewels of the said agreement until 25th October, 1962 when the first respondent asked the appellants to vacate possession on the ground that she required the flat for her personal occupation.
As this was not complied with, she filed a statement of claim before the Registrar of Co operative Societies on the ground that there was 55 a dispute within the meaning of section 91(1) of the Maharashtra Co operative Societies Act (Thereinafter referred to as the 'Act ') which required adjudication There was a challenge to the jurisdiction of the nominee of the Registrar to whom it was referred by the appellants.
The proceedings before the nominee went on for some time on July 3, the nominee made an award to the effect the, appellants were occupying the flat on leave and licence basis.
Anticipating the award the appellants filed a suit in the Court of Small Causes Bombay stating that they were in occupation of the flat as tenants and as such entitled to protection under the Bombay Rent Act, 1947 and the first respondent had no right to evict them.
In her written statement the defendant denied that the plaintiffs were tenants contending, inter alia, that the plaintiffs were occupying the flat only on leave and licence basis etc.; that the dispute between the parties had been referred to the Registrar of Co operative Societies for disposal and finally that the Court of Small Causes had no jurisdiction to entertain and try a suit involving such a dispute.
The Small Causes Court framed no less than twelve issues of which issues 2 to 8 related to the maintainability of the suit and the jurisdiction of the court in view of the provisions of section 91 (1) (d) of the Act.
The Small Causes Court held that the suit was maintainable and answered the other preliminary issues in favour of the plaintiff.
The matter was taken in revision to a Bench of the said Small Causes Court.
The Bench took a different view holding that the Registrar 's nominee did have jurisdiction to try the dispute between the parties and remanded the proceedings to the trial court for disposal of the suit after deciding on issue as to res judicata by reason of the award of the nominee.
The High Court dismissed the Special Civil Application of the plaintiffs holding that the revisional court of the Small Causes was justified in coming to the conclusion that it was not open to the plaintiffs to contend that the Registrar or his nominee had no jurisdiction to entertain the dispute on the two grounds on which it was challenged.
Before us the main points urged on behalf of the appellants were: first, whether there was any dispute between the parties touching the business of the Co operative Society which could be decided by the Registrar or referred by him to a nominee for disposal; and, secondly whether the suit filed in the Small Causes Court was maintainable having regard to the nature of the relief sought.
The central question, therefore,.is, whether the dispute between the parties is capable of reference under the Act.
The relevant portion of section 91 (1 ) (b) of the Act runs as follows (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touch 56 ing the constitution . management or business of a society shall be referred by any of the parties to the dispute. if both the parties thereto are one or other of the following: (a). . . . . . . . . (b) a member, past member or a person claiming through a member etc. " section 91(3) provides : "Save as otherwise provided under subsection (3) of section 93, no court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub section (1).
We may also note the relevant portion of section 163 (1) which provides: I ) Save as expressly provided in this Act, no civil or revenue court shall have any jurisdiction in respect of (a) (b) any dispute required to be referred to the Registrar, or his nominee (c) Before the Court of Small Causes reference was made to bye law No. 2 of the Society to show that the objects of the society were inter alia to carry on the trade of buying,selling, hiring and letting land in accordance with the co operative principles and under Regulation No. 5 in form 'A ' printed at the end of the bye laws "No tenant shall assign, underlet, vacate or part with the possession of the tenement or any part thereof without the consent in writing of the society.
" The Bench of the Court of Small Causes referred to the above provisions and observed that the bye laws of the society constituted an agreement between the members of the society and a breach thereof would affect the defaulting member 's right of membership of the society and consequently a dispute relating to the letting of the flat was a dispute which touched the business of the society.
57 (Mitter, J.) The High Court referred to section 91 of the Co operative Socities Act.
and section 28 of the Bombay Rent Act and observed: "There is a competition between two authorities, a court and the Registrar 's nominee, both exercising exclusive jurisdiction in respect of matters coming within their jurisdiction." and concluded that on general principles of law it would not be proper to allow the same question to be agitated again under a different guise.
It also observed that the decision taken by the Assistant Registrar and the nominee could have been decided by an appeal and as no appeal had been filed the provisions of law must have their effect with the result that the decision of the dispute by the nominee of the Registrar had become final.
With all respect to the High Court, it seems to us that there was a fundamental error in the above approach.
No doubt it was the business of the society to let out premises and a member had no unqualified right to let out his flat or tenement to another by virtue of the bye laws and a breach of the bye laws could affect the defaulting member 's right to membership.
But we are not able to see how letting by a member to another member would touch the business of the society which included inter alia the trade of buying, selling, hiring and letting land in accordance with co ope rative principles.
The letting of flat by respondent No. 1 was a transact ion of the same nature as the society itself was empowered to enter into but such letting by itself did not concern the business of the society in the matter of its letting ' out flats.
Nothing was brought to our notice to show that such a letting would affect the business of the society once it had sold the flat to the respondent No. 1.
The position might have been different if the latter had himself been a tenant of the flat under the society.
"To touch" means "to come in contact with" and it does not appear that there is a point of contact between a letting by the respondent No. 1 and the business of the society when the society was not itself the landlord of the flat.
Reference was made at the Bar to Deccan Merchants Co opera tive Bank Ltd. vs M/s Dalichand Jugraj Jain and others(, ').
The facts there were very different from those of the instant case.
(1) [1969] 1 S.C.R. 887.
5 LI208 Sup C I/72 58 But the Court had to consider the question of competing jurisdiction under the Bombay Rent Act and the Act and it is pertinent to note the observations at p.902"that the two acts can be harmonised best by holding that in matters covered by the Rent Act, its provisions, rather than the provisions of the Act, should apply." In the result we allow the appeal, set aside the judgement and order of the High Court And of the Bench of the Court of Small Causes.
The matter is now to go back to the Court of Small Causes for disposal according to law.
The appellants will have the costs incurred in this Court.
Appeal allowed.
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The respondent was the owner of the flat on the second floor of a Building in Bombay.
She was a member of a Co operative Housing Society and had acquired the flat from that society.
In 1959 she had put the appellant in possession of the flat for a period of 11 months on payment of Rs. 5101 per month.
According to the written agreement the possession was given on leave and licence basis.
The government was signed by one of the partners of the appellant firm who also became members of the said Co operative Society.
The agreement was renewed until 25th October, 1962 when the first respondent asked the appellants to vacate possession on the ground that she required the flat for personal occupation.
As this was not complied with she filed a statement of claim before the Registrar of Co operativc Societies on the ground that there was a dispute within the meaning of section 91(1) of the Maharashtra Co operative Societies Act.
The Registrar referred the case to a nominee whose jurisdiction was challenged by the appellants.
Nevertheless the proceedings before the nominee went on for some time and on July 3, 1964 the nominee made an award to the effect that the appellants were occupying the flat on leave and licencee basis.
The appellants, anticipating the award, filed a suit in the Court of Small Causes Bombay stating that they were in occupation of the flat as tenants and as such entitled to protection under the Bombay Rent Act, 1947.
The Small Causes Court held that the suit was maintainable and answered the other preliminary issues in favour of the plaintiff.
In revision the bench of the Small Causes Court held that the Registrar 's nominee did have jurisdiction to try the dispute between the parties and remanded the proceedings to the trial court for disposal of the suit after deciding an issue as to res judicata by reason of the award of the nominee.
The High Court up held the order of the bench.
In this Court the questions that fell for consideration were (1) Whether there was any dispute between the parties touching the business of the co operative society which could be decided by the Registrar or referred by him to a nominee for disposal and (2) Whether the suit filed in them Small Causes Court was maintainable having regard to the nature of the relief sought.
Allowing the appeal HELD : (i) No doubt it was a business of the society to let out premises and a member had no unqualified right to let out his flat or tenement to another by virtue of the bye laws and a breach of the byelaws could affect the defaulting member 's right to membership.
But HELD : (i) No doubt it was a business of the society to let Out touch the business of the society which included inter alia the trade of buying, selling, hiring and letting land in accordance with cooperative principles.
The letting of flat by respondent No. 1 was a transaction of 54 the same nature as the society it if was empowered to enter into but such letting out itself did not concern the business of the society in the matter of its letting out flats.
There was nothing to show that such letting would effect the business of the society once it had sold the flat to the respondent No. 1.
The position might have been different if the latter had himself been a tenant of the flat under, the society.
"To touch" means "to corn in contact with" and it did not appear that there was a point of contact between a letting by the respondent No. 1 and the business of the society when the society was not itself the land lord of the flat.
[57D G] (ii) As observed by this Court in an earlier case the Bombay Rent Act and the Maharashtra Cooperative Societies Act can be harmonised best by holding that in matters covered by the Rent Act, its provisions rather than the provisions of the Co operative Societies Act, should apply.
[58A] Deccan Merchants Co operative Bank Ltd. vs M/s, Dalkhand Jugraj Jain and others, [1969] 1 S.C.R., 887, distinguished.
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3082.txt
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Civil Appeal No. 2450 of 1969.
From the judgment and decree dated 14 8 63 of the Calcutta High Court in Appeal from Appellate Decree No. 632/63.
L. N. Sinha, A. N. Sinha and Rathin Das for the Appellant.
A.K. Sen, D. N. Mukherjee and N. R. Chaudhary for Respondents 1, 2 7 and 9. D. Mookerjee and P. K. Mukherjee for Respondent No. 3.
The Judgment of the Court was delivered by DESAI, J.
Kalpana Theatre with its furnishings and fixtures situated at 61, Chintamoni Dey Road, Howrah, belonging to respondents 1 and 2 is the subject matter of dispute between its landlords and tenant awaiting resolution for the last two decades.
Under a registered lease deed dated 11th September 1948 respondent 3 Kanti Bhusan Bose, took this Theatre on lease for a period of 5 years with effect from 1st September 1948.
Respondent 3 is the Managing Director of the appellant Biswabani Pvt.
Ltd. ( 'company ' for short).
It appears that during the period of lease respondents 1 and 2, the owners of the Theatre, accepted the appellant company as their tenant and in token of it accepted rent from the company at the rate of 655 Rs. 2,000/ p.m.
On the expiry of the period of 5 years disputes arose between the lessors and the lessee whereupon respondents 1 and 2 lessors commenced an action in ejectment against the company on 5th October 1953 in the Court of the First Subordinate Judge, Howrah.
In August 1953 appellant company as lessee filed an application before the Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, for fixation of standard rent of the demised premises.
Ultimately the parties arrived at a compromise and the consent terms were filed in T.S. No. 68 of 1953 instituted by the lessors respondents 1 and 2 for eviction of the company and the Court was invited to pass a decree in terms thereof.
The consent decree, inter alia provided that the company would be the tenant of Kalpana Theatre ona monthly rent of Rs. 1,000/ from 1st March 1955 for a period of 5 years and that the third respondent Kanti Bhusan Bose had to offer security by deposit of G.P. Notes of the face value of Rs. 20,000/ with the lessors.
The lease was to be for a period of 5 years commencing from 1st March 1955.
An indenture of lease was to be drawn up and executed by both the parties in terms of the consent decree.
The company was given permission to sublet the premises with prior approval of the lessors.
There is a furious controversy about one of the terms of the consent decree which reads as under: "After the period of five years there shall be no renewal of the lease, the lessee shall be treated as trespasser".
On the expiry of the term of five years on 29th February 1960 it appears that respondents 1 and 2 lessors locked up a portion of the demised premises whereupon the company filed a suit on 14th March 1960 against respondents 1 and 2 lessors and the proforma respondent 3 for a declaration that the company was the tenant of the premises, and for a permanent injunction restraining respondents 1 and 2 from interfering with its tenancy rights.
There was also a prayer for a mandatory injunction directing respondents 1 and 2 to remove the locks put by them on some portion of the demised premises and for reliefs incidental and ancillary thereto.
The suit was, inter alia, contested on a contention that as the consent decree provided for a fresh lease of five years such a lease can only be valid if it is registered and as the consent decree or the document incorporating the terms of compromise was not registered, the company continued in possession under a void lease and, therefore, on the expiry of the period of five years the company was a trespasser 656 and respondents 1 and 2 were entitled to take over possession from such a trespasser.
It was also contended that on the expiry of the period of five years on 29th February 1960 the company handed over peaceful and vacant possession to respondents 1 and 2 in terms of the consent decree.
The trial court held that as the consent decree provided for a lease for a period of five years in the absence of registration the lease for a period of five years did not come into existence but if the tenant entered into possession under an invalid lease and the landlord accepted rent a tenancy from month to month came into existence between the lessors and the lessee and that such a lessee cannot be evicted except after terminating the tenancy by a valid notice to quitand in the absence of such determination the lessee would be a lessee from month to month and can protect its possession.
In accordance with this finding the trial court decreed the appellant plaintiff 's suit.
Respondents 1 and 2 appealed to the District Court at Howrah.
The learned Additional District Judge held that the lease being void, yet the lessors would not be entitled to disturb the possession of the tenant for a period of 5 years under the provisions of section 53A of the Transfer of Property Act but after the expiry of the period of five years the appellant became a rank trespasser and the respondents 1 and 2 were entitled to take possession of the property.
Accordingly the appeal was allowed and the company 's suit was dismissed.
The appellant company preferred second appeal to the High Court.
The High Court broadly agreed with the findings of the learned Addl.
Distt.
Judge and dismissed the appeal.
The High Court granted a certificate unfortunately very vague without specifying whether the certificate was under Article 133(a), (b) or (c) as it stood at the relevant time.
The undisputed facts are that Kanti Bhusan Bose, 3rd respondent took on lease the demised premises under a registered lease need dated 11th September 1948, the period reserved under the lease being 5 years at a monthly rent of Rs. 2,000/ with an option for renewal to be exercised by a notice two months before the expiry of the lease.
It is equally undisputed that during this period of 5 years the appellant company was accepted as tenant of the demised premises and the company paid the rent reserved under the lease being Rs. 2,000/ p.m.
The period reserved under the lease expired on 31st August 1953.
But before the expiry of the period an application was made by the appellant for fixation of standard rent of the demised premises under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.
In October 1953 respondents 657 1 and 2 as lessors commenced an ejectment action against the appellant and third respondent on the ground that the period reserved under the lease has expired and the lessee has failed to exercise the option for renewal.
During the pendency of the aforementioned actions the parties entered into a compromise and the consent terms were filed in the suit instituted by respondents 1 and 2 lessors inviting the Court to pass a decree in terms thereof, and a consent decree was passed which has been referred to in the evidence as 'solenama '.
It, inter alia, provides for a lease for a further period of 5 years commencing from 1st March 1955 on a monthly rent of Rs. 1,000/ p.m. made up of a rent of Rs. 500/ for the premises and a rent of Rs. 500/ for furniture and fixtures and the lessee would have no further option of renewal of the lease on the expiry of the period reserved under the lease.
This consent decree incorporating the terms of a fresh lease to be effective as a valid lease required registration in view of the provisions contained in section 107 of the Transfer of Property Act read with section 17(1)(d) of the , because the period reserved under the lease was exceeding one year.
It is an admitted position that the instrument containing terms of lease, i.e. either the consent terms or the consent decree was not registered as required by law.
However, it is equally an admitted position that the company continued in possession and paid rent which was accepted by the lessors from the company from month to month.
It appears that on 29th February 1960, i.e. the last day on which would expire the lease for a period of 5 years, the lessors respondents 1 and 2 entered into the demised premises and locked a portion thereof.
The questions that emerge for consideration in this appeal are: 1.
What would be the status and nature of possession of a person who was admittedly a tenant of premises covered by the local rent restriction Act till the date of commencement of a fresh lease which turns out to be void for want of registration, during and at the expiry of the period purporting to be reserved by such a void lease ? 2.
Would such a person be a tenant who could only be removed by proper legal proceeding or a licensee without any interest in the premises and could be forcibly evicted by the landlords of the premises entering the premises and locking the same ? 3.
Could such a person defend his possession by a suit seeking a declaration and mandatory injunction ? 658 Appellant was accepted as tenant by respondents 1 and 2 even though the indenture of lease dated 11th September 1948 (referred to as 'the first lease ') was executed by the third respondent who was the Managing Director of the appellant company.
Indisputably when the first lease expired on 31st August 1953 the appellant was the tenant of the demised premises, a fact demonstrably established and expressly accepted by respondents 1 and 2 and evidenced by their conduct of accepting rent from the appellant company.
The indenture of first lease granted an option to the lessee which would be none other than the appellant company, to claim renewal of lease.
This option was not exercised.
Notwithstanding the non exercise of the option on the date of expiry of the lease the contractual tenancy having come to an end, the tenant would be a tenant holding over if requirements of section 116 of the Transfer of Property Act are satisfied.
However, on the date of expiry of contractual tenancy the West Bengal Premises Rent Control Temporary Provisions) Act, 1950, was in force and was applicable to the premises and, therefore, on the determination of contractual tenancy by efflux of time the terms and conditions of the lease are extinguished and the rights of such a person remaining in possession are governed by the statute alone.
He is loosely described as statutory tenant which is another name for status of irremovability (see Anand Nivas Private Ltd. vs Anandji Kalyanji Pedhi & Ors.(1).
It must be recalled here that the first lease expired on 31st August 1953.
Respondents 1 and 2 filed Title Suit No. 68 of 1953 in October 1953.
This suit ended in a consent decree as aforementioned and the appellant and respondents 1 and 2 agreed to enter into a fresh lease for a period of 5 years commencing from 1st March 1955 on a monthly rent of Rs. 1,000/ .
It is not in dispute that from 1st September 1953 to 28th February 1955 rent was paid by the appellant and the same was accepted by respondents 1 and 2.
There is no bar in law to a statutory tenant entering into a fresh contract of tenancy with the landlords which was attempted by the consent decree.
From this undisputed position an inference of tenancy can be reasonably made.
Accordingly it must be held that when the parties agreed to enter into a fresh lease (referred to as 'the second lease ') commencing from 1st March 1955, appellant company was a statutory tenant in possession of the demised premises.
By the consent decree appellant and respondents 1 and 2 entered into a fresh lease for a period of 5 years.
The High Court 659 has found this lease to be void for want of registration and this position was not disputed before us.
The appellant continued in possession for a period of 5 years and paid rent as agreed to between the parties in the consent decree.
Now, if the lease is void for want of registration neither party to the indenture can take advantage of any of the terms of the lease.
At best the provision contained in section 53A of the Transfer of Property Act which incorporated the English equitable doctrine of part performance can, if the terms thereof are satisfied, be relied upon to protect possession for the period reserved under such a void lease.
But no other terms of such an indenture inadmissible for want of registration can be the basis for a relief.
In this case respondents 1 and 2 rely upon a provision in the consent decree that there was not to be any further renewal of the lease and the High Court was so much impressed with this provision when it observed: "Here is a party who has solemnly entered into an agreement, has enjoyed the benefit of it, has committed a flagrant breach of it, and now wishes the law to come to his aid and protect him from the evil consequence.
If the appellant succeeds it will be most unhappy state of affairs".
This observation appears to be provoked by the High Court looking into that part of the consent decree which provides for no further renewal of the lease, which being a term in an indenture inadmissible for want of registration, could not have been looked into.
And this feeling of righteous indignation completely ignores the overriding provisions of the relevant Rent Restriction Act which came to the aid of every tenant in its area of operation on the determination of contractual tenancy.
At its commencement every lease world have its origin in a bilateral contract which except for lease for indefinite period or permanent lease would be for some specified duration.
On the expiry of the period the solemn implied promise or assurance is to return possession.
If such a promise is to be enforced overlooking or ignoring Rent Restriction Act it would make a mockery of protection extended by Rent Restriction Act.
It must further be made clear that section 53A of the Transfer of Property Act is not at all attracted in the facts of this case.
The suit was field by the appellant who sought to protect its possession.
The equitable doctrine of part performance can be used as a shield and not as a sword.
It can be used to defend and protect one 's possession, (see Probodh Kumar Das & Ors.
vs Dantmara Tea Co. Ltd. & Ors.).(1) In fact, any discussion of section 53A in the facts of this case 660 would be entirely beside the point.
It was so made clear by the learned counsel appearing for the present appellant before the High Court but somehow or the other the High Court has practically put into forefront the application of section 53A.
We must accordingly steer clear of this position that neither the appellant relies on section 53A to protect its possession nor would it be of any use or assistance because it can be a sheath and not a sword as the appellant has come to the Court for a declaration of its tenancy rights, seeking to protect its possession not under the doctrine of part performance as incorporated in section 53A but with specific allegation that the appellant is a tenant and it be so declared, and for an injunction restraining respondents 1 and 2 landlords from interfering or disturbing the appellant 's possession of the premises as tenant.
If, as it clearly transpires from the facts of this case, the appellant was a tenant on the date on which the second lease, which is found to be void, was to commence what would be the nature of possession of the appellant during the period of 5 years, the period sought to be reserved under the second lease and on the expiration of such period ? If the appellant was put into possession for the first time under a void lease the appellant could have protected its possession under section 53A.
But it must be made distinctly clear that the appellant was in possession on the date on which the second lease now found void was to commence.
Would this attempt inchoate or still born of entering into a fresh contractual tenancy make any difference in the position of the appellant and the nature of his possession ? If the second lease is void or inchoate or ineffective or still born it is not all effective.
If it is not effective it does not impinge upon the nature of the appellant 's possession which was that of a tenant.
In other words, the appellant continued to remain in possession of the demised premises as tenant because there was no impact of the lease which is found to be void.
It must be made distinctly clear that the appellant was not put in possession under the lease which turns out to be void.
In such a situation even during the period of 5 years for which the second lease was to be created the appellant continued to be in possession as tenant and this is evidenced by the further fact that rent was accepted from the appellant by respondents 1 and 2.
There is nothing to show that the rent was accepted from month to month by respondents 1 and 2 under the second lease and not what was determined by the Court in rent fixation case No. 114/53 wherein the parties had filed a consent precipe by which the parties invited the Rent Controller to fix the standard rent of the premises at Rs. 500/ p.m. and Rs. 500/ for use of the machinery, furniture and 661 fixtures, in all Rs. 1,000/ p.m.
In this connection, attention was drawn to Receipt Ext.
10 issued by respondents 1 and 2 on 1st January 1960 in which it is stated that the amount is accepted as per terms of consent decree (solenama), but it could not be overlooked that this amount was determined by consent of parties in the case initiated by the appellant before the Rent Controller for fixation of standard rent.
If thus the appellant was already in possession as a tenant of the premises an unsuccessful attempt to create a fresh lease would not change the nature of his possession as from a tenant to one in part performance under a void lease.
The appellant continues to be in possession as tenant and no cloud is created over its title to remain in possession as tenant merely because the appellant and respondents 1 and 2 attempted to enter into a fresh lease which did not become effective.
Even if it is assumed that the appellant was put in possession for the first time under a lease which turns out to be void, the appellant came into possession of the premises with the consent of the landlords and paid rent from month to month.
As the lease was to be for a period of 5 years, for want of registration no operative lease came into existence.
In almost identical circumstances in Ram Kumar Das vs Jagdish Chandra Deb Dhabal Deb & Anr.,(1) an inference of tenancy was made and the duration of the tenancy in such circumstances was held to be from month to month.
Woodfall on 'Landlord and Tenant ', Volume 1, 27th Edn., p. 187 para 446, in this context states as under: "Moreover, if the tenant enters into possession under a void lease, he thereupon becomes tenant from year to year upon the terms of the writing, so far as they are applicable to and not inconsistent with a yearly tenancy.
Such tenancy may be determined by the usual notice to quit at the end of the first or any subsequent year, and it will determine, without any notice to quit, at the end of the term mentioned in the writing.
But if the lessee does not enter he will not be liable to an action for not taking possession; nor will an action lie against the lessor for not giving possession at the time appointed for the commencement of the term but before the lease is executed".
In the context of fiction enacted in section 106 of the Transfer of Property Act depending upon the nature of lease, namely, one of a 662 Theatre, the person so put in possession would be a tenant from month to month.
The Privy Council in Arif vs Jadunath,(1) in terms held that if an indenture of lease is compulsorily registrable under section 107 of the Transfer of Property Act such a lease can only be made by a registered instrument and if not so made, is void altogether.
However, if from such a person in possession under a void lease the landlord accepts rent as held in Ram Kumar Das 's case, (supra) an inference of tenancy would follow.
Mulla in 'Transfer of Property Act ', 6th Edn., at p. 680 has observed that an oral agreement accompanied by delivery of possession, if for more than one year is valid, by delivery of possession, for the first year, and thereafter the lessee continuing in possession with the assent of the lessor becomes a tenant by holding over under section 116 of the Transfer of Property Act.
Such a lease being created by operation of law is binding even though the provisions of section 107 have not been complied with.
It is also noted at p. 681 that though an unregistered lease is void as a permanent lease, it can be deemed to be a monthly lease terminable by 15 days ' notice.
Mr. Sen, however, strenuously urged that the ratio in Ram Kumar Das 's case (supra) would have to be understood in the light of the recent decision of this Court in Technicians Studio Pvt. Ltd. vs Lila Ghosh & Anr.(2) As this case was heavily relied upon to assert that it concludes the point raised in the present appeal, it warrants an indepth analysis.
Much before the premises came to be owned by the respondent Lila Ghosh, her predecessors in title had brought a suit for ejectment of the lessees of the property impleading the appellant Technicians Studio Pvt. Ltd., a private limited company who were the sub lessees also as a defendant.
This suit ended in a decree some time in 1954.
The appellant applied for a review of the judgment which did not meet with success.
Against this decision rejecting the review application the sub lessee appellant moved the High Court in revision.
This revision was disposed of in terms of a consent precipe.
By the consent terms the appellant was to become the direct tenant under the first respondent 's husband and his brother who had by then become the owners of the property at a monthly rent of Rs. 1000/ .
The lease was to be for a period of 16 years from May 1954 with an option to the appellant to terminate the lease on giving 60 days ' notice to the lessors.
The indenture of lease, however, was not executed nor the consent decree was registered.
On the expiry of the 663 period of 16 years the first respondent commenced an ejectment action alleging that the appellant was a trespasser.
The appellant resisted the suit contending that it was a monthly tenant.
Negativing this contention this Court, agreeing with the High Court, held that the payments made by the appellant in that case can be explained as evidence of appellant 's willingness to perform its part of the contract and that a person who is led into possession on, the strength of a void lease does not acquire any interest in the property but gets under section 53A a right to defend his possession.
The decision in Ram Kumar Das 's case (supra) was distinguished observing that in Ram Kumar Das 's case (supra) it was admitted that in the beginning there was a relationship of landlord and tenant between the parties and the only question that arose for decision was whether the defendant was infect a monthly tenant under the plaintiff on the date when the notice to quit was served upon him.
In the case before us, as pointed out earlier, the appellant was admittedly a tenant of respondents 1 and 2 between 1948 and 1953.
Again, the appellant was a tenant from 1st September 1953 to 1st March 1955 when the second lease was to commence.
In the case under discussion appellant was a sub lessee and he was to acquire a status of direct lessee or tenant under the lease which was found to be void.
To be precise, the appellant Technicians Studio Pvt.
Ltd. was not the tenant at the commencement of the lease which turned out to be void.
That is the distinguishing feature.
In the present case the appellant was the tenant from 1948 to 1953 and till February 1955, a feature similar to Ram Kumar Das 's (supra) and which was considered decisive.
Therefore, the case falls squarely in terms of the ratio in Ram Kumar Das 's case wherein the position was admitted that in the beginning there was a relationship of landlord and tenant between the parties.
This Court in Technicians Studio 's case (supra) did not once and for ever conclude the point that a person coming in possession under a void lease can never claim to be a tenant.
On the contrary, it was in terms held that each case will have to be decided on its own facts.
This becomes abundantly clear from a pertinent observation extracted herein: "This does not mean however that there cannot be a relationship of landlord and tenant in any case where the transferee has taken possession of the property under a void lease or in part performance of a contract and is entitled to protection under section 53A of the Transfer of Property Act Such a view would be incorrect and encourage attempts to circumvent the protection of the Rent Acts given to the tenants.
Whether the relationship of land 664 lord and tenant exists between the parties depends on whether the parties intended to create a tenancy, and the intention has to be gathered from the facts and circumstances of the case.
It is possible to find on the facts of a given case that payments made by a transferee in possession were really not in terms of the contract but independent of it and this might justify an inference of tenancy in his favour.
The question is ultimately one of fact".
In this case it is unquestionably established that at the commencement of the lease which turns out to be void, i.e. on 1st March 1955 appellant was a tenant of the premises and that on its application standard rent in respect of the demised premises was determined and the same was accepted as the rent to be paid under the second lease.
Payment has in fact been made and it would be twisting the language to hold that the payment was not made as rent but under the terms of the second lease.
In view of the statutory enactment of the equitable principle of part performance as found in section 53A, the equity recognised in Walsh vs Lonsdale,(1) may not be attracted.
However, it would not be correct to hold that a tenant who was in possession of the demised premises as tenant and who negotiated a fresh agreement of lease with the landlord for a period exceeding one year which, in order to be legal, must be by a registered instrument and which turns out to be void for want of registration, would alter his position from one as tenant at the commencement of such void lease and would render him a licensee continuing in possession under the terms of a lease being void and, therefore, ineffective and that he ceases to be a tenant and could be forcibly removed at the end of the period which was reserved under the void lease.
Such an incomplete and ineffective attempt at creating a fresh lease would have no impact on a tenant who was in possession as tenant at the commencement of such a void lease and he would continue to be the tenant because section 53A would not be attracted as he is not put in possession in part performance of an agreement of lease not registered and that it would be unwise to hold that the payment of the standard rent fixed by the Rent Controller having jurisdiction could be by any process of construction treated as payment under such an agreement of lease.
Therefore, it would appear that the appellant company was a tenant during the period 1948 53 and on the expiry of the contractual tenancy on 31st August 1953 it became a statutory tenant.
A person remaining in occupation of premises let to him after the determination of or expiry of the period of the tenancy is commonly, though in 665 law not accurately, called a statutory tenant.
In other words, he acquires the status of irremovability [see Anand Nivas (Private) Ltd. case].(1) Statutory tenant being a person who enjoys the status of irremovability, would enjoy the protection of the statute until he is evicted from the premises under the enabling provisions of the statute.
A statutory tenancy would, therefore, come to an end on either the surrender of premises by such a tenant or if a decree of eviction is passed against him (See Hiralal Vallabhram vs Kastorbhai Lalbhai & Ors.) (2) As the period reserved under the first lease expired an 31st August 1953 and thereafter the tenant continued in possession, it became a statutory tenant under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.
If thereafter an ineffective attempt was made to enter into a fresh contract of tenancy the status of the appellant as tenant did not undergo any change and it continued to be the tenant of the premises and the statutory tenancy would come to an end if it surrenders possession or is evicted by due process of law.
If the appellant thus continued to be a tenant it could not be forcibly evicted.
If the premises enjoyed the protection of the West Bengal Premises Tenancy Act, 1956, which was in force on 29th February 1960 when according to respondents 1 and 2 the period reserved under the void lease expired, respondents 1 and 2 cannot, ignoring the provisions of the relevant Rent Restriction law and merely treating the appellant as licensee or trespasser, ignoring its status of irremovability, take over forcible possession.
In such circumstances the appellant as tenant would be entitled to protect its possession unless evicted in due course of law and in order to protect its possession it can legitimately sue, there being no bar in law, for a declaration of its status as tenant and for an injunction either prohibitory or mandatory, as the case may be.
The High Court really missed the core problem and with respect misled itself into invoking the provisions of section 53A which the learned counsel appearing for the present appellant declined to invoke in its favour and came to an unsustainable conclusion that under the consent decree the parties agreed that the old tenancy would be wiped out and a new tenancy would be created for a period of 5 years expiring in February 1960.
A still born attempt not clothed with legal formality cannot destroy the existing status.
The second lease never came into existence for want of registration and more particularly the appellant was not put in possession under the purported second lease which turns out to be void.
The paradoxical approach manifested in the approach is that if a valid lease had come into existence on the expiry of it the 666 appellant tenant would have continued in possession under the protection of the relevant Rent Restriction Act.
However, if such an attempt at creating a fresh lease was ineffective or infructuous, how can such an inchoate exercise destroy the existing rights which the High Court held to have been destroyed ignoring the very existence of West Bengal Premises Tenancy Act, 1956 ? The High Court was further in error in holding that if on the expiry of the agreed period of lease there was a covenant for not getting any renewal of the lease the tenant would be a trespasser, wholly overlooking the legal position as affirmatively established that on the expiry of the contractual tenancy the tenant continues as a statutory tenant except where he surrenders possession or is evicted under the enabling provisions of the relevant Rent Restriction Act.
It thus clearly transpires that the appellant was a tenant and continued to be a tenant and was entitled to protect its possession by appropriate proceeding unless evicted in due course of law.
Before we conclude it is necessary to dispose of a contention in the form of a preliminary objection raised by Mr. Sen for the respondents that the certificate granted by the High Court being invalid, the appeal must fail on that account alone.
Certificate granted by the High Court leaves much to be desired.
It is merely stated that it is a case fit for appeal to the Supreme Court.
It may be pointed out that the appellant had prayed for a certificate under Article 133(1)(a), (b) and (c) as it stood at the relevant time in 1969.
In the application for the certificate it was stated that the subject matter of the suit and appeal to the Supreme Court will exceed Rs. 20,000/ and that judgment is one of affirmance.
It was also stated that the appeal involves a question of general public importance and, therefore, a certificate may be granted under Article 133(1)(a), (b) and (c).
In the affidavit in opposition on behalf of respondents 1 and 2 it was stated that the value of the subject matter of dispute was less than Rs. 20,000/ and the appeal does not involve any question of law of general public importance which had to be determined by the Supreme Court.
With these two affidavits before it, the High Court granted certificate that it is a fit case for appeal to the Supreme Court.
A certificate which the High Court grants must be supported by adequate reasons.
It is obligatory upon the High Court to set out the question of public or private importance which in their opinion falls to be determined in the proposed appeal (see Sohanlal Naraindas vs Laxmidas Raghunath Gadit,(1) and Railway Board, Govt.
of India vs M/s. Observer Publications (P) Ltd.(2) 667 In both these cases the appeals were disposed of on merits and the preliminary objection was merely noticed.
However, in Nund & Samont Co. Pvt. Ltd. vs Commissioner of Income tax, Bihar & Orissa,(1) this Court held that a certificate of fitness for appeal to the Supreme Court issued by the High Court under section 66A of the Income tax Act, 1922, will be defective if it does not set out the substantial question of law which, in the view of the High Court, falls to be determined by the Supreme Court, and following the decision in India Machinery Stores P. Ltd. vs Commissioner of Income Tax, Bihar and Orissa,(2) the appeal was liable to be dismissed in view of the defective certificate.
However, in both the cases after observing that the certificate was defective the appeals were disposed of on merits.
In this case a very substantial question of law of general public importance is raised and it would be a travesty of justice if we now dismiss the appeal on the sole ground that the certificate is defective.
It would have been open to us to grant special leave on the question raised before us.
Therefore, the preliminary objection must be overruled.
This appeal accordingly succeeds and is allowed and the judgment and decree of the High Court as well as of the first appellate Court are set aside and the judgment and decree of the trial court are restored with costs throughout.
N.V.K. Appeal allowed.
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The third respondent took on lease the demised premises from respondents 1 and 2 under a registered lease deed dated September 11, 1948, the lease being for five years at monthly rent of Rs. 2000/ with an option for renewal to be exercised by a notice two months before the expiry of the lease.
Respondent 3 was the managing director of the appellant company.
During the period of the aforesaid lease, the appellant company was accepted as tenant of the demised premises and the Company paid the rent reserved under the lease being Rs. 2000/ per mensem.
The period reserved under the lease expired on August 31, 1953.
But before the expiry of the period an application was made by the appellant for fixation of standard rent of the demised premises under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.
In October 1953, respondent 1 and 2 as lessors commenced an ejectment action against the appellant and the third respondent on the ground that the lease had expired and the lessee had failed to exercise the option for renewal.
During the pendency of the aforementioned actions, the parties compromised and the consent decree inter alia provided that the company would be the tenant on a monthly rent of Rs. 1000/ from 1st March, 1955 for a period of 5 years and that, after the period of five years there shall be no renewal of the lease, the lessee shall be treated as trespasser.
An indenture of lease was also to be drawn up and executed by both the parties in terms of the consent decree.
On the expiry of the aforesaid term of five years on 29th February, 1960, respondents 1 and 2, lessors having entered and locked up a portion of the demised premises, the company filed a suit on March 14, 1960 against respondents 1 and 2, lessors and the proforma respondent 3 for a declaration that the company was the tenant of the premises and for an injunction restraining respondents 1 and 2 from interfering with its tenancy rights.
651 The suit was contested on the contention that as the consent decree provided for a fresh lease of 5 years, it can only be brought about by a registered instrument and as the consent decree or the document incorporating the terms of the companies was not registered, the Company continued in possession under a void lease and therefore, on the expiry of the period of 5 years the Company was a trespasser and respondents 1 and 2 were entitled to take over possession from such a trespasser.
The trial court held that as the consent decree provided for a lease for a period of 5 years in the absence of registration the lease for a period of 5 years did not come into existence, but if the tenant entered into possession under an invalid lease and the landlord accepted rent, a tenancy from month to month came into existence between the lessors and the lessee and that such a lessee cannot be evicted except after terminating the tenancy by a valid notice to quit and in the absence of such determination the lessee would be a lessee from month to month and can protect its possession and decreed the appellant plaintiff 's suit.
In appeal by Respondents 1 and 2, the District Judge held that the lease being void, yet the lessors would not be entitled to disturb the possession of the tenant for a period of 5 years in view of the provisions contained in section 53A of the Transfer of Property Act, but after the expiry of the period of 5 years the appellant became a rank trespasser and respondents 1 and 2 were entitled to take possession of the property, and accordingly allowed the appeal and dismissed the company 's suit.
The appellant company 's second appeal to the High Court was dismissed.
In the further appeal to this Court on the questions as to: (a) The status and nature of possession of a person who was admittedly a tenant of premises covered by the local rent restriction Act till the date of commencement of a fresh lease which turns out to be void for want of registration, during and at the expiry of the period purporting to be reserved by such a void lease; (b) Would such a person be a tenant who could only be removed by proper legal proceedings or a licensee without any interest in the premises and could be forcibly evicted by the landlord of the premises entering the premises and locking the same; (c) Could such a person defend its possession by a suit seeking declaration and mandatory injunction; and (d) whether the appeal was liable to be dismissed on the sole ground that the certificate which the High Court granted was defective.
^ HELD: 1.
The High Court was in error in holding that if on the expiry of the agreed period of lease there was a covenant for not getting any renewal of the lease the tenant would be a trespasser, wholly over looking the legal position that on the expiry of the contractual tenancy the tenant continues as a statutory tenant except where he surrenders possession or is evicted under the enabling provisions of the relevant Rent Restriction Act.
[666 B] 652 2.
The appellant was a tenant and continued to be a tenant and was entitled to protect its possession by appropriate proceeding unless evicted in due course of law.
[666 C] 3.
The appellant as tenant would be entitled to protect its possession unless evicted in due course of law and in order to protect its possession it can legitimately sue, there being no bar in law, for a declaration of its status as tenant and for an injunction either prohibitory or mandatory.
[665 F] 4.
The indenture of first lease granted an option to the lessee which would be none other than the appellant company, to claim renewal of lease.
This option was not exercised.
Notwithstanding the non exercise of the option on the date of expiry of the lease the contractual tenancy having come to an end, the tenant would be a tenant holding over if requirements of section 116 of the Transfer of Property Act are satisfied.
However, on the date of expiry of contractual tenancy, the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, was in force and was applicable to the premises and, therefore, on the determination of contractual tenancy by efflux of time right of re entry would be subject to the over riding provision of the Rent Act and the rights of such a person remaining in possession are governed by the statute alone.
He is loosely described as statutory tenant which is another name for status of irremovability.
[658 C D] Anand Nivas P. Ltd. vs Anandji Kalyanji Pedhi and Ors., ; ; referred to.
There is no bar in law to a statutory tenant entering into a fresh contract of tenancy with the landlord.
In the instant case this was attempted by the consent decree but the lease was void for want of requisition.
However from this undisputed position an inference of tenancy can be reasonably made.
[658 G] 6.
If the lease is void for want of registration neither party to the indenture can take advantage of any of the terms of the lease.
At best the provision contained in section 53A of the Transfer of Property Act which incorporated the English equitable doctrine of part performance can, if the terms thereof are satisfied, be relied upon to protect possession for the period reserved under such a void lease.
But no other terms of such an indenture inadmissible for want of registration can be the basis for a relief.
[659 B] 7.
Section 53A of the Transfer of Property Act is not at all attracted in the facts of this case.
The suit was filed by the appellant who sought to protect its possession.
The equitable doctrine of part performance can be used as a shield and not as a sword.
It can be used to defend and protect one 's possession.
[659 G] Probodh Kumar Das & Ors.
vs Dantmara Tea Co. Ltd. and Ors., 66 I.A. 293; referred to.
In the instant case the appellant had come to the court for a declaration of its tenancy rights seeking to protect its possession not under the doctrine of part performance as incorporated in section 53A, but with specific allegation 653 that the appellant is a tenant and it be so declared, and for an injunction restraining respondents 1 and 2 from interfering or disturbing the appellants possession of the premises as a tenant.
[660 B C] 8.
If the appellant was already in possession as a tenant of the premises, an unsuccessful attempt to create a fresh lease would not change the nature of his possession as from a tenant to one in part performance under a void lease.
The appellant continues to be in possession as tenant and no cloud is created over its title to remain in possession as tenant merely because the appellant and respondents 1 and 2 attempted to enter into a fresh lease which did not become effective.
[661 B C] Ram Kumar Das vs Jagdish Chandra Deb Dhabal Deb & Anr., ; at 280; referred to.
Technicians Studio P. Ltd. vs Lila Ghosh & Anr., ; ; explained and distinguished.
An incomplete and ineffective attempt at creating a fresh lease would have no impact on a tenant who was in possession as tenant at the commencement of such a void lease and he would continue to be the tenant because section 53A would not be attracted as he is not put in possession in part performance of an agreement of lease not registered and it would be unwise to hold that the payment of the standard rent fixed by the Rent Controller having jurisdiction as payment under such an agreement of lease.
[664 F G] 10.
A person remaining in occupation of premises let to him after the determination of or expiry of the period of the tenancy is commonly, though in law not accurately, called a statutory tenant.
He acquires the status of irremovability.
Statutory tenant being a person who enjoys the status of irremovability, would enjoy the protection of the statute until he is evicted from the premises under the enabling provisions of the statute.
A statutory tenancy would, therefore, come to an end on either the surrender of premises by such a tenant or if a decree of eviction is passed against him.
[664 H 665 B] Hiralal Vallabhram vs Kastorbhai Lalbhai & Ors. ; referred to.
A still born attempt not clothed with legal formality cannot destroy the existing status.
The second lease never came into existence for want of registration and more particularly the appellant was not put in possession under the purported second lease which turns out to be void.
The paradoxical approach manifested is that if a valid lease had come into existence on the expiry of it the appellant tenant would have continued in possession under the protection of the relevant Rent Restriction Act.
However, if such an attempt at creating a fresh lease was ineffective or infructuous, how can such an inchoate exercise destroy the existing rights.
The High Court was therefore in error when it held the existing rights to have been destroyed ignoring the very existence of the West Bengal Premises Tenancy Act, 654 12.
A. certificate that it is a fit case for appeal to the Supreme Court which the High Court grants must be supported by adequate reasons.
It is obligatory upon the High Court to set out the questions of public or private importance which in its opinion falls to be determined in the proposed appeal.
A certificate will be defective if it does not set out the substantial question of law which in the view of the High Court falls to be determined by the Supreme Court.
An appeal is liable to be dismissed if the certificate is defective.
[666 G 667 B] Sohanlal Naraindas vs Laxmidas Raghunath Gadit, , Railway Board, Govt.
of India vs M/s. Observer Publication (P) Ltd., ; ; Nund & Samont Co. P. Ltd. vs Commissioner of Income Tax, Bihar and Orissa, India Machinery Stores P. Ltd. vs Commissioner of Income Tax, Bihar and Orissa, ; referred to.
In the instant case, the certificate granted by the High Court leaves much to be desired.
It merely states that it is a fit case for appeal to the Supreme Court, without specifying whether the certificate was under Article 133 (a), (b) or (c) as it stood at the relevant time.
As a very substantial question of law of general public importance is raised, it would be a travesty of justice if the appeal is dismissed on the sole ground that the certificate is defective.
It would have been open to grant special leave on the question raised.
The preliminary objection that the certificate granted by the High Court being invalid, the appeal must fail on that account alone over ruled.
[666 E F, 667 C]
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4081.txt
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l. A. 337 & 367/1976 (Appeals by Special Leave from the Judgment and Order dated 24.3.1976 of the Punjab and Haryana High Court in Srl.
A No. 757 712 75 and Murder Reference No. 27/75 and in Crl.
Appeal No. 759 of 1975) A. K. Sen and Harjinder Singh, for the appellant.
N.S. Das Behl, for the respondent.
The Judgment of the court was delivered by KRISHNA IYER, J.
In Crl.
Appeal No. 337/1976 by special leave Shri A.K. Sen has confined his challenge indeed, leave itself was limited to the question of sentence.
The case of murder was proved and the conviction by the Sessions Court was confirmed by the High Court.
The Sessions Judge awarded life imprisonment to two accused and death sentence to the appellant.
The High Court confirmed the death sen tence and hence this appeal.
Section makes a departure from the previous Code on account of humanist considerations to personalise the sentence to be awarded.
The object of the provision is to give a fresh such circumstances as may help the court in awarding an appropriate sentence having regard to the personal, social and other circumstances of the case.
Of course, when it is a case of conviction under section 302, I.P.C. if the minimum sentence is imposed the question of providing an opportunity under Sec. 235 would not arise.
, In this case it is admitted that no opportunity was given under section 235(2) Cr.
P.C. to the appellant to.
show cause as to why the lesser sentence of life imprisonment should not be inflicted.
We may make it absolutely clear that such a failure will not affect the conviction under any circumstances.
The only point is relevant to sentence.
Even there in a murder ease where the charge of murder is made out, the limited question is as between the two sen tences prescribed under the Penal Code.
In Santa Singh vs State of Punjab(1) this Court considering section 235 (2) Cr.
P.C. held that the hearing contemplated by that sub section is not confined merely to hearing oral submissions but extends to giving an opportunity to the prosecution and the accused to place before the court facts and materials relating to the various factors bearing on the question of sentence and, if they are contested by either side, then to produce evidence for the purpose of establish ing the same.
Of course, in that particular case this Court sent the case back to the sessions court for complying with section 235(2) Cr.
It may well be that in many cases send ing the case back to the Sessions Court may lead to more expense, delay and prejudice to the cause of justice.
In such cases it may be more appropriate for the appellate court to give an opportunity to the parties in terms off section 235(2) to produce the (1) A.I.R. 1976 S.C. 2386 713 materials they wish to adduce instead of going through the exercise of sending the case back to the trial court.
This may in many cases save time and help produce prompt justice.
In the present case we propose to adopt that course and counsel for the parties agree that they will rely upon the materials available of record and they have nothing more to offer to the court bearing on the question of sentence.
It will be an idle formality in a situation like that to remit the case to reconsider the question of sentence to the Sessions Court.
Coming, to the facts of the present case, having heard both sides we are impressed by Shri Sen 's submission that the death sentence has been inflicted nearly two years ago and the agony of such a sentence has been an excruciating experience suffered by the convict for a long period.
This, by itself, may not be a circumstance to bring down the death sentence, if otherwise the act is took brutal, depraved or meriting the highest penalty.
It has been now established in many decisions of this Court that death sentence must be awarded where there are aggravating factors (vide E. Annami na vs State of Andhra Pradesh(1).
The appellant had two other assailants with him who have been awarded life impris onment.
Moreover, it is evident from the records that there was an exchange of abuse between the parties, viz., Shiv Singh and the accused party.
It is also apparent that there was no motive for the appellant to kill the innocent child who died, a circumstance which has influenced the courts below in awarding the capital sentence.
The other circumstances present also indicate that there is no partic ular reason why the appellant should have been given the severer sentence and we are satisfied that the ends of justice would be met be awarding life imprisonment.
We accordingly direct that the sentence of life imprisonment should be substituted in place of death sentence awarded by the trial court and confirmed by the High Court.
We allow the appeal to this extent.
Appeal No. 367 of 1976 is dismissed as not pressed.
Cr. A. 337 allowed in part and sentence modified.
Cr. A. 367/76 dismissed.
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The appellant was convicted along with two other accused under section 302 I.P.C. and sentenced to death while the other two were sentenced to life imprisonment.
In appeal to this Court against the orders of the High Court confirming the death sentence imposed, the special leave was granted limit ed to sentence.
Allowing the Criminal Appeal No. 337 of 1976 in part and modifying the death sentence to one of life imprisonment, the Court, HELD: (1) The object of section is to give a fresh opportunity to the convicted person to bring to the notice of the court such circumstances as may help the court in awarding an appropriate sentence have regard to the per sonal, social and other circumstances of the case.[712 D] (2) Failure to give an opportunity under s" 235(2) Cr.
P.C. will not affect the conviction under any circum stance.
In a murder case where the charge is made out the limited question is as between the two sentences prescribed under the Penal Code.
If the minimum sentence is imposed.
question of providing an opportunity under section 235 would not arise.
[712 F] (3) The hearing contemplated by section 235(2) is not con fined merely to hearing oral submissions but extend giving an opportunity to the prosecution and the accused to place before the court facts and materials of sentence and;if they are contested by either side then to produce evidence for the purpose of establishing the same.
[712 G] Santa Singh vs State of Punjab A.I.R. 1976 S C 2386, reiter ated.
(4) To save time and expense and help produce prompt justice, it may be more appropriate for the appellate court to give an opportunity to the parties in terms of section 235(2) to produce the materials they wish to adduce instead of going through the exercise of sending the case back to the trial court.
1713 A] In the instant case, the Court modified the death sen tence to one of life imprisonment in view of the facts: (i) The death sentence has been inflicted nearly two years ago, and the agony of such a sentence has been an exCruciating experience suffered by the convict for a long period; (ii) The appellant had two other assailants with him who have been awarded life imprisonment; (iii) There was no motive for the appellant to kill the innocent child; and (iv) The other circumstances present indicate that the ends of justice would be met by awarding life imprisonment.
[713 G E] E. Annamma vs State of Andhra Pradesh ; , referred to
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3809.txt
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Civil Appeal Nos.
2084 2085/74.
Appeals by Special Leave from the Judgment and Order dated 10/11/10/1974 of the Bombay High Court in First Appeal No. 160 and 173 of 1966.
U. R. Lalit, V. N. Ganpule and Mrs. V. D. Khanna for the appellant.
B. D. Bal, P. H. Parekh and M. Mudgal for the Respondent.
The Judgment of the Court was delivered by DESAI, J.
These two appeals by special leave arise from a suit filed by the respondents plaintiffs for recovering possession of land bearing Survey Nos.
487/1 to 487/6 situated at Shirwal Peta Khandala from the appellant defendant.
During the pendency of this suit a portion of the land in dispute was acquired under the Land Acquisition Act and as both the plaintiffs and the defendant laid a claim to compensation, a reference was made under section 30 of the Land Acquisition Act for determining the eligibility for the amount of compensation.
The trial Court decreed the plaintiffs ' suit and First Appeal No. 160 of 1966 was preferred by the defendant to the High Court of 958 Bombay.
Following the decision of the trial Court, the reference under section 30 of the Land Acquisition Act was answered in favour of the plaintiffs respondents and the defendant preferred First Appeal No. 173 of 1966 to the High Court.
Both the appeals were heard together and by its judgment dated 10/11 October, 1974 a Division Bench of the High Court dismissed both the appeals with costs.
Thereupon the appellant preferred the present two appeals.
As both the appeals arise from a common judgment, they were heard together and are being disposed of by this common judgment.
Facts necessary for appreciating the point of law canvassed in these appeals lie within a narrow compass.
One Dattatraya Govind Kulkarni, husband of plaintiff No. 1 and father of plaintiffs 2 to 6 had borrowed a Tagai loan of Rs. 12,000/ by making an application Exhibit 129 accompanied by prescribed form, Ext. 128 on 7th February, 1949.
The loan was borrowed for constructing wells in Survey Nos. 167 and 170 and he offered as security the lands bearing Survey Nos. 165, 166, 167, 170 and 172.
In the application Ext.
129 that accompanied the prescribed form it was stated that wells have to be sunk to bring barren land under cultivation.
In other words, the loan was for improvement of the land.
The loan was advanced and the borrower failed to repay the loan as per the stipulations.
A revenue recovery proceeding was commenced and as by the sale of the land offered as security the Government could not reimburse itself the total amount outstanding, a proclamation of sale was issued and ultimately the suit land was auctioned and it was purchased by the defendant and the sale in his favour was confirmed and he was put in possession on 20th May, 1960.
The plaintiff stated that prior to the date of auction there was a partition between the father and his sons on 6th July, 1956 evidenced by Ext.
53 and at this partition the suit land with its sub divisions came to the share of the plaintiffs and therefore, the father had no saleable interest in the suit land and it could not have been sold at a revenue auction for recovering the personal debt of the father.
So contending, the plaintiffs brought an action for a declaration that the sale is not binding upon them and possession may be restored to them.
The trial Court held that the suit land was joint family property consisting of Dattatraya and his sons but as there was an effective partition prior to the revenue sale and the partition being a genuine one, the subsequent sale is not binding upon the plaintiffs to whose share the suit land was allotted at the partition and, therefore, the sale was void and the plaintiffs are entitled to be put back in possession.
959 The High Court in appeal by the present appellant examined the question of the validity of the revenue sale in the context of the provisions of the ( 'Loans Act, for short) and held that the auction sale of the lands at the relevant time standing in the names of the plaintiffs, the land being not one in respect of which the Tagai loan was advanced, or which was offered as security for that loan, would not be binding upon the plaintiffs as the plaintiffs were not borrowers within the meaning of section 7(1) of the Loans Act and the plaintiffs ' suit on this ground was rightly decreed.
The submission on behalf of the defendant that Tagai loan was a debt and that it was incumbent on the sons of Dattatraya under the doctrine of pious obligation of the sons of a Hindu father to pay their father 's debts which were not tainted with immorality or illegality, was not accepted and the High Court held that this doctrine of pious obligation cannot be extended to the debts contracted under the Loans Act as the Act applies to all citizens of India irrespective of their religion.
With these findings the appeals were dismissed.
Mr. U. R. Lalit, learned counsel for the appellant urged that Tagai loan was borrowed by Dattatraya, the father for improvement of lands bearing Survey Nos. 167 and 170 which were joint family property and the debt represented by Tagai loan would be joint family debt incurred by the manager for the benefit of the joint family or for the benefit of the estate of the joint family and, therefore, the joint family property, irrespective of the fact whether it was offered as security for the loan or whether it benefited by the loan, would be liable for the repayment of the loan notwithstanding the fact that a partition has taken place before the suit land, which again is a joint family property, was brought to revenue auction.
It was also urged that the partition is not genuine and that it is a sham and bogus one and in fact there was no partition in the eye of law.
It was further urged that the pious obligations of the sons of a Hindu father to pay the debt incurred by the father not tainted with illegality or immorality to the extent of the joint family property in their hands would certainly apply to loan borrowed under the Loans Act and the expression "borrower" under the Loans Act can as well include a joint Hindu family and thereby making the entire joint family property liable for repayment of the loan.
Mr. Bal, learned counsel for the plaintiffs respondents contended that Tagai loan was not a joint family debt nor in borrowing the loan the father was acting as Karta but was acting in his personal capacity, nor the loan was for the benefit of the joint family estate.
It was said that the Loans Act being a complete Code in itself and only 960 recognised borrower in his individual capacity, one cannot import the concept of Karta of a joint family borrowing under the Loans Act in his representative capacity so as to make the joint family property liable for such loans.
The principal contention which goes to the root of the matter is whether the Tagai loan borrowed by Dattatraya, the father, was borrowed in his personal capacity for his personal use or as Karta of the joint family for the benefit of the joint family or joint family estate.
If the loan was borrowed by Dattatraya, the father, as Karta of the joint Hindu family for the benefit of the family, certainly it would be a joint family debt and all the joint family property would be liable for this debt.
Even if there is a subsequent partition before the debt is repaid, the creditor can proceed against the joint family property in the hands of any of the coparceners because the joint family property is liable for the joint family debts.
The Karta or the Manager of a joint Hindu family has implied authority to borrow money for family purposes and such debts are binding on other coparceners and the liability of the coparceners in such a case does not cease by subsequent partition (See Para 240, Mulla 's Hindu Law, 14th Edn., p. 298).
Where father is the Karta of a joint Hindu family and the debts are contracted by the father in his capacity as manager and head of the family for family purposes, the sons as members of the joint family are bound to pay the debts to the extent of their interest in the coparcenary property.
Further, where the sons are joint with their father and the debts have been contracted by the father for his own personal benefit, the sons are liable to pay the debts provided they were not incurred for illegal or immoral purposes.
This liability arises from an obligation of religion and piety which is placed upon the sons under the Mitakshara Law to discharge the father 's debts, where the debts are not tainted with immorality.
This liability of the sons to pay the father 's debts exists whether the father be alive or dead, (para 290, Mulla 's Hindu Law, 14th Edn., p. 354).
A further requirement is that for an effective partition of a Mitakshara joint Hindu family a provision for the joint family debts should be made.
In order to determine what property is available for partition, provision must first be made for joint family debts which are payable out of the joint family property, personal debts of the father not tainted with immorality, maintenance of dependent female members and of disqualified heirs, and for the marriage expenses of unmarried daughter.
This must be so because partition is of joint family property and if joint family debts are repaid before the partition only the residue would be available for partition.
Therefore, if partition is effected before paying 961 the debts, provision to pay the debts should be made so as to determine the residue available for partition.
Having cleared the ground in law, let us look at facts which have been found by the Courts on appreciation of evidence and which unless found to be utterly unconscionable this Court would not interfere with.
The trial Court found that the suit property was joint family property and the High Court has not departed therefrom.
In fact, in an earlier suit filed by these very plaintiffs being Special Suit No. 14 of 1958 it has been in terms stated that the lands described in para 1 of the plaint Ext.
37 which include the suit land, were originally owned by joint family of plaintiffs and Dattatraya.
Therefore, on plaintiffs ' own admission the suit land was joint family property of plaintiffs and Dattatraya.
The next important question is whether the Tagai loan was the personal debt of Dattatraya or was debt incurred by him as Karta of the joint family for the benefit of the joint family.
We would only look at uncontroverted salient features of the evidence.
Prescribed form of application, Ext.
128 with application Ext.
129 would show that the loan was borrowed for constructing wells for improvement in the potentiality of the lands bearing Survey Nos. 167 and 170.
It was submitted that these lands, for the improvement of which the loan was borrowed, were not joint family property.
There again, a reference may be made to the admission of the plaintiffs in plaint Ext.
37 which also includes lands bearing Survey Nos. 167 and 170 being described by the plaintiffs themselves as joint family property.
The High Court held that Dattatraya borrowed the loan for improvement of the land.
Therefore, Dattatraya, the father, borrowed loan in his capacity as the father for improvement of joint family lands and for this purpose offered as security three other pieces of land which were joint family property.
In the face of this unimpeachable evidence the statement in Ext.
128, the application for loan, that Dattatraya was the full owner of the lands therein mentioned would not convey the idea that it was his separate property.
It is not necessary that Karta acting in his capacity as Karta to describe himself as Karta to affirm his representative capacity.
Whether he has acted in his personal capacity or representative capacity can be gathered from all the surrounding circumstances and in this case they are eloquent, in that he mortgaged or gave as collateral security joint family property, to wit land, and it extends to whole of the interest of the family and is not confined to Karta 's share, and therefore, he must be deemed to have acted in the transaction on behalf of the family (see Mulla 's Hindu Law, 14th Edn., page 313, article 251).
It was, however, stated that agriculture 962 was not the avocation of the joint family and, therefore, the father as the Karta did not have the implied authority to borrow loan so to be binding on the joint family property.
One has merely to look at the content of the application for loan, Ext. 129 made by Dattatraya to the Mamlatdar, Taluka Vichitragad, for advancing loan to him, to dispel the contention.
The application recites that applicant Dattatraya, the father had undertaken extensive work to bring barren land under cultivation to raise sufficient crops as well as to improve the quality of Land and for improving the quality of agriculture he had undertaken, loans should be advanced to him.
Mr. Bal, however, pointed out that Dattatraya was carrying on some business which would be evident from Ext.
23, a copy of execution application No. 87/60 filed by Bhor State Bank Ltd., against one Pandurang Krishnaji Kamble and Dattatraya Govind Kulkarni in which the occupation of Dattatraya is shown as business; and Ext.
22 being a copy of Execution Application No. 92/57 in which his occupation is shown as general agent, and Ext.
120 a copy of the decree in Special Civil Suit No. 2/49 wherein the occupation of Dattatraya is shown as business and which further shows that Dattatraya had running account with one Raghunath Shridhar Phadke in which Dattatraya had withdrawn Rs. 56,800/ and had credited Rs. 41,000/ and after adding interest leaving a debit balance of Rs. 19,238 14 00.
It was urged that if all these aspects are taken into consideration, it would appear that agriculture was not the occupation of the joint family.
Now, as against this, one may also refer to Ext.
24 a copy of the BADR Execution Application No. 294/56 for executing an Award made under the Bombay Agricultural Debtors ' Relief Act against Dattatraya which would show that Dattatraya was an agriculturist by occupation and his debts were adjusted by the Courts set up under the Bombay Agriculture Debtors ' Relief Act and this could have only been done if his principal occupation was agriculture.
Therefore, mere description of Dattatraya 's avocation in Exts. 22, 23 and 120 is hardly determinative of the occupation of Dattatraya or his family.
It may be that over and above agriculture Dattatraya may have been carrying on some side business but if his application Ext.
129 shows that he had on his own showing 160 bighas of land most of which are admittedly shown to be joint family property, it cannot be denied that agriculture was one of the occupations of Dattatraya and he was carrying on that avocation as Karta of the joint family consisting of himself and his minor sons.
Now, if agriculture was one of the occupations of the joint family and if loan was borrowed for the purpose of improving the joint family lands, the loan would ipso facto be for legal necessity and it would be joint family debt for which all the joint family property would be liable.
963 If thus the loan for the recovery of which the suit property was brought to auction was joint family debt and if the suit property was joint family property, certainly it would be liable to be sold for recovery of joint family debt.
The question, however, is: does the subsequent partition make any difference in respect of the liability of the joint family property for the joint family debts ? That would necessitate examination of the circumstances in which the partition was brought about though we are not inclined to examine the question whether the partition was a sham or bogus transaction or was a motivated one with a view to defeating the creditors of the joint family.
The partition is evidenced by a registered deed, Ext.
79 dated 6th July 1956.
Partition is between father and his minor sons.
There is no dispute that on that date the debt of Tagai loan was outstanding as well as there were certain other debts.
In the partition deed Ext.
79 there is no express or implied provision for the repayment of joint family debts or even outstanding debts of Dattatraya, the father.
There was some suggestion that the property which was allotted to Dattatraya was sufficient for discharging the debts outstanding on the date of partition.
That at least is not borne out by the partition deed nor has Dattatraya gone into the witness box to say that such was the position.
Therefore, taking into consideration the recitals in the partition deed as well as the relevant evidence on record the position is clear that no provision was made at the time of partition for the joint family debts or alternatively outstanding debts incurred by the father.
It is not for a moment suggested that on this account the partition is bogus and sham, an argument which was put forward before the High Court and negatived.
The substance of the matter is that if at a partition amongst the members of the joint family no provision is made for joint family debts, then despite the partition and allotment of shares to different coparceners the joint family property in their hands which they acquired by partition would still be liable for the joint family debts.
The Judicial Committee in Sat Narain vs Das(1), pointed out that when the family estate is divided, it is necessary to take account of both the assets and the debts for which the undivided estate is liable.
After affirming this ratio, this Court in Pannalal & Anr.
vs Mst Naraini & Ors.(2) observed as under: ". the right thing to do was to make provision for discharge of such liability when there was partition of the 964 joint estate.
If there is no such provision, "the debts are to be paid severally by all the sons according to their shares of inheritance", as enjoined by Vishnu (Vishnu, Chap.
6, verse 36).
In our opinion, this is the proper view to take regarding the liability of the sons under Hindu law for the pre partition debts of the father.
The sons are liable to pay these debts even after partition unless there was an arrangement for payment of these debts at the time when the partition took place.
This is substantially the view taken by the Allahabad High Court in the Full Bench case referred to above and it seems to us to be perfectly in accord with the principles of equity and justice".
If thus the partition makes no provision for repayment of just debts payable out of the joint family property, the joint family property in the hands of coparceners acquired on partition as well as the pious obligation of the sons to pay the debts of the father will still remain.
This position of law was reaffirmed in Vriddhachalam Pillai vs Shaldean Syriam Bank Ltd. & Anr.(1).
The only effect of partition is that after the disruption of joint family status by partition the father has no right to deal with the property by sale or mortgage even to discharge an antecedent debt nor is the son under a legal obligation to discharge the post partition debts of the father.
Assuming we are not right in holding that the debt, was for the benefit of the estate of the joint family and, therefore, a joint family debt, and assuming that Mr. Bal is right in contending that it was the personal debt of the father, yet the doctrine of pious obligation of the son to pay the father 's debt would still permit the creditor to bring the whole joint family property to auction for recovery of such debts.
Where the sons are joint with their father and debts have been contracted by the father for his personal benefit, the sons are liable to pay the debts provided they were not incurred for an illegal or immoral purpose.
This liability to pay the debt has been described as pious obligation of the son to pay the father 's debt not tainted with illegality or immorality.
It was once believed that the liability of the son to pay the debts contracted by the father, though for his own benefit, arises from an obligation of religion and piety which is placed upon the sons under the Mitakshara law to discharge the father 's debts, where the debts are not tainted with immorality, yet in course of time this liability has passed into the realm of law.
965 In Anthonyswamy vs M. R. Chinnaswamy Koundan (dead) by l.r.s. & Ors.(1), following the decision in Muttayan vs Zamindar of Sivagiri(2), this Court held that this obligation of the son to pay the father 's debt not tained with illegality or immorality was not religious but a legal obligation and the rule would operate not only after the father 's death but even in the father 's life time and the pertinent observation is as under: "It is evident therefore that the doctrine of pious obligation is not merely a religious doctrine but has passed into the realm of law.
The doctrine is a necessary and logical corollary to the doctrine of the right of the son by birth to a share of the ancestral property and both these conceptions are correlated.
The liability imposed on the son to pay the debt of his father is not a gratuitous obligation thrust on him by Hindu law but is a salutary counter balance to the principle that the son from the moment of his birth acquires along with his father an interest in joint family property".
It is not the case of the plaintiffs that the debt contracted by the father for which the property was sold was tainted with illegality or immorality or that it was ayyravaharik in the sense opposed to good morals.
Therefore, even assuming that there was a partition, the debt being antecedent debt for which no provision was made in the partition and the debt having not been shown to be tainted with illegality or immorality, the sons were liable to pay this debt to the extent the joint family property came in their hands.
Viewed from either angle, the property sold was liable for the discharge of the debt of Dattatraya, the father, and even if it came in the hands of the sons on partition, the debt admittedly being a pre partition debt not shown to be tainted with illegality or immorality, could be recovered from the joint family property in the hands of the sons.
Mr. Bal, however, raised an interesting contention that if the joint family property which came in the hands of the sons on partition was to be sold for recovery of the debt of the father after partition a suit would have to be filed by the creditor and if the property in the hands of the son was to be made liable for discharge of the debt, the sons ought to be joined as parties to the suit because only in such an event the sons could set up the defence of the debt being tainted 966 with illegality or immorality.
Where a revenue sale takes place, it was said, the sons would have no opportunity to contest the character of the debt, and, therefore, any sale in such circumstances, of the property that has fallen to the shares of the sons at a partition, subsequent to the partition would be void as against the sons.
In support of the submission reliance was placed on an observation in Pannallal 's case (supra) that a decree against the father alone obtained after partition in respect of such debt cannot be executed against the property that is allotted to the sons and that a separate and independent suit must be filed against the sons before their shares can be reached.
After observing that a son is liable even after partition for the pre partition debts of his father which are not immoral or illegal, this Court proceeded to examine the question as to how this liability is to be enforced by the creditor, either during the life time of the father or after his death.
After taking note of a large number of decisions in which it was held that a decree against the father alone obtained after partition in respect of such debt cannot be executed against the property that is allocated to the sons on partition and a separate and independent suit must be instituted against the sons before their shares can be reached, it was held that the principle underlying these decisions is sound.
This Court approved the decision in Jagnarayan vs Somaji (1).
It may be noted that decree for the pre partition debt was made after partition when in the suit father after partition could not represent the sons.
This very question again came up before this Court in section M. Jakati & Anr.
vs section M. Borkar & Ors.(2) In that case the Deputy Registrar of Co operative Societies had made an order against Mr. Jakati for realisation of the amount and an item of property belonging to the joint family of Jakati was attached by the Collector and duly brought to sale under section 155 of the Bombay Land Revenue Code.
The sale was held on 2nd February, 1943 and confirmed on 23rd June, 1943.
In the meantime.
On January 15, 1943, one of the sons of Jakati instituted a suit for partition and separate possession of his share in the joint family property and contended inter alia that the sale in favour of the first respondent was not binding on the joint family.
If the order of the Deputy Registrar was to be treated as a decree, the sale under section 155 of the Bombay Land Revenue Act being execution of that decree, was after the institution of the suit for partition and therefore it was contended that a partition after the decree but before the auction sale limited the efficacy of the sale to the share of the father even though the sale was of a whole estate including the interest of the sons, because after the partition the 967 father no longer possessed the power to sell the shares of sons to discharge his debts.
Negativing this contention it was held as under: "But this contention ignores the doctrine of pious obligation of the sons.
The right of the pre partition creditor to seize the property of the erstwhile joint family in execution of his decree is not dependant upon the father 's power to alienate the share of his sons but on the principle of pious obligation on the part of the sons to discharge the debt of the father.
The pious obligation continues to exist even though the power of the father to alienate may come to an end as a result of partition.
The consequence is that as between the sons ' right to take a vested interest jointly with their father in their ancestral estate and the remedy of the father 's creditor to seize the whole of the estate for payment of his debt not contracted for immoral or illegal purpose, the latter will prevail and the sons are precluded from setting up their right and this will apply even to the divided property which, under the doctrine of pious obligation continues to be liable for the debts of the father.
Therefore where the joint ancestral property including the share of the sons has passed out of the family in execution of the decree on the father 's debt the remedy of the sons would be to prove in appropriate proceedings taken by them the illegal or immoral purpose of the debt and in the absence of any such proof the sale will be screened from the sons ' attack, because even after the partition their share remains liable".
The High Court while examining the ratio in Jakati 's (supra) case observed that even though Ganpatrao Vishwanathappa Barjibhe vs Bhimrao Sahibrao Patil(1), was referred to therein it was not specifically overruled and, therefore, the trial Court was right in relying upon it and incidentally itself relied on it.
In that case it was held that in order to make the share of sons liable after partition they should be brought on record.
This Court referring to Ganpatrao (1) observed that the decision should be confined to the facts of that case and further observed as under : "Therefore where after attachment and a proper notice of sale the whole estate including the sons ' share, which was attached, is sold and the purchaser buys it intending it to be the whole coparcenary estate, the presence of the sons eo nomine is not necessary because they still have the right 968 to challenge the sale on showing the immoral or illegal purpose of the debt.
In our opinion where the pious obligation exists and partition takes place after the decree and pending execution proceedings as in the present case, the sale of the whole estate in execution of the decree cannot be challenged except on proof by the sons of the immoral or illegal purpose of the debt and partition cannot relieve the sons of their pious obligation or their shares of their liability to be sold or be a means of reducing the efficacy of the attachment or impair the rights of the creditor.
" The binding ratio would be one laid down in Jakati 's (supra) case and it cannot be ignored by merely observing that a different approach in Ganpatrao (supra) case holds the field for the High Court as it was not overruled in Jakati 's case.
It is thus crystal clear that the pious obligation of the sons continues to be effective even after partition and if the creditor in execution of a decree obtained prior to partition seizes the property in execution without making sons parties to the suit and the property is sold at an auction and the purchaser is put in possession and the property thus passes out of the family in execution of the decree on the father 's debt, the remedy of the sons would be to challenge the character of the debt in an appropriate proceeding brought by them.
The sale cannot be voided on the only ground that the sale of the property took place after partition and the property sold was one which was allotted to the sons on partition once the property is liable to be sold for recovery of debt of the father incurred prior to partition and which is not tainted with illegality or immorality.
Partition in such a situation merely provides a different mode of enjoyment of property without affecting its liability for discharge of pre partition debts.
In the present case the sons have filed the suit and in this suit issue No. 6 framed by the learned trial judge was whether the Tagai loan of Rs. 12,000/ was incurred by Dattatraya as manager of the family, for legal necessity and the family has benefited by it, and this issue was answered in the affirmative, meaning the debt is not shown to be tainted with illegality or immorality.
No submission was made to us by Mr. Bal on behalf of the respondents that the debt was tainted with illegality or immorality.
In such a situation unless in this suit the sons challenged the character of the debt and established to the satisfaction of the Court that the debt was tainted with illegality or immorality, they cannot obtain any relief against the purchaser who purchased the property at an auction held by the Civil Court or by the revenue authorities for recovering the debt of the father which the sons 969 were under a pious obligation to pay.
Therefore, even if the plaintiffs were not parties to the proceedings held by revenue authorities for sale of the land involved in this dispute, once the sale took place and it was confirmed and purchaser was put in possession, the sons can successfully challenge the sale by establishing the character of the debt thereby showing that they were not bound to pay it and, therefore, their share in the property cannot be sold to discharge the debt.
They cannot succeed merely by showing, as is sought to be done in this case, that as the sale took place subsequent to partition and as they were not parties to the proceedings the sale is not binding on them.
This clearly merges by reading Pannalal and Jakati cases (supra) together.
The loan sought to be recovered was a Tagai loan advanced under the Loans Act.
The amount can be recovered as arrears of land revenue.
Chapter XI of the Bombay Land Revenue Code provides procedure for realisation of land revenue, recovery to be made as if they are arrears of land revenue and other revenue demands.
Section 150 provides that an arrear of land revenue may be recovered inter alia by sale of the defaulter 's immovable property under section 155.
Section 155 provides that the Collector may cause the right, title or interest of the defaulter in any immovable property other than the land on which the arrear is due to be sold.
The sale is subject to sanction and confirmation.
The first contention is that the Collector is authorised to cause the right, title or interest of the defaulter in any immovable property which is sought to be sold in a revenue auction and in this case as the sale was after the partition the defaulter Dattatraya had no interest in the property brought to auction and, therefore, no title passed to the auction purchaser.
This submission overlooks again the pious duty of the sons to pay the father 's debt as also the right of the creditor to recover debts from the joint family property in the hands of the coparceners.
In Jakati 's case (supra) this was the exact contention and after comparing the parallel provision in the Code of Civil Procedure, viz., "the right, title or interest of the judgment debtor", this Court held that it is a question of fact in each case as to what was sold in execution of the decree.
This Court affirmed the ratio in Rai Babu Mahabir Prasad vs Rai Markunda Nath Sahai(1), that it is a question of fact in each case as to what was sold, viz., whether the right, title or interest of the debtor or defaulter was sold or the whole of the property was put up for sale and was sold and purchased.
It 970 was concluded that where the right, title and interest of the judgment debtor are set up for sale as to what passed to the auction purchaser is a question of fact in each case dependent upon what was the estate put up for sale, what the Court intended to sell and what the purchaser intended to buy and did buy and what he paid for.
There is not the slightest doubt that the whole of the property was sold in the instant case and that was intended to be sold and the purchaser purchased the whole of the property and the certificate was issued in respect of sale of the property and, therefore, it is futile to say that only the right, title and interest of Dattatraya was sold and that as he had no interest in the property sold on the date of auction sale, nothing passed to the purchaser.
Assuming, for a moment that if the sale takes place after the partition, to such a proceeding the sons should be a party before the liability arising out of the doctrine of pious obligation to pay the father 's debt is enforced against the joint family property in the hands of the sons, evidence reveals that the sons were fully aware of the intended sale and not only they knew of the intended sale but possession was taken from them by the purchaser after notice to them.
Proceedings for the recovery of the amount of Tagai loan of Rs. 12,000/ were commenced much prior to 25th April, 1955 because the first proclamation of sale in respect of four pieces of land was issued on 25th April, 1955.
79 would show that no bid was received whereupon the Kamgar Patil offered a nominal bid of Re. 1/ for four pieces of land.
It may here be mentioned that this sale was challenged by none other than Dattatraya and it was quashed and he had taken back the land included in the proclamation Ext.
Thus the recovery of the loan started prior to partition which took place on 6th July, 1956.
Where a loan is taken under the Loans Act and it is being recovered as arrears of land revenue, the order of the revenue authority to recover the amount would tantamount to a decree and when a proclamation of sale is issued it amounts to execution of the decree, to borrow the phraseology of the Code of Civil Procedure.
It is thus clear that execution started prior to the partition.
Undoubtedly the proclamation for sale of suit land was issued on 22nd January, 1957 as per Ext.
80 and that was subsequent to the partition but when different properties are brought to auction by different sale proclamations it is nonetheless an execution proceeding.
The sale proclamation was issued under the provisions of the land revenue code.
Amongst others the proclamation of sale is to be fixed on the property which is to be auctioned.
After the sale was confirmed, the purchaser was required to be put in possession.
The plaintiff claimed to be in possession and yet the revenue officer on 20th May, 1960 as per Ext.
82 handed over possession of 971 the land involved in the dispute to the purchaser.
It would be advantageous to point out here that the plaintiffs served notice dated 2nd February, 1957 which would mean that the notice was served prior to the date of the auction.
The plaintiffs therein referred to the proclamation of sale for the land involved in dispute and they also referred to the proclamation of sale for the land involved in dispute and they also referred to the attachment of the land.
They also referred to the date of intended auction sale and they called upon the Collector not to proceed with the sale.
The plaintiffs thereafter filed their first suit being Special Suit No. 14/58, certified copy of the plaint of which is Ext.
37, which would show that it was filed on 6th April, 1957.
In this plaint they sought a declaration that the sale held on 26th May, 1955 and 6th April, 1957 be declared illegal.
It was alleged in the plaint that Dattatraya was a drunkard and was in bad company and had borrowed the Tagai loan for his own vices and in collaboration with the concerned officers of the revenue department and the loan could never be said to be a Tagai loan.
Amongst others, the State of Bombay was impleaded as party defendant.
Subsequently this suit was withdrawn and the present suit was filed deleting State of Bombay as party.
From this narration of facts it clearly emerges that the plaintiffs had the knowledge of the proclamation of sale and yet no attempt was made by them either to appear before the Collector who had issued the proclamation or as was now sought to be urged, offered to repay the loan.
If after this specific knowledge that proceeding for recovery of Tagai loan had commenced and during its pendency the partition was brought about and yet on the subsequent sale the revenue authority sold the whole of the property and the purchaser intended to buy the whole of the property, the only way the sons can challenge this sale is by establishing the character of the debt as being tainted with illegality or immorality and the purchaser would be entitled to defend his purchase and possession on all the contentions which would negative the plaintiffs ' case including the one about the pious obligation of the sons to pay the father 's debt.
Therefore, there is no force in the contention that as the plaintiffs were not parties to the recovery proceedings the sale is not binding on them.
That brings us to the last contention which has found favour with the High Court.
The contention is that a loan borrowed under the provisions of the Loans Act could always be in the individual and personal capacity of the borrower and the Loans Act being applicable to all the communities in this country, it does not admit of a person borrowing loan in his representative capacity as Karta of the joint family and, thereby making joint family property liable for the discharge 972 of the debt.
Section 5 prescribes the mode of dealing with the applications for loans and section 6 provides for the period for repayment of loans.
Then comes section 7 which is material.
It provides for the mode of recovery of the loans borrowed under the Act.
Section 7 reads as under: "7.
(1) Subject to such rules as may be made under section 10, all loans granted under this Act, all interest (if any) chargeable thereon, and costs (if any) incurred in making the same, shall, when they become due, be recoverable by the Collector in all or any of the following modes, namely: (a) from the borrower as if they were arrears of land revenue due by him; (b) from his surety (if any) as if they were arrears of land revenue due by him; (c) out of the land for the benefit of which the loan has been granted as if they were arrears of land revenue due in respect of that land; (d) out of the property comprised in the collateral security (if any) according to the procedure for the realisation of land revenue by the sale of immovable property other than the land on which that revenue is due: Provided that no proceeding in respect of any land under clause (c) shall affect any interest in that land which existed before the date of the order granting the loan, other than the interest of the borrower, and of mortgages of, or persons having charges on, that interest, and where the loan is granted under section 4 with the consent of another person, the interest of that person, and of mortgagees of, or persons having charges on, that interest.
(2) When any sum due on account of any such loan, interest or costs is paid to the Collector by a surety or an owner of property comprised in any collateral security, or is recovered under sub section (1) by the Collector from a surety or out of any such property, the Collector shall, on the application of the surety or the owner of that property (as the case may be), recover that sum on his behalf from the borrower, or out of the land for the benefit of which the loan has been granted, in manner provided by sub section (1).
(3) It shall be in the discretion of a Collector acting under this section to determine the order in which he will resort to the various modes of recovery permitted by it.
" 973 The loan can be recovered from the borrower as if it were an arrear of land revenue due by him or from his surety by the same procedure or out of the land for the benefit of which the loan has been granted by following the same procedure or out of the property comprising as collateral security, if any, according to the procedure for realisation of land revenue by sale of immovable property or by the sale of immovable property other than the land on which the land revenue is due.
Now the word 'borrower ' is not defined.
Could it be said that a borrower for the purpose of section 7 can be an individual and no other person ? The High Court observed that the Act is applicable to all communities in India and not merely to Hindus and there are many communities which do not have the system of joint family and if the legislature intended to include in the word 'borrower ' manager of a family, it should have said so in express terms.
There is nothing in the language of section 7 which would show that the borrower must always and of necessity be an individual.
Even if the Act applies to other communities which do not have the system of joint family, that by itself would not exclude the manager of a joint Hindu family from becoming a borrower under section 7.
If the construction as suggested by the High Court is accepted it would put joint Hindu family at a disadvantage in borrowing loans under the Loans Act because the Karta of a joint Hindu family, if he has no separate property of his own, and if he cannot borrow the loan in his representative capacity, has no security to offer, nor could he take advantage of the beneficial provision of the Act for improving the land belonging to the joint Hindu family.
We see no justification for restricting the word 'borrower ' to be an individual alone.
In fact the Act itself contemplates joint borrowers.
Section 9 provides for joint and several liability of joint borrowers.
A Karta of a joint Hindu family therefore can be a borrower in his representative capacity.
If the Karta of a joint Hindu family is considered eligible for becoming a borrower would it run counter to the position of other communities in which there is no concept of a joint family and joint family properties ? In the absence of any such concept a borrower other than a Hindu can offer all the property at his disposal even if he has not sons, as security for the loan to be borrowed because in other communities governed by their personal laws the son does not acquire interest in the ancestral properties in the hand of the father from the time of his birth.
But in Hindu law there are two seemingly contrary but really complimentary principles, one the principle of independent coparcenary rights in the sons which is an incident of birth, giving to the sons vested right in the coparcenary property, and the other the pious duty of the sons to discharge their father 's debts not tainted with immorality or illegality, 974 which lays open the whole estate to be seized for the payment of such debts (see Jakati 's case) (Supra).
Now, if the sons of a Hindu father take interest in the ancestral property in the hands of the father by the incident of birth, they also incur the corresponding obligation of discharging the debts incurred by the father either for his own benefit or for the benefit of the joint family from the property in which the sons take interest by birth.
Such a concept being absent in communities not governed by Hindu law in this behalf, the father would be free to encumber the property and the sons in such communities would neither get interest by birth nor the liability to pay the father 's debt and would not be able to challenge the sale or property for discharge of the debt incurred by the father.
Therefore, the expression 'borrower ' in section 7 need not be given a restricted meaning merely because the Act applies to all communities.
Hence a father who is the Karta of the joint family consisting of himself and his sons can become a borrower in his capacity as Karta and if the loan is for legal necessity or for the benefit of the joint family estate he would render the joint family property liable for such debt and if it is for his personal benefit the joint family property even in the hands of the sons would be liable if the debt is not tainted with illegality or immorality.
The High Court said that such liability which arises from the obligation of religion and piety cannot be extended to the loans borrowed under the Loans Act because there is no such obligation in other communities to which the Act applies.
In reaching this conclusion the High Court overlooked the principle that this doctrine of pious obligation is not merely a religious duty but has passed into the realm of law (see Anthonyswamy), (supra).
On the facts of that case this principle was applied to parties belonging to Tamil Vannian Christians.
Viewed from this angle, the High Court was in error in holding that Dharmashastras of Hindus never contemplated improvement loans being given by the Governments of the day which were usually monarchies and, therefore, a debt of the kind which is contemplated under the Loans Act could never have been under the contemplation of the writers like Brihaspati and Narada in whose texts the pious liability is imposed on the sons and others.
It is not possible to subscribe to this view for the reasons hereinbefore mentioned.
The decisions in Sankaran Nambudripad vs Ramaswami Ayyar,(1) and Chinnasami Mudaliar vs Tirumalai Pillai,(2) do not touch the question herein raised and are of no assistance in the matter.
It, therefore, clearly transpires that Dattatraya had borrowed a loan from the Government under the Loans Act for the benefit of 975 joint family property.
It was being recovered as arrears of land revenue.
The property which is the subject matter of dispute in this proceeding was joint family property.
It was sold at a revenue auction and the whole of the property was sold and the whole of it was purchased by the purchaser.
The debt of Tagai loan for which the property was sold is not shown to be tainted with illegality or immorality or avyavaharik.
Therefore, the suit property was liable to be sold at court auction for two reasons, one that the debt was joint family debt for the benefit of the joint family estate and, therefore, all segments of the joint family property were liable for the discharge of the debt, and secondly, under the doctrine of pious obligation of the sons to pay the father 's debt.
In the present proceedings no attempt was made to establish that the debt was tainted with illegality or immorality.
Therefore, the sale is valid and the purchaser acquired a full and complete title to the property.
The sale is not void.
Part of the property is acquired and the compensation is taken by the plaintiffs subject to the orders of the Court.
Accordingly, both these appeals are allowed and the plaintiffs ' suit is dismissed but in the facts and circumstances of this case, with no order as to costs throughout.
N.V.K. Appeals allowed.
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The respondents ' father took a Tagai loan from the Government for the purpose of digging wells in his land by offering his land as security for the loan.
When he failed to repay the loan, the suit land was auctioned under the revenue recovery proceeding and it was purchased by the appellants.
In a suit for recovery of possession, the respondents alleged that their father had no saleable interest in the land because, prior to the date of auction.
in the partition between themselves and their father, the suit land came to their share and therefore the land which belonged to them could not have been sold in an auction for recovering a personal debt of their father.
The trial court declared the sale as void.
The High Court affirmed the trial Court 's order.
In appeal to this Court the respondents contended that the debt was not a joint family debt; neither was the father acting as Karta of the joint family nor was the loan for the benefit of the joint family and therefore the joint family property could not be made liable for such loan.
Allowing the appeals the Court, ^ HELD: 1 (a) The suit land was joint family property of the respondents and their father.
[961C] (b) If the loan, for the recovery of which the suit property was brought to auction, was joint family debt and if the suit property was joint family property it would be liable to be sold for recovery of joint family debt.
[963A] (c) Whether the Karta acted in his personal capacity or representative capacity has to be gathered from all the surrounding circumstances.
The father borrowed the loan in his capacity as Karta of the joint family for improvement of the joint family lands and for this purpose he offered as security the land which was joint family property.
It is not necessary that the Karta acting in his capacity as Karta should describe himself as Karta to affirm his representative capacity.
Therefore he must be deemed to have acted in the transaction on behalf of the family.
[961G H] 956 (d) Agriculture was one of the occupations which the father was carrying on as Karta of the joint family.
If agriculture was one of the occupations of the joint family and if the loan was borrowed for the purpose of improving the joint family lands, the loan would ipso facto be for legal necessity and it would be joint family debt.
[962H] (e) Where the sons are joint with their father and debts have been contracted by the father for his personal benefit the sons are liable to pay the debts provided they were not incurred for illegal or immoral purpose.
This liability to pay the debt had been described as pious obligation of the son to pay the father 's debt if it is not tainted with illegality or immorality.
[960F] Muttayan vs Jamindar of Sivagiri, [1883] 9 I.A. 128 Anthonyswmy vs M. R. Chinnaswamy Koundan (dead) by L. Rs. Ors.
; ; referred to.
(f) If at a partition amongst the members of the joint family no provision was made for joint family debts, then despite the partition and allotment of shares to different coparceners, the joint family property acquired by partition would still be liable for the joint family debts.
[964D] Sat Narain vs Das, [1936] 63 I.A. 384; Pannalal & Anr.
vs Mst.
Naraini & Ors.
; at 558; Vriddhachalam Pillai vs Shaldean Syrian Bank Ltd. & Anr. ; ; referred to (g) In the instant case the property sold was liable for the discharge of the father 's debt.
The debt being a pre partition debt which was not shown to be tainted with illegality or immorality, could be recovered from the joint family property in the hands of the sons.
[965F] (h) The pious obligation of the sons continues to be effective even after partition.
If the creditor, in execution of a decree, obtained prior to partition, seizes the property in execution without making the sons parties to the suit and the property was sold at an auction and the purchaser was put in possession, the remedy of the sons would be to challenge the character of the debt in an appropriate proceeding.
The sale cannot be voided on the only ground that it took place after partition and the property sold was one which was allotted to the sons on partition.
Partition in such a situation merely provides a different mode of enjoyment of property without affecting the joint family 's liability for discharge of pre partition debts.
[968D F] section M. Jakati & Sons & Anr.
vs section M. Barkar & Ors., referred to.
(i) In the instant case the debt was not shown to be tainted with illegality or immorality.
Therefore, even if the respondents were not parties to the proceeding held by the Revenue Authorities, once the sale was confirmed and the purchaser was put in possession, the sons can challenge the sale only by establishing the character of the debt.
[968G, 969A] (2) The loan sought to be recovered being Tagai loan advanced under the Loans Act, it can be recovered as arrears of land revenue.
The Bombay land Revenue Code, provides procedure for realisation of land revenue, recovery of which could be made as if it was arrears of land revenue and other revenue demands.
[969C] 957 (3) When a loan was taken under the Loans Act and was being recovered as arrears of land revenue, the order of the Revenue Authority would tantamount to a decree and when a proclamation of sale was issued it amounted to execution of the decree.
[970F] 4 (a) The High Court was wrong in holding that since the Act was applicable to all communities in India and not merely to the Hindus, if it legislature intended to include manager of a family in the word 'borrower ', it should have said so in express terms.
There is nothing in the language of section 7 of the Loans Act to show that the borrower must always and of necessity be an individual.
If the construction suggested by the High Court is accepted it would put the joint Hindu family at disadvantage in borrowing loans under the Loans Act because the Karta of a joint Hindu family, if he has no separate property of his own, and if he cannot borrow the loan in his representative capacity, has no security to offer.
Nor would he be able to take advantage of the beneficial provision of the Act for improving the land belonging to the joint Hindu family.
[973C E] (b) Moreover there is no justification for restricting the word 'borrower ' to be an individual alone.
The Act itself contemplates joint borrowers.
A Karta of a joint Hindu family can be a borrower in his representative capacity.
[973F] Sankaran Nambudripad vs Ramaswami Ayyar, Madras 691; Chinnaswami Mudaliar vs Trimalai Pillai, Madras 572, inapplicable.
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3889.txt
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Appeal No. 255 of 1954.
Appeal by Special Leave from the judgment and decree dated April 29, 1953, of the former Pepsu High Court in R. section A. Nos. 57 and 130 of 1952, arising out of the judgment and decree dated March 8, 1952, of the Court of Addl.
Judge, Faridkot, in Civil Appeal No. 10 of 1952, against the judgment and decree dated December 4, 1951, of the Court of `ubJudge 11 Class, Faridkot, in File No. 13 of 1951.
Jagan Nath Kaushal and K. L. Mehta, for the appellant.
Kapur Chand Puri and Tarachand Brijmohan Lal, for respondents Nos. 1 to 3. 1958.
May 20.
The Judgment of the Court was delivered by SUBBA RAO J.
This appeal by Special Leave against the judgment and decree of the High Court of Patiala and East Punjab States Union raises an interesting question pertaining to the Law of Preemption.
881 The material facts are not in dispute and may be briefly stated: The dispute relates to a land measuring 179 kanals and 2 marlas, situate in village Wanderjatana.
On August 26, 1949, defendants 3 to 7 sold the said land to defendants I and 2 for a consideration of Rs. 37,611.
On August 26, 1950, defendants 8 to 11 instituted a suit, Suit No. 231 of 1950 (Exhibit P. 26/1) in the Court of the Subordinate Judge, 11 Class, Faridkot, to pre empt the said sale on the ground, among others, that they bad a right of preemption.
On January 6, 1951, the vendees, i. e., defendants I and 2, and the plaintiffs therein, i. e., defendants 8 to 11 (appellants in the present appeal), entered into a compromise.
Under the terms of the compromise, the vendees admitted that they had received Rs. 1,700 from defendants 8 to II and that defendants 8 to 1 1 agreed to pay the balance of the consideration, amounting to Rs. 35,911 on the 27th April, 1951,.
It was further agreed that on the payment of the said amount, they should get possession through Court.
As the amount agreed to be paid was in excess of the pecuniary jurisdiction of the Court of the Subordinate Judge, they filed the compromise deed in the Court of the District Judge and on the basis of the said compromise, the District Judge made a decree dated January 23, 1951.
It was provided in the decree that in case defendants 8 to I I failed to pay the balance to the vendees on April 27, 1951, the suit should stand dismissed and that if the said balance was paid on that date, the vendees should deliver possession of the land in dispute to them.
Defendants 8 to 11 deposited the balance of Rs. 35,911 on April 23, 1.951, and got possession of the land on May 17, 1951.
Before the said defendants (8 to 11) deposited the amount in Court under the terms of the compromise decree, the resondents herein, claiming to be owners of land in the same patti, filed Suit No. 13 of 1951 in the Court of the Subordinate Judge, 11 Class, Faridkot, to enforce their right of pre emption.
To that suit the original vendors were impleaded as defendants 3 to 7, the vendees as defendants I and 2 and the plaintiffs in Suit No. 231 of 1950 as defendants 8 to 11.
882 Defendants 8 to 11 contested the suit, inter alia, on the grounds that the plaintiffs had no right of preemption superior to that of theirs, that the suit was barred by limitation and that the whole of the sale consideration had been fixed in good faith and paid.
The learned Subordinate Judge found all the issues in favour of defendants 8 to 11 and dismissed the suit.
On the main issue he found that the said defendants, by obtaining a decree for pre emption before the rival claimants had filed their suit, had become vendees through Court and so the plaintiffs could not succeed unless they had a superior right.
The plaintiffs preferred an appeal to.
the Additionl District Judge, Faridkot, against the said decree.
The District Judge held that the plaintiffs and defendants 8 to 11 had equal rights of pre emption and were entitled to share the sale in the proportion of 3/7 and 4/7 respectively on payment of the proportionate amount of the consideration.
On the main question, he took the view that defendants 8 to 11 did not exercise their right of pre emption when the present suit was instituted for the reason that by the date of the filing of the suit they had not deposited the purchase money in Court.
Both the parties filed Second Appeals against the decision of the District Judge in the High Court of Patiala questioning that part of the decree which went against them.
The High Court upheld that part of the decree of the learned District Judge holding that the plaintiffs were entitled to a share in the suit property but remanded the suit to the District Judge to give his findings on the following two questions: (1) What was the amount paid by defendants 8 to 11 to the original vendees and whether they paid it in good faith; (2) Whether the case would come under section 17C, cl.
(e) of the Punjab Pre emption Act (hereinafter to be referred to as the Act).
As the High Court refused to certify that the case was a fit one for appeal to the Supreme Court, defendants 8 to 11 preferred the above appeal by obtaining special leave of this Court.
The learned Counsel for the appellants raises the following two contentions before us: (1) Section 28 of 883 the Pre emption Act indicates that a property can be divided between equal pre emptors in terms of section 17 of the Pre emption Act only when both the suits are pending before the Court at the time of the passing of the decree ; (2) the appellants exercised their right of pre emption by obtaining a decree or at any rate when they deposited the money payable under the decree and thereby got themselves substituted in place of the original vendees and thereafter, the plaintiff 's can succeed only by proving their superior right to them.
The learned Counsel for the respondents countered the aforesaid argument by stating that the plaintiffs, being pre emptors of equal degree, have got a statutory right under section 17 of the Pre emption Act to share the land with the appellants, and the appellants, having been substituted in place of the original vendees pendente lite, are hit by the doctrine of lis _pendens and therefore, they cannot claim higher rights than those possessed by the original vendees at the time of the filing of the suit.
Before attempting to give a satisfactory answered to the question raised, it would be convenient at the outset to notice and define the material incidents of the right of pre emption.
A concise but lucid statement of the law is given by Plowden J. in Dhani Nath vs Budhu (1) thus: A preferential right to acquire land, belonging to another person upon the occasion of a transfer by the latter, does not appear to me to be either a right to or a right in that land.
It is,jus ad rem aliens acquirendum and not a jus ? 'In re aliena. .
A right to the offer of a thing about to be sold is not identical with a right to the thing itself, and that is the primary right of the pre emptor.
The secondary right is to follow the thing sold, when sold without the proper offer to the pre emptor, and to acquire it, if he thinks fit, in spite of the sale, made in disregard of his preferential right." The aforesaid passage indicates that a pre emptor has two rights: (1) inherent or primary right, i.e., a right (1)136 P. R. 1894 at p. 5ii.
884 to the offer of a thing about to be sold and (2) secondary or remedial right to follow the thing sold.
Mahmood J. in his classic judgment in Gobind Dayal vs Inayatullah (1) explained the scope of the secondary right in the following terms: " It (right of pre emption) is simply a right of sub stitution, entitling the pre emptor, by means of a legal incident to which sale itself was subject, to stand in the shoes of the vendee in respect of all the rights and obligations arising from the sale, under which lie, derived his title.
It is, in effect, as if in a sale deed the vendee 's name were rubbed out and pre emptor 's name inserted in its place".
The doctrine adumbrated by the learned Judge, namely, the secondary right of pre emption is simply a right of substitution in place of the original vendee, has been accepted and followed by subsequent decisions.
The general law of pre emption does not recognize any right to claim a share in the property sold when there are rival claimants.
It is well established that the right of pre emption is a right to acquire the whole of the property sold in preference to other persons (See Mool Chand vs Ganga Jal (2)).
The plaintiff is bound to show not only that his right is as good as that of the vendee but that it is superior to that of the vendee.
Decided cases have recognized that this superior right must subsist at the time the pre emptor exercises his right and that that right is lost if by that time another person with equal or superior right has been substituted in place of the original vendee.
Courts have not looked upon this right with great favour, presumably, for the reason that it operates as a clog on the right of the owner to alienate his property.
The vendor and the vendeeire, therefore, permitted to avoid accrual of the right of pre emption by all lawful means.
The vendee may defeat the right by selling the property to a rival pre emptor with preferential or equal right.
To summarize: (1) The right of pre emption is not a right to the thing sold but a right to the offer of a thing about to be sold.
(i) All. 775, 809.
(2) Lah.
258, 273.
885 This right is called the primary or inherent right.
(2) The pre emptor has a secondary right or a remedial right to follow the thing sold.
(3) It is a right of substitution but not of re purchase, i. e., the pre emptor takes the entire bargain and steps into the shoes of the original vendee.
(4) It is a right to acquire the whole of the property sold and not a share of the property sold.
(5) Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place.
(6) The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place.
The next question is whether this right is modified or otherwise enlarged by the ' provisions of the Act.
Relevant provisions of the Act, material to the present purpose, read thus: Section 4: " The right of pre emption shall mean the right of a person to acquire agricultural land or village immovable property or urban immovable property in preference to other persons, and it arises in respect of such land only in the case of sales and in respect of such property only in the case of sales or of foreclosures of the right to redeem such property".
Section 13: " Whenever according to the provisions of this Act, a right of pre emption vests in any class or group of persons the right may be exercised by all the members of such class or group joint, and, if not exercised by them all jointly, by any two or more of them jointly, and, if not exercised by any two or more of them jointly, by them severally".
Section 17: " Where several pre emptors are found by the Court to be equally entitled to the right of preemption, the said right shall be exercised, (a)if they claim as co shares, in proportion among themselves to the shares they already hold in the land or property ; (b)if they claim as heirs, whether co sharers or not, in proportion among themselves to the shares in which but for such sale, they would inherit the land or property in the event of the vendor 's decease without other heirs; 886 (c)if they claim as owners of the estate or recognised subdivision thereof, in proportion among themselves to the shares which they would take if the land or property were common land in the estate or the subdivision, as the case may be; (d)if they claim as occupancy tenants, in proportion among themselves to the areas respectively held by them in occupancy right; (e)in any other case, by such pre emptors in equal shares.
" Section 19: " When any person proposes to sell any agricultural land or village immovable property or urban immovable property or to foreclose the right to redeem any village immovable property or urban immovable property, in respect of which any persons have a right of preemption, lie may give notice to all such persons of the price at which he is willing to sell such land or property or of the amount due in respect of the mortgage, as the case may be.
Such notice shall be given through any Court within the local limits of whose jurisdiction such land or property or any part thereof is situate, and shall be deemed sufficiently given if it be stuck up on the chaupal or other public place of the village, town or place in which the land or property is situate.
" Section 20: " The right of pre emption of any person shall be extinguished unless such person shall, within the period of three months from the date on which the notice tinder section 19 is duly given or within such further period not exceeding one year from such date as the court may allow, present to the Court a notice for service on the vendor or mortgagee of his intention to enforce his right of pre emption.
Such notice shall state whether the preemptor accepts the price or amount due on the footing of the mortgage as correct or not, and if not, what sum he is willing to pay." " When the Court is satisfied that tile said notice has been duly served on the vendor or mortgagee the proceedings shall be filed.
" Section 28: " When more suits than one arising out of the same sale or foreclosure are pending the plaintiff 887 in each suit shall be joined as defendant in each of the other suits, and in deciding the suits the court shall in each decree state the order in which each claimant is entitled to exercise his right".
The Act defines the right and provides a procedure for enforcing that right.
It does not enlarge the content of that right or introduce any change in the incidents of that right.
Section 4 embodies the preexisting law by defining the right as a right of a person to acquire land in preference to other persons in respect of ,ales of agricultural lands.
Section 13 cannot be read, as we are asked to do, as a statutory recognition of a right of preemptors of equal degree to exercise their rights piece meal confined to their shares in the land.
Section 13 confers on a group of persons, in whom the right of preemption vests, to exercise that right either jointly or severally, that is to say, either the group of persons or one of them may enforce the right in respect of the entire sale.
Section 17 regulates the distribution of preempted land when the Court finds that several pre emptors are equally entitled to the right of pre emption.
But this Section applies only where (1) the right is yet to be exercised and (2) the pre emptors are found by the Court to be equally entitled to exercise the right.
The section does not confer the right on or against a person, who has already exercised the right and ceased to be a preemptor by his being legitimately substituted in place of the original vendee.
(See Mool Chand vs ganga Jal (1) at p. 274 and Lokha Singh vs Sermukh Singh (2)).
Sections 19 and 20 prescribe the procedure for the exercise of the primary right, while section 28 confers a power on the Court to join together two or more suits arising out of the same sale, so that suitable directions may be given in the decree in regard to the order in which each claimant is entitled to exercise the right.
This section is enacted presumably to avoid conflict of decisions and finally determine the rights of the various claimants.
The aforesaid provisions do not materially affect the characteristics of the right of pre (1) Lah.
113 (2) A.I.R. 1952 Punj.
206, 207.
888 emption as existed before the Act.
They provide a convenient and effective procedure for disposing of together different suits, arising out of the same transaction, to avoid conflict of decisions, to fix the order of priority for the exercise of their rights and also to regulate the distribution of the preempted land between rival pre emptors.
The provisions do not in any way enable the preemptor to exercise his right without establishing his superior right over the vendee or the person substituted in his place or to prevent the vendor or the vendee, by legitimate means, to defeat his right by getting substituted in place of the vendee a pre emptor with a superior right to or an equal right with that of the plaintiff.
Nor can we accept the argument of the learned counsel for the appellants that section 28 precludes the Court from giving a decree for pre emption in a case where the two suits were not joined together but one of the suits was decreed separately.
Section 28 enacts a convenient procedure, but it cannot affect the substantative rights of the parties.
We do not see that, if the plaintiffs were entitled to a right of pre emption, they would have lost it by the appellants obtaining a decree before the plaintiffs instituted the suit, unless it be held that the decree itself had the effect of substituting them in place of the original vendees.
We cannot, therefore, hold that the plaintiffs ' suit is in any way barred under the provisions of the Act.
This leads us to the main question in this case, namely, whether the appellants having obtained a consent decree oil January 23, 1951, in their suit against the vendees and having paid the amount due under the decree and having taken delivery of the property and thus having got themselves substituted in place of the original vendees, can legitimately defeat the rights of the plaintiffs, who, by reason of the aforesaid substitution, were only in the position of pre emptors of equal degree vis a vis the appellants and therefore ceased to have any superior rights.
The learned Counsel for the respondents contends that the appellants are hit by the doctrine of lis pendens and 889 therefore the act of substitution, which was effected on April 23, 1951, could not be in derogation of their right of pre emption, which they have exercised by filing their suit on February 15, 1951.
It is now settled law in the Punjab that the rule of lis pendens is as much applicable to a suit to enforce the right of pre emption as to any other suit.
The principle on which the doctrine rests is explained in the leading case of Bellami vs Sabine (1), where the Lord Chancellor said that pendente lite neither party to the litigation can alienate. . the property so as to affect his opponent.
In other words, the law does not allow litigant parties, pending the litigation, to transfer their rights to the property in dispute so as to prejudice the other party.
As a corollary to this rule it is laid down that this principle will not affect the right existing before the suit.
The rule, with its limitations, was considered by a Full Bench of the Lahore High Court in Mool Chand vs Ganga Jal (2).
In that case, during the pendency of a pre emption suit, the vendee sold the property which was the subject matter of the litigation to a person possessing a right of pre emption equal to that of the pre emptor in recognition of that person 's right of pre emption.
This re sale took place before the expiry of the period of limitation for instituting a pre emption suit with respect to the original sale.
The Full Bench held that the doctrine of lis pendens applied to preemption suits; but in that case, the resale in question did not conflict with the doctrine of lis pendens.
Bhide J. gave the reason for the said conclusion at page 272 thus: " All that the vendee does in such a case is to take the bargain in the assertion of his pre existing pre emptive right, and hence the sale does not offend against the doctrine of lis pendens ".
Another Full Bench of the Lahore High Court accepted and followed the aforesaid doctrine in Mt. Sant Kaur vs Teja Singh (3).
In that case, pending the suit for pre emption, the vendee sold the land purchased (i) ; ; (2) Lah. 258, 273.
(3) I.L.R. [1946] Lah.
467, 890 by him to a person in recognition of a superior right of pre emption.
Thereafter, the second purchaser was brought onrecord and was added as a defendant to the suit.
At the time of the purchase by the person having a superior right of pre emption, his right to enforce it was barred by limitation.
The ]High Court held that that circumstance made a difference in the application of the rule of lis pendens.
The distinction between the two categories of cases was brought out in bold relief at page 145 thus: " Where the subsequent vendee has still the means of coercing, by means of legal action, the original vendee into surrendering the bargain in his favour, a surrender as a result of a private treaty, and out of Court, in recognition of the right to compel such surrender by means of a suit cannot properly be regarded as a voluntary transfer so as to attract the application of the rule of lis pendens.
The correct way to look at the matter, in a case of this kind, is to regard the subsequent transferee as having simply been substituted for the vendee in the original bargain of sale.
He can defend the suit on all the pleas which he could have taken had the sale been initially in his own favour. " " However, where the subsequent transferee has lost the means of making use of the coercive machinery of the law to compel the vendee to surrender the original bargain to him, a re transfer of the property in the former 's favour cannot be looked upon as anything more than a voluntary transfer in the former 's favour of such title as he had himself acquired under the original sale.
Such transfer has not the effect of substituting the subsequent transferee in place of the vendee in the original bargain.
Such a transferee takes the property only subject to the result of the suit.
Even if lie is impleaded as a defendant in such suit, he cannot be regarded as anything more than a representative in interest of the original vendee, having no right to defend the suit except on the pleas that were open to such vendee himself ".
This case, therefore, expressly introduces a new element in the applicability of the doctrine of lis pendens 891 to a suit to enforce the pre emptive right.
If the right of the pre emptor of a superior or equal degree was subsisting and enforceable by coercive process or otherwise, his purchase would be considered to be in exercise of that pre existing right and therefore not hit by the doctrine of lis pendens.
On the other hand, if he purchased the land from the original vendee after his superior or equal right to enforce the right of preemption was barred by Limitation, he would only be in the position of a representative in interest of the vendee, or to put it in other words, if his right is barred by limitation, it would be treated as a non existing right.
Much to the same effect was the decision of another Full Bench of the Lahore High Court in Mohammad Sadiq vs Ghasi Ram (1).
There, before the institution of the suit for pre emption, an agreement to sell the property had been executed by the vendee in favour of another prospective pre emptor with an equal degree of right of pre emption; subsequent to the institution of the suit, in pursuance of the agreement, a sale deed had been executed and registered in the latter 's favour, after the expiry of the limitation for a suit to enforce his own pre emptive right.
The Full Bench held that the doctrine of lis pendens applied to the case.
The principle underlying this decision is the same as that in Mt. Sant Kaur vs Te a Singh (2), where the barred right was treated as a non existent right.
The same view was restated by another Full Bench of the East Punjab High Court in Wazir Ali Khan vs Zahir Ahmad Khan (3).
At p. 195, the learned Judges observed: " It is settled law that unless a transfer pendente lite can be held to be a transfer in recognition of a subsisting pre emptive right, the rule of lis pendens applies and the transferee takes the property subject to the result of the suit during the pendency where of it took place".
The Allahabad High Court has applied the doctrine of lis pendens to a suit for pre emption ignoring the limitation implicit in the doctrine that it cannot affect (i) A.I.R. 1946 Lah.
(2) I.L.R. , (3) A.I.R. [1949 East Punj.
[93. 892 a pre existing right.
(See Kundan Lal vs Amar Singh (1)).
We accept the view expressed by the Lahore High Court and East Punjab High Court in preference to that of the Allahabad High Court.
In view of the aforesaid four Full Bench decisions three of the Lahore High Court and the fourth of the East Punjab High Court a further consideration of the case is unnecessary.
The settled law in the Punjab may be summarized thus: The doctrine of lis pendens applies only to a transfer pendente lite, but it cannot affect a pre existing right.
If the sale is a transfer in recognition of a pre existing and subsisting right, it would not be affected by the doctrine, as the said transfer did not create now right pendente lite ; but if the pre existing right became unenforceable by reason of the fact of limitation or otherwise, the transfer, though ostensibly made in recognition of such a right, in fact created only a new right pendente lite.
Even so, it is contended that the right of the appellants to enforce their right of pre emption was barred by limitation at the time of the transfer in their favour and therefore the transfer would be hit by the doctrine of lis pendens.
This argument ignores the admitted facts of the case.
The material facts may be recapitulated: Defendants 3 to 7 sold the land in dispute to defendants 1 and 2 on August 26, 1949, and the sale deed was registered on February 15, 1950.
The appellants instituted their suit to pre empt the said sale on August 26, 1950, and obtained a compromise decree on January 23, 195 1.
They deposited the balance of the amount payable on April 23, 1951, and took possession of the land on May 17, 1951.
It would be seen from the aforesaid facts that the appellants ' right of pre emption was clearly subsisting at the time when the appellants deposited the amount and took possession of the land, for they not only filed the suit but obtained a decree therein and complied with the terms of the decree within the time prescribed thereunder.
The coercive process was still in operation.
if so, it follows that the appellants are not hit by the (i)A.I.R. 1927 All.
VI 893 doctrine of lis pendens and they acquired an indefeasible right to the suit land, at any rate, when they took possession of the land pursuant to the terms of the decree, after depositing in Court the balance of the amount due to the vendors.
We shall briefly touch upon another argument of the learned Counsel for the appellants, namely, that the compromise decree obtained by them, whereunder their right of pre emption was recognized, clothed them with the title to the property so as to deprive the plaintiffs of the equal right of pre emption.
The right of pre emption can be effectively exercised or enforced only when the pre emptor has been sub stituted by the vendee in the original bargain of sale.
A conditional decree, such as that with which we are concerned, whereunder a pre emptor gets possession only if he pays a specified amount within a prescribed time and which also provides for the dismissal of the suit in case the condition is not complied with, cannot obviously bring about the substitution of the decreeholder in place of the vendee before the condition is complied with.
Such a substitution takes effect only when the decree holder complies with the condition and takes possession of the land.
The decision of the Judicial Committee in Deonandan Prashad Singh vs Ramdhari Chowdhri (1) throws considerable light on the question whether in similar circumstances the pre emptor can be deemed to have been substituted in the place of the original vendee.
There the Subordinate Judge made a pre emption decree under which the pre emptors were in possession from 1900 to 1904, when the decree was reversed by the High Court and the original purchaser regained possession and in 1908, the Privy Council, upon further appeal, declared the pre emptors ' right to purchase, but at a higher price than decreed by the Subordinate Judge.
In 1909 the pre eimptors paid the additional price and thereupon again obtained possession.
The question arose whether the pre emptors were not entitled to mesne profits for the period between 1904 to 1909, i.e., during the period the judg (i)(1916) L. R. 44 1.
A. 80.
894 ment of the first appellate Court was in force.
The Privy Council held that during that period the preemptors were not entitled to mesne profits.
The reason for that conclusion was stated at page 84 thus: " It therefore follows that where a suit is brought it is on payment of the purchase money on the specified date that the plaintiff obtains possession of the property, and until that time the original purchaser retains possession and is entitled to the rents and profits.
This was so held in the case of Deokinandan vs Sri Ram (1) and there Mahmud J. whose authority is well recognized by all, stated that it was only when the terms of the decree were fulfilled and enforced that the persons having the right of pre emption become owners of the property, that such ownership did not vest from the date of sale, notwithstanding success in the suit, and that the actual substitution of the owner of the pre empted property dates with possession under the decree ".
This judgment is, therefore, a, clear authority for the position that the pre emptor is not substituted in the place of the original vendee till conditions laid down in the decree are fulfilled.
We cannot, therefore, agree with the learned Counsel that the compromise decree itself perfected his clients ' right in derogation to that of the plaintiffs.
But as we have held that the appellants complied with the conditions laid down in the compromise decree, they were substituted in the place of the vendee before the present suit was disposed of.
In the aforesaid view, the other questions raised by the appellants do not arise for consideration.
In the result, the appeal is allowed and the suit is dismissed with cost, , throughout.
Appeal allowed.
(1) All.
|
Upon the sale of certain village land the appellants filed a suit for pre emption, and a compromise decree was passed allowing pre emption provided the appellants deposited the purchase amountbvacertaindate.
The appellants Posited the amount and got Possession of the land.
Before the appellants deposited 879 the amount, the respondents who were pre emptors of an equal degree, filed a suit to enforce their right of pre emption.
The appellants contended that the land could be divided between two equal pre emptors only when both the suits were pending before the court at the time of the passing of the decree, and that the appellants having obtained the decree and paid the amount got substituted in place of the vendees and the respondents could succeed only by establishing a superior right of pre emption.
The respondents countered that they had a statutory right under section 17 Of the Punjab Pre emption Act to share the land with the appellants and that the appellants, having been substituted in place of the vendees Pendente lite, were hit by the doctrine of lis pendens and could not claim a higher right than the vendees: Held, that the respondents ' suit could not succeed as they (lid not have a superior right of pre emption over the appellants who had become substituted in place of the vendees upon payment of the purchase money under their decree.
A pre emptor has two rights: (i) inherent or primary right to the offer of a thing about to be sold and (2) a secondary or remedial right to follow the thing sold.
The secondary right is simply a right of substitution in place of the original vendee.
Dhani Nath vs Budhu, 136 P. R. 1894 at P. 511 and Gobind Dayal vs Inayatullah, All. 775, followed.
In a suit for pre emption the plaintiff must show that his right is superior to that of the vendee and that it subsists at the time he exercises his right.
This right is lost if before he exercises it another person with an equal or superior right has been substituted in place of the original vendee.
The Punjab Preemption Act defines the right of pre emption and provides a procedure for enforcing it.
It does not enlarge the content of this right nor does it introduce any change in the incidents of the right.
Section 28 Of the Act does not preclude the Court from giving a decree for pre emption in a case where the suits are not joined together and one of the suits has been decreed separately.
The doctrine of lis pendens applies only to a transfer Pendente lite, but it cannot affect a pre existing right.
If the sale is a transfer in recognition of a preexisting and subsisting right, it would not be affected by the doctrine, as the transfer does not create a new right Pendente lite but if the preexisting right became unenforceable by reason of limitation or otherwise, the transfer, though ostensibly made in recognition of such a right, in fact creates only a new right pendente lite.
The appellants ' right of pre emption was subsisting and was not barred by limitation at the time of the transfer in their favour as they had filed a suit and had obtained a decree and the coercive 112 880 process was still in operation.
Consequently the appellants were not hit by the doctrine of lis pentlens and they acquired an indefeasible right to the land when they took possession of it after depositing the purchase money in court.
Mool Chand vs Ganga jal, Lah.
258, Mt. Sant Kaor vs Teja Singh, I.L.R. , Mohammad Sadhiq vs Ghasi Ram, A.I.R. 1946 Lah.
322 and Wazir Ali Khan vs Zahir Ahmad Khan, A.I.R. 1949 East Punj.
193, approved.
Kundan Lal vs Amar Singh, A.I.R. 1927 All.
664, disapproved.
The right of pre emption is effectively exercised or enforced only when the pre emptor has been substituted for the vendee.
A conditional decree whereunder the pre emptor gets possession only if he pays a specified amount within a prescribed time and which also provides for the dismissal of the suit in case the condition is not fulfilled, cannot bring about the substitution of the decree holder for the vendee before the condition is fulfilled.
Such substitution takes effect only when the decree holder fulfils the condition and takes possession of the land.
Deonandan prashad Singh vs Ramdhari Choudhyi, (1916) L. R. 44 I. A. 80, followed.
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609.txt
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Appeal No. 790 of 1957.
Appeal from the judgment and decree dated February 10, 1954, of the Allahabad High Court in Civil Misc.
Writ No. 280 of 1950.
C. B. Aggarwala, G. C. Mathur and C. P. Lal, for the appellants.
G. section Pathak and D. N. Mukherjee, for the respondent No. 1. 1960.
November 11.
The Judgment of the Court was delivered by MUDHOLKAR J.
This is an appeal by the State of Uttar Pradesh against the decision of the Full Bench of the Allahabad High Court in a writ petition.
In the writ petition the respondents challenged certain orders made by the Government of Uttar Pradesh under section 3, cl.
(b) of the United Provinces , (XXVIII of 1947) requiring the respondents to pay bonus at certain rates for the years 1947 48 and 1948 49 to their workers and also payment of retaining allowances to the skilled seasonal workmen and clerical staff.
The circumstances under which the orders were made are briefly these: 333 The Indian National Sugar Mills Workers ' Federation, Lucknow, served notices on various sugar factories in Uttar Pradesh on December 15, 1949, in which they made six demands.
We need, however, mention only one of them as that alone is in controversy in this appeal.
That demand related to the bonus for the year 1948 49 and to the restoration of the reduction which had been made in the previous year 's bonus.
By that notice the Federation threatened a strike in the industry with effect from January 16, 1960, if the demands were not met by the sugar factories.
Since this situation brought into existence an industrial dispute, the Government of Uttar Pradesh, in exercise of the power conferred by sections 6 and 10 of the , (XIV of 1947) appointed a Court of Inquiry and referred the dispute to it.
The notification also stated the points which were referred to the Court of Inquiry.
That notification was twice amended but nothing turns on those amendments.
A full enquiry was held by the Court of Inquiry at which the representatives of both the employers as well as the employees were represented and material was placed before the Court of Inquiry by both the sides.
The Court of Inquiry submitted its report to the Government on April 15, 1950.
On receipt of this report the Government of Uttar Pradesh published the report in the Uttar Pradesh gazette on May 8, 1950, as provided for in section 17 of the .
On July 5, 1950, the Government of Uttar Pradesh, in exercise of the powers conferred by section 3(b) of the Uttar Pradesh , issued a notification directing the various sugar factories to pay bonus to their workmen for the year 1948 49 as well as to pay certain amounts as bonus for the year 1947 48.
A further direction was made in the notification for payment of retaining allowance to the skilled seasonal workmen and clerical staff with effect from the off season in the year 1950.
Thereupon the Indian Sugar Millers Association, which is an Association of sugar factories in India and is registered under the Trade Union Act made a petition before the High Court at Allahabad under 334 article 226 of the Constitution for the issue of a writ against the Government of Uttar Pradesh prohibiting the Government from enforcing the notification.
The writ petition was dismissed by the High Court on September 14, 1950, on the ground that the Association had no legal interest in the matter.
Thereupon various sugar mills preferred separate writ petitions before the High Court, the respondents before us being one of them.
As many as fourteen grounds were taken on their behalf in their writ petition.
We are, however, concerned with only three of them to which Mr. G. section Pathak, who appears for the respondents confined his arguments.
Before we refer to those grounds we would complete the narration of facts.
The High Court of Allahabad allowed the writ petitions, in so far as the question of payment of bonus was concerned, though Sapru, J., one of the judges constituting the Full Bench, expressed a doubt as to the correctness of the view that the order of the State Government as regards the payment of bonus was invalid.
After the decision of the High Court, the State of Uttar Pradesh applied for a certificate under article 133(1)(b) and article 133(1)(c) of the Constitution.
The High Court having granted the certificate, the present appeal has been brought to this Court.
In order to appreciate the points raised by Mr. G. section Pathak, it is necessary to set out the provisions of section 3 of the Uttar Pradesh .
They are as follows: " If, in the opinion of the State Government, it is necessary or expedient so to do for securing the public safety or convenience, or the maintenance of public order or supplies and services essential to the life of the community, or for maintaining employment, it may, by general or special order, make provision (a) for prohibiting, subject to the provisions of the order, strikes or look outs generally, or a strike or lock out in connection with any industrial dispute; (b) for requiring employers, workmen or both to observe for such period, as may be specified in the order, such terms and conditions of employment as may be determined in accordance with the order; 335 (c) for appointing industrial courts; (cc) for appointing committees representative both of the employer and workmen for securing amity and good relations between the employer and workmen and for settling industrial disputes by conciliation; for consultation and advice on matters relating to production, organization, welfare and efficiency; (d) for referring any industrial dispute for conciliation or adjudication in the manner provided in the order ; (e) for requiring any public utility service, or any subsidiary undertaking not to close or remain closed and to work or continue to work on such conditions as may be specified in the order; (f) for exercising control over any public utility service, or any subsidiary undertaking, by authorising any person (hereinafter referred to as an authorised controller) to exercise, with respect to such service, undertaking or part thereof such functions of control as may be specified in the order; and, on the making of such order the service, undertaking or part thereof such functions of control as may be specified in the order; and, on the making of such order the service, undertaking or part, as the case may be, shall so long as the order continues to be carried on in accordance with any directions given by the authorised controller in accordance with the provisions of the order and every person having any functions of management of such service, undertaking or part thereof shall comply with such directions; (g) for any incidental or supplementary matters which appear to the State Government necessary or expedient for the purposes of the order: Provided that no order made under clause (b) (i) shall require an employer to observe terms and conditions of employment less favourable to the workmen than those which were applicable to them at any time within three months preceding the date of the order; (ii) shall, if an industrial dispute is referred for adjudication under clause (d), be enforced after the decision of the adjudicating authority is announced be or with the consent of, the State Government.
" 336 The view taken by the High Court was that clause (b) of section 3 of the Uttar Pradesh , is prospective in operation in that thereunder it is open to the State Government to ask an employer or an employee to observe a term or a condition of employment in future and that consequently it is not competent thereunder to require an employer to pay bonus to workmen in respect of a period of employment which is already past.
The view of the High Court was challenged before us on behalf of the State.
According to the State the provisions of the aforesaid clause are wide enough to permit the making of such a direction to the employer because by doing so the State Government would only be imposing a condition of employment in future.
In answer to this contention Mr. Pathak has, as already stated, raised three points and they are as follows: (1) Clause (b) of section 3 does not operate retrospectively and must be construed as having a prospective operation only.
(2) This clause does not apply at all where an industrial dispute has arisen and that the appropriate provision under which the State Government can take action where an industrial dispute has arisen is cl.
(3) If cl.
(b) is susceptible of the interpretation that it is applicable even when an industrial dispute has arisen then it is ultra vires in as much as it would enable the State Government to discriminate between an industry and an industry or an industrial unit and another industrial unit or between a workman and a workman by referring some cases for adjudication to an industrial court under cl.
(d) and passing executive order itself in respect of others.
The provisions of cl.
(b), according to him, are violative of article 14 of the Constitution.
Further, according to him, they are also violative of the provisions of article 19(1)(g) of the Constitution in as much as they confer an arbitrary power on the State Government to require an employer to pay whatever it thinks fit to an employee and thus place an unreasonable restriction on the rights of the employer to carry on his business.
337 We entirely agree with the learned judges of the Allahabad High Court that cl.
(b) of section 3 cannot be given a retrospective effect.
But we are unable to agree with them that the State Government in making a direction to the employers to pay bonus for the years in question purported to give a retrospective operation to the provisions of that clause.
The order made by the State Government in regard to bonus is to the effect that it shall be paid for the year 1947 48 to those persons who worked during that year and for the year 1948 49 to those persons who worked in that year.
This payment was directed to be made within six weeks of the making of the order.
By giving this direction the State Government did no more than attach a condition to the employment of workmen in the year 1950 51 in sugar factories affected by the order.
That is all that it has done.
Mr. Pathak contended that bonus has certain attributes of a wage and wage being a matter of contract can only be a term of employment agreed to between the employer and the employee but could not be a condition of employment which could be imposed by a statute or which could be imposed by a Government acting under a statute.
We agree that normally wage is a term of contract but it would be futile to say that it cannot be made a condition of employment.
The Minimum Wages Act provides for the fixation of a statutory minimum wage payable to a worker in respect of certain types of employments and is an instance of wage being made a condition of employment.
That apart, whether wage or bonus is a term of a contract or a condition of employment it is clear that section 3 empowers the State Government to require the employers and workmen or both to observe any term or condition of employment for a specified period.
Since the law enables the State Government to impose a term it is apparent that the legislature which enacted that law did not import into that word a con.
sensual sense.
We cannot, therefore, accept the argument that under cl.
(b) it was not open to the State Government to make the payment of bonus to 338 workmen a condition of their employment in future and thus augment their past wages.
Mr. Pathak then referred to the following observations in the judgment of Bhargava, J. s " Obviously there can be no question of requiring any one to observe for a future period terms and conditions of employment which have already remained effective and have already been carried out by those persons ".
According to Mr. Pathak the effect of the order of the Government is to add a new term or a condition with regard to employment for a period which is already over.
We would again point out that this is not the effect of the order of the Government.
The effect of that order is merely to require the employer to pay an additional sum of money to his employees as a term and condition of work in future.
Mr. Pathak, however, said that this would involve payment of bonus even to new employees, that is, those who had not participated in earning the profits in the past and that this would be contrary to the very conception of bonus.
The answer to that is that under the order of the Government such bonus is payable only to those workers who had worked during the years in question and not to new employees.
It is further to be borne in mind that in the dispute in question the employees were bargaining in their collective capacity and, therefore, the question whether the personnel forming the employees of the factories in July, 1950, when the order was made by the Government, and in the years 1947 48 and 1948 49 to which the dispute relates was the same is quite immaterial.
As has been rightly pointed out by Sapru, J., " The employees might well have taken in the industrial dispute the line that the payment of bonus in respect of the years 1947 48 and 1948 49 to the workmen employed in those years was regarded by those who were employed in future as a preliminary and essential condition for not only the settlement of the industrial dispute in progress but also for carrying on their future work in sugar factories ".
We also concur with the observations of the learned judge that by coming 339 conceded the State Government was not passing an order which will have retrospective effect but was passing an order which was to ensure that the work.
men to be employed in the year 1950 would work in a contented manner.
It must not be forgotten that the dispute was in the present, that is, it existed when the impugned order was made, though its origin was in the past.
What the order did was to resolve that dispute and this it could only do by removing its cause.
Mr. Pathak then relied upon the following observations of Bhargava, J., in L. D. Sugar Mills vs U. P. Government (1): " The expression 1 to observe for such period as may be specified, such terms and conditions of employment as may be determined ' gives an indication that clause (b) of section 3 of the U. P. , is meant for the purpose of passing orders by which the Government gives directions about what the terms and conditions of employment should be and not how a particular term and condition of employment already in existence should be acted upon.
" Bhargava, J. 's decision was, however, reversed in Ram Nath Koeri and Another vs Lakshmi Devi Sugar Mills and Ors.
(2) by a division bench of the Allahabad High Court in Letters Patent Appeal brought against Bhargava, J. 's decision.
We agree with the view taken by the Appellate Bench.
In our opinion, therefore, there is nothing in cl.
(b) of section 3 of the Act which prohibited the State Government from making a direction to the sugar factories with regard to the payment of bonus for the years 1947 48 and 1948 49 in their order of July 7, 1950 and that by making such a direction the State Government was not giving a retrospective effect to the provisions of that clause.
In this connection it is relevant to remember that any direction as to payment of bonus must inevitably be based on the available surplus, and such surplus can be determined only at the end of a given year.
Therefore, what the impugned (1) A.I.R. 1954 All. 705, 714.
(2) (1956) II L. L. J. 11.
340 order purports to do is to require the employers to pay specified amounts in future, though the said ,amounts are fixed by reference to the profits made in the two preceding years.
If a direction as to payment ;of bonus can be issued under section 3(b) it cannot, therefore, be said to be retrospective.
The next argument of Mr. Pathak appears, at first sight, to be more formidable.
He points out that undoubtedly an industrial dispute had arisen, and indeed it is upon that basis that the State Government proceeded to appoint a Court of Inquiry.
Therefore, according to Mr. Pathak resort could be taken by the State Government only to the special provisions of cl.
(d) and not to the more general provisions of cl.
(b) of section 3.
In other words, where there is an industrial dispute, the appropriate thing for the Government to do is to refer it for conciliation or adjudication under the provisions of cl.
(d) and not to deal with the matter by an executive order as it has done in this case.
Mr. Pathak then refers to a further passage from the judgment of Bhargava, J., just cited which is as follows: " It appears from the language that this provision was not meant for the purpose of dealing with individual disputes arising out of the application of a term or condition of employment and no power was granted to the State Government under this provision of law, to sit as an adjudicator to decide a dispute that might have arisen relating to the working and actual application of terms and conditions of employment already in force.
The provision was for the purpose of enabling the State Government to vary the agreed terms and conditions of employment for purposes specified in a. 3 of U. P. , under the pressing necessities or expediency justifying such course of action.
" We entirely agree with Mr. Pathak that the normal way of dealing with an industrial dispute under the Act would be to have it dealt with judicially either by conciliation or by adjudication and that judicial process cannot be circumvented by resort to executive action.
The proceeding before a conciliator or an 341 adjudicator is, in a sense, a judicial proceeding because therein both the parties to the dispute would have the opportunity of being heard and of placing the relevant material before the conciliator or adjudicator.
But there may be an emergency and the Government may have to act promptly " for securing the public safety or convenience or the.
maintenance of public order or supplies and services essential to the life of the community or maintaining employment.
" It was, therefore, necessary to arm it with additional powers for dealing with such an emergency.
Clause (b) of section 3 was apparently enacted for this purpose.
An order made thereunder would be in the nature of a tempor ary or interim order as would be clear from the words " for such period as may be specified " appearing therein and from the second proviso to section 3.
Under this proviso where an industrial dispute is referred for adjudication under cl.
(d) an order made under cl.
(b) cannot be enforced after the decision of the adjudicating authority is announced by or with the consent of the State Government.
It would, therefore, follow from this that where the Government has made an executive order, as it did in this case, under cl.
(b) of section 3, it is open to the aggrieved party to move the Government to refer the industrial dispute for conciliation or adjudication under cl.
(d) of section 3.
Mr. Pathak, however, stated that under this section, the Government has a discretion whether or not to refer a dispute for conciliation or adjudication under cl.
But in our opinion where once the Government has acted under cl.
(b) on the ground that it was in the public interest to do so, it would not be open to the Government to refuse to refer the dispute under cl.
(d) for conciliation or adjudication.
Mr. C. B. Agarwal, who appeared for the State of Uttar Pradesh conceded, and we think rightly, that this would be so and added that in case the State Government was recalcitrant it could be forced to do its duty by the issue of a writ of mandamus by the High Court under article 226 of the Constitution.
There is a further argument of Mr. Pathak which must be noticed and that argument is that there is 342 nothing in cl.
(b) which limits its operation to an emergency and that it is, therefore, not open to us to place a construction thereon of the kind we are placing.
The opening words of section 3 themselves indicate that the provisions thereof are to be availed of in an emergency.
It is true that even a reference to an arbitrator or a conciliator could be made only if there is an emergency.
But then an emergency may be acute.
Such an emergency may necessitate the exercise of powers under cl.
(b) and a mere resort to those under cl.
(d) may be inadequate to meet this situation.
Whether to resort to one provision or other must depend upon the subjective satisfaction of the State Government upon which powers to act under section 3 have been conferred by the legislature.
No doubt, this result is arrived at by placing a particular construction on the provisions of that section but we think we are justified in doing so.
As Mr. Pathak himself suggested in the course of his arguments, we must try and construe a statute in such a way, where it is possible to so construe it, as to obviate a conflict between its various provisions and also so as to render the statute or any of its provisions constitutional.
By limiting the operation of the provisions of cl.
(b) to an emergency we do not think that we are doing violence to the language used by the legislature.
Further, assuming that the width of the language could not be limited by construction it can be said that after the coming into force of the Constitution the provisions can, by virtue of article 13, have only a limited effect as stated above and to the extent that they are inconsistent with the Constitution, they have been rendered void.
In our view, therefore, the provisions of cl.
(b) of section 3 are not in any sense alternative to those of cl.
(d) and that the former could be availed of by the State Government only in an emergency and as a temporary measure.
The right of the employer or the employee to require the dispute to be referred for conciliation or adjudication would still be there and could be exercised by them by taking appropriate steps.
Upon the construction we place on the 343 provisions of cl.
(b) of section 3 it is clear that no question of discrimination at all arises.
Similarly the fact that action was taken by the Government in an emergency in the public interest would be a complete answer to the argument that that action is violative of the pro visions of article 19(1)(g).
The restriction placed upon the employer by such an order is only a temporary one and having been placed in the public interest would fall under cl.
(6) of article 19 of, the Constitution.
Upon this view we hold that the High Court was in error in issuing a writ against the State Government quashing their order in so far as it related to payment of bonus.
The appeal is allowed and order of the High Court is set aside.
Costs of this appeal will be paid by the respondents.
Appeal allowed.
|
The Government of U. P. appointed a Court of enquiry under sections 6 and 10 of the United Provinces , and referred to it the present dispute.
The Court of enquiry submitted its report to the Government, whereupon the Government issued a notification in July, 1950, directing the various sugar factories to pay bonus to their workmen for the years 1948 49 as well as to pay certain amounts as bonus for the years 1947 48.
331 Court against the Government, prohibiting it from enforcing the notification.
The State Government came up in appeal, urging, that the provisions of cl.
(b) of section 3 of the United Provinces , were wide enough to permit it to issue such a direction to the employer because by doing so the State Government would be imposing a condition of employment in future.
The respondents, inter alia, contended that (1) clause (b) of section 3 of the Act does not operate retrospectively ; (2) bonus could only be a term of employment by agreement and could not be imposed by statute ; (3) where there was an industrial dispute cl.
(d) and not cl.
(b) of section 3 of the Act would apply and (4) if cl.
(b) was applicable it was ultra vires being discriminatory and violative of article 14 of the Constitution and also violative of article 19(i) of the Constitution as it confers arbitrary powers on the State Government.
Held, that (i) though cl.
(b) of section 3 of the United Provinces , could not be given a retrospective effect, yet there was nothing therein which prohibited the State Government from giving a direction with regard to the payment of bonus and by giving such a direction the State Government was not giving retrospective effect to the provisions of that clause nor did it add a new term or a condition for a period which was over, it merely required the employer to pay an additional sum of money to their employees as a term and condition of employment in future; (ii) though normally wage is a term of contract it can be made a condition of employment by statute, and it was open to the State Government under cl.
(b) of section 3 to make the payment of bonus to workmen a condition of their employment in future; (iii) where the employees bargained in their collective capacity, the fact that the personnel of the factory when the order for the payment of bonus was made by the Government and in the year to which dispute related were not the same, did not affect the power of the Government as the order would apply only to those employees who had worked during the period in question and not to new employees ; (iv) the normal way of dealing with an industrial dispute would be to have it dealt with judicially and not by resort to executive action, but cl.
(b) of section 3 empowers the Government to act promptly in case of an emergency and arms it with additional powers to deal with such an emergency in the public interest; (v) when the Government had made an executive or per under cl.
(b) of section 3 on the ground that it was in the public interest to do so it was open to the aggrieved party to move the Government to refer the industrial dispute for conciliation or adjudication under cl.
(b) of section 3 of the Act.
332 (vi) the provisions of cl.
(b) of section 3 are not in any sense alternative to those of cl.
(d) and the former could be availed of by the State Government only in an emergency and as a temporary measure.
The right of the employer or the employee to require the dispute to be referred for conciliation or adjudication would still be there and could be exercised by them by taking appropriate steps; (vii) clause (b) of section 3 of the Act is not violative of the provisions of article 19(1)(g) of the Constitution as it permits action to be taken thereunder by the Government only in an emergency and in the public interest.
The restriction placed upon the employer is only a temporary one and having been placed in the public interest falls under cl.
(6) of article 19 of the Constitution.
Ram Nath Koeri and Anr.
vs Lakshmi Devi Sugar Mills and Ors., , approved.
L. D. Mills vs U. P. Government, A.I.R. 1954 All. 705, overruled.
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991.txt
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il Appeal No. 1062 of 1963.
Appeal by special leave from the judgment and order dated September 25, 1962, of the Assam High Court in Civil Rule No. 221 of 1962.
G. section Pathak and Naunit Lal, for the appellants.
M. K. Ramamurthy, for respondent No. 1.
The Judgment of the Court was delivered by Wanchoo J.
This is an appeal by special leave against the judgment of the Assam High Court.
Shri Ajit Kumar Sharma (hereinafter referred to as the respondent) is a teacher in the Handique Girls College (hereinafter referred to as the College) at Gauhati.
He filed a writ petition in the High Court on the following averments.
This is a private college teaching up to B.A. standard and affiliated to the Gauhati University established under the Gauhati University Act, No. 16 of 1947, (hereinafter referred to as the Act).
The College is managed by a Governing Body according to the provisions of the Statute for the management of private colleges framed by the Gauhati University under section 21 (g) of the Act.
Under section 23 (h) of the Act, the Executive Council may frame Ordinances to provide for the emoluments and conditions of service of teachers of the University, including teachers in private colleges.
The University has in 'Pursuance of the powers so conferred on it framed rules for the grant of leave to teachers of private colleges which are binding on the Governing Bodies of such colleges, and had actually been adopted by the Governing Body of the College in July 1956 for its teachers.
Under these rules the Governing Body of the College cannot compel a teacher to take leave without pay.
The College receives grant in aid from the State of Assam and there are certain conditions for giving grant in aid.
These conditions do not provide for withdrawal of the grant in aid if a private college fails to put a teacher, who seeks election to a legislative or local body, on compulsory leave without pay from the date of the filing of nomination till the end of the next academic Session or till expiry of the term of the office to which the teacher is elected.
892 The respondent as already stated is a teacher in the College.
He applied for leave with pay from January 2, 1962 to March 5, 1962 in order to contest a seat for Parliament.
This leave was granted to him by the Governing Body of the College by resolution No. 1 of March 9, 1962.
The respondent stood for election and was defeated.
He thereupon applied that he be permitted to rejoin his duties from March 6, 1962 and the Governing Body permitted him to do so by its resolution No. 2 dated Match 9, 1962.
He therefore worked as such from March 6, 1962.
On March 20, 1962, the Director of Public Instruction, Assam (hereinafter referred to as the Director) wrote a letter to the Principal and Secretary of the College with reference to the letter of March 10, 1962 from the College in which apparently the Director had been informed of the leave granted to the respondent and certain other teachers in connection with elections to Parliament and Assam Legislative Assembly.
In this letter, the Director informed the College that he was unable to approve the resolution of the Governing Body permitting respondent and certain other teachers to rejoin their duties "immediately".
The letter pointed out that such permission was in contravention of r. 7 of the Rules regarding the Conduct and Discipline of the Employees of Aided Educational Institutions (hereinafter referred to as the Rules) and could not therefore be approved.
The Director also added that the Rules had been framed in 1960 after due consultation with the University and the Assam College Teachers"Association.
On receipt of this letter, the Governing Body seems to have reconsidered the matter of leave to the respondent, and passed a resolution on April 4, 1962.
This letter along with another letter was considered by the Governing Body of the College, and it was resolved in view of these letters that the resolution of March 9, 1962, permitting the respondent to rejoin duties from March 6, 1962 could not be given effect to.
It was further resolved that the respondent and some other teachers be granted leave in accordance with the Rules.
This resolution of the Governing Body was conveyed to the respondent by the Principal of the College by letter dated April 5, 1962 and he was told that he had been granted compulsory leave without pay till the end of the academic session in view of his standing for election in the last general elections.
The respondent thereupon filed the writ petition in the High Court out of which the present appeal has arisen.
His contention was that the Rules to which the Director had made reference had no statutory force and that he was entitled to leave under the Rules framed by the Gauhati University, which had been accepted by the 893 College.
He also contended that the Rules not having the force of law did not affect the powers of the Governing Body of the College in the matter of its functions.
Consequently the second resolution of the Governing Body dated March 9, 1962 was proper and correct and the respondent was properly allowed to rejoin duty after the expiry of his leave on March 6, 1962.
The Director had no authority to interfere with the second resolution of the Governing Body dated March 9, 1962 and that resolutions of this character passed by a Governing Body did not require the approval of the Director and would have effect by themselves.
It was further contended that as the leave rules which.
govern the College did not give power to the Governing Body to put a teacher on compulsory leave without pay against his will and consent, the resolution of the Governing Body dated April 4, 1962 by which the respondent was put on compulsory leave without pay was of no effect and in any case the Governing Body should not have acted on the illegal direction of the Director.
Finally it was urged that the Governing Body acted as it did on a threat contained in the letter from the Additional Director dated March 19, 1962, in which it was said that the education department would not provide funds for salaries and allowances for any employee who had gone on leave in connection with elections in contravention of r. 7 of the Rules, and therefore the action of the Governing Body was bad and in any case the Director had no right to threaten the Governing Body in this way.
The respondent therefore prayed for a writ in the nature of certiorari / prohibition / mandamus declaring r. 7 of the Rules as having no legal force and also as having no binding character on the Governing Body or the respondent.
He further prayed that the resolution of the Governing Body dated April 4, 1962 be declared ultra vires, void and in effective in law, and the Director should be directed not to withhold the grant in aid to be given to the College on the failure of the Governing Body to put the respondent on compulsory leave without pay.
Before we consider the reply of the State, we would like to give the genesis of the Rules.
It appears that in February 1959 the State of Assam decided to grant additional grant in aid to private colleges to implement the recommendations of the University Grants Commission regarding scales of pay and other, emoluments to the teacher of such colleges.
Apparently these scales of pay and other emoluments were advantageous to the teachers and meant an improvement on their pay and other emoluments which they were getting from before.
It was further decided that such, 894 grant in aid should be given to private colleges on condition that the college authorities agreed to abide by certain rules regulating the conditions of service of their employees.
Accordingly it was decided to frame rules in consultation with the University and the Assam College Teachers ' Association.
Further the views of the Governing Bodies of all private colleges were also invited on the draft rules.
Among them, the Governing Body of the College was also consulted and it resolved on August 6, 1960 that it agreed with the proposed rules contemplated by the Government to be framed as communicated to it.
The Government also ascertained the views of the Gauhati University and the Assam College Teachers ' Association and eventually the Rules were notified by notification dated March 9, 1961, published on March 29, 1961.
Rule 7 of the Rules, which is material for our purposes is in these terms: "An employee desiring to seek election to the Legislative Body or to hold office with any political Organisation or local bodies shall be on compulsory leave without pay from the date of the filing of his nomination till the end of the next academic session or till the termination of the term of office to which he may be elected as the case may be.
Such employee however shall not be allowed to retain lien on his post for a period exceeding five years.
" The Rules therefore were framed in consultation with University and the Assam College Teachers ' Association, which presumably represents the teachers of all private colleges.
The Governing Body of the College was also consulted and it accepted the Rules to be promulgated.
In this Governing Body the members of the teaching staff of the College are well represented and it was after the concurrence of the University, the College Teachers ' Association and the Governing Body of the College in particular in which the teachers of the College were well represented that the Rules were notified.
The case of the appellants was that considering the manner in which the Rules were framed they were binding on the College as well as on the teachers of the College and it was thereafter that the Government gave the revised grants to the College.
It seems further that the case of the appellants was that the Rules had statutory force in view of the amendment of the Act by Assam Act 11 of 1961 by which a proviso was added to section 21 (g) of the Act whereby the Government was given power to make the 895 necessary rules in consultation with the University in respect of government colleges and government aided colleges.
There were certain other objections by the appellants, to which it is unnecessary to refer.
The Governing Body of the College was also made a party to, the writ petition and submitted a written statement.
It supported the stand taken by the State, and in particular pointed out that the Governing Body in which the teaching staff of the College was ten represented had accepted the Rules before they were notified.
In consequence the Government had been giving grant in aid to the College in accordance with the recommendations of the University Grants Commission by which the pay scales etc.
, of the teachers had been improved and the teachers had been receiving the pay and dearness allowance under this grant in aid.
No representation was ever made by any member of the teaching staff when the Rules were under consideration and were notified that he would not be bound by the Rules.
The teachers including the respondent having accepted the pay and dearness allowance under the scheme of the grant in aid given by the State on terms and conditions laid down in the Rules, the respondent was estopped from challenging the Rules which were in the interest of the College and education in general.
The Governing Body in particular was bound by the Rules having accepted them and the resolution of April 4, 1962, was not passed on.
account of any threat by the Director.
The main question that was argued before the High Court was whether the Rules in question had statutory force.
Alternatively, it was argued that even if the Rules had no statutory force and were mere executive instructions for the purpose of grant in aid, the High Court should not issue a writ against the State or the Director interfering with such administrative instructions issued by the Director.
It was further urged that if the Rules were mere executive instructions which had been accepted by the Governing Body of the College in which the teachers of the College were well represented, they would be in the nature of contractual obligations which could not be enforced by the issue of a writ under article 226.
The High Court first considered the question whether the Rules had statutory force and came to the conclusion that they could not be said to be issued under the proviso to section 21(g) of the Act on which reliance was placed and therefore did not have any statutory force.
But the High Court further held that even if the Rules had no statutory force it was open to it to issue a mandamus under article 226 to the Director, who is a public authority, to refrain from, giving effect to the Rules which had no statutory force.
It 896 therefore made a direction to the Director not to give effect to his letter of March 20, 1962.
Further it was urged before the High Court that the Governing Body of the College was not a statutory body and therefore no writ or direction could issue to it and the remedy of the respondent was to go to the civil court to enforce his right (if any).
The High Court however held that the words of article 226 were wide enough and did not confine its power to the issue of writs, directions or orders in the nature of mandamus; they gave power to issue directions, orders or writs which the Court considered proper in the circumstances of each case and such direction could be issued for any purpose.
The High Court therefore held that as the Governing Body had not applied its independent mind to the question of leave, it could issue a direction to it also.
The High Court however did not decide whether the Governing Body was a statutory body or not, and in the result directed the Governing Body also not to give effect to the letter of the Director dated March 20, 1962.
Thereupon there was a prayer to the High Court on behalf of the State and the Director for leave to appeal to this Court, which was refused.
Then the State and the Director applied to this Court for special leave which was granted; and that is how the matter has come up before us.
It may be mentioned that the Governing Body of the College has been made a respondent in the appeal before us.
The main question which falls for decision in this appeal is whether the High Court is right in issuing a writ of mandamus to the State through the Director directing it not to give effect to the letter of March 20, 1962.
It has not been contended on behalf of the appellants that the Rules have statutory force and :the arguments before us have been made on the basis that the Rules have no statutory force and are mere executive instructions given by the Government to private colleges as a condition for the implementation of pay scales etc., recommended by the University Grants Commission for private colleges, these scales being apparently higher than those existing from before.
It seems to us that the High Court was in error in granting a writ of mandamus against the State through the Director once it found that the Rules bad no statutory force and were mere administrative instructions for the purpose of giving grant in aid to private colleges.
What grants the State should make to private educational institutions and upon what terms are matters for the State to decide.
Conditions of these grants may be prescribed by statutory rules; there is 'however no law to prevent the State from prescribing the conditions 897 of such grants by mere executive instructions which have not the force of statutory rules.
In the present case the Rules have been framed in order to give revised grants to private colleges to enable them to give higher scales of pay etc., to their teachers in accordance with the recommendation of the University Grants Commission.
The Rules have been held by the High Court to have no statutory force, and that is not disputed before us.
In these circumstances it is clear that the Rules are mere executive instructions containing conditions on which grants would be made to private colleges to implement the recommendations of the University Grants Commission as to pay scales etc., of teachers of private colleges.
Where such conditions of grant in aid are laid down by mere executive instructions, it is open to a private college to accept those instructions or not to accept them.
If it decides not to accept the instructions it will naturally not get the granted which is contingent on its accepting the conditions contained in the instructions.
On the other hand, if the college accepts the conditions contained in the instructions, it receives the grant in aid.
If however having accepted the instructions containing the conditions and terms, the college does not carry out the instructions, the Government will naturally have the right to withhold the grant inaid.
That is however a matter between the Government and the private college concerned.
Such conditions and instructions as to grant in aid confer no right on the teachers of the private colleges and they cannot ask that either a particular instruction or condition should be enforced or should not be enforced.
It is only for the Governing Body of the College to decide whether to carry out any direction contained in mere administrative instructions laying down conditions for grant in aid.
Further it is open to the Governing Body not to carry out any such instruction which is not based on rules having statutory force, and it will then be naturally open to the State to consider what grant to make.
But if the Governing Body chooses to carry out the instruction, it could hardly be said that the instruction was being carried out under any threat.
It is certainly not open to a teacher to insist that the Governing Body should not carry out the instruction.
The rules for the purpose of grant in aid being as in this case merely executive instructions confer no right of any kind on teachers and they cannot apply to the High Court for a mandamus asking for the enforcement or nonenforcement of the rules, even if indirectly there may be some effect on them because of the grant in aid being withheld in whole or in part.
Such mere administrative instructions even though called rules are only a matter between the Governing Body and the State 898 through the Director and cannot in our opinion form the basis of a petition for writ under article 226 by a teacher.
We may in this connection refer to Messrs. Raman and Raman vs The State of Madras(1) where this Court had to consider certain orders and directions issued under section 43A of the Motor Vehicles (Madras Amendment) Act, 1948.
The question arose whether the orders issued under section 43A had the status of law or not.
This Court held that such orders did not have the status of law regulating the rights of parties and must partake of the character of administrative orders.
It was further held that there could be no right arising out of mere executive instructions, muchness a vested right, and if such instructions were changed pending any appeal, there would be no change in the law pending the appeal so as to effect any vested right of a party.
That decision in our opinion governs the present case also, for it has been found by the High Court, and it is not disputed before us, that the Rules are mere administrative instructions and have not the force of law as statutory rules.
They therefore confer no right on the teachers of private colleges which would entitle them to maintain a writ petition under article 226 for the enforcement or non enforcement.
of any provision of the Rules.
The Rules being mere administrative instructions are matters between private colleges and the Government in the matter of grant in aid to such colleges, and no teacher of a college has any right under the Rules to ask either for their enforcement or for their non enforcement.
We are therefore of opinion that the High Court was in error when it granted a writ against the State through the Director, by which the Director was asked not to give effect to its letter dated March 20, 1962, against the Governing Body of the College.
Then we come to the question whether a writ could have been issued against the Governing Body of the College.
We find however that there is no appeal by the College against the order of the High Court issuing a writ against it.
In these circumstances we do not think that we can interfere with the order of the High Court insofar as it is against the Governing Body of the College.
At the same time we should like to make it clear that we should not be taken to have approved of the order of the High Court against the Governing Body of the College in circumstances like the pre sent and that matter may have to be considered in a case where it properly arises.
Before we leave this case we should like to add that it was stated on behalf of the State before us that even if the decision went in (1) [1959] Supp. 2 S.C.R. 227.
899 favour of the State, it would not enforce r. 7 insofar as the respondent is concerned, as the State was concerned merely with the clarification of the law on the subject.
In the result we allow the appeal and set aside the order of the High Court granting a writ against the State through the Director.
The State of Assam has agreed to pay counsel engaged amicus curiae for respondent, Ajit Kumar Sharma.
We therefore pass no order as to costs.
Appeal allowed.
|
The respondent was a teacher in a private college affiliated to the Gauhati University in Assam.
The college was receiving grants in aid from the State on certain conditions set out in the form of Rules.
One of the rules, r. 7, provided that if a teacher stood for election to the Legislature, he should be on compulsory leave without pay from the date of filing of nomination till the end of the next academic session or, till the termination of the term of the office to which he may be elected.
The respondent applied for leave for three months and contested for a. seat in Parliament but was defeated.
So, he applied for permission to rejoin, and the Governing Body granted him the permission.
The Director of Public Instruction, however, pointed out that such permission was in contravention of the aforesaid rule, and therefore, the Governing Body informed the respondent that he had been granted compulsory leave without pay till the end of the academic session.
The respondent thereupon filed a petition in the High Court for the issue of a writ of mandamus or other appropriate direction on the grounds that : (i) the rule had no legal force, (ii) the rule did not bind the Governing Body or the respondent and (iii) the order of the Governing Body putting him on compulsory leave was ineffective.
He also prayed that the State should be directed not to withhold the grant inlaid to the college if the Governing Body did not impose compulsory leave on him.
The Governing Body was also made a party to the petition.
The High Court held that the rules had no statutory force, and issued a direction to the Director, as a public authority, to refrain from giving effect to.
such rules.
The High Court also issued a similar direction to the Governing Body, on the ground that it had not applied its independent mind to the question of respondent 's leave.
The State appealed to the Supreme Court, but did not dispute that the Rules were only administrative instructions.
HELD: The order of the High Court issuing a writ to the State through its Director should be set aside.
[899 B] The rules being mere administrative instructions have not the force of law as statutory rules.
They therefore confer no right on the teachers of private colleges which would entitle them to maintain a writ petition under article 226, for the enforcement or non enforcement of any provision of the rules.
They being mere administrative instructions, are matters between private colleges and the Government in the matter of grants in aid to such colleges, and no teacher of any college has any right under the rules to ask either for their enforcement or non enforcement.
It is open to the Governing Body not to carry out any such instructions and it will then be open to the State to consider what grant to make.
But if the Governing Body chooses to carry out the instructions it could not be said that the instruction was carried out under any threat; and, it is not oven to a teacher 891 to insist that the Governing Body should not carry out the instruction.
[897 B H] Messrs Raman and Raman vs The State of Madras, [1959] Supp.2.
S.C.R. 227, referred to,
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1869.txt
|
iminal Appeal No. 73 of 1959.
Appeal by special leave from the judgment and order dated January 16/20th, 1959, of the Bombay High Court in Confirmation case No. 25 of 1958 with Criminal Appeal No. 1372 of 1958, arising out of.
the judgment and order dated October 27, 1958, of the Sessions Judge, Poona, in Sessions Case No. 52 of 1958.
A. section R. Chtiri, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant.
H. N. Seervai, Advocate General for the State of Bombay, Porus A. Mehta and R. H. Dhebar, for the respondent.
December 14.
The Judgment of section K. Das and Hidayatullah, JJ., was delivered by Hidayatullah, J. Sarkar, J., delivered a separate Judgment.
HIDAYATULLAH J.
This appeal by special leave is against the judgment of the Bombay High Court [J. C. Shah, J. (now of the Supreme Court) and V. section Desai, J.] by which it maintained the conviction of the appellant, Lagu, under section 302 of the Indian Penal Code, and confirmed the sentence of death passed on him by Shri V. A. Naik (now Naik, J.) Sessions Judge, Poona.
The appellant was tried for the murder of one Laxmibai Karve, and the charge held proved against him was that on or about the night between November 12 and 13, 1956, either at Poona or in the course of a railway journey between Poona and Bombay, he administered to the said Laxmibai Karve, some unrecognised poison or drug which would act as a poison, 59 462 with the intention of causing her death and which did cause her death.
Laxmibai Karve was a resident of Poona where she lived at 93 95, Shukrawar Peth.
Before her marriage of she was known as Indumati, Indutai or Indu Ponkshe.
In the year 1922, she married Anant Ramachandra Karve, a widower with a son by name, Vishnu.
On her marriage, as is the custom, she was named Laxmibai by the family of her husband and was known as Laxmibai Karve.
She was also known as Mai or Mai Karve.
From Laxmibai there were born two sons, Ramachandra (P.W. 1) and Purshottam alias Arvind, who died in 1954.
Anant Ramachandra Karve was a moderately rich man, who had been successful in business.
He died in 1945 of pleurisy.
He was attended till his death by the appellant and his brother, B. C. Lagu, both of whom are doctors.
Anant Ramachandra Karve left a will dated February 28, 1944.
Prior to the execution of the will, he had gifted Rs. 30,000 to his son, Vishnu, to set him up in business.
By his will he gave the house No. 93 95, Shukrawar Peth, Poona to Ramachandra with a right of residence in at least three rooms to his widow, Laxmibai and a further right to her to receive Rs. 50 per month from the rent of the house.
He assigned an insurance policy of Rs. 5,000 in her favour.
The business was left to Ramachandra.
The cash deposits in Bank, Post Office and with other persons together with the right to recover loans from debtors in the Bhor State were given to Purushottam alias Arvind.
Certain bequests of lands and debentures were made to Visbnu 's children.
Laxmibai was also declared owner of all her ornaments of about 60 tolas of gold and nose ring and pearl bangles which were described in the will.
In addition to what she inherited from her husband, Laxmibai inherited about Rs. 25,000 invested in shares from her mother, Girjabai, and another 60 tolas of gold ornaments.
In January 1954, Purushottam alias Arvind died at Poona.
By Purushottam 's death Laxmibai also inherited all the property held by him.
463 Thus, at the time of her death, Laxmibai possessed of about 560 shares in diverse Electric ' Companies, debentures in South Madras Electric Supply Corporation and Mettur Chemical and Industrial Corporation, a sum of Rs. 7,882 15 0 at the Bank of Maharashtra, a sum of Rs. 35,000 in deposit with one Vasudeo Sadashiv Joshi, gold and pearl ornaments and sundry movables like clothes, house hold furniture, radio etc.
In the year 1946, Ramachandra, the elder son, started living separately.
There were differences between the mother and son.
The latter had suffered a loss in the business and had mortgaged the house with one Shinde, who filed a suit, and obtained a decree but Vishnu filed a suit for partition claiming that his onethird share was not affected.
Before this, Ramachandra had closed his business in 195 1, and joined the military.
He was posted at different places, but in spite of their differences, mother and son used to correspond with each other.
In May, 1956, Laxmibai arranged and performed his marriage, and he went away in June, 1956.
Laxmibai had contracted tuberculosis after the birth of Purushottam.
That was about twenty years before her death.
The lesion, however, healed and till 1946 her health was not bad.
From 1946 she suffered from diabetes.
In 1948 she was operated for hysterectomy, and before her operation, she was getting hysterical fits.
On June 15, 1950, she was examined by Dr, R. V, Sathe, who prescribed some treatment.
In July, 1950, she was admitted in the Wanless Tuberculosis Sana torium for pulmonary affection, and she was treated till November 15, 1950.
Two stages of thoracoplasty operations were performed, but she left, though a third stage of operation was advised.
In the operations, her leftside first rib and portions of 2nd to 6th ribs were removed.
Laxmibai was, however, treated with medicines, and the focus, it appears, was under control.
We now come to the events immediately preceding her death.
Laxmibai had, through the appellant, taken an appointment from Dr. Sathe of Bombay for 464 a consultation about her health, for November 13, 1956, at 3 30 p. m.
It was to attend this appointment that she left Poona in the company of the appellant by Passenger train on the night of November 12,1956, for Bombay.
The train arrived at Victoria Terminus Station at 5 10 a. m. thirty five minutes late.
It is an admitted fact that Laxmibai was then deeply unconcious and was carried on a stretcher by the appellant to a taxi and later to the G. T. Hospital, where she was entered as an in door patient at 5 45 a. m. She never regained consciousness and died at 11 30 a. m.
Her body remained it the G.T. Hospital till the evening of the 14th, when it was sent to the J. J. Hospital morgue for preservation.
Later, it was to be handed over under the orders of the Coroner to the Grant Medical College for the use of Medical Students.
It was noticed there that she had a suspicious ligature mark on the neck, and the body was subjected to postmortem examination and the viscera to chemical analysis and then the body was disposed of.
Both the autopsy as well as the chemical analysis failed to disclose any poison and the mark on the neck was found to be postmortem.
The appellant was the medical attendant and friend of the family.
He and his brother (also a medical practitioner) attended on Anant Ramachandra Karve till his death.
The appellant also treated Purshottam alias Arvind for two days prior to his death on January 18, 1954.
He was also the medical attendant of Laxmibai and generally managed her affairs.
In 1955, he started living in the main room of the suite occupied by Laxmibai, and if Ramachandra is to be believed, the reason for the quarrel between Laxmibai and himself was the influence which the appellant exercised over the mother to the disadvantage of the son.
However that be, it is quite clear that the son left Poona in June, 1956, and did not see his mother alive again.
The death of Laxmibai was not known to the relatives or friends.
The appellant also did not disclose this fact to any one.
On the other hand, he kept it a close secret.
Soon afterwards, people began receiving 465 mysterious letters purporting to be from Laxmibai, stating that she had gone on pilgrimage, that she did not intend to return and that none should try to find her whereabouts.
She advised them to communicate with her through the newspaper " Sakal ".
Laxmibai also exhorted all persons to forget her, as she had married one Joshi and had settled at Rathodi, near Jaipur in Rajasthan.
People who went to her rooms at first found them locked, but soon the doors were open and the meveable property was found to have been removed.
Through these mysterious letters Laxmibai informed all concerned that she had herself removed these articles secretly and that none was to be blamed or suspected.
It is the prosecution case that these letters were forgeries, and that the appellant misappropriated the properties of Laxmibai, including her shares, bank deposits etc.
The appellant has admitted his entire conduct after the death of Laxmibai, by which he managed to get hold of her property.
His explanation was that he would have given the proceeds to some charitable institution according to her wishes adding some money of his own to round off the figure.
He led no evidence to prove that Laxmibai before she left Poona or at any time gave such instructions to him in the matter.
Meanwhile, the continued disappearance of Laxmibai was causing uneasiness to her friends and relatives.
On December 31, 1957, G. D. Bhave (P. W. 8) addressed a complaint to the Chief Minister, Bombay.
Similarly , Dr. G. N. Datar (P. W. 5) also addressed a letter to the Chief Minister, Bombay on February 16, 1958, and in both these petitions, doubts were expressed.
Ramachandra too made a report, and in consequence of a preliminary investigation, the appellant was arrested on March 12,1958.
He was subsequently tried and convicted by the Sessions Judge, Poona.
His appeal was also dismissed, and the certificate of fitness having been refused, he obtained special leave from this Court and filed this appeal.
The appellant 's contention in this appeal is that the prosecution has not succeeded in proving that 466 Laxmibai was poisoned at all, or that there was any poison administered to her which would evade detection, yet cause death in the manner it actually took place.
The appellant contends also that his conduct before the death of Laxmibai was bona fide and correct, that no inference of guilt can be drawn from all the circumstances of this case, and that his subsequent conduct, though suggestive of greed, was not proof of his guilt on the charge of murder.
The conviction of the appellant rests on circumstantial evidence, and his guilt has been inferred from medical evidence regarding the death of Laxmibai and his conduct. ' The two Courts below have held that the total evidence in this case unerringly points to the commission of the crime charged and every reasonable hypothesis compatible with the innocence of the appellant has been successfully repelled.
A criminal trial, of course, is not an enquiry into the conduct of an accused for any purpose other than to determine whether he is guilty of the offence charged.
In this connection, that piece of conduct can be held to be incriminatory which has no reasonable explanation except on the hypothesis that he is guilty.
Conduct which destroys the presumption of innocence can alone be considered as material.
The contention of the appellant, briefly, is that the medical evidence is inconclusive, and that his conduct is explainable on hypotheses other than his guilt.
Ordinarily, it is not the practice of this Court to re examine the findings of fact reached by the High Court particularly in a case where there is concurrence of opinion between the two Courts below.
But the case against the appellant is entirely based on circumstantial evidence, and there is no direct evidence that he administered a poison, and no poison has, in fact been detected by the doctor, who performed the postmortem examination, or by the Chemical Analyser.
The inference of guilt having been drawn on an examination of a mass of evidence during which subsidiary findings were given by the two Courts below, we have felt it necessary, in view of the extraordinary nature of this case, to satisfy ourselves 467 whether each conclusion on the separate ' aspects of the case, is supported by evidence and is just and proper.
Ordinarily, this Court is not required to enter into an elaborate examination of the evidence, but we have departed from this rule in this particular case, in view of the variety of arguments that were addressed to us and the evidence of conduct which the appellant has sought to explain away on hypotheses suggesting innocence.
These arguments, as we have stated in brief, covered both the factual as well as the medical aspects of the case, and have necessitated a close examination of the evidence once again, so that we may be in a position to say what are the facts found, on which our decision is rested.
That Laxmibai died within six hours of her admission in the G. T. Hospital is not questioned.
Her body was identified by persons who knew her well from her photograph taken at the J. J. Hospital on November 19, 1956.
In view of the contention of the appellant that she died of disease and/or wrong treatment, we have to determine first what was the state of her health before she went on the ill fated journey.
,This enquiry takes us to the medical papers maintained at the institutions where she was treated in the past, the evidence of some of the doctors who dealt with her case, of the observation of witnesses who could depose to her outward state of health immediately before her departure, and lastly, the case papers maintained by the appellant as a medical adviser.
The earliest record of Laxmibai 's health is furnished by Dr. K. C. Gharpure (P. W. 17), who treated her in 1948.
According to Dr. Gharpure, she entered his Nursing Home on April 6, 1948, and stayed there till April 24, 1948.
Laxmibai was then suffering from Menorrhagia and Metrorrhagia for about six years.
In 1946 there was an operation for dilatation and also curettage.
She had Diabetes from 1945 and hysterical fits since 1939.
On admission in Dr. Gharpure 's Nursing Home, her blood pressure was found to be 140/80 and urine showed sugar + + , albumin nil.
She was kept in the hospital and probably treated, and on the 11th, when a sub total 468 hysterectomy was performed, she had blood pressure 110/75 and sugar traces (albumin nil) before the Laguoperation.
According to Dr. Gharpure, the operation was not for hysterical fits, and along with hysterectomy the right ovary was cysticpunctured and the appendix was also removed.
A certificate was issued by Dr. Gharpure (exhibit 121), in which the same history is given.
Laxmibai was next examined by Dr. Ramachandra Sathe (P.W.25) on June 15, 1950.
He deposed from the case file which he had maintained about her complaints.
A copy of the case papers shows that she was introduced to him by the appellant.
At that time, her weight was 120 lbs.
and her blood pressure, 140/90.
Dr. Sathe noticed that diabetes had existed for four years, and that she was being given insulin for 8 months prior to his examination.
He also noticed hysterectomy scar, and that she had a tubercular lesion on the left apex 20 years ago.
According to the statement of the patient, she had trouble with tuberculosis from May 1949, and her teeth were extracted on account of pyorrhoea.
She was getting intermittent temperature from September 1949, and was receiving streptomycin and PAS irregularly.
She was then suffering from low temperature, slight cough and expectoration.
On examination, the doctor found that there was infiltration in the left apex but no other septic focus was found.
The evidence does not show the treatment which was given, and the doctor merely stated that he must have recommended a line of treatment to the patient, though he had no record of it.
On July 13, 1950, Laxmibai entered the Wanlesswadi T. B. Sanatorium, and stayed there till November 15, 1950.
Her condition is noted in two certificates which were issued by the Sanatorium and proved by Dr. Fletcher (P. W. 16), the Medical Superintendent.
In describing the previous history of the patient, the case papers showed that she had a history of Pott 's disease (T. B. of the spine) 20 years before.
She had diabetes for five years and history of hysterectomy operation two years before.
It was also noted that she had 469 T. B. of the lungs 15 years back, but had kept well for 14 years and a new attack began in or about 1949.
The certificate describes the treatment given to her in these words: " Patient was admitted on 13th July, 1950.
X Ray on admission showed extensive filtration on the left side with a large cavity in the upper zone; the right side was within normal limits.
She had diabetes with high blood sugar which was controlled by insulin.
Two stages of thoracoplasty operations on the left side were done and there was good clearing of disease but there was a small residual cavity seen and the third stage operation was advised.
The patient is leaving at her own request against medical advice.
Her sputum is positive.
" From the above, it appears that Laxmibai 's general complaints were menstrual irregularities corrected by hysterectomy, tuberculosis of the lungs controlled to a large extent by thoracoplasty and medicines and diabetes for which she was receiving treatment.
In the later case papers, there is no mention of hysterical fits, and it seems that she had overcome that trouble after the performance of hysterectomy and the cysticpuncture of the ovary, for there is no evidence of a recurrence after 1948.
Diabetes was, however, present, and must have continued till her death.
Next, we come to the evidence of some witnesses who saw her immediately prior to her departure for Bombay on November 12, 1956.
The first witness in this connection is Ramachandra (P.W. 1), son of Laxmibai.
He has given approximately the same description of her many ailments and the treatment she underwent.
He last saw her in June, 1956, when his marriage was performed.
According to him, the general condition of his mother was rather weak, but before that, her condition had not occasioned him any concern and he had not noticed anything so radically wrong with her as to prompt him to ask her about her ailments.
When he last saw his mother in June 1956, lie found her in good health.
Dr. Madhav Domadhar Bhave (P.W. 9), who knew Laxmibai 470 intimately stated that he saw her last in the month of October, 1956, and that the condition of her health was good.
No question was asked from him in cross examination at all.
His brother, G. D. Bhave, (P.W. 8), who is a landlord, had gone to Laxmibai 's house on November 8, 1956, and met her in the presence of the appellant.
Laxmibai had then told him that she was going to Bombay with the appellant to consult Dr. Sathe in connection with her health.
She had also stated that she would be returning in four or five days.
According to the witness, she was in good health, and was moving about and doing her own work.
The next witness is Champutai Vinayak Gokhale (P.W. II), who met Laxmibai on November 10 or 11, 1956.
Champutai is a well educated lady.
She is a B.Sc.
of the Bombay University and an M.A. of Columbia (U.S.A.) University.
She said that she had gone to Laxmibai 's house to invite her for the birthday party of her son, which was to take place on November 13, 1956.
She found Laxmibai in good state of health, and Laxmibai promised that though she would be going to Bombay, she would return soon enough to join the party.
Similarly, Viswanath Janardhan Karandikar, pleader of Poona, met Laxmibai on November 10 or,11 , 1956.
Laxmibai had herself gone in the afternoon to him to ask him whether her presence was necessary in Poona in connection with the suit filed by Vishnu, to which we have referred earlier.
The witness stated that Laxmibai was in good state of health 'at that time, and that he informed her that he did not propose to examine her as a witness.
She was again seen by Dattatreya Vishnu Virkar (P.W. 6) on the night of November 12, 1956, an hour before she left her house for Bombay.
Virkar, who is a Graduate in Electrical Mechanics and in Government service, was a tenant living in the same house.
Laxmibai, according to the will of her husband, was entitled to Rs. 50 out of the rents from tenants.
She went to Virkar 's Block at 8 p.m. and told him that she was going to Bombay to consult a doctor in the company of the appellant and needed money.
Virkar gave her Rs. 50 and 471 Laxmibai went back to her Block saying that she would give a receipt.
Later, she brought the receipt to Virkar seated at his meals, asked him not to get UP and left the receipt in his room.
The receipt signed by Laxmibai is exhibit 70, and is dated November 12, 1956.
Shantabai (P.W. 14), a servant of Laxmibai, was deaf and dumb, and her evidence was interpreted with the help of Martand Ramachandra Jamdar (P.W. 13), the Principal of a Deaf and Mute School.
It appears that Shantabai had studied Marathi, and was able to answer questions written on a piece of paper, replies to which questions she wrote in her own hand.
Some of the questions were not properly answered by Shantabai, but she stated by pantomime that on the day on which she left, the appellant had given two injections to Laxmibai.
The learned Sessions Judge made a note to the following effect: In the morning the accused gave Laxmibai one injection and in the evening he gave the second one.
(The signs were so clear that I myself gathered the meaning and the interpreter was not asked to interpret the signs).
" Next, Laxmibai was seen by Pramilabai Sapre (P.W. 12) at 8 p.m. on November 12,1956.
Laxmibai had told the witness that she was going to Bombay to consult a doctor and Laxmibai again ' passed her door at 9 15 p.m., when the witness was at her meals.
Though Laxmibai told her not to disturb herself, the witness did get up and saw her.
The witness stated that Laxmibai did not suffer from T. B. after the ,operation but was suffering from diabetes, and that she sometimes used to give Laxmibai her injections of insulin but only till 1953.
The last witness on the state of Laxmibai 's health is K. L. Patil (P. W. 60), who saw Laxmibai immediately before her departure for the station.
He saw her standing at the Par in front of her house with a small bag and a small bedding.
He then saw the appellant arriving there, and Laxmibai presumably left in a rickshaw or a tonga, because there was a stand for these vehicles in the neighbourhood.
All this evidence was not questioned except to point out that Dr. Datar in his petition to the Chief Minister had stated that Laxmibai was a 472 frank case of tuberculosis of both lungs and an invalid(Ex. 68).
But Dr. Datar explained that he had so stated there, because it was being " circulated " that she had gone on a long pilgrimage alone, and that it was most improbable.
Indeed, Dr. Datar said that Laxmibai was well enough to do all her work and even cooked for herself.
From this mass of evidence given by persons from different walks of life and most of them well placed, it is clear enough that Laxmibai was not in such a state of health that she would have collapsed in the train, unless something very unusual took place.
She was not in the moribund state in which she undoubtedly was, when she reached the hospital.
Her general health, though not exactly good, had not deteriorated so radically as to prevent her from attending to her normal avocations.
She appeared to have been quite busy prior to her departure arranging for this matter and that, and she did not rely upon other persons ' help but personally attended to all that she desired.
Right up to 9 15 or so in the night, she was sufficiently strong and healthy to go about her affairs, and indeed, she must have boarded the train also in a fit state of health, because there is nothing to show that she was carried to the compartment in a state of collapse or unconsciousness.
We have stated earlier that the appellant who was presumably treating her for her ailments had maintained case papers to show what treatment he was giving her from time to time.
These case, papers are exhibit ' 305, and commence on February 27, 1956.
The medicines that have been shown as prescribed in these case papers show treatment for diabetes, general debility, tuberculosis, rheumatism and indigestion.
Much reliance cannot, however, be placed upon this document, because these case papers significantly enough stop on November 12, 1956, and continue again from February 13, 1957, when Laxmibai was no more.
There are four entries of treatment given to Laxmibai between February 13 and February 28, 1957, when Laxmibai had already died and her body had undergone postmortem examination and been cremated.
473 The extent to which her treatment, if any, went in the period covered by the case papers may or may not be truly described by the appellant in these papers, but we are definitely of the opinion that the entries there cannot be read without suspicion, in view of the extraordinary fact described by us here.
It appears, however, that the last insulin injection was given to her on September 27, 1956, though the appellant stated in his examination as accused in the case that she was put on Nadisan tablets for diabetes.
The appellant was questioned by the Sessions Judge as to the State of her health, and he stated that Laxmibai on the day she left for Bombay had a temperature of 100 degrees and was suffering from laryngitis, pharyngitis, and complained of pain in the ear.
What relevance this has, we shall point out subsequently when we deal with the medical evidence and the conclusions of the doctors about it.
The next question which falls for consideration is whether the appellant and Laxmibai travelled in the same compartment on the train.
The train left Poona at 10 p.m., and it is obvious enough that it was a comparatively slow and inconvenient train.
We have no evidence in the case as to whether the appellant travelled with Laxmibai in the same compartment, but both the Courts below have found from the probabilities of the case that he did.
The best person to tell us about this journey is necessarily the appellant, and reference may now be made to what he stated in regard to this journey.
The appellant had arranged for the examination of Laxmibai by Dr. Sathe at Bombay.
He was the family physician and also a friend.
Laxmibai was an elderly lady and the appellant was for some time previous to this journey living in the main room of her block.
There would be nothing to prevent the appellant from travelling in the same compartment with his patient, who might need his attention during the journey.
The appellant denied in Court that he had travelled in the same compartment, but his statements on this part of the events have not been quite consistent.
After Laxmibai died and the question arose about the disposal of her body, the police at 474 Poona were asked to contact the appellant to get some information about her.
On November 16, 1956, before any investigation into ail offence of any kind was started, the appellant was questioned by the police, and he gave a written statement in exhibit 365.
He stated there as follows: "I, Anant Chintaman Lagu, occupation Medical practitioner, age 40 years, residing at H. No. 431/5, Shukrawar and dispensary at H. No. 20, Shukrawar Peth, Poona 2, on being questioned, state that on the night of 12th November, 1956, 1 left Poona for Bombay by the train which leaves Poona at 10 p.m.
I reached Victoria Terminus at 5 15 a.m. on 13th November, 1956.
In my compartment I bad a talk with a woman as also with other passengers.
On getting accomodation in the train almost all of us began to doze and at about 12 p.m. we slept.
As Byculla came, we started preparations for getting down.
At that time one woman was found fast asleep.
From other passengers I came to know that her name was Indumati Panse, about 36 years old and she had a brother serving in Calcutta.
Other passengers got down at V. T.
The woman, however, did not awake.
1, therefore, looked at her keenly and found that she was senseless.
Being myself a doctor, I thought it my duty to take her to the hospital.
I, therefore, took her to the G.T. Hospital in a taxi.
I know that that hospital was near.
As I had taken the said woman to the hospital, the C.M.O. took my address.
I have no more information about the woman.
She is not my relation and I am not in any way responsible for her.
" It will appear from this that he was travelling in the same compartment as Laxmibai, though for reason 's of his own he did not care to admit that he was taking her to Bombay.
Similarly, in the hospital when he was questioned about the patient he had brought for admission, he stated to Dr. Ugale (P. W. 18), Casualty Medical Officer, that the lady had suddenly become unconscious in the train.
This fact was noted by Dr. Ugale in the bed head ticket, and Dr. Ugale has stated on oath that the information was supplied by 475 the appellant himself.
To Dr. Miss Aneeja, who was the House Physician on the morning of November 13, the appellant also stated the same thing.
Dr. Miss Aneeja had also made a separate note of this, and stated that the information was given by the appellant.
In view of these statements 'made by the appellant at a time when he was not required to face a charge, we think that his present statement in Court that he travelled in a separate compartment cannot be accepted.
The train halted at various stations en route, and evidence was led in the case, of the Guard, K. Shamanna (P. W. 37), who deposed from his memo book (exhibit 214).
This train made 26 halts en route before it arrived at V. T. Station.
Some of these halts were of as many as 20 minutes.
It is difficult to think that the appellant would not have known till he arrived at Victoria Terminus that his patient was unconscious, and the fact that he mentioned that she became suddenly unconscious shows that be knew the exact manner of the onset.
Without, however; speculating as to what had actually happened, it is quite clear to us that Laxmibai was in the same compartment as the appellant, a fact which was not denied by the learned counsel in the arguments before us.
If we were to accept what the appellant stated as true, then Laxmibai lost her consciousness suddenly.
It is, however, a little difficult to accept as true all that the appellant stated in this behalf, because be told a patent lie to the police when he was questioned, that he knew nothing about the woman or Who she was, but took her to the hospital as an act of humanity when he found her unconscious.
There is nothing to show beyond this statement to the police in exhibit 365 that there were other passengers in the compartment; but if there had been, the attention of these passengers would have been drawn to the condition of Laxmibai, and some ' one would have advised the calling of the Guard or the railway authorities at one of these stations at which the train halted.
The circumstances of the case, therefore, point to the appellant and Laxmibai being in the compartment together, and the preponderance of 476 probabilities is that the compartment was not occupied by any other person.
We shall leave out from consideration for the present the circumstances under which Laxmibai was admitted in the G. T. Hospital and the treatment given to her.
We shall now pass on to her death and what happened thereafter and the connection of the appellant with the circumstances resulting in the disposal of the dead body.
We have already stated that the appellant was present in the hospital till her death.
We next hear of the appellant at Poona.
On the afternoon of November 13, 1956, Dr ' Mouskar (P. W. 40), the Resident Medical Officer of the Hospital, sent a telegram (exhibit 224) to the appellant, and it conveyed to him the following information: " Indumati expired.
Arrange removal reply immediately.
" The telegram was sent at about 2 p.m.
The appellant in reply did not send a telegram, but wrote an inland letter in which he stated that the name of the woman admitted by him in the hospital had been wrongly shown as "Paunshe", and that there was an extra "u" in it.
He also stated that he had informed her brother at Calcutta about the death, and that the brother would call at the hospital for the body of his sister.
The name of the brother was shown as Govind Vaman Deshpande.
The letter also stated that the appellant was writing in connection with the woman aged 30 to 35 years admitted in the hospital at 6 a.m. on November 13, 1955, and who had expired the same day at 11 a.m.
The name of the brother in this letter is fictitious, because Laxmibai bad no brother, much less a brother in Calcutta and of this name.
Thereafter, the appellant took no further action in the matter till the police questioned him on the 16th, two days after he had sent the letter.
It seems that the appel lant did not expect the police to appear so soon, and he thought it advisable to deny all knowledge about the lady he had taken to the hospital by telling the police that he did not know her.
The inference drawn from these two pieces of conduct by the Courts below is against the appellant, and we also agree.
We have already stated that from then onwards, the 477 appellant did not care to enquire from the hospital authorities as to what had happened to his patient 's dead body, and whether it had been disposed Of or not.
He also did not go to Bombay, nor did he inform Dr. Sathe about the cancellation of the appointment.
In his examination, he, however, stated that he attempted to telephone to Dr. Sathe, but could not get through, as the instrument was engaged on each occasion.
One expects, however, that he would have in the ordinary course written a letter of apology to Dr. Sathe, because he must have been conscious of the fact that he had kept the Specialist waiting for this appointment; but he did not.
It is said that the appellant need not have taken this appointment and could have told a lie to Laxmibai; but the appointment with Dr. Sathe had to be real because if the plan failed, Laxmibai would have been most surprised why she was brought to Bombay.
With this ends the phase of events resulting in the death of Laxmibai.
We shall deal with the events in the hospital later, but we pursue the thread of the appellant 's conduct.
Prior to the fateful journey, Laxmibai had passed two documents to the appellant.
They are Exs. 285 and 286.
By the first, Laxmibai intimated the Bank of Maharashtra, Poona, that she was going to withdraw in the following week from her Savings Bank account a sum of money between Rs. 1,000 and Rs. 5,000.
The other document was a bearer cheque for Rs. 5,000, also signed by Laxmibai but written by the appellant.
The appellant presented the first on November 17 after writing the date, November 15, on it and the second on November 20, after writing the date, November 19, and received payment.
Prior to this, on November 12, 1956, when Laxmibai was alive and in Poona he had presented to the Bank of Maharashtra a dividend warrant for Rs. 2,607 6 0 to Laxmibai 's account writing her signature himself.
This was hardly necessary if he was honest.
The signature deceived the Bank, and it is obvious that he was a consummate forger even then.
Of course, he put the money into Laxmibai 's account, but he had to if he was to draw it out again on the strength of these 61 478 two documents.
The question is, can we say that he was honest on November 12, 1956? The answer is obvious.
His dishonest intentions were, therefore, fully matured even before he left Poona.
Thereafter, the appellant converted all the property of Laxmibai to his own use.
He removed the movables in her rooms including the pots and pans, furniture, clothes, radio, share scrips and so on, to his own house.
He even went to the length of forging her signature on securities, transfer deeds, letters to banks and companies, and even induced a lady magistrate to authenticate the signature of Laxmibai for which he obtained the services of a woman who, to say the least, personated Laxmibai.
So clever were the many ruses and so cunning the forgeries that the banks, companies and indeed, all persons were completely deceived.
It was only once that the bank had occasion to question the signature of Laxmibai, but the appellant promptly presented another document purporting to be signed by Laxmibai, which the bank accepted with somewhat surprising credulity.
The long and short of it is that numerous persons were imposed upon, including those who are normally careful and suspicious, and the appellant by these means collected a sum of no less than Rs. 26,000 which he disposed of in various ways, the chief, among them being the opening of a short term deposit account in the name of his wife and himself and crediting some other amounts to the joint names of his brother, B.C. Lagu, and himself.
We do not enter into the details of his many stratagems for two reasons.
Firstly because, all this conduct has been admitted before us by his counsel, and next because he has received life imprisonment on charges connected with these frauds.
Suffice it to say that if the appellant were to be found guilty of the offence, sufficient motive would be found in his dealings with the property of this unfortunate widow after her death.
If murder there was,it was to facilitate the action which he took regarding her property.
If the finding of his guilt be reached, then his subsequent conduct would be a part of a very deepseated plan beginning almost from the time when he 479 began to ingratiate himself into the good opinion of the lady.
The fact, however, remains that all this conduct cannot avail the prosecution, unless it proves conclusively some other aspects of the case.
We cannot, however, overlook one or two other circumstances which are part of this conduct.
We have already stated briefly that the appellant cause all persons to believe that Laxmibai was alive and living at Rathodi as the happily married wife of one Joshi.
Both Joshi and Rathodi were equally fictitious.
In this connection, the pleader, the son, the friends and the relations of Laxmibai were receiving for months after her death letters and communications purporting to be signed by her, though written at the instance of the appellant by persons, who have come and deposed before the Court to this fact.
These letters were all posted in R. M. section vans, and the prosecution has successfully proved that they were not posted in any of the regular post offices in a town or village.
These letters show a variety of details and intimacies which made them appear genuine except for the handwriting and the signature of Laxmibai.
For a time, people who received them, though suspicious, took them for what they were worth, and it appears that they did not worry very much about the truth.
It has now been successfully proved by the prosecution and admitted by the appellant 's counsel before us that these letters were all sent by the appellant with the sole object of keeping the people in the dark about the fact of death, so that the appellant might have time to deal with the property at leisure.
The appellant asserts that he thought of this only after the death of Laxmibai.
It seems somewhat surprising that the appellant should have suddenly gone downhill into dishonesty, so to speak, at a bound.
The maxim is very old that no one becomes dishonest suddenly; nema fuit repente turpissimus.
What inference can be drawn from his conduct after the death of Laxmibai is a matter to be considered by us.
And in this connection, we can only say at this stage that if some prior conduct is connected intrinsically, with conduct after death, then the motive of the appellant would be very clear indeed.
480 We now pass on to the evidence of what happened in the hospital and the total medical evidence on the cause of death.
This evidence has to be considered from different angles.
Much of it relates to the condition of Laxmibai and the treatment given to her; but other parts of it relate to the conduct of the appellant and the information supplied by him.
There is also further evidence about the disposal of the body and the enquiries made into the cause of death.
These must be dealt with separately.
For the present, we shall confine ourselves to the pure medical aspect of the case of Laxmibai during her short stay in the hospital.
When Laxmibai was admitted in the hospital, Dr. Ugale (P.W.18), the Casualty Medical Officer, was in charge.
He made a preliminary examination and recorded his impressions before he sent the patient to Ward No. 12.
He obtained from the appellant the history of the attack, and it appears that all that the appellant told him was " Patient suddenly became unconscious in train while coining from up country.
History of similar attacks frequently before".
It also appears that the appellant told him that the lady was liable to hysterical fits, and that was set down by Dr. Ugale as a provisional diagnosis.
So much of Dr. Ugale 's evidence regarding the health of Laxmibai as given by the appellant.
Now, we take up his own examination.
According to Dr. Ugale, there were involuntary movements of the right hand, which he noticed only once.
Only the right hand was moving.
He found corneal reflex absent.
Pupils were normal and reacting to light.
So far as central nervous system and respiration were concerned, he detected nothing abnormal.
According to him, there was no evidence of a hysterical fit, and he stated that he queried that provisional diagnosis which, according to him, was supplied by the appellant.
According to Dr. Ugale, the name of the patient was given as lndumati Paunshe.
The patient was then made over to the care of Dr. Miss Aneeja (P. W. 19).
Dr. Miss Aneeja was then a raw Medical Graduate, having passed the M.B.B.S. in June, 1956.
She was working as the House Physician, 481 and was in charge of Ward No. 12.
She was summoned from her quarters to the Ward at 6 15 a.m. and she examined Laxmibai.
We leave out of account again the conversation bearing upon the conduct of the appellant, which we shall view subsequently.
He told her also about the sudden onset of unconsciousness, and that there was a history of similar attacks before.
We are concerned next with the result of the examination by Dr. Miss Aneeja, bearing in mind that she was not a very experienced physician.
She found pulse 100, temperature 99 5, respiration 20.
The skin was found to be smooth and elastic nails, conjunctiva and tongue were pink in colour lymphatic glands were not palpable; and bones and joints had nothing abnormal in them.
The pupils of the eyes were equal but dilated, and were not then reacting to light.
She found that up to the abdomen and the sphincter the reflexes were absent.
The reflexes at knee and ankle were normal, but the plantar reflex was Babinsky on one foot, and there was slight rigidity of the neck.
It appears that Laxmibai was promptly given a dose of a stimulant and oxygen was started.
Dr. Miss. Aneeja also stated that she gave an injection of insulin (40 units) immediately.
Much dispute has arisen as to whether Dr. Miss Aneeja examined the urine for sugar, albumin and acetone before starting this treatment.
It is clear, however, from her testimony that no blood test was made to determine the level of sugar in the blood.
A lumbar puncture was also made by Dr. Miss Aneeja and the cerebro spinal fluid was sent for chemical analysis.
That report is available, and the fluid was normal.
According to Dr. Miss Aneeja, the Medical Registrar who, she says, was Dr. Saify, recommended intravenous injection of 40 units of insulin with 20 C.C. of glucose, which were administered.
According to her, Laxmibai was also put on glucose intragastric drip.
Dr. Miss Aneeja stated that the urine was examined by her three times, and in the first sample, sugar and acetone were present in quantities.
The first examination, according to her, was at 6 30 a.m., the next at 8 30 a.m. and the last at 11 a.m.
She stated that she 482 had used Benedict test for sugar and Rothera 's test for acetone.
In all the examinations, according to her, there was no albumin present.
Dr. Miss Aneeja also claims to have phoned to Dr. Variava, the Honorary Physician, at 6 45 or 7 a.m., and consulted him about the case.
According to her, Dr. Saify, the Registrar of the Unit, visited the Ward at 8 30 a.m. and wrote on the case papers that an intravenous injection of 40 units of insulin with 20 C.C. of glucose should be administered.
According to her, Dr. Variava visited the Ward at 11 a.m., and examined Laxmibai, but the patient expired at 11 30 a.m.
We do not at this stage refer to the instructions for postmortem examination left by Dr. Variava which were noted on the case papers, because that is a matter with regard to the disposal of the dead body, and we shall deal with the evidence in that behalf separately.
The evidence of Dr. Miss Aneeja shows only this much that she was put in charge of this case, examined urine three times and finding sugar and acetone present, she started a treatment by insulin which was also supplemented by administration of glucose intravenously as well as by intragastric drip.
Apart from one dose of stimulant given in the first few minutes, no other treatment beyond administration of oxygen was undertaken.
She had also noted the observations of the reflexes and the condition of the patient as they appeared to her on examination.
There is a considerable amount of contradiction between the evidence of Dr, Miss Aneeja and that of Dr. Variava as to whether acetone was found by Dr. Miss Aneeja before Dr. Variava 's visit.
According to the learned Judges of the Court below, the first urine examination deposed to by Dr. Miss Aneeja and said to have been made at 6 30 a.m. was never performed.
The other two examinations were made, as the urine chart (exhibit 127) shows.
It is, however, a question whether they were confined only to sugar and albumin but did not include examination for acetone.
We shall discuss this point after we have dealt with the evidence of Dr. Variava.
483 Dr. Variava (P.W. 21) was the Honorary Physician, and was in charge of this Unit.
According to him, he went on his rounds at 11 a.m., and examined Laxmibai from 11 a.m. to 11 15 a.m.
He questioned Dr. Miss Aneeja about the line of treatment and told her that she could not have made a diagnosis of diabetic coma without examining urine for acetone.
Dr. Variava deposed that the entry regarding acetone on the case papers was not made when he saw the papers at 11 a.m.
He then asked Dr. Miss Aneeja to take by catheter a sample of the urine and to examine it for acetone.
Dr. Miss Aneeja brought the test tube with urine in it, which showed a light green colour, and Dr. Variava inferred from it that acetone might be present in traces.
According to Dr. Variava, Laxmibai 's case was not one of diabetic coma, and he gave two reasons for this diagnosis, namely, that diabetic coma never comes on suddenly, and that there are no convulsions in it, as were described by Dr. Ugale.
Dr. Variava also denied that the phone call to him was made by Dr. Miss Aneeja.
Dr. Variava stated that before he left the Ward he told Dr. Miss Aneeja that he was not satisfied that the woman had died of diabetic coma and instructed her that postmortem examination should be asked for.
In connection with the evidence about the examination of the urine, we have to see also the evidence of Marina Laurie, nurse (P.W. 59), who stated how the entries in the urine chart came to be made.
It may be pointed out that the urine chart showed only two examinations for sugar, at 8 30 a.m. and 11 am.
, and not the one at 6 30 a.m.
The entry about that was made on the case papers under the head " treatment " by Dr. Miss Aneeja, and it is the last entry I acetone + + ' which Dr. Variava stated was not on the papers at the time he saw them.
Indeed, Dr. Variava would not have roundly questioned Dr. Miss Aneeja about the examination for acetone, if this entry had been there, and Dr. Miss Aneeja admits a portion of Dr. Variava 's statement when she says that she examined the urine on Dr. Variava 's instructions and 484 brought the test tube to him, in which the urine was of a light green colour.
Now, the urine chart does not show an examination of the urine at 6 30 a.m.
According to Dr. Miss Aneeja, she examined the urine, carried the impression of colour in her mind, and noted the result on the case papers.
She was questioned why she adopted the unusual course, but stated that it often happened that the urine chart was not prepared and the result was not taken to the case papers.
However it be, Dr. Variava is quite positive that the entry about acetone did not exist on the case papers, and an examination of the original shows differences in ink and pen which would not have been there, bad all the three items been written at the same time.
It also appears that even at 8 30 a.m. the urine was examined for sugar only because the entry in the urine chart shows brick red colour which is the resulting colour in Benedict test and not in Rothera 's test.
Similarly, at II a.m. the urine chart shows only a test for sugar because the light green colour is not the resulting colour of Rothera 's test but also of the Benedict test.
Indeed, Dr. Variava was also shown a test tube containing the urine of slight greenish colour, and his own inference was that acetone might be present in traces.
There is thus nothing to show that Dr. Miss Aneeja embarked upon a treatment for diabetic coma after ascertaining the existence of acetone.
All the circumstances point to the other conclusion, namely, that she did not examine the urine for acetone ' and that seems to be the cause of the questions put by Dr. Variava to her.
We have no hesitation, therefore, in accepting Dr. Variava 's evidence on this part of the case, which is supported by the evidence of the course, the urine chart and the interpolation in the case papers.
From all that we have said, it is quite clear that the treatment given to her for diabetic coma was based on insufficient data.
There was also no Kussmaul breathing (Root & White, Diabetes Mellitus, p. 118); her breathing was 20 per minute which was normal.
Nor was there any sign of dehydration, 485 because the skin was smooth and elastic, and the Babinsky sign was a contra indication of diabetic coma.
This is borne out by the diagnosis of Dr. Variava himself, who appears positive that Laxmibai did not suffer from diabetic coma, and is further fortified by the reasons given by Dr. H. Mehta (P.W. 65), to whose evidence we shall have occasion to refer later.
Two other doctors from the hospital were examined in connection with Laxmibai 's stay.
The first was Dr. J. C. Patel, who was then the Medical Registrar of Unit No. 1.
It seems that Dr. Saify, the permanent Medical Registrar, was on leave due to the illness of his father, and Dr. J. C. Patel was looking after his Unit.
Dr. J. C. Patel went round with Dr. Variava at 11 a.m., and in his presence, Dr. Variava examined Laxmibai.
He has no contribution to make, because he says he does not remember anything.
The only piece of evidence which he has given and which is useful for our enquiry is that in the phone book (exhibit 323) in which all calls are entered, no call to Dr. Variava on the morning of the 13th was shown.
The evidence of Dr. J. C. Patel is thus useless, except in this little respect.
The other doctor, Dr. Hiralal Shah (P. W. 72) was the Registrar of Unit No. 2.
After Laxmibai entered the hospital, Dr. Miss Aneeja sent a call to him, and he signed the call book (exhibit 322).
Dr. Hiralal Shah pretended that he did not remember the case.
He stated that if he was called, he must have gone there, and examined the patient; but he stated in the witness box that he did not remember anything.
All the three doctors, Dr. Miss Aneeja, Dr. Patel and Dr. Hiralal Shah, denied having made the entry " Insulin 40 units 1.
V. with 20 C. C. glucose." Dr. Miss Aneeja says that it was written by Dr. Saify, who, as we shall show presently, was not present in Bombay at all on that day.
We do not propose to deal with the cause of the death, before adverting to the findings of Dr. Jhala (P.W. 66), who performed the autopsy and Dr. H. section Mehta (P. W. 65), to whom all the case papers of Laxmibai were handed over for expert opinion.
Dr. Jhala performed the postmortem operation on November 23, 62 486 and he was helped by his assistants.
Though the body was well preserved and had been kept in the air conditioned morgue, there is no denying the fact that 10 days had passed between the death and the postmortem examination.
The findings of Dr. Jhala were that the body and the viscera were not decomposed, and that an examination of the vital organs could be made.
Dr. Jhala found in the stomach 4 oz. of a pasty meal and, ' oz.of whitish precipitate in the bladder.
He did not find any other substance which could be said to have been introduced into the system.
He examined the brain and found it congested.
There were no marks of injury on the body; the lungs were also congested and in the upper lobe of the left lung there was a tubercular focus which, in his opinion, was not sufficient to cause death ordinarily.
He also found Atheroma of aorta and slight sclerosis of the coronary.
He stated that the presence of the last meal in the stomach indicated that there was no vomitting.
He found no pathological lesion in the pancreas, the kidney, the liver and any other internal organ.
He gave the opinion after the receipt of the Chemical Analyser 's report that death could have occurred due to diabetic coma.
It must be remembered that Dr. Jhala was not out to discover whether any offence had been committed.
He was making a postmortem examination of a body which, under the Coroner 's order, had been handed over to the medical authorities with a certificate from a hospital that death was due to diabetic coma.
It was not then a medico legal case; the need for postmortem had arisen, because the peon had noticed certain marks on the neck, which had caused some suspicion.
After discovering that the mark on the neck was a postmortem injury, all that he had to do was to verify whether the diagnosis made by the G.T. Hospital that death was due to diabetic coma was admissible.
He examined the body, found no other cause of death, and the Chemical Analyser not having reported the administration of poison, he accepted the diagnosis of the G. T. Hospital as correct.
Dr. Jhala, however, stated that there were numerous poisons which could 487 not be detected on chemical analysis even in the case of normal, healthy and undecomposed viscera.
He admitted that his opinion that death could have occurred due to diabetic coma was an inaccurate way of expressing his opinion.
According to him, the proper way would have been to have given the opinion death by diabetes with complications.
" As we have said, all these papers were placed before Dr. H. section Mehta for his expert opinion.
It is to his evidence we now turn to find out what was the cause of death of Laxmibai.
In the middle of March 1958, Dr. Mehta was consulted about this case, and he was handed over copies of all the documents we have referred to in connection with the medical evidence, together with the proceedings of the Coroner 's inquest at Bombay.
According to Dr. Mehta, opinion was sought from him about the cause of death of 'Indumati Paunshe ' and whether it was from diabetic coma, any other disease or the administration of a poison.
Dr. Mehta was categorical that it was not due to diabetic coma.
He was also of the opinion that no natural cause for the death was disclosed by the autopsy, and according to him, it was probably due to the administration of some unrecognisable poison or a recognisable poison which, due to the lapse of time, was incapable of being detected by analysis.
He gave several reasons for coming to the conclusion that Laxmibai did not suffer from diabetic coma.
Each of his reasons is supported by citations from numerous standard medical authorities on the subject, but it is unnecessary to cite them once again.
According to him, the following reasons existed for holding that Laxmibai did not suffer from diabetic coma: (1) Convulsion never occur in diabetic coma per se.
According to Dr. Mehta, the involuntary movements described by Dr. Ugale must be treated as convulsions or tremors.
We are of opinion that Dr. Ugale would not have made this note on the case papers if he had not seen the involuntary movements.
No doubt, these involuntary movements had ceased by the time the patient was carried to Ward No. 12, because Dr. Miss Aneeja made a note that they were not observed in 488 the Ward.
But Dr. Ugale was a much more experienced doctor than Dr. Miss Aneeja, and it, is possible that Dr. Miss Aneeja did not notice the symptoms as minutely as the Casualty Medical Officer.
(2) Diabetic coma never occurs all of a sudden and without a warning.
There are premonitary signs and symptons of prodromata.
In the case, there is no evidence to show how Laxmibai became unconscious.
We have, however, the statement of the appellant made both to Dr. Ugale and Dr. Miss Aneeja that the onset was sudden.
Dr. Mehta was cross examined with a view to eliciting that a sudden onset of diabetic coma was possible if there was an infection of any kind.
A suggestion was put to him that if the patient suffered from Otitis Media, then sometimes the un conciousness came on suddenly.
It may be pointed out that the appellant in his examination stated that on the day in question, Laxmibai had a temperature of 100 degrees, laryngitis, pharyngitis, and complained of pain in the ear.
That statement was made to bring his defence in line with this suggestion.
Dr. Mehta pointed out that Dr. Jhala had opened the skull and had examined the interior organs but found no pathological lesion there.
According to Dr. Mehta, Dr. Jhala would have detected pus in the middle ear if Otitis Media had existed.
The fact that no question suggesting this was put to Dr. Jhala shows that the defence is an afterthought to induce the Court to hold that death was due to diabetic coma, or, in other words, to natural causes.
We are inclined to accept the evidence of Dr. Jhala that he and his assistants did not discover any pathological lesion in the head or the brain.
Otitis Media would have caused inflammation of the Eustachian tube, and pus would have been present.
No such question having been put, we must hold that there was no septic focus which might have induced the sudden onset of diabetic coma.
It was also suggested to Dr. Mehta that there was a tubercular infection and sometimes in the case of tubercular infection diabetic coma suddenly supervened.
The tuberculosis in this case was not of such severity as to have caused this.
Dr. Jhala referred 489 to the septic focus in the apex of the left lung, but he stated that it was riot sufficient to have caused the death of Laxmibai.
Illustrative cases of sudden diabetic coma as a result of tubercular infection were not shown, and the condition of Laxmibai, as deposed to by witnesses right up to 9 p.m. on the night of November 12, 1956, does not warrant the inference that she had diabetic coma suddenly as a result of this infection.
(3) Dr. Mehta also stated from the case papers maintained by the appellant from February 15, 1956, to November 12, 1956, that during that time, Laxmibai did not appear to have suffered from any severe type of acidosis.
The appellant in his examination in Court stated that Laxmibai was prone to suffer from acidosis, and that he had treated her by the administration of Soda Bi carb.
In the case papers, Soda Bicarb has been administered only in about 8 to 10 doses varying between 15 grains to a dram.
It is significant that on most of the occasions it was part of a Carminative mixture.
The acidosis, if any, could not have been so severe as to have been corrected by such a small administration of Soda Bi carb, because the acidosis of diabetes is not the acidity of the stomach but the formation of fatty acids in the system.
Such a condition, as the books show, may be treated by the administration of Soda Bi carb but in addition to some other specific treatment.
(Joslin, Root & White, Treatment of Diabetes Mellitus, p. 397).
(4) A patient in diabetic coma is severely dehydrated.
(Root & White Diabetes Mellitus p. 118).
We have already pointed out that there was no dehydration, because the skin was soft and elastic and the tongue was pink.
The eye balls were also normal and were not soft, as is invariably the case in diabetic coma.
Dr. Mehta has referred to all these points.
(5) Nausea and vomiting are always present in true diabetic coma.
There is nothing to show either from her clothes or from the smell of vomit in the mouth or from any other evidence that Laxmibai had vomitted in the train.
Dr. Jhala who performed the 490 postmortem examination had stated that Laxmibai could not have vomitted because in her stomach 4 oz. of pasty meal was found.
The same fact is also emphasised by Dr. Mehta.
(6) In diabetic coma, there will befall of blood pressure, rapid pulse; there will be Kussmaul breathing or air hunger.
The respiration of Laxmibai was found by Dr. Ugale and Dr. Miss Aneeja to be normal.
The temperature chart in the case, exhibit 129, gives in parallel columns the respiration corresponding to a particular temperature, and the temperature of 99.5 degrees (Fahrenheit) found by Dr. Miss Aneeja corresponds to respiration at 20 times per minute.
Dr. Variava, Dr. Ugale or Dr. Miss Aneeja also did not say anything about the Kussmaul breathing, and the pulse of 100 per minute according to Dr. Mehta was justified by the temperature which Laxmibai then had.
Indeed, according to Dr. Mehta, in diabetic coma the skin is cold, and there was no reason why there should be temperature.
According to Dr. Mehta, there was no evidence of any gastric disturbance, because the condition of the tongue was healthy.
Dr. Mehta also pointed out that the Extensor reflex called the, Babinsky sign was not present in diabetic coma, while according to Dr. Miss Aneeja it was present in this case.
Dr. Mehta then referred to the examination of the urine for sugar and acetone, and stated that the examination for sugar was insufficient to determine the presence of Ketonuria, which is another name for the acidosis which results in coma.
We have already found that the examination for acetone was not made and there was no mention of acetone breath either by Dr. Ugale or by Dr. Miss Aneeja, which would have been present if the acidosis was so advanced.
(Root & WhiteDiabetes Mellitus, p. 118).
(8) Lastly, the examination of cerebro spinal fluid did not show any increase of sugar and no affection in the categories of meningial irritation was disclosed by the chemical analysis of the fluid.
(Physician 's Hand.
book, 4th Edn., pp. 115 120).
The neck rigidity which was noticed by Dr. Miss Aneeja did not have, therefore, 491 any connection with such irritation, and it is a question whether such a slight neck rigidity existed at all.
These reasons of Dr. Mehta are prefectly valid.
They have the support of a large number of medical treatises to which he has referred and of even more.
which were referred to us during the arguments, all which we find it unnecessary to quote.
We accept Dr. Mehta 's testimony that diabetic coma did not cause the death of Laxmibai.
It is significant that the case of the appellant also has changed, and he has ceased to insist now that Laxmibai died of diabetic coma.
The treatment which was given to Laxmibai would have, if diabetic coma had existed, at least improved her condition during the 5 hours that she was at the hospital.
Far from showing the slightest improvement, Laxmibai died within 5 hours of her admission in the hospital, and in view of the contra indications catalogued by Dr. Mehta and accepted by us on an examination of the medical authorities, we are firmly of opinion that death was not due diabetic coma.
We now deal with events that took place immediately after Laxmibai expired.
We have already shown that at that time Dr. Variava was present and was questioning Dr. Miss Aneeja about her diagnosis of diabetic coma.
Before Dr. Variava left the Ward, he told Dr. Miss Aneeja that he was not satisfied about the diagnosis, and that a postmortem examin ation should be asked for.
This endorsement was, in fact, made by Dr. Miss Aneeja on the case papers, and the final diagnosis was left blank.
Dr. Miss Aneejia says that she left the Ward at about 11 30 a.m. and was absent on her rounds for an hour, then she returned to the Ward from her quarters at about 1 p.m. and went to the office of Dr. ' Mouskar, the Resident Medical Officer.
According to her, she met Dr. Saify, the Registrar, at the door, and he had the case papers in his hands.
Dr. Saify told her that the Resident Medical Officer thought that there was no need for a postmortem examination, as the patient was treated in the hospital for diabetic coma.
Dr. Saify ordered Dr. Miss Aneeja to cancel the endorserment about 492 postmortem and to write diabetic coma as the cause of death, which she did, in Dr. Saify 's presence.
This is Dr. Miss Aneeja 's explanation why the postmortem was not made, though ordered by Dr. Variava.
Dr. Mouskar 's version is quite different.
According to him, the case papers arrived in his office at 1 p.m.
He had seen the endorsement about the postmortem and the fact that the final diagnosis had not been entered in the appropriate column.
Dr. Mouskar admitted that he did not proceed to make arrangements for the postmortem examination.
According to him, the permission of the relatives and the Coroner was necessary.
He also admitted that he did not enquire from the Honorary Physician about the need for postmortem examination.
He was thinking, he said, of consulting the relatives and the person who had brought Laxmibai to the hospital.
Dr. Mouskar sent a telegram at 2 p.m. to the appellant, which we have quoted earlier.
He explained that he did not mention the postmortem examination, because he was waiting for the arrival of some person connected with Laxmibai.
He further stated that between 4 and 5 p.m. he asked the police to remove the body to the J. J. Hospital morgue and to preserve it, and sent a copy of his requisition to the Coroner.
According to him, on the 15th the Coroner 's office asked the hospital for the final diagnosis in the case.
He stated that he asked one out of the three: Honorary Physician, the Registrar or the House Pbysician, about the final diagnosis, though he could not say which one.
He had sent the papers through the call boy for writing the final diagnosis, and he received the case papers from the Unit, with the two corrections, namely, the cancellation of the requisition for postmortem examination and the entry of diabetic coma as the final diagnosis.
He denied that he had any talk with Dr. Saify regarding the postmortem examination.
It,would appear from this that there are vital differences in the versions of Dr. Miss Aneeja and Dr. Mouskar.
The first contradiction is the date on which the case papers were corrected and the second, about Dr. SaifY 's intervention in the matter.
Dr. SaifY, 493 fortunately for him, had obtained leave orders and had left Bombay on November 8, 1956, for Indore, where his father was seriously ill.
He was, in fact, detained at Indore, because his father suffered from an attack of coronary thrombosis, and he had to extend his leave.
All the relevant papers connected with his leave have been produced, and it seems that Dr. Saify 's name was introduced by Dr. Miss Aneeja either to avoid taking responsibility for correction, on her own, of the papers, or to shield some other person, who had caused her to make the corrections.
Here, the only other person, who could possibly have ordered her was the Resident Medical Officer, Dr. Mouskar, who at 1 p.m. had received the papers and had seen the endorsement about the postmortem examination.
Dr. Mouskar 's explanation that he sent the telegram to the appellant for the removal of the body without informing him about the postmortem examination is too ingenious to be accepted by any reasonable person.
Dr. Mouskar could not ordinarily countermand what the Honorary Physician had said without at least consulting him, which he admits he did not do.
This is more so, if it was only a matter of the hospital 's reputation.
Whether the corrections were made by Dr. Miss Aneeja in the wards when the call boy took the papers to her (a most unusal course for Dr. Mouskar to have adopted) or whether they were made by Dr. Miss Aneeja in the office of Dr. Mouskar, to the door of which, she admits she had gone, the position remains the same.
Dr. Miss Aneeja no doubt told lies, but she did so in her own interest.
She could not cancel the requisition about postmortem examination on her own without facing a grave charge in which Dr. Mouskar would have played a considerable part.
The fact that this correction did not trouble Dr. Mouskar and that his dealings with the body were most unusual points clearly to its being made at his instance.
Dr. Miss Aneeja invented the story about Dr. Saify as a last resort knowing that unless she named somebody the responsibility would be hers.
The corrections were made at the instance of Dr. Mouskar, because Dr. Mouskar admits that he sent the papers to the 63 494 Ward for final diagnosis in the face of the endorsement for postmortem examination, and Dr. Miss Aneeja admits making the corrections at the door of Dr. Mouskar 's office.
In our opinion, both of them are partly correct.
Dr. Mouskar made the first move in getting the papers corrected, and Dr. Miss Aneeja corrected them not at the door of the office, because there was no Dr. Saify there but in the office, though she had not the courage to name Dr. Mouskar as the person who had ordered the correction.
Dr. Mouskar 's telegram and his sending the body to another morgue without the postmortem examination show only too clearly that it was he who caused the change to be made.
It is also a question whether the correction about 'acetone + + 'was not also made simultaneously.
We do not believe that the corrections were made as late as November 15, because his telegram for the removal of the dead body and its further removal to the J. J. Hospital would not fit in with the endorsement for postmortem examination on the case papers.
Now, the question is not whether Dr. Mouskar made the correction or Dr. Miss Aneeja, but whether the appellant had anything to do with it.
Dr. Miss Aneeja stated that the appellant was present till the visit of Dr. Variava was over and this is borne out by the reply of the appellant, because in the inland letter he mentioned the time of the death which the telegram did not convey to him and which he could have only known if he was present in the hospital.
We believe Dr. Miss Aneeja when she says that the appellant was present at the hospital, and the circumstances of the case unerringly point to the conclusion that he knew of the demand for a postmortem examination.
Though Dr. Mouskar and the appellant denied that they met, there is reason to believe that the appellant knowing of the postmortem examination would not go away without seeing that the postmortem examination was duly carried out or was given up.
Dr. Mouskar and the appellant both admitted that they were together in the same class in 1934 in the S P. College, Poona, though both of them denied that 495 they were acquainted with each other.
Dr. Mouskar stayed in Poona from 1922 to 1926, 1931 to 1936 and 1948 to 1951.
The appellant was practising at Poona as a doctor, and it is improbable that they did not get acquainted during Dr. Mouskar 's stay, belonging, as they do, to the same profession.
Dr. Mouskar further tried to support the appellant by saying that at 1 p.m. when he saw the case papers the entry about acetone was read by him.
He forgot that in the examinationin chief he had stated very definitely that he had not read the case papers fully and had only seen the top page.
When he was asked for his explanation, he could not account for his conduct in the witness box, and admitted his mistake.
There are two other circumstances connected with Dr. Mouskar, which excite considerable suspicion.
The first is that he mentioned hysterical fits as the illness from which Laxmibai suffered when Dr. Ugale had questioned it and postmortem had been asked for to establish the cause of death.
The next is that the call book of the hospital for the period was not produced by him as long as he was in office.
When he retired, the call book was brought in by his successor, and it established the very important fact that it was not Dr. Saify, the Registrar, who was summoned but Dr. Shah, who had also signed the call book in token of having received the call.
Dr. Mouskar 's conduct as the Resident Medical Officer in having the postmortem examination cancelled was a great lapse, and it is quite obvious to us that the finding by the two Courts below that this was done at the request of the appellant is the only inference possible in the case.
The alternative suggestion in the argument of the appellant 's counsel that Dr. Mouskar thought that Dr. Variava was making " a mountain out of a mole hill " and that " the reputation of the hospital was involved " does not appeal to us, because if that had been the motive, Dr. Mouskar would have talked to Dr. Variava and asked him to revise his own opinion.
The cancellation of the requisition for postmortem examination came to Dr. Variava as a surprise, because he stated that he had heard nothing about it.
496 From the above analysis of the evidence, we accept the following facts: The appellant was present in the hospital till the death of Laxmibai, and in his presence, Dr. Variava examined Laxmibai and questioned the diagnosis of Dr. Miss Aneeja and gave the instructions for the postmortem examination.
Dr. Variava 's stay was only for 15 minutes, and at the end of it, Laxmibai expired.
The statement of the appellant that he caught the 10 30 train from Bombay to Poona because he was asked by the Matron to leave the female ward, and that he was going back to get a female attendant from Poona, is entirely false.
He took no action about a female attendant either in Bombay or in Poona, and he could not have left by the 10 30 train if he was present in the hospital till 11 30 a.m.
We are also satisfied that Dr. Miss Aneeja did not cancel the endorsement about the postmortem examination on her own responsibility.
She was ordered to do so.
We are also satisfied that it was not Dr. Saify who had given this order, but it must have been Dr. Mouskar, who did so.
We are also satisfied that Dr. Mouskar did not induce Dr. Miss Aneeja to cancel the postmortem by sending the case papers through the call boy of her Ward, but she was summoned to the office, to the door of which she admits she had gone.
We are, therefore, in agreement with the two Courts below that Dr. Mouskar caused these changes to be made, and that Dr. Miss Aneeja did not have the courage to name the Resident Medical Officer, and lied by introducing the name of Dr. Saify.
We are also satisfied that Dr. Mouskar and the appellant were acquainted with each other not only when they were in College together but they must have known each other, when Dr. Mouskar was residing at Poona.
The cancellation of the postmortem examination was caused by the appellant, because Dr. Mouskar 's explanation on this part of the case is extremely unsatisfactory, and his failure to consult Dr. Variava, if it was only a hospital matter, is extremely significant.
The appellant 's immediate exit from the hospital and the telegram to him at Poona show that Dr. Mouskar knew where the appellant was to be 497 found.
The telegram conveyed to the appellant that the postmortem was not to be held, because it said that the body should be immediately removed.
Now, the appellant, as we have said, took no action about Laxmibai 's death and kept this information to himself.
He did not also arrange for the removal of the body.
He sent an inland letter which, he knew would take a day or two to reach the hospital.
He knew that the body would be lying unclaimed at the hospital, and that the hospital could not hold the body for ever without taking some action.
The appellant is a doctor.
He has studied in medical institutions where bodies are brought for dissection purposes, and he must be aware that there is an Anatomy Act, under which unclaimed bodies are handed over to Colleges after 48 hours for dissection.
He also knew that the cause of death would become more and more difficult to determine as time passed on, and it is quite clear that the appellant was banking on these two circumstances for the avoidance of any detection into the cause of death.
He had also seen to it that the postmortem examination would not be made, and he knew that if the body remained unclaimed, then it would be disposed of in accordance with the Anatomy Act.
He wrote a letter which he knew would reach the hospital authorities, and he named a fictitious brother who, he said, could not arrive before the 16th from Calcutta.
This delay would have gained him three valuable days between the death and any likely examination, and if the body remained unclaimed, then it was likely to be disposed of in the manner laid down in the Anatomy Act.
The anticipations of the appellant were so accurate that the body followed the identical course which he had planned for it, and it is an accident that ten days later a postmortem examination was made, because an observant peon noticed some mark on the neck which he thought, was suspicious.
But for this, it would have been impossible to trace what happened to Laxmibai, because the hospital papers would have been filed, the body dissected by medical students and disposed of and the relatives and friends kept in the dark about the whereabouts of Laxmibai by spurious letters.
498 This brings us to another piece of conduct which we have to view.
When Laxmibai boarded the train, she had a bedding and a bag with her, which she was seen carrying at the Par by Patil (P. W. 60) on the night she left Poona.
There is a mass of evidence that Laxmibai was in affluent circumstances, and always wore on her person gold and pearl ornaments.
There is also evidence that she had taken Rs. 50 from Virkar the night she travelled, and presumbly she was carrying some more money with her, because she had to consult a specialist in Bombay and money would be required to pay him.
When she reached the hospital in the company of the appellant, she had no ornaments on her person, no money in her possession and her bag and bedding had also disappeared.
As a matter of fact, there was nothing to identify her or to distinguish her from any other indigent woman in the street.
There is no explanation which any reasonable person can accept as to what happened to her belongings.
It is possible that the bag and the bedding might have been forgotten in the hurry to take her to the hospital, but her gold ornaments on her person could not so disappear.
The appellant stated that he noticed for the first time in the taxi that she had no ornaments on her person; but there would be no need for him to notice this fact if Laxmibai started without any ornaments whatever.
In view of the fact that Laxmibai 's entire property soon passed into the hands of the appellant, it is reasonable to hold that he would not overlook the valuable gold and pearl ornaments in this context.
Further, the absence of the ornaments and other things to identify Laxmibai rendered her anonymity complete, in so far as the hospital was concerned, unless information to that end was furnished by the appellant only.
In the event of Laxmibai 's death in the hospital, no complication would arise if she did not possess any property and the body would be treated as unclaimed, if none appeared to claim it.
In addition to the stripping of the lady of her belongings, the appellant took measures to keep her 499 identity a close secret.
No doubt, he gave her name as " Indumati ", but he added to it her maiden surname in a garbled form.
According to Dr. Ugale, the name given was " Paunshe ".
In every one of the other papers, the name appears to have been corrected by the addition of some letter resembling Ilk " but not in the case papers.
Dr. Ugale swore that he had not heard the name " Paunshe " before, though his mother tongue is Marathi, and he is himself a Maharashtrian.
He, therefore, asked the appellant to spell the name, and he was definite that the name was written as spelt by the appellant.
There is, however, other evidence coming from the appellant himself to show that he did not give the correct maiden surname of Laxmibai, because in the letter he wrote to the hospital he only stated that there was an extra " u " in the name as entered in the papers but did not mention anything about " k ".
His solicitude about the name and its spelling in the case papers clearly shows that his mind even under the stress of these circumstances was upon one fact only that the name should remain either " Paunshe " or " Panshe " and not become " Ponkshe ".
Indeed, one would expect the appellant to have given the name " Laxmibai Karve " or " Indumati Karve " instead of " Indumati Ponkshe ", and much less, " Indumati Paunshe ".
There must be some reason for the appellant choosing the maiden surname, even if he gave the correct maiden name.
The reason appears to be this: Either he had to say at the hospital that he did not know the name, or he had to give some name.
If he said that he did not know the name, it would have caused some suspicion, and the matter would then have been entered in the emergency police case register.
This is deposed to by the doctors in the hospital.
By giving the name, he avoided this contingency.
By giving a garbled name, he avoided the identity, if by chance that name came to the notice of some one who knew Laxmibai.
His intention can only be interpreted in the light of his subsequent conduct and the use to which be put this altered name.
We have already seen that he did the fact of death from every 500 one and wrote to people that the woman was alive.
He had two opportunities of correcting this name which he had noticed very carefully on the case papers.
The first was when he wrote the letter to the hospital in which he insisted that " u " should be omitted but did not add " k ".
The other was when on the 16th the police questioned him and he stated that he did not know who the woman was.
He also gave the age of the woman wrongly, and perhaps, deliberately : see the correction and overwritings in the inland letter he wrote on November 14, 1956.
Immediately after the death of Laxmibai, he misappropriated a sum of Rs. 5,000 by presenting two documents, Exs. 285 and 286, without disclosing to the Bank that the person who had issued the cheque was no more.
All this subsequent conduct gets tied to his conduct in giving the name as " Indumati Paunshe " or " Panshe "; and it shows a foreknowledge of what was to happen to Indumati at the hospital.
It also shows a preparation for keeping the fact of her death hidden from others to facilitate the misappropriation of her property, which as we know, eventually took place starting from November 15, that is to say, two days following her death.
No explanation worth considering exists why this name was given, and the effort of the counsel for the appellant that he was probably on intimate terms with Laxmibai and chose to call her by her maiden name rather than her married name is belied by the fact that in every document in which the name has been mentioned by the appellant, he has adderssed her as Laxmibai Karve and not as Indumati Ponkshe.
There is no evidence that this elderly lady was anything more than a foolishly trusting friend of this man who took advantage of her in every way.
Then, there is the conduct of the appellant in not disclosing to the hospital authorities the entire case history of Laxmibai and the treatment which he had been giving her as her medical attendant.
Instead of telling the doctor all the circumstances of her health, he told him that the woman was suffering from hysterical fits, which fits, according to the 501 evidence in the case, did not recur after 1948.
He also did not give any particulars of the onset of unconsciousness in the train.
Even the fact that Laxmibai had suffered from diabetes for some years was not mentioned, and this shows that he was intent upon the medical attendants in the hospital treating the case from a scratch and fumbling it, if possible.
To him, it appears to us, it was a matter of utter indifference what treatment was given to her, an attitude which he continued to observe even after his patient had died.
In our opinion, therefore, the conduct at the hospital appears significantly enough to suggest that he anticipated that Laxmibai was doomed, and he was intent upon seeing to it that no one but himself should know of her death and that a quiet disposal of her body should take place.
We may mention here one other fact, and that is that the G.T. Hospital, is situatted at a distance of 5 or 6 furlongs from the Victoria Terminus Station, whereas the St. George 's Hospital is said to be only 50 feet away from the main entrance.
Why an unconscious woman was carried first on a stretcher and then in a taxi to this distant hospital when she could have been carried straight to the hospital on the stretcher itself, is not explained.
There is of course, this significant fact that at the St. George 's Hospital he would not have been able to pull his weight with the medical authorities, which he was able to do with Dr. Mouskar because of his acquaintance with him.
This choosing of the hospital is of a piece with the choosing of an inconvenient train which would make detection difficult, arrival at the hospital when it would be closed except for emergency cases, and the patient likely to be waited upon by a raw and inexperienced doctor in the early hours of the morning.
We, however, cannot say this too strongly, because it is likely that Laxmibai herself chose to travel by a night train.
But the whole of the conduct of the appellant prior to the death of Laxmibai appears to be of a piece with his conduct after her death, and we are satisfied that even before her entry into the hospital, the appellant had planned this line of conduct.
64 502 Our findings thus substantially accord on all the relevant facts with those of the two Courts below, though the arrangement and consideration of the relevant evidence on record is somewhat different.
It is now necessary to consider the arguments which have been advanced on behalf of the appellant.
The first contention is that the essential ingredients required to be proved in all cases of murder by poisoning were not proved by the prosecution in this case.
Reference in this connection.
is made to a decision of the Allahabad High Court in Mst.
Gujrani vs Emperor (1) and two unreported decisions of this Court in Chandrakant Nyalchand Seth vs The, State of Bombay(2) decided on February 19, 1958, and Dharambir Singh vs The State of Punjab (3) decided on November 4, 1958.
In these cases, the Court referred to three propositions which the prosecution must establish in a case of poisoning: (a) that death took place by poisoning; (b) that the accused had the poison in his possession ; and (c) that the accused had an opportunity to administer the poison to the deceased.
The case in Dharambir Singh V.
The State of Punjab (3) turned upon these three propositions.
There, the deceased had died as a result of poisoning by potassium cyanide, which poison was also found in the autopsy.
The High Court had disbelieved the evidence which sought to establish that the accused had obtained potassium cyanide, but held, nevertheless, that the circumstantial evidence was sufficient to convict the accused in that case.
This Court did not, however, accept the circumstantial evidence as complete.
It is to be observed that the three propositions were laid down not as the invariable criteria of proof by direct evidence in a case of murder by poisoning, because evidently if after poisonidgthevictim, the accused destroyed all traces of the body, the first proposition would be incapable of being proved except by circumstantial evidence.
Similarly, if the accused gave a victim something: to eat and the victim died immediately on the ingestion of that food with symptoms of poisoning and (1) A.I.R. 1933 All. 394.
(2) Cr. A. No. 120 Of 1957.
(3) Cr. k. No. 98 of 1958.
503 poison, in fact, was found in the viscera, the requirement of proving that the accused was possessed of the poison would follow from the circumstance that accused gave the victim something to eat and need not be separately proved.
There have been cases in which conviction was maintained, even though the body of the victim had completely disappeared, and it was impossible to say, except on circumstantial evidence, whether that person was the victim of foul play, including poisoning.
Recently, this Court in Mohan vs State of U. P. (1) decided on November 5, 1959, held that the proof of the fact of possession of the poison was rendered unnecessary, because the victim died soon after eating pedas given by the accused in that case, and he had not partaken any other food likely to contain poison.
In Dr. Palmer 's case (2) , strychnine was not detected, and the accused was convicted by the jury after Lord Chief Justice Campbell (Cresswell, J. and Mr. Baron Alderson , concurring) charged the jury that the discovery of the poison on autopsy, was not obligatory, if they were satisfied on the evidence of symptoms that death had been caused by the ministration of the strychnine.
The conduct of Palmer, which was also significant, was stressed inasmuch as he had attempted to thwart a successful chemical analysis of the viscera, and had done suspicious acts to achieve that end.
In Dr. Crippen 's case (3), the conduct of the accusedafter the death of Mrs. Crippen in making the friends and relatives believe that Mrs. Crippen was alive was considered an incriminatory circumstance pointing to his guilt.
No doubt, in Dr. Crippen 's case (3), the body was found and poison was detected, but there was no proof that Dr. Crippen had administered the poison to her, that being inferred from his subsequent conduct in running away with Miss Le Neve.
In the second case of this Court, the poison was availiable to the victim, and it was possible that she had taken it to end an unhappy life.
The cases of this Court which were decided, proceeded upon their own facts, and though the three (1) Cr. A. No. 108 of 1959.
(2) Notable Trials Series.
(3) Notable Trials Series.
504 propositions must be kept in mind always, the sufficiency of the evidence, direct or circumstantial, to establish murder by poisoning will depend on the facts of each case.
If the evidence in a particular case does of not justify the inference that death is the result of poisoning because of the failure of the prosecution to prove the fact satisfactorily, either directly or by circumstantial evidence, then the benefit of the doubt will have to be given to the accused person.
But if circumstantial evidence, in the absence of direct proof of the three elements, is so decisive that the Court can unhesitatingly hold that death was a result of administration of poison (though not detected) and that the poison must have been administered by the accused person, then the conviction can be rested on it.
In a recent case decided in England in the Court of Criminal Appeal (Regina vs Onufrejczyk (1), the body of the victim was not found at all.
And, indeed, there was no evidence that he had died, much less was murdered.
The accused 's conduct in that case which was held decisive, was very similar to the conduct of the present appellant.
He was in monetary difficulties, and the victim was his partner, whom he wished to buy out but did not have the money to do so.
One fine day, the partner disappeared, and his body was not found, and it was not known what had happened to him.
The activities of the accused after the disappearance of his partner were very remarkable.
To people who enquired from him about his partner, he told all manner of lies as to how a large and dark car had arrived in the night and that three men bad carried off his partner at the point of a revolver.
To a sheriff 's officer he stated that his partner had gone to see a doctor.
He also asked a lady to send him some sham registered letters and forged other documents.
Lord Chief Justice Goddard stated the law to be that in a trial for murder, the fact of death could be proved by circumstantial evidence alone, provided the jury were warned that the evidence must lead to one conclusion only, and that even though there was no body or even trace of a body or any direct evidence as to (1) [1955] 1.Q.B 388.
505 the manner of the death of a victim, the corpus delicti could be held to be proved by a number of facts, which rendered the commission of the crime certain.
pertinent to remember that Lord Goddard observer during the course of argument that there was no virtue in the words " direct evidence ", and added: "It would be going a long way, especially these days when we know what can be done with acid, to say that there cannot be a conviction without some proof of a body.
If you are right you have to admit that a successful disposal of the body could prevent a conviction.
" It is obvious that Lord Goddard had in mind the case of John George Haigh (1) who, as is notorious, disposed of bodies by steeping them in acid bath, destroying all traces.
It is, in this context, instructive to read a case from Now Zealand to which Lord Goddard also referred, where the body of the victim was never found, The King vs Horry (2 ).
The statement of the law as to proof of corpus delicti laid down by Gresson,J. (concurred in by Fair, A.C.J., Stanton, J. and Hay, J.) was approved by Lord Goddard with one slight change.
The statement of the law (head note) is as follows : " At the trial of a person charged with murder, the fact of death is provable by circumstantial evidence, notwithstanding that neither the body nor any trace of the body has been found, and that the accused has made no confession of any participation in the crime.
Before he can be convicted, the fact of death should be proved by such circumstances as render the commission of the crime morally certain and leave no ground for reasonable doubt: the circumstantial evidence should be so cogent and compelling as to convince a jury that upon no rational hypothesis other than murder can the facts be accounted for." Lord Goddard did not agree with the words " morally certain " and stated that he would have preferred to say " such circumstances as render the commission of the crime certain." (1) Notable Trials Series.
(2) [1952) N.Z.L.R. 111.
506 The same test has been applied by Wills in his Book on Circumstantial Evidence, and the author has quoted the case of Donellan (1), where the conduct of Donellan in rinsing out a bottle in spite of the wife of the victim asking him not to touch those bottles, was treated as a very significant evidence of guilt.
Butler, J., charged the jury that: " if there was a doubt upon the evidence of the physical witnesses they must take into their consideration all the other circumstances either to show that there was poison administered or that there was not, and that every part of the prisoner 's conduct was material to be considered.
" Similarly, in Donnall 's case (2 ), Abbot, J., according to Wills, in summing up, said to the jury that: "there were two important questions: first did the deceased die of poison? and if they should be of opinion that she did, then whether they were satisfied from the evidence that the poison was administered by the prisoner or by his means.
There were some parts of the evidence which appeared to him equally applicable to both questions, and those parts were what related to the conduct of the prisoner during the time of the opening and inspection of the body; his recommendation of a shell and the early burial; to which might be added the circumstances, not much to be relied upon, relative to his endeavours to evade his apprehension.
His Lordship also said, as to the question whether the deceased died by poison, I in considering what the medical men have said upon the one side and the other, you must take into account the conduct of the prisoner in urging a hasty funeral and his conduct in throwing away the contents of the jug into the chamber utensil '." In Rex vs Horry (3), where the entire case law in England was presented for the consideration of the Court, it was pointed out by the Court that there was no rule in England that corpus delicti must be proved by direct evidence establishing the death of the person (1) Gurneys Rep. (1781) (2) (3) [1952] N.Z.L.R. 111.
507 and further, the cause of that death.
Reference was made to Evans vs Evans(1), where it was ruled that that corpus delicti might be proved by direct evidence or by " irresistible grounds of presumption ".
In the same case, it has been pointed out that in New Zealand the Court upheld numerous convictions, where the body of the victim was never found.
The rule of law stated by Sir Matthew Hale in Pleas of the Crown Vol. 2, p. 290 that " I would never convict any person of murder or manslaughter, unless the fact were proved to be done, or at least the body found dead " was not accepted in this and other bases.
Lord Goddard also rejected the statement as one of universal application, in the case to which we have already referred.
The case of Mary Ann Nash(2) is illustrative of the proposition that even though the cause of death may not appear to be established by direct evidence, the circumstances of the case may be sufficient to infer that a murder has been committed.
In that case, the prisoner had an illegitmate son, 5 years old.
There was evidence to show that the mother desired to put the child out of her way.
One day in June, 1907, the mother left the house and returned without the child.
She made several statements as to what had happened to the child, which were found to be untrue.
As late as April 1908, the body of a child was discovered in a well.
Decomposition had so far advanced that even the sex of the child could not be determined.
There was nothing therefore to show whether death was natural or violent, or whether it had occurred before or after the body was put into the well.
The case was left to the jury.
On appeal, it was contended that there being no proof how death took place, the judge should not have left the case to the Jury but ought to have withdrawn it.
Lord Chief Justice delivering the judgment of the Court of Appeal referred to the untrue statements of the prisoner about the wherebouts of the child, and observed as follows: " All these statements were untrue.
She bad an object in getting rid of the child, and if it had been (1) 161 E.R. 466, 491.
(2) 508 lost or met with an accidental death, she had every interest in saying so at once.
It is said there is no evidence of violent death, but we cannot accept that Mr. Goddard cannot have meant that there must be proof from the body itself of a violent death.
In view of the facts that the child left home well and was afterwards found dead, that the appellant was last seen with it, and made untrue statements about it, this is not a case which could have been withdrawn from the jury.
" There is no difference between a trial with the help of the jury and a trial by a Judge in so far as the appraisement of evidence is concerned.
The value of the evidence in each case must necessarily be the same.
If the case of Mary Ann Nash (1) could be left to the jury, here too the case has been decided by the two Courts below concurrently against the appellant on evidence on which theY could legitimately reach the conclusion whether an offence of murder had been established or not.
A case of murder by administration of poison is almost always one of secrecy.
The poisoner seldom takes another into his confidence, and his preparations to the commission of the offence are also secret.
He watches his opportunity and administers the poison in a manner calculated to avoid its detection.
The greater his knowledge of poisons, the greater the secrecy, and consequently the greater the difficulty of proving the case agaisnt him.
What assistance a man of science can give he gives; but it is too much to say that the guilt of the accused must, in all cases, be demonstrated by the isolation of the poison, though in a case where there is nothing else such a course would be incumbent upon the prosecution.
There are various factors which militate against a successsful isolation of the poison and its recognition.
The discovery of the poison can only take place either through a postmortem examination of the internal organs or by chemical analysis.
Often enough, the diagnosis of a poison is aided by the information which may be furnished by relatives and friends as to the symptoms 1 161 E R. 466 491 509 found on the victim, if the course of poison has taken long and others have had an opportunity of watching its effect.
Where, however, the poision is administered in secrecy and the victim is rendered unconscious effectively, there is nothing to show how the deterioration in the condition of the victim took place and if not poison but disease is suspected, the diagnosis of poisoning may be rendered difficult.
In Chapman 's case(1), the victim (Maud Marsh) was sent to Guy 's Hospital, where the doctors diagnosed her condition to be due to various maladies including cancer umatism and acute dyspepsiaIt is clear that doctors can be deceived by thesymptoms of poison into believing tHat they have a genuine case of sickness on hand.
In Dr. Palmer 's case (2), two medical witnesses for the defence diagnosed the case from the symptoms as being due to Angina Pectoris or epilepsy with tetanic complications.
The reason for all this is obvious.
Lambert in his book "The Medico Legal Post Mortem in India (pp. 96,99.100) has stated that the pathologist 's part in the diagnosis of poisoning is secondary, and has further observed that several poisons particularly of the synthetic hypnotics and vegetable alkaloids groups do not leave any characteristic signs which can be noticed on postmortem examination.
See Modi 's Medical Jurisprudence and Toxicology, 13th Edn., pp.
450 451 and Taylor 's Principles and Practice of Medical Jurisprudence, Vol.
ll,p. 229.
The same is stated by Otto Saphir in his book " Autopsy " at pp.
71 and 72.
In Dreisbach 's Handbook of Poisons.
1955, it is stated that pathological findings in deaths from narcotic analgesics are not characteristic.
He goes further and says that even the laboratory findings are non contributory.
The position of the pathologist who conducts a postmortem examination has been summed up by Modi in Medical Jurisprudence and Toxicology, 13th edn.
, p. 447 as follows: " In order to make a probable guess of the poison and to look for its characteristic postmortem appearances, it is advisable that a medical officer, before (1) Notable Trials Series.
(2) Notable Trials Series.
65 510 commencing a postmortem examination on the body of a suspected case of poisoning, should read the police report and endeavour to get as much information as possible from the relatives of the deceased regarding the quality and quantity of the poison administered, the character of the symptoms with reference to their onset and the time that elapsed between the taking of the poison and the development of the first symptoms, the duration of the illness, nature of the treatment adopted, and the time of death.
He will find that in most cases the account supplied by the police and the relatives is very meagre, or incorrect and misleading.
His task is, therefore, very difficult, especialy when many of the poisons except corrosives and irritants do not show any characteristic postmortem signs and when bodies are in an advanced state of decomposition . ".
Similarly, Gonzales in Legal Medicine and Toxicology states at p. 629: " The question of whether or not a negative toxicologic examination is consistent with death by poison can be answered affirmatively, as may persons overcome by carbon monoxide die after twenty four hours, at which time the gas cannot be determined in the blood by chemical tests.
Likewise, the organs of individuals who have been poisoned by phosphorus may not contain the toxic substance respons ible for death if they have managed to survive its effects for several days.
Many conditions seriously interfere with the toxicologic examination, such as postmortem decomposition .
We need not multiply authorities, because every book on toxicology begins with a statement of such a fact.
Of course, there is a chemical test for almost every poison, but it is impossible to expect a search for every poison.
Even in chemical analysis, the chemical analyser may be unsuccessful for various reasons.
Taylor in his Principles and Practice of Medical Jurisprudence, Vol.
11, p. 228 gives three possible explanations for negative findings, viz., (1) the case 511 may have been of disease only; (2) the poison may have been eliminated by vomitting or other means or neutralised or metabolised; and (3) the analysis may have been faultily performed.
Svensson Wendel in Crime Detection has stated at p. 281 that: " Hypnotics are decomposed and disappear very quickly some even in the time which elapses between the administration and the occurrence of death.
Circumstantial evidence in this context means a combination of facts creating a net work through which there is no escape for the accused, because the facts taken as a whole do not admit of any inference but of his guilt.
To rely upon the findings of the medical man who conducted the postmortem and of the chemical analyser as decisive of the matter is to render the other evidence entirely fruitless.
While the circumstances often speak with unerring certainty, the autopsy and the chemical analysis taken by themselves may be most misleading.
No doubt, due weight must be given to the negative findings at such examinations.
But, bearing in mind the difficult task which the man.
of medicine performs and the limitations under which he works, his failure should not be taken as the end of the case, for on good and probative circumstances, an irresistible inference of guilt can be drawn.
In the present case, the effort of the appellant has been to persuade the Court that the death of Laxmibai was possibly the result of disease rather than by poison.
During the course of the case and the appeal, various theories have been advanced and conflicting diagnoses have been mooted.
The case of the appellant has wavered between death by diabetic coma and by hypoglycemia, though relying upon the condition of the arteries and the aorta and the rigidity of the neck , suggestions of coronary complications and renal failure have also been made.
We have shown above that this was not a case of diabetic coma, because of the absence of the cardinal symptoms of diabetic coma.
This also is the opinion of Dr. Variava and Dr. Mehta, though Dr. Jliala, for reasons which we have indicated, accepted it.
The appellant argued again the case 512 from the angle of diabetic coma, but later veered in favour of hypoglycemia.
This change noticeable not only in the arguments before us but also throughout the conduct of the case is merely to confuse the issue, and create, if possible, a doubt, which would take the mind away from the surrounding circumstances, and focus it only upon the medical aspect of the case.
Full advantage has been taken of the findings of Dr. Ugale and Dr. Miss Aneeja, which suggest partly an onset of diabetic coma, partly of hypoglycemia, and partly of renal failure.
There is no true picture of any one disease.
The rigidity of the neck was not reflected in the chemical analysis of the cerebro spinal fluid and was negatived, in so far as renal failure is concerned, by the negative findings about albumin.
Diabetic coma stood ruled out by the presence of the Babinsky sign and the suddenness of the onset, the negative aspect of acetone breath and the rather remarkable failure of the specific treatment given for it to have worked any change.
Driven from these considerations to such doubtful suggestions as coronary complications of which no physical evidence was found by Dr. Jhala, the appellant put his case 'on hypoglycemia, and relied upon the fact that at the hospital 40 units of insulin intravenously and another 40 units subcutaneously were administered.
Medical text books were quoted to show that in the case of hypoglycemic coma the introduction of even a small quantity of insulin sometimes proves fatal.
The learned AdvocateGeneral stoutly resisted this move, which was at variance with the case as set out before the High Court, because it is obvious enough that if one accepted the theory of hypoglycemic coma, the only injections of insulin causing such shook would be proved to have been given at the hospital and not by the appellant.
Here, the position, however, is not so difficult for the State, because Laxmibai was found to have 4 oz. of pasty meal in her stomach, and with food inside her, the possibility of hypoglycemia taking place naturally was extremely remote.
If it was hypoglycemic coma due to excessive administration of insulin, then it must have been administered prior to its onset, and who could have 513 given it but the appellant ? Even though coma supervenes suddenly, the patient passes through symptoms of discomfort, and Laxmibai would have told the appellant about it in the train.
The appellant mentioned nothing of this to Dr. Ugale.
If an excessive dose of insulin was given by the appellant, the question of intent would arise, and the conduct shows the intention.
There were no pronounced symptoms of hypoglycemia either.
Laxmibai just passed from unconsciousness to death without the manifestation of any of the signs associated with the syndrome of hypoglycemic death.
It is also to be remembered that hypoglycemic coma is generally overcome by the administration of a very small quantity of glucose (5 or10 grams of glucose orally): Treatment of Diabetes Mellitus by Joslin, Root and White, p. 350.
The 40 units given intravenously were mixed with 20 C. C. of glucose and carried the palliative with them.
Even otherwise, Laxmibai was receiving glucose by intragastric drip, and during the three and a half hours, there should have been an improvement.
The surprising part is that the administration of the insulin and glucose brought about no visible symptoms in the patient either for better or for worse.
She passed into death, and the inference can only be that she did not die of these diseases of which she was either suspected or for which she was treated but of something else, which could not answer to the treatment given to her.
Dreisbach in his Handbook on Poisons at p. 27 has stated that coma also results from the action of several poisons.
Depressants, sedatives and hypnoties all cause death by coma (ibid.
p. 201).
The symptoms, according to the author, are sleepiness, mental confusion, unsteadiness rapidly followed by coma with slow shallow respiration, flaccid muscles and absent deep reflexes.
The difference between coma due to disease and coma as the result of poisons is stated by him in the following words: Coma from poisoning presumably results from some interference with brain cell metabolism.
In attempting to combat the effects of drugs which induce coma, remember that no agents are known 514 which will specifically overcome the metabolic derangements of drug induced coma.
The mechanism of action of cerebral stimulant drugs is also unknown, but these drugs presumably act by depressing some inhibiting function in the cell.
There is no evidence that any stimulants specifically oppose the cellular metabolic depression induced by the depressant drugs such as the barbiturates.
" No specific antidote is known for the sedative and hypnotic drugs.
(Ibid.
p. 202).
The condition of Laxmibai clearly indicated an impairment of the central nervous system.
It is no doubt true that in some cases of coronary thrombosis, coma supervenes; but it is idle to suggest in the present case that Laxmibai was afflicted by this type of coma, because Dr. Jhala who performed the postmortem examination and opened the coronary arteries found no evidence of thrombosis.
According to Otto Saphir, a myocardial infarct is easily detected.
(Autopsy, pp.
301 302).
Coma in Laxmibai 's case, as we have shown above, was not the result either of acidosis, hypoglycemia, renal failure or meningial irritation.
Her liver, pancreas and kidney were found to have no pathological lesions, and it is significant that no question was even attempted to establish that the opinion of Dr. Jhala on this part of the case was incorrect.
Learned counsel for the appellant suggested that the examination by Dr. Jhala might have been superficial, and might not have included a microscopical examination of sections of some of the vital organs normally affected by diabetes.
This suggestion, in our opinion, ought to have been put forward during the cross examination of the witness, and it is unfair now to suggest that the opinion that no lesions were found was based on either improper or inadequate examination.
We hold that Dr. Jhala performed the examination adequately, and he was also helped by his assistants.
Here, we pause to ask a question why the appellant brought up the question of hysterical fits at all.
He could have said that Laxmibai was a diabetic, and that it was likely she had coma by reason of that 515 disease.
The suggested diagnosis given by the appellant was so unlikely that Dr. Ugale questioned it then and there.
There is nothing in the Wanlesswadi T.B. Sanatorium papers or in Dr. Sathe 's evidence to show that Laxmibai had hysterical fits after her hysterectomy operation.
No suggestion was made to the doctors in Court that Laxmibai might have had hysterical fits.
The condition of the muscles and the absence of deep reflexes clearly show that this was just another piece of deception.
It is not possible to hold that the appellant gave the full particulars to Dr. Miss Aneeja.
No suggestion was made to her or to Dr. Ugale that any information other than what was noted in the case papers was furnished.
There is no case for holding 'that Laxmibai had a relapse of hysterical fits.
It would, therefore, appear that Laxmibai 's condition was not due to any disease, because diseases inducing coma generally leave some trace behind, and also respond to medication.
No doubt, in some cases the pathological findings after death from diabetic coma have been negative, but the question is if this was such a case.
We have, on the one hand, the fact that numerous poisons causing coma leave no identifiable trace in the victim after death, and, on the other, that sometimes the autopsy does not disclose any discoverable signs in a patient who dies after an attack of diabetic coma or disease.
The appellant can be presumed to have had knowledge of these poisons.
The appellant challenged the Advocate General to show from any standard book that the symptoms found by the doctors accorded with any known poison.
Here, it must also be remembered that a man with knowledge may manipulate not one but more drugs to achieve his purpose, and the cardinal signs of poisoning on the victim may, as a result, be either obliterated or, at least significantly modified.
We give one example on ,which a certain amount of knowledge is possessed even by laymen.
A poison of which one of the symptoms would be the contracting of the pupils of the eyes may be side tracked by putting into the eyes of the victim a drug like atropine, which by its local 516 action dilates the pupils.
We give this example, because most of us know the action of atropine on the eyes, and because the example also shows how easily a person with knowledge may confuse the symptoms by a simple trick.
We are not suggesting that this is what has happened in this case; but when we have to deal with a case of crime versus natural death, we cannot overlook the possibility of some ingenious artifice having been used to screen the action.
If Laxmibai died in circumstances which prima facie admit of either disease or homicide by poisoning, we must look at the conduct of the appellant who brought her to the hospital, and consider to what conclusion that conduct unerringly points.
If the appellant as an honest medical man had taken Laxmibai to the hospital and she had died by reason of disease, his conduct would have been entirely different.
He would not have taken her to the hospital bereft of property with which she started from home; he would not have given a wrong or misleading name to cover her identity; he would not have given a wrong age and wrong history of her ailments; he would not have written a letter suggesting that she had a brother in Calcutta, which brother did not exist; he would not have abandoned the corpse to be dealt with by the hospital as an unclaimed body; he would not have attempted to convince the world that she was alive and happily married; he would not have obtained her property by forgeries, impersonation and other tricks indulged in both before and after her death; but he would have informed her relatives and done everything in his power to see that she was properly treated and stayed on to face whatever inquiry the hospital wished to make into the cause of death and not tried to avoid the postmortem examination and would not have disappeared, never to reappear.
His prevarications about where ' Laxmibai was, make a big and much varied list, and his forgeries cover scores of documents.
In the words of Baron Parke in Towell 's case (1): Circumstantial evidence is the only evidence which can in cases of this kind lead to discovery.
(1)(1854) ; 517 There is no way of investigating them except by the use of circumstantial evidence; but it most frequently happens that great crimes committed in secret leave behind them some traces, or are accompanied by some circumstances which lead to the discovery and punishment of the offender.
Direct evidence of persons who saw the fact, if that proof is offered upon the testimony of men whose veracity you have no reason to doubt is the best proof; but, on the other hand, it is equally true with regard to circumstantial.evidence, that the circumstances may often be so clearly proved, so closely connected with it, or leading to one result in conclusion, that the mind may be as well convinced as if it were proved by eye witnesses.
" The appellant in this case took some risk in taking Laxmibai to the hospital arid in giving his name there; and these aspects were, in fact, stressed as arguments in the case.
As regards the first part, the argument overlooks that what appears to us to be a risk might not have so appeared to the appellant, who might have been sure of his own ability to screen himself.
To him, the death of Laxmibai at the hospital without discovery of poison would be the greatest argument in his favour that he had acted honestly.
The second argument is equally unacceptable to us.
The appellant could not take the risk of a false name and address, if he was intending that the body should be disposed of as unclaimed.
By giving his own address he could keep the strings in his own hands.
If he gave an address and no reply came from that address, the hospital would suspect foul play.
If he gave the address of Laxmibai, people in Poona would know of this mysterious death, and they would remember the death of Purshottam alias Arvind in 1954.
At that time also a postmortem examination on the body of Arvind was held (see, evidence of Ramachandra (P. W. 1)), and the explanation of the appellant given in writing on January 22, 1954, is set out below in his own words: " My name is Anant Chihtaman Lagu, age. years, residing at No. 431/5, Madiwale Colony, Poona, on 66 518 being questioned state that I am the family doctor of Karve family in H. No. 94 95, Shukrawar.
The deceased Purshottam Anant Karve belongs to that family.
He came from Bombay to Poona on Saturday, the 16th January, 1954.
He had come to me on Sunday, the 17th February, 1954, for medicine for weakness.
I treated him for 2 clays, on 17th and 18th.
He had neither told me that there was poisoning in his stomach, nor did I detect any even when I examined and treated him.
He became unconscious 5 hours before his death.
He was taken to the Sassoon Hospital at 9 p.m. on 18th January, 1954.
He was taken to the Sassoon Hospital because his disease was increased in unconsciousness and also because his mother as also myself and Dr. Joshi were of the same opinion.
He died there in about 30 to 45 minutes.
The fact that there was deliberate poisoning by somebody, was neither revealed in my examination nor did Purshottam Karve speak to me anything about it during the time I treated him 2 days before.
What exactly was the cause of death could not be revealed during my treatment.
I do not know if somebody is on bad terms with him.
There are rumours about suicide but there is no reason or any circumstance whatsoever for doing so.
" A false address would have started enquiries at the hospital end.
Laxmibai 's own address would have started speculation in Poona.
It was for this reason that the appellant had to choose another place and to trim between fact and fiction so that he might be able to deal with the matter himself Of course, Laxmibai did have an address of her own which could have been given, and which did not cease to be her address because she had got an attack of coma, from which people are known to recover.
These arguments, however, are of no avail, in view of the appellsnt 's entire conduct now laid bare, which conduct has been proved to our satisfaction to have begun not after the death of Laxmibai but much ,earlier.
This conduct is so knit together as to make a net work of circumstances pointing only to his guilt, 519 The case is one of extreme cunning and premeditation.
The appellant, whose duty it was to care for this unfortunate lady as a friend and as her medical adviser, deliberately set about first to ingratiate himself in her good opinion, and becoming her confidant, found out all about her affairs.
All this time he was planning to get at her property after taking her life.
He did not perpetrate his scheme at Poona, where the death might have brought a host of persons to the hospital.
He devised a diabolical scheme of unparalleled cunning and committed an almost perfect murder.
But murder, though it hath no tongue, speaks out sometimes.
His method was his own undoing; because even the long arm of coincidence cannot explain the multitude of circumstances against him, and they destroy the presumption of innocence with which law clothed him.
In our judgment, the two Courts below were perfectly correct in their conclusion that the death of Laxmibai was the result of the administration of some unrecognised poison or drug which would act as a poison, and that the appellant was the person who administered it.
We, accordingly, confirm the conviction.
As regards the sentence of death passed on the appellant by the Sessions Judge and confirmed by the High Court, it is the only sentence that could be imposed for this planned and cold blooded murder for gain, and we do not interfere with it.
The appeal fails, and it will be dismissed.
SARKARJ.
In my opinion this appeal should be allowed.
The appellant was tried by the Sessions Judge, Poona, on a charge under section 302 of the Indian Penal Code for the murder of Laxmibai Karve on November 13, 1956, by administering poison, to her and was convicted and sentenced to death.
His appeal to the High Court at Bombay against the conviction and sentence failed.
He has now appealed to this Court with special leave.
The evidence against the appellant is all circumstantial.
The question to be decided in this appeal is 520 whether that evidence is such that the only reasonable conclusion from it is that the appellant was guilty of the charge brought against him.
Laxmibai Karve, the deceased, was the widow of one Anant Karve who was a businessman of Poona.
Laxmibai was married in 1922 at the age of eleven to Anant Karve, then a widower.
Her maiden name was Indumati Ponkshe.
After her marriage she was given the name Laxmibai but was also called Indumati or Indutai or Mai Karve or simply Mai.
It does not appear that after her marriage she had been known by her father 's surname of Ponkshe, a fact the significance of which will appear later.
Anant Karve had a son named Vishnu by his first wife.
By Laxmibai he bad two sons, Ramchandra and Purshottam also called Arvind.
Anant Karve died in 1945 leaving a will.
By his will he gave Laxmibai a right of residence in tree rooms in his dwelling house at No. 93 95, Shukrawar Peth, Poona and a right to receive Rs. 50 per month from the rent of that house which was in part let out, and made certain other bequests to her.
He devised the rest of his properties to his sons.
Besides what she had received from her husband, Laxmibai in 1954 inherited the properties of Purshottam who had died interstate and unmarried in that year.
She further inherited a large sum of money and gold ornaments of considerable value from her mother, Girjabai, who had died in 1946 or 1947.
She bad also considerable valuable ornaments of her own.
Her total assets amounted in 1956 to about Rs. 80,000.
Part of her liquid assets were held in shares and debentures in limited companies.
She had also certain moneys in an account in her name in the Bank of Maharashtra.
A considerable sum was due to her from one Joshi to whom she had given a loan.
After the death of her husband, differences cropped up between Laxmibai and her elder SOD, Ramchandra.
In 1946 Ramchandra started living separately from his mother in the same house and used to take his food in a hotel In October 1952, Ramchandra joined military 521 service as a craftsman and left Poona.
Since joining service till the death of Laxmibai he was not residing at Poona but came there now and then.
In May 1956, Laxmibai got Ramchandra married.
After her husband 's death Laxmibai lived in the three rooms in premises No. 93 95, Shukrawar Peth, Poona, in which she had been given a right of residence by her husband 's will.
Her younger son Purshottam also appears to have gone out of Poona on service in 1953, and he died in January 1954.
Since then Laxmibai had been living all by herself.
She had however certain relatives in Poona.
The appellant is a medical doctor.
He and his brother B. C. Lagu, also a doctor, had been the family physicians of Anant Karve during his life time and attended him in his last illness.
After his death the appellant continued to be Laxmibai 's family doctor.
It is clear from the evidence that Laxmibai had great trust and confidence in the appellant and depended on him in all matters concerning her moneys and investments.
It was he who went to the Bank for withdrawing and depositing moneys for her.
In 1955 he actually took on rent a big hall in premises No. 93 95, Shukrawar Peth for his personal use and had been in occupation of it since then.
Laxmibai did not possess very good health.
She had developed a tuberculous lesion some twenty years before her death but it had healed.
She was a chronic diabetes patient since 1946 and started having hysterical fits since 1939.
She suffered from menorrhagia and metrorrhagia since 1942.
On April 11, 1948, Dr. Ghorpure, a surgeon performed an operation on her which is described in these terms: Abdomen opened by mid line sub umbilical incision Subtotal hysterectomy done.
ovary cysticpunctured Appendicectomy.
Abdomen closed after exploring other viscera which were normal.
In 1949 she suffered from pyorrhoea and had her teeth taken out.
In 1950 the tuberculous affection became active and on June 15, 1950, she consulted Dr. Sathe, a lung specialist, who found that there was tuberculous 522 affection of the left lung and he recommended a line of treatment.
This treatment was carried out by the appellant but apparently did not achieve much result.
On July 13, 1950, she got herself admitted into the Wanlesswadi Tuberculosis Sanatorium at Miraj in Bombay for treatment of the tuberculosis.
Two thoracoplasty operations were performed on the left lung and she was recommended a third such operation which she was unwilling to undergo and left the hospital at her own desire.
In the course of these operations nine of her ribs on the left side were removed.
The report given by this hospital on November 17, 1950, reads thus: Patient was admitted on 13th July, 1950.
X Ray on admission showed extensive filtration on the left side with a large cavity in the upper zone; the right side was within normal limits.
She had diabetes with high blood sugar which was controlled by insulin.
Two stages of thoracoplasty operation on the left side were done and there was good clearing of disease but there was a small residual cavity seen and the third stage operation was advised.
The patient is leaving at her own request against medical advice.
Her sputum is positive.
There is no evidence that after she left Wanlesswadi Sanatorium she had any relapse of any of her previous illnesses earlier recounted.
It appears from the evidence of her relation one Datar, a medical man, that Laxmibai had been completely invalid being a frank case of tuberculosis of both the lungs but in November 1956, her health was good and she was cooking her food and moving about in the house.
The other evidence also shows that she was carrying on her daily avocations of ' life in a normal way at that time.
After her death her body was found to be well nourished.
She had however to have ordinary medical attention constantly and the diabetes had continued though controlled.
The appellant treated her all along and the fees paid to him appear debited to Laxmibai 's account.
I have so far been stating the earlier history of the case and now come to the more immediate events.
On November 8, 1956, Laxmibai had Rs. 5,275 09 in her 523 account in the Bank of Maharashtra.
On a date between November 8 and 10, she signed two papers the first of which was a notice to the Bank reading I desire to withdraw an amount exceeding Rs. 1,000 up to about Rs. 5,000 in the next week from My savings Bank Account" and the other was a withdrawal slip or cheque and it read, " Pay Bearer the sum of Rupees Five thousand only which please debit to the 2account of Laxmibai Anant Karve".
None of these papers bore any date and the, bodies of them, were in the appellant 's handwriting.
These papers were made over by Laxmibai to the appellant and he did not present them to the Bank till after her death.
On November 12, 1956, the appellant paid to the credit of Laxmibai 's account in the Bank a dividend warrant dated November 10, 1956, for Rs. 2,607 6 0 drawn in her favour by a company on the Bank of Maharashtra, after signing her name on the back of it himself.
The appellant had fixed up an engagement with Dr. Sathe of Bombay, who has been named earlier, for November 13, 1956, at 3 p.m. for examining Laxmibai.
On November 8, 1956, Bhave, a relation of Laxmibai, called on Laxmibai and found the appellant there.
Laxmibai told him that she proposed to go to Bombay with the appellant for consulting Dr. Sathe for her health and that she would be returning in four or five days.
On November 10 or 11, she saw a lawyer Karandikar, also a relation, and informed him that she intended to go to Bombay with the appellant for consulting a physician.
About the same time Champutai, daughter of Bhave mentioned earlier, came to Laxmibai 's house to invite her to attend the birthday party of her son which had been fixed for November 13.
Laxmibai told Champutai that she was going to Bombay and if she was able to come back in time, she would attend the party.
At about 8 p.m. on November 12, Laxmibai went to Virkar, who was a tenant of the house where she lived, and informed him that she was going to Bombay by the night train to consult a doctor and requested him to pay Rs. 50 on account of the rent then due for meeting the expenses of the 524 journey to Bombay.
The amount was paid by Virkar to her.
She told Virkar that she expected to return to Poona after three or four days.
About the same time she met Pramilabai, another tenant of the house, and told her that she was going to Bombay with the appellant by the night train to consult Dr. Sathe.
A little later she was seen by a third tenant Krishnaji, standing in front of the house with a small bag and bedding.
Krishnaji also saw the appellant on the road going away from the house.
All these people have said that they found Laxmibai in a good state of health and going about performing her normal avocations of life.
There was a passenger train leaving Poona for Bombay at 10 p.m. Laxmibai and the appellant went by this train to Bombay on November 12, 1956.
Though the appellant denied this, the Courts below have found that they travelled in the same compartment.
The train reached Victoria Terminus Station, Bombay, at 5 10 a.m. on November 13.
Laxmibai had then gone into a comatose condition.
The appellant procured a stretcher and carried her into a taxi with the help of porters and took her to Gokuldas Tejpal Hospital, usually called for short G.T. Hospital, which is about six furlongs from the station.
They reached the hospital at about 5 45 a.m. Laxmibai was taken to the Outdoor Department where Dr. Ugale, the Casualty Officer in charge, admitted her 'into the hospital.
According to Dr. Ugale, the appellant told him that the name of the unconscious woman was Indumati Paunshe and her age was forty.
The appellant gave as the address of the patient the address of his own dispensary at Poona, namely, " C/o Dr. Lagu 20 B, Shukrawar, Gala No. 12, Poona 2 ".
Dr. Ugale said that the appellant at his request spelt the name "Paunshe" and he took it down as spelt by the appellant.
On enquiry about the history of the patient by Dr. Ugale the appellant told him that the patient suddenly became unconscious in the train while coming from upcountry and that there was a history of similar attacks frequently before.
Dr. Ugale also said that the appellant told him that he thought that the case was one of hysterical fit from 525 which she frequently suffered.
He did not tell Dr. Ugale that the patient suffered from any other disease.
He said that he had brought the unconscious woman to Bombay for getting her examined by a specialist and that she was his patient.
Dr. Ugale entered in the appropriate record of the hospital called the case paper, all that the appellant told him and what he himself had noticed.
As a result of his own examination Dr. Ugale found that the patient was making some involuntary movement, the corneal reflex was absent, the pupils were normal and reactive.
He found nothing abnormal in the cardiovascular system or the respiration.
There was a clerk sitting by the side of Dr. Ugale when the appellant was speaking to him and he made the necessary entries in another record of the hospital.
In that record the name of the patient appears as Indumati Pankshe.
Dr. Ugale examined the person of Laxmibai and found no ornament or cash on her.
Within four or five minutes of the time that she arrived at the Out door Department of the hospital, Laxmibai was removed to Ward No. 12.
Dr. Anija, a young woman doctor, who had passed out the previous June, was then the House Physician in attendance at that ward.
The appellant accompanied Laxmibai to the ward and introduced himself to Dr. Anija as Dr. Lagu, which is his name.
He told her that while travelling in a train from upcountry the patient had got unconscious and therefore he had brought her straight from the station to the hospital and that before the journey the patient was alright.
He further said that the patient had similar attacks before.
The appellant also told Dr. Anija that he was the family physician of the patient and a family friend and spoke of some of the illnesses from which the patient had earlier suffered.
Dr. Anija made some notes in the case paper of what she heard from the appellant and then examined the patient, the result of which she also similarly noted in the case paper.
Thereafter, according to Dr. Anija, she tested the patient 's urine in a laboratory attached to the ward and recorded the finding on the case paper.
She then administered some stimulant and oxygen and also 67 526 gave an injection of 40 units of insulin as she thought, ' as a result of the urine test, that the case was one of diabetic coma.
There is some dispute as to whether the urine was examined by Dr. Anija at this time and as to when the entries on the case paper of the results of the examination had been made.
This will be discussed later.
Dr. Anija examined the urine of the patient for the second time at about 8 30 a.m. and that also disclosed a certain quantity of Sugar.
She said that she then sent a call to the Registrar of the ward, who was her immediate superior, to come and see the case.
The Registrar came and, according to Dr. Anija, directed that the patient be given another 40 units of insulin with 20 c.c. of glucose by intravenous injection and that she be also given " intra gastric glucose drip " and this was done at about 9 a.m. At about 11 a.m. the HonorarY Visiting Physician, Dr. Variava, came to the hospitals Dr. Anija told him that it was a case of diabetic coma.
Dr. Variava then himself examined the patient and thereafter asked Dr. Anija why she thought it to be a case of diabetic coma, to which Dr. Anija replied that she did so because there was sugar present in the urine.
Dr. Variava then asked her whether she had examined the urine for acetone to which she replied that she had not.
Dr. Variava thereupon reprimanded her by saying " How can you diagnose a case of diabetic coma without ascertaining acetone in the urine ?" Thereafter under the directions of Dr. Variava, Dr. Anija again tested the urine and showed it to Dr. Variava who thought that the urine contained a slight trace of acetone.
Shortly after this urine test the patient, that is, Laxmibai expired.
It was then about 11 30 a.m. Dr. Variava then told Dr. Anija that he did not think that the case was one of diabetic coma and that therefore he wanted a postmortem examination of the body of the deceased.
Dr. Anija then made a note on the case paper stating " Asked for postmortem " and put her signature below the entry.
She did not then put down anything in the column there about the final diagnosis.
Dr. Variava did not wait to see the entry about 527 postmortem being made by Dr. Anija but left to attend other cases.
It is clear that the appellant was present in the hospital up to the time of the death Of Laxmibai though in his statement in the trial Court he had denied this.
There is no evidence as to how long he remained in the hospital after Laxmibai 's death but it is clear that he was in Poona on November 14.
There was arrangement in the hospital for conducting postmortem examinations.
The case papers along with note " Asked for postmortem " had been sent by Dr. Anija to the Resident Medical Officer of the hospital, Dr. Mouskar.
It was his duty to arrange for the postmortem examination.
The case paper came to Dr. Mouskar 's office at 1 p.m. but he did not proceed to make any arrangement for having a postmortem examination held.
Instead, at about 2 p. m. he sent an official telegram to the appellant at Poona at the address which he had given to Dr. Ugale and which was recorded in the case paper.
The telegrams was in these words: " Indumati expired arrange removal reply immediately.
" On November 14, the appellant wrote from Poona a letter in reply to the telegram.
This letter was in these terms: " I have already telegraphed to the brother of Shrimati Indumati Panshe at Calcutta, earliest he will reach Bombay on the 15th November, 1956, Thursday.
His name is Govind Vaman Deshpande; he will enquire as Indumati Panshe.
I have seen the name of the patient entered in the Ward Book as Indumati Pannshe as 'n ' extra.
Please correct ' it.
I am writing all these things in connection of a case woman aged 30 35 years admitted in G. T. Hospital at 6 a.m. on Tuesday 13th November, 1956, and expired the same day at about 11 a.m. Shri Govind Vaman Deshpande will take the body and do the necessary funeral function according to Hindu rites.
" Laxmibai had in fact no brother of the name of Govind Vaman Deshpande and in fact the appellant 528 had sent no telegram as he stated in the letter.
The statements in the letter were all false.
The letter was received in the office of Dr. Mouskar in the afternoon of November 15.
Not having received any reply from the appellant to his telegram, Dr. Mouskar on November 14, at about 4 p. m., sent the following information to the Inspector of Police A Esplanade P. section, Bombay.
Sir, I am to state that Smt.
Indumati Paunshe, Hindu, female, aged 40 years was admitted in Ward No.
Xll for treatment of hysterical fits on 13th November, 1956, at 5 45 a. m.
She died on the same day at 11 30 a.m.
The address given at the time of admission is as follows: C/o Dr. Lagu, 20B, Shukrawar, Gala No. 12, Poona 2.
A telegram on the above address has already been sent, but without any response.
It is therefore requested that the body may please be removed and taken to the J. J. Hospital Morgue for avoiding decomposition.
" A copy of this letter was sent to the Coroner for information.
The letter was written as in the G. T. Hospital there was no air conditioned morgue and there was one in the J. J. Hospital.
On receipt of this letter the police immediately wrote to the Coroner for permission to remove the body from the G. T. Hospital to the J. J. Hospital.
The permission was granted by the Coroner at about 7 50 p.m. on the same day.
The body was thereupon removed from the G. T. Hospital to the J. J. Hospital morgue at about 9 p.m. on November 14.
On the same day, that is, November 14, at about 9 30 p. m. the police again wrote to the Coroner stating that it had received a report from the Resident Medical Officer, G. T. Hospital of the death of one Indumati Paunshe, referring evidently to the letter which Dr. Mouskar had earlier on the same day written to the 529 police,and that Indumati appeared to have no relatives in Bombay and further that the cause of death was not certified and requesting in the circumstances that an inquest over the death might be held.
What happened about this request will be stated later.
On November 15, the Bombay police sent a wireless message to the police at Poona intimating that on November 13, one Indumati Paunshe, who had been admitted to the G.T. Hospital for treatment of hysterical fits, had died on the very day in the hospital and her address was " C/o Dr. Lagu, 20B, Shukrawar, Gala No. 12, Poona 2 " and asking that enquires might be made at the above address and the relatives might be asked to claim the dead body which was lying unclaimed.
Pursuant to this message, the Poona police interviewed the appellant at Poona on November 16, when he made the following statement: "On November 12 he left Poona for Bombay by the 10 p.m. train and had gone off to sleep.
Towards the end of the journey when he started preparing to get down at Bombay, he found one woman fast asleep.
From other passengers he came to know that her name was Indumati Paunshe about 35 years of age and she had a brother serving in Calcutta.
When other passengers got down at Victoria Terminus Station in Bombay, the woman did not awake.
He thereupon looked at her keenly and found her senseless.
Being himself a doctor he thought it his duty to take her to the hospital and so took her to the G. T. Hospital in a taxi.
As he had taken that woman to the hospital, the Casualty Medical Officer took his address.
He had no more information about the woman.
She was not his relation and he was not in any way responsible for her.
" The statement so made by the appellant was received by the Bombay police from the Poona police on November 17.
I now come back to the events that were happening at Bombay.
I have earlier stated that the case paper had not initially given the final diagnosis as to the 530 cause of Laxmibai 's death but bore the endorsement "Asked for postmortem ".
At some stage, as to which the evidence is conflicting and which I will have to discuss later, the endorsement " Asked for postmortem " was crossed out and the words "diabetic coma " were written on the case paper as the caus of the death of the patient.
Both of these alterations had been made by Dr. Anija who put her signature under the crossed out entry.
Dr. Mouskar on November 15, sent to the Coroner a certificate of the death of the patient Indumati in the G. T. Hospital stating therein diabetic coma as the cause of her death.
By this time the alteration in the case paper had clearly been made, crossing out the direction as to postmortem examination and stating therein diabetic coma as the cause of death.
On the same day, that is, November 15, the police wrote a letter to Dr. Mouskar, apparently in ignorance of the death certificate issued by him, requesting him to send per bearer the cause of the death of " Indumati ".
This letter was sent with a copy, the idea being that the original would be retained by the Hospital and the copy returned with an acknowledgement of the receipt of the original made on it.
Both these were however produced from the police custody without any endorsement by the hospital acknowledging the receipt of either.
The copy bore the following remark, "Diabetic coma, Dr. N. section Variava, G. T. Hospital.
" It is clear on the evidence that the endorsement had not been made by Dr. Variava.
Dr. Anija also denied having made it though before the police she admitted that the words " Diabetic coma " had been written by her.
Dr. Mouskar said that neither the original nor the copy had ever come to him and he thought that the endorsement "Diabetic coma" might be in Dr. Anija 's hand writing but he could not say by whom the words "Dr. N.S. Variava, G. T. Hospital" had been written adding that the words " Dr. N. section Variava " had not been written by Dr. Variava.
The question as to who made the endorsement will be discussed later.
On receipt of the death certificate from Dr. Mouskar, the Coroner 's office made on the letter of the police 531 dated November 14, asking an inquest to be made, which I have earlier mentioned, an endorsement directing that no inquest was necessary as the Resident Medical Officer, G. T. Hospital had certified the cause of death and had issued the death certificate.
On November 19, the Coroner 's office directed that the dead body might be disposed of as unclaimed after taking a photograph of it.
A photograph of the dead body was duly taken on the same day.
In the mean time the Grant Medical College had written to the Coroner on November 17, for authority to take over certain unclaimed dead bodies lying in the J.J. Hospital mortuary, for dissection purposes and thereupon the Coroner made an order directing that the dead bodies might be made over to the Grant Medical College.
Pursuant to this order, the dead bodies, which included that of Laxmibai, were then made over to the Grant ,Medical College on November 20, 1956.
When the dead body of Laxmibai was about to be taken to the dissection hall, some scratches on the neck were detected.
The Professor of Anatomy of the College did not thereupon allow the body to be dissected and brought the discovery to the notice of the police.
The police then wrote to the Coroner that in view of this, a postmortem and an inquest might be held.
Accordingly, under the instructions of the Coroner, Dr. Jhala, Police Surgeon, Bombay, held a postmortem examination of the body of Laxmibai on November 23.
He found no sign of decomposition in the body nor any characteristic smell of any recognisable poison.
He also found the scratches on the neck to be postmortem.
Dr. Jhala sent the viscera to the Government Chemical Examiner who sent the report of his examination on December 19, 1956, wherein he stated that he was unable to detect any poison in the viscera.
Thereupon, Dr. Jhala submitted his postmortem report stating that in his opinion death could have occurred on account of diabetic coma.
In the meantime, after the postmortem examination, the body of Laxmibai had been made over to the Hindu Relief Society for cremation on November 24 and the cremation had been duly carried out.
532 It is now necessary to go back to Poona and relate what the appellant did after Laxmibai 's death.
To describe it summarily, the appellant did not give any one the information of Laxmibai 's death but on the contrary.
represented that she was alive and moving about from place to place and in the meantime misappropriated most of her moneys.
I will now give some details of his activities in relation to Laxmibai 's moneys.
It will be remembered that about November 8, the appellant had taken from Laxmibai a notice to the Bank for withdrawal of money and a withdrawal slip, none of which bore any date.
The appellant inserted on the notice of withdrawal the date November 15, 1956, and lodged it in the Bank on the same day or soon thereafter.
On the withdrawal slip he inserted the date November 19, 1956, and on November 20, presented it to the Bank and drew out a sum of Rs. 5,000 from Laxmibai 's account.
He subsequently put in to the credit of her account diverse cheques and by April 1957, bad drawn out by forging her signature practically the whole amount in her credit totalling about Rs. 10,000 including the sum of Rs. 5,000 withdrawn on November 20, 1956.
The appellant also embarked on a systematic course of forgeries of the signature of Laxmibai on various fabricated documents, including share transfer deeds, as a result of which, before the end of 1957, he misappropriated a large part of the liquid assets belonging to Laxmibai 's estate.
When some of the forged signatures of Laxmibai had been doubted by the authorities to whom they had been presented with the object of being acted upon, the appellant even went to the length of getting a woman to falsely impersonate Laxmibai before a Magistrate and thereby procured the latter to certify forged signatures of Laxmibai as genuine signatures.
He also clandestinely denuded Laxmibai 's flat of its entire contents.
None of her ornaments has been recovered after her death.
In the meantime, he had been falsely representing to various persons, including all friends and relatives of Laxmibai, that he had met her on several dates after November 13, when she was already 533 dead.
He manufactured various letters purported to be written by her from distant places in India and addressed to her relatives in Poona stating that she was going round on a pilgrimage.
Eventually, he fabricated letters purported to have been written by her to her relatives in which it was stated that she had married one Joshi and bad settled down in a place called Rathodi near Jaipur and did not intend to return to Poona.
There is in fact no place of the name of Rathodi.
His idea in manufacturing these letters was to create a false impression in the minds of Laxmibai 's friends and relatives that she was still alive and this he did with the object of gaining time to misappropriate her properties.
It is not necessary to go into the details of this part of the conduct.
The substance of it is that he made full use of the situation arising out of Laxmibai 's death to misappropriate by all kinds of dishonest means most of her properties and to facilitate the misappropriation assiduously spread the story that she was alive.
It may be stated that the appellant was put on his trial on charges of misappropriation and other allied charges and found guilty and sentenced to imprisonment for life.
The long absence of Laxmibai had gradually made her relatives grow suspicious about her fate and they approached the police but no trace of Laxmibai could be found.
Several petitions were sent to the higher police officers and also to the Chief Minister of Bombay.
In the end, the matter was entrusted to Mr. Dhonde, Deputy Superintendent of Police, C. I. D., Poona, for enquiry.
Mr. Dhonde made various investigations and eventually on March 13, 1958, interrogated the appellant.
The appellant then told him that be had taken Laxmibai to the G. T. Hospital, Bombay, and admitted her there, and that she died there on November 13, 1956.
The police made enquiries at the G. T. Hospital and was able to find the clothes which Laxmibai wore when she died.
These were identified by Laxmibai 's relations.
The photograph of the dead body of Laxmibai also helped to prove her identity.
After certain further enquiries, the police sent up the 68 534 appellant for trial on a charge of murder of Laxmibai with the result I have earlier mentioned.
The prosecution case is that the appellant caused the death of Laxmibai by administering to her a poison which was undetectable.
On the evidence in this case it has to be held, as the Courts below have done, that there are poisons which cause death but are undetectable.
I do not wish to be understood as saying that death by poisoning cannot be proved without proof of detection of poison in the deceased person 's system after his death.
I quite agree that the circumstances may be such that the only reasonable conclusion that can be drawn is that death was an unnatural death.
In this view of the matter, I do not consider it necessary to discuss the cases cited at the bar and in the judgments of the Courts below.
They are all illustrative of the proposition that a crime can be proved by circumstantial evidence, a proposition which I fully accept.
In one of them, namely, Regina vs Onufrejczyk(1) guilt was held proved from the circumstances of the case notwithstanding that there was no body or trace of a body, or any direct evidence as to the manner of death of a victim.
The legal proposition that arises in the present case may be put in the words of Wills in his treatise on Circumstantial Evidence which has been quoted in the judgment of the High Court: It would be most unreasonable and lead to the grossest injustice, and in some circumstances to impunity for the worst of crimes, to require, as an imperative rule of law, that the fact of poisoning shall be established by any special and exclusive medium of proof, when that kind of proof is unattainable, and specially if it has been rendered so by the act of the offender himself.
No universal and invariable rule, therefore, can be laid down; and every case must depend upon its own particular circumstances; and the corpus delicti must, like anything else, be proved by the best evidence reasonably capable of being adduced, and by such an amount and combination of relevant facts, whether direct or circumstantial, as to establish the factum probandum (1) [1955] 1 Q. B. 388.
535 to the exclusion of every other reasonable hypothesis.
(7th Ed., p.,385) ".
In the present case, therefore, the circumstances must be such that no other conclusion than that Laxmibai died of poisoning and that the poison was administered by the appellant, can reasonably be drawn.
The Courts below have found that the circumstances of this case fully establish this.
I have come to a different conclusion.
In my view, the circumstances are not such that from them the only reasonable conclusion to be drawn is that Laxmibai died of poisoning.
If that conclusion cannot be drawn, of course no question of the appellant having poisoned her arises.
I may also say that if Laxmibai could be said to have died of poisoning, I would have no reason to disagree with the view of the Courts below that it was the appellant who had administered the poison.
I proceed now to consider the question whether Laxmibai had died of poisoning.
I do not suggest that poison had to be found in her system.
In my view, if it could be established in this case that Laxmibai had died an unnatural death the conclusion would be inevitable that that unnatural death had been brought about by poison; no other kind of unnatural death could be possible on the facts of this case.
The real question in this case then is whether Laxmibai had died an unnatural death.
I think the Courts below also considered that to be the only question in this case.
I have earlier said that no poison was detected in the postmortem examination.
So far as direct evidence of the cause of death goes, which in this case is all opinion evidence, we have the evidence of three doctors.
All that Dr. Variava said was that death was not due to diabetic coma.
The Courts below have accepted this evidence and I find no reason to take a different view.
Then there is Dr. Jhala, who conducted the postmortem examination.
He had stated in the port mortem examination report that the cause of death was diabetic coma.
In his evidence in Court he said that the opinion stated in his report was not based on his pathological findings and that the proper way of describing the cause of 536 death would be by stating " death by diabetes with complications ".
He also referred to certain complications such as, atheroma of aorta with slight sclerosis of coronary.
In the end he was asked by the Court, " Would you agree with the view that the proper opinion on the pathological data available before you should have been that the cause of death was not ascertainable or could not be ascertained ?" His answer was, " My answer is that on pathological data I would agree to the answer proposed.
We have however to see the clinical data also.
" On the clinical data he would have said that death was due to diabetes with complications, but he conceded that that opinion was somewhat speculative.
These two doctors there fore did not suggest that death was due to any unnatural cause.
Dr. Variava did not in his evidence say that he had directed the postmortem examination to be done because he suspected any foul play.
It would appear that be did not suspect any foul play for he did not require the case to be marked as a medico legal case.
The most important direct evidence as to the cause of death and on which the prosecution has greatly relied, is the, opinion of Dr. Mehta who appears to be a medical man of some eminence.
All the papers connected with the illnesses of Laxmibai and the postmortem examination report bad been given to him and he had made a thorough study of them.
The net result of this study would appear from his evidence, the relevant part of which I think it right now to set out.
He said: " On a careful consideration of the entire material placed before me I am definitely of the opinion that the cause of death of Indumati Paunshe as mentioned in the case record and the Coroner 's inquest, viz., diabetic coma, cannot be true.
In my opinion, the cause of death may probably be due to: (1)Administration of some unrecognisable poison, i.e., some poison for the detection of which there are no definite chemical tests.
(2)Administration of some recognisable poison for which there are chemical tests, but which tests 537 could not be obtained on account of deterioration of the poison remaining in the dead body which was kept in the morgue for considerable time after death without postmortem being performed and which was already undergoing decomposition prior to the actual postmortem examination as is clear from the absence of rigor mortis.
Rigor mortis is means stiffening of muscles.
The above opinion that the probable cause of death may be due to administration of poison is further fortified by the fact that the postmortem did not reveal any definite pathological lesion to account for the sudden rapid death of the deceased.
The question then arises whether she died a natural death, i.e., due to any other disease or diseased condition.
The postmortem notes do not show anything abnormal beyond congestion of organ is and tubercular focus in the left lung.
Congestion of organs occurs in majority of the cases after death of the person and particularly more so when so many days have elapsed between death and postmortem examination.
Some decomposition is bound to be going on.
There is still possibility of death being due to poison in spite of the fact that the poison was not detected in the postmortem examination.
Two reasons can be assigned for non detection of poison: (1) There are no definite chemical tests for each and every poison.
There are some poisons which cannot be detected on chemical analysis.
(2) There may be a recognisable poison in the sense that there are tests for its detection.
But the poison may not be detected on account of deterioration of the poison remaining in the body for a considerable time before the postmortem examination and it has undergone decom.
position or oxidation. . .
The possibility of death being due to poisoning cannot be ruled out.
" 538 I do not think that the Courts below thought that the evidence of Dr. Mehta established that death must have been due to an unnatural cause.
If they did, I find myself unable to agree with them.
The substance of Dr. Mehta 's evidence is that death may " probably be due to " some poison, " the probable cause of death maybe due to administration of some poison", the posibility of death being due to poisoning cannot be ruled out.
It will have been seen that Dr. Mehta posed a question whether Laxmibai had died a natural death.
That question he did not answer beyond stating that the postmortem examination did not show anything abnormal beyond congestion of organs and a tubercular focus in the left lung and that such congestion of organs occurs in the majority of cases after death.
It is clear that Mr. Mehta could not say with conviction that death had been caused by poisoning nor that death could not have been due to natural causes.
The net result of the evidence of the medical experts is clearly that it cannot be said with definiteness how death was caused.
In this view, nothing really turns on the fact that shortly prior to her death Laxmibai was found to have been in good health, which of course can only mean as good a health as a confirmed invalid like her could have.
It cannot be definitely inferred from the fact that she was in good health that she had not died a natural death.
If such an inference was possible, the doctors who gave evidence would have given a clear opinion but this they did not.
In this state of the evidence the Courts below have founded themselves on various circumstances of the case, most of which I have earlier related, in coming to the conclusion that Laxmibai bad met with an unnatural death.
These circumstances I now proceed to consider.
The first thing that I wish to discuss is the fact that after Laxmibai 's death the appellant started on a systematic career of misappropriating her assets.
I am unable to conclude from this that the appellant had caused her death.
It is reasonably possible to think that he made use of the opportunity that came is way on Laxmibai 's death to misappropriate her 539 properties and had not caused her death.
The fact that the appellant deliberately kept back the information of Laxmibai 's death from her relatives and falsely created the impression in their minds that she was alive, does not advance the matter.
This was clearly done with a view to give him time in which to carry out his scheme of misappropriating her properties.
I quite concede however that these circumstances may take on a different colour from other circumstances, but I have found no such circumstance.
The next circumstance is the conduct of the appellant in obtaining from Laxmibai her signatures on the undated notice of withdrawal to the Bank and the withdrawal slip.
The bodies of these documents are in the handwriting of the appellant.
The Courts below have thought that the appellant obtained the signatures of Laxmibai on blank papers and filled them in the forms they now stand after the death of Laxmibai and utilised them to misappropriate her moneys.
They came to this conclusion from the fact that these documents were admittedly without dates and had been subsequently dishonestly utilised.
It has been held from this that the appellant had during her life time a design on her moneys and therefore it becomes likely that he caused her death.
I am unable to agree with this conclusion.
It would be difficult to hold from the fact that the appellant had a design on Laxmibai 's moneys that he had also a design on her life or that her death was, an unnatural death.
But apart from that there is reason to think that when Laxmibai signed these documents their bodies had already been written up.
That reason is this.
It will be remembered that on November 12, 1956, the appellant had put to the credit of Laxmibai 's account in the Bank a dividend warrant in her favour for Rs. 2,607 6 0.
The balance to the credit of her account on November 12, 1956, became as a result of this deposit, Rs. 7,882 15.
Now it is obvious that if the appellant had filled in the bodies of the notice of withdrawal and the withdrawal slip after the death of Laxmibai he would not have mentioned the amounts therein as Rs. 5,000 but would have increased it to a 540 figure nearer the balance because he undoubtedly had set about to misappropriate the moneys in that account and in fact he actually withdrew almost the entire balance in that account later by forging Laxmibai 's signatures on other appropriate documents.
Therefore, it seems to me that the bodies of the notice of withdrawal and the withdrawal slip had been written out before Laxmibai put her signatures on them.
Furthermore, the evidence clearly establishes that even during Laxmibai 's life time the appellant used to present to the Bank cheques signed by Laxmibai for withdrawal of moneys and signed on the reverse of such cheques in acknowledgement of receipt of the moneys.
He also used to deposit moneys in the Bank to the credit of her account.
It is quite possible that the two documents mentioned had come into the appellant 's possession in the usual course of managing Laxmibai 's banking affairs.
The fact that Laxmibai had not put dates on the documents would indicate that it was not intended that they would be presented to the Bank immediately for there is no reason to think that Laxmibai had not noticed that the documents did not bear any date.
She seems to have been quite a capable woman managing her own affairs well.
The Courts below have thought that there was no need for her to have wanted to withdraw such a large amount.
The appellant said that she wanted to invest the money if), some fixed deposit which would have yielded a higher return but he actually lent it to a friend whom however he refused to name.
The Courts below have disbelieved the appellant 's case.
Even so it does not seem to me possible to hold that Laxmibai did not want to withdraw any moneys and the appellant had fraudulently got her to put her signatures on blankpapers.
I have earlier given my reason for this.
It was not necessary for the appellant to have got her to sign blank papers and there is nothing to show that she would have done that even if the appellant had asked her.
I may here mention that no adverse inference can be drawn from the fact that the appellant put in the 541 dividend warrant to the credit of Laxmibai 's account: it proves no guilt.
But it is said that the appellant forged the name of Laxmibai on the back of it.
The High Court thought that this forgery proves that the appellant had during the lifetime of Laxmibai entertained the intention to misappropriate her property.
I am wholly unable to see how that conclusion could be reached from this or how in fact the forgery proves anything against the appellant.
By the forgery, as it is called, the appellant was putting the money into the account to which it lawfully belonged; he did not ,thereby give it a different destination.
Furthermore, he need not have signed her name himself.
In the normal course Laxmibai would have signed it herself if asked to do so and given it to the appellant for being sent to the credit of her account.
There is no reason to think that she would not have signed it if the appellant had asked her to do so.
The dividend warrant was in Laxmibai 's favour and had been drawn on the Bank of Maharashtra.
It was being put to her credit in the same Bank.
The Bank was therefore not likely to scrutinise with any care the payee 's signature on the dividend warrant.
That may have been nature reason why it was left to the appellant to sign Laxmibai 's name on the dividend warrant for putting it into the Bank.
But whatever view is taken I cannot see how it helps at all in solving any question that arises in this case.
The trial Court found it a riddle and did not rely on it.
Next, it is said that the appellant falsely denied that he travelled in the same compartment with Laxmibai on their journey to Bombay.
The denial was no doubt false.
But it had been made at the hearing.
He had admitted to the doctors at the hospital and to the Poona police on November 16, 1956, that he and the deceased had travelled in the same compartment.
This falsehood therefore does not establish that the death of Laxmibai was an unnatural death, a question which I am now investigating.
The fact that they travelled in the same compartment may no doubt have given him an opportunity to administer poison to her and to that extent it is of course relevant, 542 It is also said that there was a hospital called St. George 's Hospital within a few yards of the Victoria Terminus Station but the appellant took the unconscious Laxmibai to the more distant G. T. ofHospital with an ulterior purpose.
That purpose it is said was that in the G. T. Hospital his friend Dr. Mouskar, was the Resident Medical Officer and the appellant wanted to secure his help, if necessary, in preventing the discovery of the crime that he had committed.
The appellant said that he chose the G. T. Hospital as he was familiar with it but not with the St. George 's Hospital.
This seems to me to be too insignificant a thing.
The St. George 's Hospital was no doubt very near, but the G. T. Hospital was not very far away either.
There is nothing to show that the appellant knew that Dr. Mouskar was on duty on the day in question.
There is neither any evidence to show how much the two were friendly or how far Dr. Mouskar would have gone to help the appellant.
Furthermore, as the appellant had administered a poison which was undetectable, it is not clear what help he anticipated he would require from Dr. Mouskar.
Again, he must have known that as the Resident Medical Officer, Dr. Mouskar was not in charge of the treatment of patients in the hospital but only performed administrative functions and that the unconscious Laxmibai would have to be treated by other doctors.
It cannot be said that if these other doctors found anything wrong, Dr. Mouskar could have done much to help the appellant.
So it seems to me impossible to draw any inference against the appellant from the fact that he had taken the unconscious Laxmibai to the comparatively distant G. T. Hospital.
It is then pointed out that when Laxmibai was admitted to the G. T. Hospital, she had no ornaments on her person and no moneys with her and even her bag and bedding had disappeared.
It is suggested that the appellant had removed them and that this again proves that he had conceived the idea of misappropriating her properties even during her life time which supports the theory that he caused her death.
Now the bedding and bag can be dismissed at once, 543 There is no evidence as to what they contained.
They were of small sizes.
It is reasonable to think that in the bag Laxmibai had taken a few wearing apparels which she might need for her stay in Bombay which the evidence shows she thought would not be of more than four days.
The box and the bedding, must, therefore, have been of very insignificant value.
As regards ornaments, the evidence is that usually she wore certain ornaments which might be of some value.
None of the witnesses, however, who saw her the day she left Poona, has said that they found ornaments on her person.
It is not at all unlikely that as she was going to Bombay and was not sure where she would have to put up there, she had as a measure of safety, taken off the ornaments she usually wore, before she left Poona.
Then again, if the appellant had taken off the ornaments from the person of Laxmibai he must have done it in the train or while taking her to the hospital.
Now it is too much to assume that in the compartment in which they were travelling there were no other passengers.
The removal of the ornaments would have been noticed by the other passengers or if done later, by the stretcher bearers or the taxi driver.
None of these persons was called.
Neither is there any evidence that any search for them had been made.
Therefore, it seems to me that on the evidence on record it cannot be said definitely that the appellant removed any ornaments from the person of the unconscious Laxmibai.
With regard to the money, she must have brought some with her to meet her expenses in Bombay.
It is more than likely that she had entrusted the moneys to the appellant for safety which the appellant never returned.
There is no evidence that she had more than Rs. 50 with her and there is no reason to think that she was carrying a large sum.
The disappearance of the money does not prove that the appellant had conceived the design of getting rid of her.
Then we find the appellant describing Laxmibai in the Hospital by the name 'Indumati Paunshe '.
It is said he did this to prevent her identity being discovered after her death and that this shows that he had 544 already poisoned her and knew that she was going to die.
Now, so far as the name Indumati is concerned, that was one of her names.
The papers that the appellant maintained in connection with Laxmibai 's treatment show that he mostly called her by that name and never called her Laxmibai.
He said that he was used to calling her by her maiden name of Indumati Ponkshe and gave that name to Dr. Ugale by sheer force of habit.
Dr. Ugale however said that as he did not follow the surname he asked the appellant to spell it and took it down as spelt, namely, as " Paunshe ",.
The Appellant denies that he gave the name Paunshe but says he said " Ponkshe ".
The appellant 's version receives support from the fact that the hospital clerk who also took down the name for another record of the hospital as the appellant was giving it to Dr. Ugale, took it down as " Indumati Pankshe ".
Therefore, there is some doubt whether Dr. Ugale heard the name correctly.
However that may be, I doubt if the name Paunshe indicates that the appellant gave it with a view to prevent disclosure of identity.
It is said that his plan was to disappear after Laxmibai 's death so that her body would become unclaimed and be disposed of as such.
If that were Bo, then nothing would turn on the name.
It is only when people came to know that a woman of the name of Indumati Paunshe had died that the question as to who she was would have &risen.
In view of the fact that the appellant had given Indumati 's address as care of himself at Poona, it would be known that she belonged to Poona.
I am very doubtful if an enquiry made at Poona for Indumati Paunshe would have kept back the real identity.
Indumati or Laxmibai had disappeared mysteriously; her maiden name was Ponkshe.
People interested in her would surely have been led by the name Indumati Paunshe to enquire if it was Laxmibai Karve.
So it seems to me that if the appellant had really wanted that the woman he took to the hospital should never be discovered to have been Laxmibai, he would have used a totally different name.
I am unable to hold that the use of the name " Indumati Paunshe " is any clear evidence of the guilty intention of the appellant.
In this connection I have to refer to the 545 appellants letter of November 14, 1956, to the G. T. Hospital in which he pointed out that in the hospital record the name had been taken down as " Pannshe " that is s, with an extra " n " and this should be corrected.
By this time the appellant had clearly conceived the idea that the news of the death of Laxmibai should be prevented from becoming public.
He had also misled the hospital authorities by informing them that Indumati 's brother would arrive to take over her body; as already stated, she had no brother.
Therefore this attempted correction in the name by deleting the extra " n " is really irrelevant; the extra " n " would not in any event have made the discovery of the identity of the dead person easier.
What led the appellant to make this attempt cannot however be ascertained.
Then I have to consider the fact that the appellant told Dr. Ugale that Laxmibai had become unconscious of a hysterical fit and she had a history of similar attacks before.
It is said that this story about hysterical fit is false and had been conceived to hide the fact that she had been poisoned.
The appellant had denied that he had mentioned hysterical fit to Dr. Ugale and said that he had only stated that she had suddenly become unconscious.
That he had mentioned sudden onset of unconsciousness in the train is admitted by Dr. Ugale.
It is somewhat curious that the appellant would have mentioned both " hysterical fit " and " patient suddenly became unconscious in the train ".
It is significant that "hysterical fit" was entered in the case paper by Dr. Ugale under the head " Provisional Diagnosis " a thing, for which I think, the doctor in charge has some responsibility.
It may also be stated that Dr. Anija did not, say that the appellant mentioned hysterical fit to her.
In these circumstances I have some doubt if the appellant had in fact mentioned hysterical fit " to Dr. Ugale.
I will however proceed on the basis that the appellant did mention hysterical fit to Dr. Ugale.
Now, there is evidence that for nine years upto 1948 Laxmibai had suffered from hysterical fits.
There is no 546 evidence one way or the other whether she had such fits thereafter.
If she had not, the prosecution could have easily produced evidence of it.
The only evidence on which the prosecution relied was that of Laxmibai 's son, Ramachandra.
All that he said was that between 1943 and 1948 his mother suffered from fits and that in 1956 when he had come to Poona for his marriage his mother was not suffering from fits. 'Now, Ramachandra does not appear to have much knowledge of his mother 's health.
He did not even know what kind of fits these were nor that his mother suffered from diabetes.
Apart from the nature of his evidence, it has to be remembered that he was living separtely from his mother since 1946 and was away from Poona since 1952.
It cannot therefore be said that it would have been improbable for the appellant to have thought that Laxmibai had a relapse of a hysterical fit.
I now come to the fact that the address of Laxmibai given by the appellant to the hospital authorities was his own address.
It is said that he did so deliberately to ensure all communications concerning her from the hospital coming to him; that he knew that Laxmibai was going to die and wanted that nobody else would know of her death.
I find some difficulty in appreciating this.
I do not see what communication could be addressed by the hospital authorities to Laxmibai after her death or when she was lying ill in the hospital.
Further there was no other address which the appellant could have given.
Laxmibai lived alone in her flat and when she was away, there would be no one there to receive any communication addressed to her at that address.
Her only son Ramachandra was away from Poona.
She was clearly more friendly with the appellant than with her other relatives, none of whom was a very near relative.
In these circumstances and particularly as he had taken Laxmibai to Bombay it seems only natural that he would give his own address.
Again if he had given Laxmibai 's own address, that would have served his purpose as well for he had a room in her house and because of his friendly relation with 547 Laxmibai, would have been in charge of her flat in her absence as he in fact was.
It would not have been difficult for him to ensure that any letters that came 'for Laxmibai would reach him.
He could also have given an entirely false name and address and disappeared from the scene altogether; the body of Laxmibai would then, whether there was postmortem examination or not, have been disposed of in due time as an unclaimed body and nobody would have ever known what had happened to Laxmibai.
Indeed, it is the prosecution case that this was the appellant 's plan and things happened just as he had planned and that is why he deliberately brought Laxmibai to the hospital and gave his own address.
What strikes me is that this plan would have worked with any false address given.
I am therefore unable to think that the fact that the appellant gave his own address is a circumstance which can be reasonably explained only on the hypothesis of his guilt.
I come now to the most important circumstance on which the Courts below have strongly rested their conclusion.
It is said that the endorsement made on the hospital case paper reading " Asked for postmortem " under the direction of Dr. Variava had been crossed out and under the heading " Cause of death " in that paper the entry " diabetic coma " had been interpolated.
The Courts below have found that it is the appellant who had procured these alterations to be made with the help of his friend Dr. Mouskar.
If this is so, then no doubt it would be a very strong circumstance pointing to the guilt of the appellant for the only reasonable explanation of this act would be that he wanted to prevent a postmortem examination which might reveal that Laxmibai had been poisoned.
As I have already said, the alterations had no doubt been made.
But in my view, there is no evidence whatever to show that the appellant had anything to do with them.
Before state my reasons for this view, it is necessary to set out the relevant evidence on this point.
Dr. Anija admits that she made the alterations but she says that she did it in these circumstances: After 548 she had made the endorsement "Asked for postmortem " on the case paper, she asked the sister in charge of the ward to send 'the case paper to Dr. Mouskar whose duty it was to do the needful as regards the postmortem examination, and herself followed Dr. Variava on a round of the wards, which took her about an hour.
About 12 30 p.m. she proceeded to Dr. Mouskar 's office to make enquiries as to when the postmortem examination was to be held.
She met Dr. Saify, the Registrar of Unit No. 1 of the hospital in which Ward No. 12 was included, outside Dr. Mouskar 's office.
Dr. Saify had the case paper in his hand and he told her that Dr. Mouskar thought that there was no need for holding a postmortem examination as the case had been treated as one of diabetic coma and also asked her to cancel the direction about the postmortem examination and to show in the column meant for cause of death, " Diabetic coma ".
As Dr. Saify was her official superior, she accordingly carried out his directions and made the alterations in the case paper as required.
I will now refer to Dr. Mouskar 's evidence on this aspect of the case which was as follows: The case paper relating to Laxmibai came to his office at 1 p.m. on November 13.
At that time the endorsement " Asked for postmortem " was still there and diabetic coma had not been shown as the cause of death.
There was arrangement in the hospital for postmortem examination but he did not proceed to arrange for it immediately as on the face of it it was not a medico legal case nor a road side case.
It was the invariable practice to ask for the permission of the Coroner for holding the postmortem examination in all cases but before doing so it was necessary in nonmedico legal cases to get the permission of the relatives of the deceased for holding the postmortem examination.
In that view of the matter at 2 p.m. he sent the telegram to the appellant at his address as appearing in the case paper.
He never met the appellant in the hospital.
On the next day, that is, November 14, about 4 p.m. he wrote to the police to remove the dead body to their air conditioned morgue in the J. J. Hospital 549 for better preservation as no reply to the telegram had been received.
till then.
He sent a copy of this letter to the Coroner.
On the morning of November 15, somebody from the Coroner 's office rang him up and asked him about the final diagnosis.
He thereupon sent the case paper through a ward boy to Unit No. 1 with an oral message either to the Honorary physician,, the Registrar or the Assistant Houseman as to whether they were able to tell him about the final diagnosis and whether they still insisted on postmortem examination.
He did this as there was no final diagnosis uptil then and as the physicians often changed their minds in a non medico legal case.
After about half an hour the case paper came back to him and he found that the final diagnosis had been stated as " Diabetic coma " and the endorsement "Asked for postmortem" had been crossed out.
He then wrote out the death certificate and sent it to the Coroner.
The Courts below have disbelieved both Dr. Anija and Dr. Mouskar as to their respective versions regarding the manner in which the, case paper had been altered.
It has to be noticed that a art from the evidence of these two doctors, there is no other evidence on this question.
The Courts below have held that the alteration was made by Dr. Anija at the direction of Dr. Mouskar and that Dr. Mouskar had been persuaded to give that direction by the appellant whose friend he was, on a representation that he, the ' appellant, was the patient 's old family doctor and knew the case to be one of diabetic coma and that it would save the family humiliation if the dead body was not cut up for a postmortem examination.
They also held that the alteration was made on November 13, soon after the death of Laxmibai and before the appellant had left Bombay for Poona.
They have further held that Dr. Mouskar got the alteration made as a friendly act for the appellant and that he was in no way a conspirator in the crime.
There is no direct evidence to support this finding but it has been inferentially arrived at from the evidence of these two doctors.
The reasons on which this finding is based may be thus stated: (a) Dr. Mouskar was an old friend of the 70 550 appellant; (b) both Drs.
Anija and Mouskar had lied with regard to this part of their evidence; (c) Dr. mouskar 's conduct after the death of Laxmibai and his evidence in court showed that he wanted to assist the appellant; (d) Dr. Anija being very much junior to Dr. Mouskar had been prevailed upon by the latter to give false evidence; and (e) lastly, that no 'one excepting the appellant could have been interested in avoiding the postmortem examination.
As to the first reason, the only evidence on this question is that of Dr. Mouskar.
All that he said was that in 1934 he and the appellant had studied Inter Science in a college in Poona together and that he had stayed in Poona for three different periods, namely 1922 26, 1931 36 and 1948 51.
He also said that while studying together he had come to know the appellant by name but had never talked to him and had never come in contact with him since 1934.
The Courts below have disbelieved the later part of the evidence of Dr. Mouskar and have held that he and the appellant were friendly.
This finding does not seem to me to be based on strong grounds.
No reason has been given as to why Dr. Mouskar should be disbelieved.
The prosecution led no evidence to show that the two were friendly.
No witness has been found to say that the two were seen talking to each other in the hospital.
It has not been noticed, that the difference in age between the two was twelve years.
I will take the, next three reasons together.
They are that Drs.
Anija and Mouskar had both lied and that the conduct and the evidence of Dr. Mouskar showed that he wanted to help the.
appellant and lastly, that Dr. Anija gave false evidence only as she dared not estrange Dr. Mouskar who held a much higher position.
There is no doubt that Dr. Anija told lies.
The first lie was that she had tested the urine at 6 30 a.m. for acetone.
She also interpolated into the case paper an entry showing that she had found acetone in the urine which she said she examined at 6 30 a.m.
Dr. Variava said that he took her to task for diagnosing the case as diabetic coma without having tested the urine for acetone, which she told him she had not 551 that acetone had been found on the first examination of urine was not there when he saw it at about 11 a.m.
The second lie which Dr. Anija said was that she put through a telephone call to Dr. Variava about 7 a.m. and told him about the symptoms she had found and that she had been giving insulin.
She said that Dr. Variava agreed with her diagnosis and asked her to continue the treatment she had started.
That this is untrue, will appear from the fact that Dr. Variava denied that this talk had taken place.
Dr. Variava 's recollection is supported by the fact that on arrival at the hospital he doubted if the case was of diabetic coma and the treatment given was the correct one.
Further, there is a call book in the hospital on which telephone calls made by the house physicians are entered.
There is no entry there showing a call having been made by Dr. Anija on Dr.
Variava.
The third lie that she said was that it was Dr. Saify who told her outside Dr. Mouskar 's office to make the alteration in the case paper.
It has been clearly established that Dr. Saify was not on November 13 in Bombay at all.
He was then on leave and in Indore.
I come now to Dr. Mouskar.
No ' art of his evidence has been directly found to be false.
The Courts below have disbelieved him on improbabilities.
The first improbability they found was in Dr. Mouskar 's explanation that he did not arrange for the postmortem examination immediately as he considered the permission of the Coroner and the relatives of the deceased necessary before holding the postmortem examination and that this was the invariable practice in non medico legal cases.
I do not know why it should be said that this practice is improbable.
The prosecution did not lead any evidence to show that there was no such practice as spoken to by 'Dr. Mouskar.
That the Coroner 's permission had to be taken would be borne out by the fact as appearing in the correspondence, that the police asked the Coroner to hold an inquest as the cause of death was not known.
The Courts below referred to the telegram that Dr. Mouskar sent to the appellant at about 2 p.m. on November 13 and observed that if Dr. Mouskar had delayed the postmortem examination only in order to obtain the 552 consent of the relatives, then the telegram would not have asked the appellant to arrange for the removal of the dead body.
Dr. Mouskar said that he had intended to ask for the permission to hold the postmortem examination when the appellant appeared on receipt of his telegram.
The Courts below have not accepted this explanation.
It does not seem to me that this explanation is so absurd that it must be rejected.
No other view would fit in with the circumstances of the case.
This I will explain now.
It has to be remembered that the finding of the Courts below is that Dr. Mouskar was not in any sense a conspirator with the appellant in the crime.
The learned Advocate General of Bombay, who appeared for the respondent, also made it clear that he did not suggest that Dr. Mouskar was in any conspiracy.
On the evidence on the record it would be impossible to hold that Dr. Mouskar was in any conspiracy with the appellant.
There is no reason whatever for him to have done that.
There is no evidence of such friendship between the appellant and Dr. Mouskar from which it can possibly be inferred that Dr. Mouskar would have become a party to secreting a diabolical crime committed by the appellant.
The trial Court expressly held, "I do not think that at that time Dr. Mouskar realised that there was anything suspicious about the death of Laxmibai, nor do I think that he was aiding or abetting the suppression of truth by cancelling the postmortem examination.
" The High Court also took the same view.
We then come to this that if Dr. Mouskar had procured the cancellation of the direction for postmortem examination, he had done so without thinking that there was anything suspicious about the death of Laxmibai, and only to oblige his friend, the appellant, by saving the family of the; deceased from humiliation by cutting up her body.
Now that being so, when Dr. Mouskar got the direction cancelled at the appellant 's request, he would naturally expect the appellant to take charge of the body and to remove it for cremation.
Evidently, the appellant had disappeared for otherwise Dr. Mouskar would not have sent him a telegram to Poona.
What would.have been the normal reactions then of an 553 innocent man in Dr. Mouskar 's position? He would have been very much surprised.
He would have thought that he had been let down.
It is not too much to think that he would have grown suspicious.
As an innocent man, as he has been found to be, the only thing he could then possibly have done was to have restored the direction for postmortem examination and to proceed to take steps to have it held.
I cannot imagine that an innocent man in such circumstances would have acted otherwise.
It will be remembered that the appellant 's reply to the telegram was not received for over two days and in the meantime Dr. Mouskar did nothing in the matter.
I find it impossible to hold that Dr. Mouskar, innocent as he was, would have waited all this time and done nothing about the postmortem examination at all.
It would have been impossible for him then to have asked if the doctors in charge of the case still wanted a postmortem examination as he actually did.
If he was not a party to any conspiracy with the appellant, I cannot think it possible for him to have sent the telegram to Poona asking the appellant to remove the body after he had been innocently made to obtain a cancellation of the direction and found that the appellant had disappeared.
I may also add that if the appellant had duped Dr. Mouskar and procured him to obtain a cancellation of the direction for postmortem examination, it would be extremely unlikely for him to have taken the risk of disappearing from the hospital without making any arrangement for the disposal of the body for then he could not be sure ,whether the postmortem would be held or not.
It would have been more natural for him to have taken over the body and cremated it.
That would not have affected his design, as alleged by the prosecution, to have evidence of the natural death of Laxmibai created and to have kept back the know] edge of her death from her relatives.
I therefore think that the telegram instead of showing that Dr. Mouskar had already obtained a cancellation of the direction for postmortem examination rather indicates that that direction had not till then been cancelled as is Dr. Mouskar 's own evidence.
This makes the explanation 554 of Dr. Mouskar as to why he sent the telegram a very probable explanation.
Now, there are other things which would support Dr. Mouskar 's evidence.
On November 14, about 4 p.m. he wrote to the police intimating them that a Hindu female named Indumati Panshe who had been admitted into the hospital on November 13 at 5 45 a.m. for treatment of hysterical fits had died the same day at 11 30 a.m. ' He further stated in that letter that a telegram had been sent to the address given at the time of the admission of the patient but without a response and requested that the dead body might be removed to the J. J. Hospital morgue.
This would indicate two things.
First, that Dr. Mouskar was surprised at having received no answer from the appellant to his telegram and that being so, if he had been innocently induced to get the case paper altered, he would not have permitted the alteration to remain there.
The second thing it shows is that Dr. Mouskar even in the afternoon of November 14 referred to hysterical fits as the illness of the patient.
This would be impossible if the prosecution case is true, namely, that at about 1 p.m. on November 13, Dr. Mouskar had procured Dr. Anija to state in the case paper that the cause of death was diabetic coma.
The next thing that the Courts below have found against Dr. Mouskar is that his story of having received a telephone call from the Coroner 's office on the morning of November 15 asking for the final diagnosis of the case was unbelievable.
I find no reason to disbelieve Dr. Mouskar.
His evidence is strongly supported by the death certificate which he issued on that date stating diabetic coma as the cause of death.
There is no reason to think that Dr. Mouskar would have issued this certificate on the 15th unless he had been asked about the cause of death.
Furthermore, the police on that date had actually wanted to know the cause of death as will appear from their letter of November 15.
If the police could ask, I do not see why the Coroner 's office could not.
In that letter the police asked Dr. Mouskar to send per bearer the cause of death to enable them to dispose of the dead body.
I have earlier referred to this letter.
It is on a copy 555 of this that the endorsement " Diabetic coma, Dr. N. section Variava, G. T. Hospital" had been made.
There is no other explanation as to why Dr. Mouskar sent the death certificate on this date and not on any other date.
Indeed, if he was under the impression that the appellant or a relative of the deceased would come and take charge of the body for cremation, as the prosecution case must be, then he would not have issued the death certificate for that was wanted only to enable the police to dispose of the dead body.
Therefore it seems to me likely that Dr. Mouskar had been asked by the Coroner about the cause of death.
Now if he was so asked, it does not strike me as wholly improbable that he asked the physicians in charge whether they were then in a position to state the cause of death or still insisted on a postmortem examination.
It has to be remembered that till then no suspicion attached to the case.
Dr. Mouskar said that he had seen the physicians change their opinion in such matters and had therefore asked whether a postmortem examination was still required.
It has also to be remembered that Dr. Mouskar had no knowledge that the direction for postmortem examination had been given by Dr. Variava.
All that he knew was that such a direction appeared over the signature of Dr. Anija.
It does not seem to me improbable that Dr. Mouskar on being asked by the Coroner to state the cause of death would have enquired of the physicians in charge about it.
If this version is not true, then the only other probable theory would be that the alteration in the case paper had been made at 1 p.m. on November 13, which as I have earlier said, cannot be accepted in view of the telegram and the other records in this case.
It was also said that Dr. Mouskar 's version cannot be accepted for it was not possible for him to make enquiries about the cause of death through a ward boy.
I think this would be too insignificant a ground for disbelieving Dr. Mouskar.
I may now deal with the letter of the police dated November 15 to Dr. Mouskar asking for the cause of the death.
It will be remembered that this letter was sent along with a copy of it and on the copy the endorsement " Diabetic coma, Dr. W. section Variava.
556 G. T. Hospital " had been made.
Dr. Mouskar denied that these letters ever came to him.
The Courts below have been unable to accept his denial.
Their view is that it is Dr. Mouskar who got the endorsement set out above, to be made and is falsely denying it.
I am unable to appreciate why Dr. Mouskar should falsely deny it.
He was innocent.
He had on that date issued the death certificate.
He could easily have admitted the fact, if he had made the endorsement or got it made.
Now it seems to me that there is no evidence that the letter was produced before Dr. Mouskar.
In normal course, as spoken to by police Inspector Kantak, who had written this letter, the original would have been retained at the office of Dr. Mouskar and only the copy would have come back to the police with an acknowledgment of the receipt of the original endorsed on it.
That did not happen.
Both the copy and the original were received back by Kantak.
The bearer who was sent to deliver the letter was not called.
There is therefore no evidence whatever that the letters were actually delivered or what had actually happened.
On the contrary, the return of both copies to the police would show that they had not been delivered to Dr. Mouskar for if the letter had been deliver ed, then there is no reason why Dr. Mouskar would not have given a formal reply to it stating that diabetic coma was the cause of death.
He would have had no difficulty in doing so because on the same day he sent the death certificate mentioning diabetic coma as the cause of death.
He had no reason to take to subterfuge and to get the words " Diabetic coma.
Dr. N. section Variava.
G T. Hospital " written on the copy by somebody.
It would therefore appear that there is no reason to disbelieve Dr. Mouskar when he said that he bad not received the letters and had nothing to do with the endorsement made on the copy of the letter.
What might have happened was that the death certificate having been earlier issued, some clerk in the office returned these letters and by way of an informal communication of the cause of death made the endorse.
ment on the copy.
It may be stated here that Dr. Anija admitted to the police that the words " Diabetic coma " in the endorsement had been written by her 557 but in court she denied that she had written them.
This is another instance which makes me greatly doubt her veracity.
It may be that she had written the words " Diabetic coma " and got some one else to write out the rest of the endorsement.
I come now to the last fact which the Courts below have thought fit to disbelieve, in the evidence of Dr. Mouskar.
I have earlier mentioned that when Laxmibai was lying unconscious in Ward No. 12, Dr. Anija had sent for the Registrar.
Dr. Anija stated that the Registrar whom she sent for was Dr. Saify.
This is untrue for, as I have already said, it has been proved clearly that Dr. Saify was not in Bombay at all on that day.
Now it appears that the hospital kept a call book in which a House Physician wanting to call the Registrar would make an entry and send it to the Registrar.
This call book was produced on September 2, 1958, and it showed that Dr. Anija had herself written down the name of Dr. Shah as the Registrar whom she was calling.
What therefore had happened was that Dr. Saify being away on leave to the knowledge of Dr. Anija, she had sent the call to Dr. Shah.
This call book conclusively proves that Dr. Anija 's statement that she had been told by Dr. Saify, the Registrar, to make the alteration in the case paper is false.
Dr. Mouskar had said in his evidence that he could not trace this call book.
The Courts below have thought that he was lying and was deliberately preventing this call book from coming to light so that Dr. Anija might not be contradicted by her own writing that it was Dr. Shah whom she had sent for which in its turn would show that her story that it was Dr. Saify who had asked her to make the alteration in the case paper was false.
Now Dr. Mouskar 's evidence was concluded on August 25, 1958, and he had retired from the office of the Resident Medical Officer on August 14 preceding.
Dr. Anija 's evidence was taken down on August 18 and August 19, 1958.
1 do not see why if the call book was considered to be of that importance, the police could not produce it after Dr. Mouskar had left office.
It was actually produced from the hospital and must have been lying there all the time.
The next thing to be noticed is that there is 558 nothing on the record to show that Dr. Mouskar was interested in establishing that Dr. Saify was on duty on November 13 and therefore prevented the call book from being produced.
In fact, Dr. Mouskar in his evidence about Dr. Saify stated that " he was not working in the hospital on the 13, 14 and 15 November.
, I think also that he was not staying in his quarters during that period and I did not see Dr. Saify on these days at all." Therefore, there is no basis for suggesting that Dr. Mouskar deliberately prevented the production of the call book.
I may here state that there is nothing in the evidence of Dr. Mouskar which goes to show that he was supporting Dr. Anija in any of her lies.
The Courts below have excused the lies of Dr. Anija in the view that she had told them as she dared not estrange Dr. Mouskar.
Again, there seems to me to be no basis for this finding.
There is nothing on the record to show that Dr. Anija expected anything from Dr. Mouskar or would have been in any difficulty if she had told the truth even at the risk of putting Dr. Mouskar in a difficult situation.
There is no evidence that Dr. Anija had any talk directly with Dr. Mouskar concerning the case of the unconscious Laxmibai and therefore she could not and did not directly contradict anything that Dr. Mouskar said.
Again, it is clear from the evidence that Dr. Anija had left the hospital on January 31, 1957.
She had worked there without any remuneration.
There is no evidence that she had anything to do with the hospital or its Resident Medical Officer, after she had left the hospital.
Again, on the date that Dr. Anija gave evidence, Dr. Mouskar had already retired from his office at the hospital.
In these circumstances, I find no justification for the conclusion that Dr. Anija had lied only out of fear of Dr. Mouskar.
I might also point out that the only lie in Dr. Anija 's evidence which the Courts below thought she said out of fear or at the persuasion of Dr. Mouskar was her statement that it was Dr. Saify who had told her that Dr. Mouskar had wanted the direction as to postmortem examination crossed out and diabetic coma written as the cause of death.
I have earlier stated that dr. Mouskar has gone against this part of 559 Dr. Anija 's evidence by saying that Dr. Saify was not in Bombay on the day in question.
It is clear therefore that it was not Dr. Mouskar who had wanted that Dr. Anija should interpose Dr. Saify between him and her in the matter of the direction for altering the case paper.
Further, if Dr. Mouskar really wanted that Dr. Anija should put the blame for the alteration on somebody else, then Dr. Anija would not have mentioned that Dr. Saify told her that Dr. Mouskar, had wanted the alteration.
She would simply have said that it was at Dr. Saify 's order only that she made the alteration or put the responsibility on Dr. Shah.
The Courts below have been unable to explain why Dr. Anija brought in Dr. Saify at all.
I think this is capable of an explanation as I will show later.
The net position therefore is that Dr. Anija was clearly lying; there is no clear proof that Dr. Mouskar had lied at all.
On the contrary, his evidence and conduct would seem to be consistent with the contemporaneous record and there is no material on which it can be found that Dr. Anija told the lies as she was afraid of Dr. Mouskar.
I come now to the last reason on which the Courts below found that it must have been the appellant who procured the alteration in the case paper.
It has been said that no one else was interested in getting that done.
I take it that this does not mean a finding that the appellant was interested in getting the alteration made for then of course his guilt would already have been assumed.
What it means is that if it is not possible to find reasonably that any one else was interested in getting the alteration made, then it would fit in with the theory that the appellant had committed the crime and therefore was interested in getting the alteration made.
The real question is, can it be reasonably said on the evidence that there was no one other than the appellant who could be interested in getting the alteration made ? I think it cannot.
On the facts established and without making any assumption one way or the other, it seems to me very probable that it was Dr. Anija who was interested in preventing the postmortem examination and therefore in making the interpolations on the case paper.
I will now state m reasons for this view.
560 I have earlier stated that Dr. Anija examined the urine of the patient at 6 30 a.m. on November 13.
There is an entry with regard to it in the case paper, which reads 'Sugar + + + Albumin Acetone + + There is little reason to doubt that Dr. Anija did examine the urine at that time for sugar, for otherwise she was not likely to have started the insulin injections.
She gave two of these, one at 6 30 a.m. and the other at about 9 a.m.
Dr. Variava 's recollection is that when the case paper was shown to him about 11 a.m. the entry "Sugar + + + Albumin " was there but the entry " Acetone + + " was not there and that Dr. Anija told him that she had not examined the urine for acetone.
The entry " Acetone + + " was clearly interpolated in the case paper later.
It wasbecause she had not tested the urine for acetone but had none the less started the treatment for diabetic coma that Dr. Variava had taken her to task and asked her to test the urine for acetone.
All this clearly shows that Dr. Anija had interpolated the entry " Acetone + + " at some later time.
The trial Court thought that Dr. Mouskar having invented the theory of diabetic coma " must have also thought it necessary to make entries regarding the presence of acetone + +.
in the case record " to support this false diagnosis.
This is nobody 's case.
Such a finding would necessarily mean that Dr. Mouskar was in conspiracy with the appellant to hide the crime by creating evidence in support of natural death of the patient.
The findings of the trial Court that Dr. Mouskar was innocent and that he had procured Dr. Anija to make the entry " Acetone + + " cannot stand together.
The latter ending must be rejected as it is purely inferential.
The High Court did not find that the entry " Acetone + + " had been made by Dr. Anija at the persuasion of Dr. Mouskar.
But it appears to have taken the view that Dr. Anija having been induced by Dr. Mouskar to state diabetic coma as the cause of death, herself incorporated before the papers were submitted to the Coroner an entry with regard to the examination of the urine in the case paper and in that entry included " Acetone + + ".
Whether the High Court is right in its view that the entire entry as to the result 561 of urine test at 6 30 a.m. of November 13, 1956, had been made in the case paper later is a matter which I need not discuss.
The only question is who made the entry " Acetone + + " and when.
I may state here that the papers were sent to the Coroner at the time Of the postmortem examination, namely,, on November 22, 1956.
According to the High Court, therefore, the entry " Acetone + + " had been made by Dr. Anija on her own and Dr. Mouskar had nothing to do with it and that Dr. Anija made the entry not at about 1 p.m. on November 13, 1956, when she crossed out the direction for postmortem examination and wrote out diabetic coma as the cause of death but almost nine days later.
The High Court did not accept that part of Dr. Mouskar 's evidence where he said that he was positive that the entry " Acetone + + " was in the case paper when it reached him at 1 p.m. on November 13.
Earlier he had said that he had not read the case paper fully when it first came to him.
Dr. Mouskar was plainly making a mistake.
It is nobody 's case that it was then there.
Even on the prosecution case it was added sometime later, that is, when after the receipt of the case paper Dr. Mouskar had been persuaded by the appellant to procure a cancellation as to the direction for postmortem examination.
We then come to this that the entry " Acetone + +" had been made by Dr. Anija on her own.
If she did this, she must have had some reason for it.
I cannot imagine that reason being anything else excepting to create evidence in support of her diagnosis of diabetic coma.
The next lie which Dr. Anija spoke and which I wish now to refer, is the false story of her telephone talk with Dr. Variava at about 7 a.m.
She said that she then informed Dr. Variava about the condition of the patient and that she had started insulin injection and further that Dr. Variava told her to continue the treatment.
I have earlier said that this statement was a clear falsehood and given reasons for this view.
It is nobody 's case, and it could not be, that Dr. Mouskar had asked her to tell this lie.
Why then did she do so? Again, the only possible reason that I can think of is the same that I have given earlier, namely, that she was keen on 'creating evidence in support of the line of treatment that she had given to 562 the patient.
She had been treating the patient as a case of diabetic coma.
It is clear from her evidence and of course from that of Dr. Variava, that he had reprimanded her for adopting that line of treatment without having tested the urine for acetone.
She had clearly made a mistake in the treatment of the case and this might have put her in a difficulty with the hospital authorities and also in her future professional career.
It was clearly her interest to see that her mistake was not finally established as a result of the postmortem examination which had been directed by Dr. Variava.
In these circumstances, she was under a great temptation to prevent the postmortem examination which might have revealed her mistake.
It must be remembered that she had just started on her professional career and was a very young person.
I am unable therefore to hold that, apart from the appellant there was no one else who could have been interested in crossing out the direction as to postmortem examination and inserting diabetic coma as the cause of death.
In the circumstances that I have mentioned, it seems quite probable that Dr. Anija had made the alteration in the case paper entirely on her own and to save herself from the possible effects of her mistake.
It also seems probable to me that Dr. Anija had made the alterations on November 15, when Dr. Mouskar had sent the case paper through the ward boy for ascertainment of the cause of death.
I have earlier said that Dr. Anija had falsely introduced Dr. Saify as the person who had told her that Dr. Mouskar had wanted the direction as to postmortem examination to be crossed out and diabetic coma to be stated as the cause of death.
I have also said that Dr. Mouskar did not support Dr. Anija as to the presence of Dr. Saify in the hospital on the day in question.
Why then did Dr. Anija introduce the name of Dr. Saify ? I have said that the Courts below have not been able to find any explanation as to why Dr. Anija introduced the name of Dr. Saify.
It seems to me that when the alteration which she had made on her own, was found out in the course of the investigation, she had to give some explanation as to why she had made it.
She thought of saying that she did it under the orders of Dr. Mouskar who was very 563 much her senior and whom she was bound to obey.
But she also realised that Dr. Mouskar was sure to deny that he had asked her to make the alteration and as against his, her evidence was not likely to be accepted.
It was therefore that she hit upon the idea of interposing Dr. Saify in between her and Dr. Mouskar in the hope that Dr. Saify being also a very young person, there was some chance of her evidence being accepted as against his.
Apart from that there does not appear to be any other explanation as to why Dr. Anija introduced the name of Dr. Saify.
She had clearly forgotten while inventing this story that Dr. Saify was away on leave but that of course makes no difference for if she had remembered it, she might have named somebody else, probably Dr. Shah or Dr. Patel who worked in Unit No. 2 of the Hospital.
Then it has to be remembered that Dr. Anija admitted to the police that she had written out the words " Diabetic coma " on the letter from the police of November 15, asking for the cause of death and this she later denied.
All this would make more probable the view that it was Dr. Anija who in order to prevent the detection of the mistake made by her in the treatment of Laxmibai had the endorsement "Asked for post , mortem " crossed out and inserted in the case paper diabetic coma as the cause of death and that she had not been asked by Dr. Mouskar to make the alteration in the case paper.
I think it right to state here that it cannot be said that Dr. Shah was also to blame for the wrong diagnosis of diabetic coma.
Dr. Anija said that pursuant to her call the Registrar came at about 8 45 a.m. and approved of her diagnosis and advised a further insulin injection of 40 units.
She also said that the Registrar wrote on the case paper the words "Inj.
Insulin 40 units Iv.
glucose 20 c.c.
" By " the Registrar " she was of course referring to Dr. Saify.
It is clear from the call book that it was Dr. Shah, who was the Registrar of Unit No. 2 who had been sent for by Dr. Anija.
Dr. Shah said in his evidence that he must have gone to the patient pursuant to the call but he had no recollection of the case at all.
He denied that the entry " Inj.
Insulin 40 units Iv.
glucose 20 c.c.
"was in his hand writing.
Dr. Patel who was 564 officiating as the Registrar of Unit No. 1 in the absence of Dr. Saify on leave, also denied that that entry was in his handwriting.
Dr. Shah said from the sequenceof time noted in the call book and the case paper, that he must have gone to the ward before 6 30 a.m.
According to Dr. Shaw he could not have seen the case paper when he called because he was not the Registrar of Unit No. 1.
He admitted that he must have advised Dr. Anija, about the case.
What the advice was we do not know.
It is clear however that Dr. Anija had started treating the case as diabetic coma and given 40 units of insulin before she sent for the Registrar.
Indeed according to her, the Registrar, who must have been Dr. Shah, arrived at 8.45 a.m.
So we get that Dr. Anija started treatment of diabetic coma and gave insulin prior to 6 30 a.m. and her statement that the Registrar wrote down the direction for a second insulin injection of 40 units at 8 45 a.m. is false.
It is therefore clear that the treatment given to the unconscious Laxmibai had been under the judgment of Dr. Anija alone.
It would follow that Dr.
Shah had no responsibility for that treatment.
This is also supported by the fact that Dr. Anija did not tell Dr. Variava that Dr. Shah had also thought it to be a case of diabetic coma.
There is another circumstance against the appellant which must now be noticed, and that is that the appellant left the hospital soon after the death of Laxmibai without showing the least care as to what happened thereafter.
This conduct considered with the appel.
lant 's letter of November 14, 1956, stating falsely that " Indumati 's " brother would come to take over her body and further considered with the subsequent conduct of the appellant in fraudulently misappropriating the deceased Laxmibai 's money clearly indicates that immediately after the death of Laxmibai the appellant had conceived the idea of misappropriating her properties.
It has been suggested that it would be somewhat strange that the dishonest intention cropped up in the appellant 's mind so suddenly and therefore it is reasonable to think that he had entertained that design even during the lifetime of Laxmibai.
The Courts below have accepted that suggestion.
I cannot say that that is an unreasonable view to take.
565 But supposing the appellant had during Laxmibai 's lifetime cast a covetous eye on her properties, would that be enough to justify a finding that her death had been an unnatural death ? I do not think it would.
The design may provide a motive for murder; but the murder, that is, in this case an unnatural death, cannot be proved by it.
That design does not exclude the possibility that Laxmibai died a natural death and the appellant made full use of the opportunity thereby provided to carry his design into effect.
I think I should mention here one other aspect of the case.
The trial Court observed that the symptoms found in the record as to the last illness and death of Laxmibai all clearly pointed to the conclusion that death was due to hypoglycemia and that hypoglycemia might be one of the possible causes of her death.
The trial Court however held that there was nothing to show in the symptoms that hypoglycemia could have been of spontaneous origin though the matter was not very clear.
It would seem that the trial Court thought that the hypoglycemia had been induced by two injections of insulin given by the appellant to Laxmibai sometime on November 12.
The trial Court for this purpose relied on the evidence of Shantabai a maid servant employed by Laxmibai, who said that on November 12, the appellant gave Laxmibai two injections.
This maid servant was deaf and dumb and her evidence must be of doubtful value.
However that may be, there is nothing to show that death was caused by hypoglycemia brought about by the two injections given by the appellant, assuming that he had given them.
It has to be remembered that in the hospital Laxmibai was given two further injections of insulin of 40 units each.
It may be that these injections really caused her death.
That is a possibility which on the finding of the trial Court cannot be brushed aside.
Now, if that is so, then clearly the appellant is not responsible for the death of Laxmibai.
He had done nothing to induce Dr. Anija or any of the other doctors in the hospital to give more insulin to Laxmibai.
There is no evidence to that effect.
Dr. Anija was clear in her evidence that she never consulted Dr. Lagu regarding the diagnosis that death was due to diabetic.
I need not further into this aspect of the 566 matter for all that I wish to point out is that the trial Court had thought that hopoglycemia might be the cause of death.
The High Court, thought that it was not possible in view of the absence of evidence about the time taken for insulin to induce hypoglycemia to hold that death was due to hypoglycemia induced by a massive dose of insulin.
It seems to me that if there was no evidence, that was the fault of the prosecution and not of the appellant.
In all cases and particularly in a case of this kind, it is the duty of the prosecution to prove that the death was an unnatural death and exclude by evidence completely, the possibility of death having been caused by some instrumentality other than the appellant.
This is another reason for saying that it has not been clearly established in this case that Laxmibai 's death was an unnatural death or has been caused by the appellant.
I have so long been discussing the facts which are supposed to lead towards the guilt of the appellant.
I propose now to deal with some of the facts which seem to be in his favour.
The prosecution case is that the appellant had in the train administered to her an undetectable poison which caused her death.
Now, if the appellant had done that, he must have made a plan for it before he started on the journey to Bombay with her from Poona.
It seems unlikely that if he had done that, he would have made no effort to keep it a secret that he was taking her to Bombay.
The evidence is clear that he made no such effort.
The next fact that has to be faced by the prosecution is that the railway compartment would be a most unusualplace in which to administer a poison.
The appellant could not have expected that there would be a compartment for Laxmibai and himself in which there would be no other passenger.
Indeed the trial Court thought that there must have been other passengers in that compartment.
That being so, it becomes improbable that the appellant had planned to poison her in the train.
Again, it has been proved as a fact by Dr. Sathe himself that the appellant had made an appointment with him for November 13.
Was it necessary for him to have done this if he knew that Laxmibai would die before the hour fixed with Dr. Sathe ? Further, if he had administered 567 a poison to Laxmibai, would he have taken her to a. public hospital? That would have been impossible unless the appellant was perfectly certain that the poison was absolutely undetectable.
That requires a great deal of knowledge of poisonous drugs which there is no evidence to think the appellant possessed.
But assume that the appellant was so certain that the poison would never be detected, why then should he have worried about the postmortem examination at all? If it is found that the appellant had not prevented the postmortem examination being held, there would be very little on which to base his conviction for the murder of Laxmibai by poisoning.
Nor can it be said that the appellant was not sure whether the poison would be detected or not, but none the less took the risk of taking the unconscious Laxmibai to the G. T.hospital in the hope that if any difficulty arose, he could rely on Dr. Mouskar to help him.
There is no evidence on which we can hold that Dr. Mouskar would have helped him if any suspicion as to Laxmibai 's death having been caused by poision had arisen.
It has to be remembered that Dr. Mouskar was not doing the work of a physician in the hospital but was in charge only of the administration.
All these are very strong circumstances indicating that the appellant had not administered any poison to Laxmibai on the train.
Very cogent reasons would be required to dispel the presumption in favour of the appellant arising from them.
I find no such reasons in the case.
In the net result the circumstances appear to me to be these.
First, the appellant had a design during Laxmibai 's lifetime to misappropriate her properties.
This only supplies the motive for causing her death but does not prove that the death which occurred, was an unnatural death.
Secondly, the appellant did not give to the hospital the correct name of Laxmibai : the name given however was not such as from it her identity could never have been discovered.
Thirdly, the appellant gave his own address instead of that of Laxinibai.
It seems to me that that was a natural thing for him to have done in the circumstances of the case for there would have been no one in Laxmibai 's flat to receive her letters and there there was no other address which the appellant could have 568 given.
Further, the address given necessarily connected the appellant with the last hours of Laxmibai 'slife a conduct not very probable in a person who had brought about her death.
The theory that that address was given only to ensure that communications from the hospital concerning the dead Laxmibai should reach the appellant is not very plausible.
It is clear that if the appellant had not given his own address, the only other address he could possibly have given would have been Laxmibai 's address.
I am unable to appreciate what communication the hospital could have sent to Laxmibai at her address after her death or when she lay in the hospital.
In any event, the appellant would have had no difficulty in getting hold of any such communication sent to Laxmibai 's own address.
Fourthly, the appellant told Dr. Ugale that Laxmibai had had a hysterical fit.
It is doubtful whether he said so, and also whether, if he did, it was purposefully false.
What purpose it served is not clear.
The appellant did not mention hysterical fit to the doctor in charge of the treatment nor did he do anything to induce her to take a different line of treatment from that which she had adopted.
He did nothing to induce any idea in her mind as to the cause of the illness or the disease.
In these circumstances it does not seem possible to hold that hysterical fit had been mentioned by the appellant to prevent detection of the fact that Laxmibai had been poisoned.
Lastly, come the series of the appellant 's acts from immediately after Laxmibai 's death indicating his intention to acquire her properties and the acquisition thereof by deception and forgery.
These cannot prove that Laxmibai died an unnatural death.
Considering them all together, I am unable to think that the only reasonable conclusion possible is that Laxmibai died an unnatural death.
In my view the prosecution has failed to prove the guilt of the appellant.
In the result I would allow the appeal.
BY COURT.
In accordance with the opinion of the majority, the appeal is dismissed.
Appeal dismissed.
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At the trial of a person for murder by alleged poisoning, the fact of death by poisoning is provable by circumstantial evidence, notwithstanding that the autopsy as well as the chemical analysis fail to disclose any poison; though the cause of death may not appear to be established by direct evidence, the medical evidence of experts and the circumstances of the case may be sufficient to infer that the death must be the result of the administration to the victim of some unrecognised poison or drug which acts as a poison, and a conviction can be rested on circumstantial evidence provided that it is so decisive that the court can unhesitatingly hold that the death was not a natural one.
Per section K. Das and M. Hidayatullah, jj.
Where the evidence showed that the appellant who was the medical adviser of the deceased, deliberately set about first to ingratiate himself in the good opinions of his patient and becoming her confidant, found out all about her affairs and gradually began managing her affairs, that all the time he was planning to get at her property and had forged her signature on a dividend warrant and had obtained undated cheque from her and then under the guise of helping her to have a consultation with a specialist in Bombay took her in a train, and then brought the patient unconscious to a hospital bereft of all property with which she had started from home and gave a wrong name to cover her identity and wrong history of her ailments, that after her death he abandoned the body to be dealt with by the hospital as an unclaimed body, spread the story that she was alive and made use of the situation to misappropriate all her properties, and that he tried by all means to avoid postmortem examination and when questioned gave false and conflicting statements, held that if the deceased died in circumstances which prima facie admit of either disease or homicide by poisoning one must look at the conduct of the appellant both before and after the death of the deceased, that the corpus delicti could be held to be proved by a number of facts which render the commission of the crime certain, and that the medical evidence in the case and the conduct of the appellant unerringly pointed to the conclusion that the death of the deceased was the result of the administration of some unrecognised poison or drug which would act as a poison and that the appellant was the person who administered it.
461 Per Sarkar, J. If it could be established in this case that the deceased had died an unnatural death, the conclusion would be inevitable that unnatural death had been brought about by poison, but the circumstances were not such that from them the only reasonable conclusion to be drawn was that the deceased died an unnatural death.
Held, that the prosecution had failed to prove the guilt of the appellant.
Regina vs Onufrejczyk, [1955] 1 Q.B. 388, The King vs Horry, [1952] N.Z.L. 111, Mary Ann Nash 's case, (1911) 6 Cr.
R. 225 and Donnall 's case, , considered and relied on.
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855.txt
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ivil Appeals Nos. 484 & 485 of 1987.
336 From the Judgment and Order dated 2.12.1986 of the Andhra Pradesh High Court in Election Petition Nos. 3 & 5 of 1985.
P.P. Rao, P. Krishna Rao, V.A. Babu and K.R. Nagaraja for the Appellants.
Shanti Bhushan, G. Narasimhulu and T.V.S.N. Chari for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
These two appeals arise out of the judgments in two Election Petitions in the Andhra Pradesh High Court questioning the election of respondent No. 1 as a Member of Parliament from Srikakulam No. 1 Parliamentary Constituency in the 8th General Election to the House of the People.
The points raised in these appeals are common and so are the relevant facts; and, hence, they are being disposed of by this common judgment.
We propose to take note of only the few facts which are necessary for the appreciation of the controversy before us.
The polling date for the said election along with other parliamentary elections in the State of Andhra Pradesh was December 27, 1984 but in Srikakulam No. 1 Parliamentary Constituency the polling was countermanded and the date of polling was later fixed on January 28, 1985.
In both the Election Petitions the election of respondent No. 1 was questioned mainly on the ground that Shri N.T. Rama Rao, the Chief Minister of Andhra Pradesh as well as the President of the Telugu Desam Party as well as respondent N. 1 gave certain speeches and certain advertisements were got pub lished by Shri N.T. Rama Rao through the Publicity Depart ment of the Government of Andhra Pradesh in the newspapers containing certain statements which are alleged to amount to a corrupt practice within the meaning of the said term in section 123(1)(A) of the Representation of the People Act, 1951 (hereinafter referred to as "the said Act").
The main question canvassed before us is whether the statements contained in these aforesaid advertisements amount to a corrupt practice under section 123(1)(A)(b) of the said Act.
Section 123(1)(A)(b) of the said Act runs as follows: "123.
Corrupt practices The following shall be deemed to be corrupt practices for the purposes of this Act: 337 (1) 'Bribery ', that is to say (A) any gift, offer or promise by a candidate or his agent or by any other person with the consent of a candidate or his election agent of any gratification, to any person whomsoev er, with the object, directly or indirectly of inducing (a) x x (b) an elector to vote or refrain from voting at an election, or as a reward to (i) a person for having so stood or not stood, or for having withdrawn or not having with drawn his candidature; or (ii) an elector for having voted or refrained from voting.
" The advertisements very shortly stated, refer to the auspicious gifts made by the Government of Andhra Pradesh to the poor people on the eve of New Year and Sankranti.
In the said advertisements, it is stated that the said Government which was formed by the Telugu Desam Party was giving to the poor people whose income was below Rs.6,000 per year, a kilo of rice at Rs.2 per Kg.
and the said advertisements referred to a new scheme of selling sarees and dhoties at half prices to the poor people in the State of Andhra Pradesh having Green cards.
Green cards were directed to be issued to all the persons whose annual income was below Rs.6,000.
The supply of the rice at subsidised rates as aforesaid was also to be made to the Green card holders only.
The scheme to sell sarees and dhoties at subsidised rates was to be opera tive from January 26, 1985 to March 31, 1985.
In considering the question whether the said advertise ment and the said speeches amount to a corrupt practice, we are of the view that the provisions of section 123 of the said Act which deal with corrupt practices have to be inter preted, keeping in mind that dictates of commonsense require that they never could have been intended to treat normal election promises made in election manifestoes or usual election speeches by members of various political parties aspiring to power and by different candidates aspiring to get elected to legislative bodies concerned as corrupt practices.
We are of the view that these advertisements and speeches amount to nothing more than statements extolling the achievements of the Government of the State of Andhra 338 Pradesh under the Telugu Desam Party headed By N.T. Rama Rao, the Chief Minister and contain normal election promises and these statements do not amount to corrupt practices falling within the scope of sub clause (b) of clause (A) of sub section (1) of section 123 of the said Act.
It was urged by Mr. Rao, learned counsel for the appel lants that in the impugned judgments, the High Court has incorrectly taken the view that in order to amount to brib ery within the meaning of the said term in section 123(1)(A), the transaction must amount to a bargain by the candidate with a view to get votes.
It was pointed out by him that the said view has been taken in the impugned judg ments, relying upon the decision of a Bench comprising two learned Judges of this Court in Ghasi Ram vs Dal Singh and Others, ; at pp 109 110.
We have gone through to the relevant portion of that judgment (at page 109 and 110 of the said report).
A careful perusal of the said judgment shows that what has been really held in that case is that if the promises given or made amount to a bargain entered into by a candidate for a vote or votes, that would amount to a corrupt practice; but it has not been held there that unless the act alleged amounts to such a bargain, it could not amount to a corrupt practice.
In our view, that judgment does not lay down that in order to amount to a corrupt practice, the transaction must amount to a bargain for getting a vote.
It was pointed out by Mr. Rao, however, that such a view seems to have been taken in two other decisions rendered by two Benches, each comprising two learned Judges of this Court in Bhanu Kumar Shastri vs Mohan Lal Sukhadia and Others, ; at p. 543 and Harjit Singh Mann vs section Umrao Singh and Others, ; at p. 5 10 and these judgments need to be overruled.
We do not propose to go into the correctness or otherwise of this view because, even on the footing that in order to amount to a corrupt practice under the aforesaid provision the alleged acts need not constitute a bargain, the acts established in the present case, in our opinion, do not amount to a corrupt practice.
Our attention was drawn by Mr. Rao to the fact that in this case the said advertisements and the speeches had to be viewed in the context of the fact that the advertisements were issued and the speeches were made after respondent No. 1 filed his nomination papers on January 4, 1985, for the election and before the election was held in the aforesaid constituency.
It was further pointed out that the offer made for the sale of sarees and dhoties at subsidised rates was limited to the period from January 26, 1985 to March 31, 1985.
It 339 cannot be denied that these factors are relevant factors.
We cannot, however, lose sight of the fact that this offer was made not only in this constituency but throughout the State where the elections to the House of the People were sched uled to be held, and were, in fact, held on December 27, 1984.
It was only in case of this constituency that the election to be held on the scheduled date was countermanded and later held on January 28, 1985.
We cannot lose sight of the fact that, as far as the said speeches and the said advertisements, which were issued by the Publicity Depart ment of the State, are concerned, they deal in the main with the achievements of the Government of Andhra Pradesh which, of course, was being run by Ministers belonging to Telugu Desam Party to which respondent No. 1 also belonged.
More over, the offer in the advertisements for the sale of dhoties and sarees at discount rates was in the nature of a benefit offered to poor persons in that State.
When a Gov ernment announces the measures which are intended for the benefit of any of the classes for whose the Government can normally be expected to work like the poor or the economical backward classes, it is only in rare circumstances that such a promise can be said to amount to a corrupt practice within the meaning of section 123(1)(A) even though such a promise might be made on the eve of elections.
Keeping this in mind, in our opinion, although the offer to sell dhoties and sarees at discount rates was of a limited duration as afore stated, it cannot be regarded as a corrupt practice.
Such an offer was bound to have financial repercussions and it is quite possible the duration of the offer was limited to enable the Government to study the financial repercussions rather than from any improper motive.
We find support for this view from the decision of this Court in H.V. Kamath vs Ch.
Nitiraj Singh, that case an Ordi nance was passed by the Government of Madhya Pradesh as a result of which a large number of agriculturists, namely, those holdings of plots of land of less than 7.5 acres area of paying land revenue not exceeding Rs.5 were exempted from the payment of the land revenue.
It was held that such a concession does not amount to a gift, offer or promise of any gratification within the meaning of section 123(1)(A) of the said Act nor does the announcement of the declaration made at a meeting shortly before the election or the issue of a pamphlet containing that declaration at that time carry the matter any further.
It was held that neither Shri D.P. Misra who was the Chief Minister nor Shri S.K. Dixit who acted as his agent were guilty of any corrupt practice within the meaning of the aforesaid provision.
It was next contended by Mr. Rao, although very faintly, that the High Court was in error as it had not decided all other issues which 340 were raised in the election petition.
In this regard we cannot lose sight of the fact that the term of the present Lok Sabha is likely to be over within a few months and fresh elections are likely to be held and it would, therefore, be an exercise in futility to remand the matter to the High Court for deciding the remaining issues.
In the result, the appeals fail and are dismissed.
Looking to the facts and circumstances of the case, there will be no order as to costs.
R.N .J.
Appeals dis missed.
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These two appeals arise out of the judgments in two Election Petitions before the Andhra Pradesh High Court questioning the election of respondent No. 1 as a Member of Parliament from Srikakulam No. 1 Parliamentary constituency in the 8th General Election to the House of the People on the ground that Shri N .T.
Rama Rao the Chief Minister of Andhra Pradesh as well as respondent No. 1 gave certain speeches and certain advertisements were got published by Shri N.T. Rama Rao through the Publicity Department of the Govt.
of Andhra Pradesh in the newspapers containing certain statements which are alleged to amount to a corrupt practice within the meaning of Section 123(1)(A) of the Representa tion of the People Act 1951.
Dismissing the appeals, this Court, HELD: That these advertisements and speeches amount to nothing more than statements extorting the achievements of the Government of the State of Andhra Pradesh under the Telegu Desham party headed by N.T. Rama Rao, Chief Minister and contain normal election promises and these advertise ments donot amount to corrupt practices falling within the scope of sub clause (b) of clause (A) of sub section (1) of Section 123 of the said Act.
[337H; 338A] Ghasi Ram vs Dal Singh & Ors., ; at pp.
109 110; Bhanu Kumar Shastri vs Mohal Lal Sukhadia & Ors., ; at p. 543 and Harjit Singh Mann vs section Umrao Singh & Ors., ; at p. 510, referred to.
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6197.txt
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Civil Appeal No.1396 of 1974 From the Judgment and order dated 28.2.1973 of the Kerala High Court in I.T. Reference No. 84 of 1971.
T.S. Krishnamurthy Iyer, V.J. Francis and N.M. Popli for the Appellant.
S.Balakrishnan for the Respondent.
The Judgment of the Court was delivered by PATHAK J.
This appeal by special leave is directed against the judgment of the High Court of Kerala disposing of an Agricultural 163 Income tax Reference and answering the following question in favour of the assessee and against the Revenue: "Whether on the facts and circumstances of the case the Tribunal was justified in holding that the amount of Rs.33,747.09 is not agricultural income for the assessment year 1964 65." The assessees Kerala Estate Mooriad Chalapuram, is a broad description of seven persons possessing the status of tenants in common under the Kerala Agricultural Income tax Act, 1950.
They owned an estate from which they derived agricultural income liable to be assessed in the year 1963 64.
The assessees followed the mercantile system of accounting.
In assessment proceedings for the year 1963 64, the assessees claimed a deduction of Rs.33,747.09 from their agricultural income on the ground that it was payable towards interest on a loan of Rs.4,00,000 taken by them from M/s. Associated Planters Ltd., Calicut.
The deduction was allowed.
During the accounting period relating to the assessment year 1964 65 M/s. Associated Planters Ltd.waived payment of the interest of Rs.33,747.09, and accordingly the amount was credited to the revenue accounts of the assessees.
The assessing authority brought the amount to tax.
The case was ultimately carried in second appeal to the Tribunal on the question whether the sum of Rs.33,747.09 credited in the relevant previous year could be assessed to tax for the year 1964 65.
The Tribunal, by majority, held that it was not agricultural income.
As the instance of the Commissioner of Agricultural Income tax, Kerala, a reference was made to the High Court of Kerala under sub section
(2) of section 60 of the Kerala Agricultural Income tax Act on the question of law set forth earlier, and the High Court has answered the question in the affirmative.
The High Court has taken the view that it was immaterial that the assessees followed the mercantile system of accounting, because the case was not one of an actual or constructive receipt or any receipt at all but only one of remission.
According to the High Court a remission could not give rise to a credit item in the accounts of the assessees, and that what had been given up by the creditor in favour of the assessees or returned to them could not constitute the income of the assessees.
The High Court observed that what was returned to the assessees had nothing to do with the activities of the assessees, and that it did not arise from the agricultural operations carried on by the assessees.
The Kerala Agricultural Income tax Act, 1950 provides for the 164 levy of tax on agricultural income in the State of Kerala.
Section 3 of the Act provides that agricultural income shall be charged for each financial year on the total agricultural income of the previous year of every person at the rates specified in the Schedule.
Section 4 defines what 'total agricultural income ' is, and s.5 details the deductions to be made in computing the agricultural income.
Clauses (e), (g), (h), and (i) of section 5 refer to interest paid by an assessee in different kinds of cases.
The interest in all these cases has to be deducted from the agricultural income of a person before the levy is imposed.
It is not disputed that the interest allowed to be deducted in the assessment of the present assessees falls under one of those clauses and was, therefore, rightly deducted in computing their agricultural income.
The question is whether the interest waived by M/s. Associated Planters Ltd. and credited to the revenue accounts of the assessees can be regarded as their agricultural income.
There has been serious controversy through the years on the question whether an amount refunded or remitted constitutes the income of an assessee.
In Commissioner of Income tax, Mysore vs Lakshmama, the Mysore High Court took the view that a refund received by the assessee in respect of excise fees payable by him amounted to a revenue receipt liable to tax.
In that case, however, the High Court specifically made a distinction between cases of refund and cases of remission, and it appears to have taken the position that an amount received as remission of duty could not be treated as a revenue receipt, while an amount received by way of refund could be.
In the judgment under appeal, the High Court of Kerala noticed that decision and after exhaustively surveying several decisions came to the conclusion that the remission in the present case could not amount to agricultural income.
We think that the view taken by the High Court in the case before us is right.
The remission cannot, in our opinion, be considered as amounting to the receipt of agricultural income.
What was allowed to be deducted from the total agricultural income of the assessees was interest pursuant to s.5 of the Act.
It was a deduction made permissible by the Act.
To be regarded as taxable in the hands of the assessees the amount which was the subject of remission must be capable of being described as agricultural income.
As the High Court has observed in the present case "what was returned to the assessee has nothing to do with the activities of the assessee, it does not arise from business nor does it arise from agricultural operations when the assessee is an agriculturist.
" 165 In order to eliminate such a controversy in cases falling under the Indian Income tax Act, 1922 sub section
(2A) was added in section 10 of that Act, whereby a receipt such as this was expressly made liable to tax by legal fiction as profits and gains of business, profession or vocation.
Sub section (2A) was inserted in s.10 in 1955.
Before that Chagla, C.J., speaking for the Court in Mohsin Rehan Penkar vs Commissioner of Income tax, Bombay City, had observed: "It is impossible to see how a mere remission which leads to the discharge of the liability of the debtor can ever become income for the purposes of taxation".
This observation was noted by the Mysore High Court in C.I.T. vs Lakshmamma (supra), and appears from what was said by them to have received that tacit approval of the learned Judges.
It was made the basis of distinguishing the case before them from that decided by the Bombay High Court.
We may point out in regard to sub section
(2A) of section 10 of the Indian Income Tax Act, 1922 that it has been replaced by an even wider provision as sub section
(1) of section 41 of the Income Tax Act, 1961.
No provision of that nature finds place in the Kerala Agricultural Income Tax Act.
The appeal fails and is dismissed with costs.
M.L.A. Appeal dismissed.
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The Kerala Agricultural Income Tax Act, 1950 provides for the levy of tax on agricultural income in the State of Kerala.
Section 5 details the deductions to be made in computing the agricultural income.
Clauses (e), (g), (h) and (i) refer to interest paid by the assessee in different kinds of cases.
The interest in all these cases, has to be deducted from the agricultural income of a person before the levy is imposed.
The respondents assessees claimed a deduction of Rs.33,747.09 from their agricultural income under section 5 of the Kerala Agricultural Income Tax Act 1950 towards interest on a loan of Rs.4 lakhs taken from a creditor.
The deduction was allowed.
However, in the next accounting period relating to the assessment year 1964 65, the said creditor waived payment of the interest of Rs.33,747,09 and accordingly the amount was credited to the revenue accounts of the respondents assessees.
The Assessing Authority brought the amount to tax.
But, the Tribunal as well as the High Court took the view that the case was not one of an actual or constructive receipt or any receipt at all but only one of remission and a remission could not give rise to a credit item in the accounts of the assessees and that what had been given by the creditor in favour of the assessees or returned to them could not constitute the income of the assessees.
Dismissing the appeal of the Revenue, ^ HELD: (1) The view taken by the High Court is right.
The remis 162 sion cannot be considered as amounting to the receipt of agricultural income.
What was allowed to be deducted from the total agricultural income of the assesses was interest pursuant to section 5 of the Act.
It was a deduction made permissible by the Act.
To be regarded as taxable in the hands of the assessee, the amount which was the subject of remission must be capable of being described as agricultural income.
[164F G] In the instant case, what was returned to the assessees has nothing to do with the activities of the assessees; it does not arise from business nor does it arise from agricultural operations when the assessee is an agriculturist.
[164G H] Commissioner of Income tax, Mysore vs Lakshmamma,[1964] , approved.
Mohsin Rehman Penkar vs Commissioner of Income tax, Bombay City,[1948] , referred to.
(2) In order to eliminate such a controversy in cases falling under the Indian Income tax Act, 1922, sub s.(2A) was added in section 10 of that Act, whereby a receipt such as this was expressly made liable to tax by legal fiction as profits and gains of business, profession or vocation.
Sub.s.(2A) of s.10 of the Indian Income Tax Act, 1922 has been replaced by an even wider provision as sub section
(1) of section 41 of the Income Tax Act, 1961.
No provision of that nature finds place in the Kerala Agricultural Income Tax Act.
[165A B;D]
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ivil Appeal Nos. 410 and 520(N) of 1973.
From the Judgment and Decree dated 21/22/23.11.1972 of the Gujarat High Court in First Appeal Nos. 454 and 455 of 1970.
B.K. Mehta, D.N. Misra, J.B. Dadachanji & Co. and N.J. Modi, for the Appellants.
236 S.K. Dholakia, P.H. Parekh, J.H. Parekh, Ms. Sunita Sharma, Krishan Kumar, Vimal Dave and H.J. Javeri, for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
These appeals are directed against the deci sion of the Gujarat High Court in an appeal arising out of a suit for partition instituted by the respondent No. 1, Vadilal Bapalal Modi (since deceased).
The father of the plaintiff Vadilal was Bapalal who had 5 sons the plaintiff, Ramanlal, Gulabchand, Kantilal and Jayantilal; and a daughter Champaben.
Gulabchand was impleaded as the first defendant in the suit and on his death his heirs and legal representatives have been substi tuted.
Kantilal and Champaben are defendants No. 2 and 3 respectively.
Ramanlal predeceased Bapalal and his wife and son are defendants No. 4 and 5.
Jayantilal also died earlier and his wife Smt.
Chandrakantaben, defendant No. 6 is the appellant in Civil Appeal No. 418 of 1973.
Their children are defendants No. 7 to 12.
CiviI Appeal No. 520 of 1973 has been preferred by the 7th defendant, Narendra.
The suit by VadilaI was instituted in 1960, claiming share in the considerably large properties detailed in the Schedule to the plaint, but the present appeals are not related to any other item excepting the property described as a chawl admeasuring 7 acres and 2 gunthas of land with 115 rooms and huts, situated in the Naroda locality in Ahmedabad under Lot No. 8 of the plaint which has been referred to by the counsel for the parties before us as the chawl or the Naroda chawl.
According to the case of the defendants No. 6 to 12, this property exclusively belongs to defendant No. 6 and is not liable to partition.
The other defendants contested the claim of the plaintiff with respect to some other items, but so far the disputed chawl is con cerned, they supported the plaintiffs ' case that it belonged to the joint family and is liable to partition.
The land of Lot No. 8 was acquired by Bapalal in 1932 for a sum of Rs.9,450 and the rooms were constructed thereon in about 1934.
It has been held by the High Court, and the finding has not been challenged before us, that Bapalal acquired the property and built the chawl with the aid of ancestral joint funds, and the property, therefore, belonged to the family.
According to the case of the defendants 237 No. 6 to 12, Bapalal orally gifted the property to his daughter in law Chandrakanta the 6th defendant, in March, 1946 and made a statement before the Revenue authorities on the basis of which her name was mutated, and she was put in possession thereof.
Admittedly 114 rooms in the Naroda chawl had been let out to tenants, and one room was retained for the caretaker.
According to Chandrakanta 's case, although she came in peaceful possession, the management which in cluded realisation of rent was in the hands of Gulabchand (defendant No. 1).
It appears that in 1952 some dispute arose and Chandrakanta assumed direct charge of the Naroda chawl and has remained in possession thereafter.
Thus she has been in exclusive possession of the disputed chawl since 1946, and acquired good title therein by adverse possession before the suit was filed in 1960.
The learned Judge, City Civil Court, Ahmedabad, who tried the suit, held that BapalaI and his sons constituted a joint Hindu family and the business carried on by Bapalal was for the benefit of the family and the income from the business was thrown in the common pool and all the proper ties including the disputed chawl were treated as belonging to the family.
Proceeding further it has been found that the case of the defendant No. 6 about the gift, the mutation of her name, and her exclusive possession from 1946 till the date of the suit was correct.
She was accordingly held to have acquired a title by adverse possession.
The suit, therefore, was dismissed with respect to the disputed chawl.
For the purpose of the present appeal it is not essential to mention the findings of the trial court relating to the other items of the suit property.
The plaintiff appealed before the Gujarat High Court.
Some of the defendants also filed two separate appeals against the judgment of the trial court dealing with other items of property with which we are not concerned.
The appeals were heard and disposed of to gether by a common judgment in November 1972.
The High Court reversed the finding of adverse possession in regard to the disputed chawl and granted a decree for partition.
It was held that the defendant No. 6 remained in exclusive posses sion of the property only since 1952 and the period was thus short of the time required for prescription of title.
Deal ing with the relief for rendition of accounts, the Court held that since the rents of the chawl from 1952 were col lected by Jayantilal, Chandrakanta 's husband and after his death by her son Narendra (defendant No. 7), Chandrakanta was liable to render accounts till the death of her husband and she along with defendant No. 7 would be jointly liable for the period thereafter.
The present appeals are directed against this judgment.
238 5.
According to the case of the defendant No. 6, her husband, Jayantilal, used to indulge in speculative business and he was, therefore, not considered a dependable person.
To ensure economic stability of Chandrakanta and her chil dren, her father in law, Bapalal decided to make a gift of the Naroda chawl to her.
Both Bapalal and Chandrakanta appeared before the Talati of Naroda on 5.3.1946 and made statements.
The original statement of Bapalal recorded by the Talati and signed by Bapalal was produced and marked as Ext.
268 in the trial court and similarly the statement of Chandrakanta as Ext.
Bapalal has stated in Ext.
268 that Chandrakanta had loyally served him and, therefore, he was making the gift.
A prayer was made for substitution of her name in the revenue records.
A similar prayer was made by the lady in Ext.
The extract from the Record of Rights is Ext.
247 which mentions Bapalal as the occupant of the Naroda chawl.
The entry was made in May 1933.
This entry appears to have been placed within brackets and a second entry inserted mentioning Chandrakanta 'wife of Jayantilal Bapalal '.
Mr. B.K. Mehta, the learned counsel for the appel lant has strongly relied upon the revenue entry as proof of her title.
Reference was made to the decision in Gangabai and others vs Fakirgowda Somaypagowda Desai and others, A.I.R. 1930 Privy Council 93; and Desai Navinkant Kesarlal vs Prabhat Kabhai, 9 Gujarat Law Reporter 694.
It was point ed out by the learned counsel that in the Privy Council case also the revenue records, which were under consideration, were prepared under the Bombay Land Revenue Code, that is the same Code under which Ext.
247 was prepared and it was observed in the judgment that the revenue entry furnished presumptive evidence of title.
The Gujarat case also indi cated that a presumption as to the rights in the concerned property arose in favour of the person whose name was en tered.
We are not very much impressed by this part of argu ment of the learned counsel as it cannot be denied that title to Naroda chawl could not have passed to the defendant No. 6 by virtue of the entry Ext.
The value of the chawl even in 1946 was large and no registered instrument of transfer was executed.
Besides Ext.
247 describes Bapalal and thereafter Chandrakanta as Kabjedar, that is, occupant.
In these circumstances the presumption which can be raised in favour of Chandrakanta from this entry is with respect to her possession and possession only.
There is a serious dispute between the parties as to the actual physical possession of the chawl during the period 1946 to 1952 and we will have to consider the evi dence on this aspect in some detail.
In 1952 there was direct confrontation between Chandrakanta and the defendant No. 1, Gulabchand.
On 14.4.1952 a public notice was 239 published in a local daily named 'Sandesh ' vide Ext.
254 wherein Gulabchand informed and called upon the tenants in the chawl to pay the rent to him within 3 days against receipts to be issued, failing which legal steps would be taken against them.
On the very next day 'Sandesh ' carried another public notice Ext.
255 issued by Chandrakanta as serting her title and exclusive possession and repudiating the claim of Gulabchand.
The tenants were warned that Gulab chand or any other person on his behalf had no right or authority to dispute her claim.
On the same day, i.e., on 15.4.1952 another public notice was published in 'Sandesh ' at the instance of Gulabchand reiterating his claim and asserting that his father Bapalal (who was then alive) was the owner.
It appears that no further action was taken by any of the parties.
The evidence on the record shows that Bapalal had withdrawn himself from wordly affairs and was staying in Vrindavan near Mathura.
The evidence led by Chandrakanta of her exclusive possession from 1952 through her husband and son till the date of the suit was accepted as reliable by the High Court.
Thus there is concurrent finding of both the two courts below accepting her exclusive possession from 1952 onwards.
The learned counsel for the plaintiff has, therefore, rightly not challenged before us this finding which we are independently also satisfied is a correct one.
The actual position of the chawl from 1946 to 1952 becomes crucial, as Chandrakanta is bound to fail if she is not successful in proving her adverse possession for this period.
As has been stated earlier, the suit was filed in 1960 and her possession since 1952 cannot be treated long enough for a prescriptive title to accrue.
The parties have, therefore, taken great pains to prove before us their rival cases as to the possession of the chawl from 1946 to 1952.
The defendant No. 1 was admittedly managing the properties belonging to the family.
Out of 115 rooms in Naroda chawl only 114 were let out to tenants and one room was retained in which, according to the case of Chandrakan ta, a caretaker known as Gangia Pathan, engaged by Bapalal, was staying.
After collecting the rent from the tenants the Pathan used to hand over the money to the defendant No. 1.
After the gift, it was decided that the same arrangement would continue but the defendant No. 1 would be managing the property on her behalf and after receipt of the rent he would deliver the same to her.
She claims that this arrange ment was acted upon.
Admittedly the total rent collection from the chawl was not large and after deducting the ex penses including the maintenance and repair costs and the salary of the Jamadar (caretaker) the money left was not a considerable sum.
240 According to the evidence of Chandrakanta the Pathan left the service and his whereabouts are not known and another Jamadar with the name of Maganji came in his place.
He looked after the chawl till 1950.
Thereafter he was substi tuted by Nathu Singh.
Maganji 's present whereabouts are also not known.
In 1952 Gulabchand made a claim to the chawl repudiating the ownership of Chandrakanta and he was, there fore, removed.
The appellant has relied on a large number of rent receipts filed by her and her learned counsel laid great stress on five of them which have been marked as Exts.
240 to 243 and 250 issued in December 1947, January 1948, June 1948 April 1949 and July 1947 respectively.
It is signifi cant to note that the defendant No. 1 was in charge of the collection of the rent upto 1952 according to the case of all the parties.
The parties contesting the claim of the appellant contend that he was so doing on behalf of the entire family and not on behalf of Chandrakanta as claimed by her.
The defendant No. 1, however, did not choose to enter the witness box nor did he produce any document which could have supported his case.
The counter foil receipts were in his possession and neither they were filed by the defendant No. 1 nor the plaintiff called for the same.
Defendant No. 6 was able to examine two of the tenants Vajesingh (D.W. 1) and Nathaji (D.W. 2).
They filed a large number of receipts issued to them evidencing payment of rent.
The list of documents filed by them are printed on pages 394 to 395 of the paper book and have been marked as Exts. 237 and 239.
12 receipts in the list Ext.
237 are for the period 1.6.1946 to 30.5.1949 and 7 of the list Ext.
239 are from 1.1.1947 to 30.9.1949.
They support the case of Chandrakanta inasmuch as on the top of these receipts are printed the following words: " CHAWL OF BAI CHANDRAKANTA THE WIFE OF MODI JAYANTILAL BAPALAL" Out of them the receipts Exts.
240 to 243 were admittedly issued when the defendant No. 1 was incharge of collection of rent and it is not denied that they were issued at his instance during the crucial period.
The other receipt Ext.
250 was issued for the period 1.6.1947 to 1.7.1947 under the signature of the plaintiff Vadilal and this also similarly carried the description of the chawl as belonging to Chan drakanta.
No explanation is forthcoming on behalf of either the defendant No. 1 or the plaintiff as to how they were issuing receipts of the above description.
241 11.
From the evidence it appears that although defendant No. 1 was in charge of the management of the chawl during 1946 to 1952, the actual collection from the individual tenants was made by the Jamadar (caretaker) who generally signed the receipts and handed over the collected amount to the defendant No. 1.
The tenant Nathaji (D.W. 2) has said that Maganji Jamadar used to prepare the receipts.
It has been argued before us on behalf of the plaintiff that the receipts were filed after the examination of the plaintiff was over and so he could not explain the same, specially the one receipt issued under his signature.
It is significant to note that the cases of the plaintiff, the defendant No. 1 and the other defendants excepting defendants 6 to 12 are common so far the Naroda chawl was concerned and the turn of these defendants leading evidence at the trial of the suit came later.
The evidence of Chandrakanta was closed on 29.9.1964 and the witnesses for the defendant No. 1 were examined on 20.10.1964.
Besides, the plaintiff could have re examined himself if he had any explanation to offer.
The cross examination of D.W. 2 on his behalf also indicates that no suggestion to the witness by way of explanation was made.
In his evidence plaintiff stated that he was also collecting the rent from the different tenants in chawl at the instance of defendant No. 1 and he used to hand over the collections to him.
He admitted the fact that there were counter foils which ramained with the defendant No. 1.
The High Court while examining this aspect accepted and relied on Ext.
250 signed by the plaintiff, but failed to appreci ate the significance of the description of the Naroda chawl on the receipt as the property of the defendant No. 6.
Similar is the position of the defendant No. 1 who did not come to the witness box at all.
Chandrakanta examined her self as D.W. 3 and supported her case.
Although there are some minor discrepancies in her deposition, the same is consistent with the documents and the circumstances in the case and appears to be reliable.
While reversing the finding of the trial court that Chandrakanta was in exclusive possession of the chawl not only from 1952 onwards but even earlier since 1946, the High Court was mainly impressed by three items of the evidence, namely, i)certain account books claimed to be the books at the joint family, ii) several IncomeTax returns filed by the defendant No. 1, and iii) a document of agreement, Ext.
So far the Income Tax papers are concerned, they are of the period after 1952 and it has already been stated earlier that the High Court has agreed with the trial court that since 1952 the defendant No. 6 was in adverse possession of the chawl.
In view of this finding, with which we fully agree, the Income Tax documents do not 242 have any impact, except showing that the author of these returns was falsely including income therein which did not accrue to the family.
So far the account books and the deed of agreement are concerned, it will be necessary or appreci ating their true nature and impact on this case, to consider some more facts.
The account books were produced by the defendant No. 1 within a list of documents, Ext. 123.
The defendant No. 1, however, did not lead any evidence with respect to the same when his turn at the trial came.
As mentioned earlier, he personally avoided the witness box, but examined some wit nesses who did not attempt either to prove the books or speak about their authenticity.
The books were admitted in evidence and marked as exhibits on the statement of the plaintiff which he made in cross examination.
Some of the books were shown to him and he admitted that they were in his hand writing, but immediately added; "I have written them as per the instructions of defendant No. 1 and as directed by him.
They are maintained from month to month.
" The income from the Naroda chawl which was admittedly very small as compared to the vastness and the present value of the property, was included in the account books.
According to the case of the respondent the books are authentic, and disclosed the true state of affairs.
There was considerable discussion at the bar before us as well as before the High Court as is apparent from the judgment under appeal, relat ing to the law of evidence dealing with account books.
Reliance was placed on Sec.
34 of the which provides that entries in books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the Court has to enquire.
It has been contended on behalf of the respondents that since the plaintiff stated that the books were being maintained from month to month the requirement of law was satisfied.
Mr. Mehta, the learned counsel for the appellant argued that apart from the formal proof of the execution of the docu ment, the party relying thereon was under a duty to lead evidence in support of the correctness of the entries in the books which is completely lacking here.
Besides, it was pointed out that the relevant books are merely joint khata bahis of Samvat 2005 to 2006 equivalent to 1948 to 1949 without the support of primary evidence of the cash books.
, ,The other relevant documents which are admittedly in pos session of the defendant No. 1 have not been produced, including the account books of other years during the cru cial 243 period, the Income tax returns and assessment orders for the period 1946 to 1952 and the counter foil rent receipts.
It is apparent from the evidence that nobody takes the responsibility of supporting the correctness of the entries in the account books.
When they were produced in Court the plaintiff filed his objection as per his purshis, Ext. 172 (page 368 of the paper book).
Many of the documents produced by the defendant No. 1 were accepted, but the account books which were serial nos.
123 75 to 123 97 of the list Ext.
123 were in express terms not admitted.
The plain tiff said that they might be exhibited, but subject to his objection.
The defendant No. 6 also filed her objection as per the purshis Ext.
The plaintiff did not make any statement supporting the books in his examination in chief and only in reply to the question of the cross examining lawyer of the defendant No. 1, he stated as mentioned earli er.
It is significant to note that by saying that he had written as per the instructions of the defendant No. 1 he made it clear that he could not vouchsafe for their reli ability.
In spite of this situation, the defendant No. 1 could not sommon courage to support them either personally or through any witness.
No reason has been suggested at all on his behalf as to why he did not produce the other impor tant documents in his possession which would have supported the account books and the joint case of the parties resist ing the appellants ' claim.
In view of all these circum stances we have no hesitation in rejecting the account books as not reliable.
So far Ext.
167 is concerned, the High Court has relied upon it as the Naroda chawl has been treated by the document as belonging to the joint family.
It was executed on 24.10.1954 by the plaintiff and his three brothers but not by Jayantilal, the husband of defendant No. 6, although he is also shown as a party thereto.
The brothers appear to have settled their dispute with respect to different items of property and the disputed Naroda chawl is shown as the seventh item in the list of properties.
Although the four brothers personally signed the document, so far Jayantilal 's branch was concerned the signature of Narendra, defendant No. 7, who was a minor then, was taken.
Reliance has been placed on the attestation of Bapalal, the father of the executants.
Two days earlier, i.e., on 22.10.1954, he had executed a release deed, Ext.
222 giving up his right in the family properties for a sum of money named therein.
He was already staying in Vrindavan for sometime past and proposed to spend the rest of his life there.
The release deed, however, did not contain any list of properties and the document, therefore, is not of any help to either side.
SOl far the 244 agreement Ext.
167 is concerned, it has not been stated by anybody that Bapalal went through its contents or that somebody read the same to him before he attested it.
There is no presumption that an attesting witness of a document must be assumed to be aware of its contents.
What is signif icant, however, is that it was executed in 1954 when the defendant No. 6 was in adverse possession to the exclusion of the defendant No. 1 and the other members of the family, and Jayantilal did not join the document and his brothers chose to get the signature of his minor son.
This is con sistent with their dishonest attempt to include the income from the chawl in the Income Tax returns of the period after 1952, when the defendant No. 6 undoubtedly was in exclusive possession.
As has been stated earlier, in 1952 there was a direct confrontation between them on the one hand and the defendant No. 6 on the other, when public notices were published in 'Sandesh '.
If their case about their earlier possession had been true they would have produced their Income Tax returns and the assessment orders of that period, i.e. 1946 to 1952.
The family was possessed of vast proper ties and was paying Income Tax.
The entire circumstances lead to the irresistible conclusion that after the defendant No. 1 was removed by the defendant No. 6 from the management of the disputed Naroda chawl he and the other members of the family started creating evidence in support of their false claim.
We do not in the circumstances place any reliance on this deed of agreement.
So far the oral evidence in the case is concerned, the plaintiff, Vadilal examined himself as a witness, but was not supported by any other member of the family, al though his brothers, Gulabchand and Kantilal, defendants 1 and 2 respectively, were alive when the case was heard in the trial court.
Even his nephew, Rajnikant, defendant No. 5, son of deceased Ramanlal did not prefer to come to the witness box.
The husband of the defendant No. 6, Jayantilal had died in 1956, i.e., about 3 4 years before the institu tion of the suit.
Chandrakanta examined herself in support of her case and was cross examined at considerable length.
Her son, Narendra defendant No. 7, who was minor in 1954 when Ext.
167 was executed, was also examined as a witness.
After the death of his father, Jayantilal in 1956, he start ed collecting the rent of the chawl, and as stated earlier both the courts have concurrently held in favour of the exclusive possession of the defendant No. 6 from 1952 on wards.
The plaintiff, however, claimed that the chawl was in the possession of the family even later than 1952.
We have been taken through his evidence and the evidence of Chandra kanta in extenso by the learned counsel for the parties, who made long comments thereon during their arguments.
Both the judg 245 ments of the trial court and the High Court have discussed the evidence at length and we do not consider it necessary to once more deal with them in detail.
We agree with the reasons given by the trial court for accepting the case and the evidence of the defendant No. 6 and rejecting the plain tiff 's oral evidence and the case of the respondents.
The plaintiff contradicted himself so seriously during his examination that at one stage he had to expressly admit that several of the statements made in his examination in chief were 'false ' (see paragraph 25).
It was demonstrated by the further cross examination that he had made many more incor rect statements.
On the other hand, Chandrakanta 's evidence is far superior.
Although she also made some inconsistent statements, but the discrepancies did not relate to any matter of vital importance.
Her evidence substantially is reliable and is supported by important circumstances of (i) the mutation of her name in place of Bapalal on the basis of a statement of the latter; (ii) the description of the chawl as belonging to her on the printed rent receipts given to the tenants out of which some were issued by the defendant No. 1 and the plaintiff, and (iii) the suppression of vital materials in possession of the defendant No. 1 which were withheld from the Court.
The conduct of the parties in not filing the suit before 1960 is also consistent with the correctness of her case.
When the defendant No. 1 was effec tively removed from the management of the property by the defendant No. 6 in 1952, Bapalal was alive.
The defendant No. 1 as also the other members of the family contesting her claim kept quiet and did not risk starting a litigation during his life time.
Even in 1960 it was the plaintiff and not the defendant No. 1 who instituted the present suit in which he included the Naroda chawl in the schedule of properties to be partitioned.
The defendant No. 1 was manag ing the affairs of the family, but did not take any steps to dislodge the defendant No. 6 from the chawl.
The impugned judgment indicates that there were serious differences between the plaintiff and the defendant No. 1 on other items of property and the main reason for the plaintiff to file the suit does not appear to be his claim to the Naroda chawl.
We do not consider it necessary to reiterate the other reasons given in the trial court judgment in support of the decision in favour of the appellant, with which we agree.
We, therefore, hold that the defendant No. 6 remained in exclusive adverse possession of the disputed Naroda chawl right from 1946 onwards till the suit was filed in 1960.
Mr. Dholakia, the learned counsel for the contesting respondents contended that since the chawl has remained in actual possession of the tenants, Bapalal or the family must be held to be in symbolic 246 possession in 1946 and for that reason the defendant No. 6 also can not be treated to have come in actual possession of the property, which could have permitted her to prescribe a title in the chawl.
The learned counsel further argued that since the defendant No. 1 and the plaintiff were actually collecting rent from the tenants they also must be held to be in joint possession and, therefore, the defendant no. 6 can not succeed as she has not been able to prove their ouster.
The other members of the joint family will also be entitled to rely on this aspect so as to successfully defend their right.
Reliance was placed on the decision of the Patna High Court in Hari Prasad Agarwalla and another vs Abdul Haq and others, A.I.R. 1951 Patna 160; in support of the argument that for adverse possession actual physical possession is necessary and mere constructive possession is not sufficient.
We are afraid, it is not possible to accept the argument.
The subject matter of dispute in the present case is the title to the chawl as the owner landlord subject to the tenancy of the tenants in possession.
Neither the plaintiffs nor the defendants are claiming the actual physical posses sion of the chawl by eviction of the tenants.
Any reference to the actual physical possession of the tenant is, there fore, wholly irrelevant for the purpose of the present controversy.
It has to be remembered that the title to the chawl as owner, subject to the tenancy was an interest in immovable property so as to be covered by Article 144 of the Indian Limitation Act, 1908, which specifically mentioned," . or any interest therein".
These words were retained in Article 65 of the new Limitation Act.
It is true that it is the intention to claim exclusive title which makes possession adverse and this animus possidendi must be evidenced and effectuated by the manner of occupancy which again depends upon the nature of the property.
The manner of possession depends upon the kind of possession which the particular property is susceptible.
That possession to the extent to which it is capable of demonstration must be hostile and exclusive and will cover only to the extent of the owner 's possession.
In the present case the parties have been fighting for the rent from the chawl so long as it continues in possession of the tenants.
Before the gift of 1946 the defendant No. 1 was collecting the rent and he continued to do so even thereafter till 1952.
The appellant has, however, established her case that the defendant No. 1 acted as her agent after 1946 and when he repudiated this agency in 1952 he was effectively removed from the manage ment of the chawl.
Since 1946 the tenants attorned to the defendant No. 6 and paid rent to her under printed receipts announcing her ownership, but of course through her agent the defendant No. 1.
The actual physical possession of the tenants in 247 the circumstances would enable the appellant to establish her prescriptive title.
The decision in Uppalapati Veera Venkata Satyanarayanaraju and another vs Josyula Hanumayamma and another, , indicates that if a tenant makes an attornment in favour of a person who is not the true owner and follows and paying the rent to him, such a person must be held to have effective possession.
The land lord must be deemed to be in possession through his tenant is also demonstrated by another illustration.
If the tenant trespasses over the neighbour 's land treating it to be covered by his tenancy and remains in possession for the requisite period so as to prescribe a title thereto, his interest therein is limited to the interest of the tenant and his landlord acquires the title of the owner.
The con duct of such a tenant has been aptly described as stealing for the landlord (see I.L.R. 10 Calcutta 820 and The fact that the tenants have been in actual physical possession of the chawl is, in the circumstances, of no assistance to the respondents.
What is material is that they paid the rent to the defendant No. 6. 19.
There is no merit in the further argument that the defendant No. 1 must be treated to be in joint possession as he was actually collecting the rent from the tenants.
It is well settled that the possession of the agent is the posses sion of the principal and in view of the fiduciary relation ship the defendant No. 1 cannot be permitted to claim his own possession.
This aspect was well emphasised in David Lyeii vs John Lawson Kennedy, [1889] XIV H.L. (E) 437, where the agent who was collecting the rent from the tenants on behalf of the owner and depositing it in a separate ear marked account continued to do so even after the death of the owner.
After more than 12 years of the owner 's death his heir 's assignee brought the action against the agent for possession and the agent defendant pleaded adverse posses sion and limitation.
The plaintiff succeeded in the first court.
But the action was dismissed by the Court of Appeal.
The House of Lords reversed the decision of the Court of Appeal and remarked: "For whom, and on whose behalf, were those rents received after Ann Duncan 's death? Not by the respondent for himself, or on his own behalf, anymore than during her life time".
Emphasing the fiduciary character of the agent his possession was likened to that of trustee, a solicitor or an agent receiving the rent under a power of attorney.
Another English case of Williams vs Pott, L.R. XII Equity Cases 149, arising out of the circumstances similar to the present case was more interesting.
The agent in that case was the real owner of the estate but he collected the rents for a considerably long period as the agent of his principal who was his mother.
After the agent 's death his heir claimed the estate.
248 The mother (the principal) had also by then died after purporting by her will to devise the disputed lands to the defendants upon certain trusts.
The claim of the plaintiff was dismissed on the plea of adverse possession.
Lord Romil ly, M.R., in his judgment observed that since the possession of the agent was the possession of the principal, the agent could not have made an entry as long as he was in the posi tion of the agent or his mother, and that he could not get into possession without first resigning his position as her agent which he could have done by saying: "The property is mine; I claim the rents, and I shall apply the rents for my own purposes".
The agent had thus lost his title by reason of his own possession as agent of the principal.
A similar situation arose in Secretary of State for India vs Krishna moni Gupta, 29 Indian Appeals 104, a case between lessor and lessee.
There the proprietors of the land in dispute, Mozum dars were in actual physical possession but after getting a settlement from the Government in ignorance of their title.
The Government contended that the possession of the Mozum dars was, in circumstances, the possession of the Government claiming the proprietory right in the disputed land and that such possession was in exclusion and adverse to the claim of the Mozumdars to be proprietors thereof.
The plea succeeded.
It was observed by the Judicial Committee.
"It may at first sight seem singular that parties should be barred by lapse of time during which they were in physical possession, and estopped from disputing the title of the Government.
But there is no doubt that the possession of the tenant is in law the posses sion of the landlord or superior proprietor, and it can make no difference whether the tenant be one who might claim adversely to his landlord or not.
Indeed, in such a case it may be thought that the adverse character of the possession is placed beyond controversy.
" We are, therefore, of the view that the defendant No. 6 was in adverse possession from the period 1946 to 1952 through her agent defendant No. 1 and thereafter through her husband, Jayantilal and son, defendant No. 7 till 1960 when the suit was filed, the total period being more than 12 years.
For the reasons mentioned above, the decision of the High Court must be held to be erroneous.
Consequently the decrees for accounts against the defendants No. 6 and 7 must also go.
Accordingly, the appeals are allowed, the decision of the High Court, so far 249 the subject matter of the present appeals is concerned, is set aside and that of the trial court restored.
In view of the close relationship of the parties and the other circum stances, the parties are directed to bear their own costs throughout.
N.V.K. Appeals allowed.
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Respondent No. 1 in the appeals instituted a suit for partition against his younger brothers and sisters, and the heirs of his deceased brothers.
The plaintiff was the eldest among the brothers and sisters.
The 1st and 2nd Defendants were his brothers, the 3rd Defendant his sister, the 4th and 5th Defendants, the widow and son respectively of the third brother.
Defendant 6 was the widow of the fourth brother, and Defendants 7 to 12 were his children, while Defendant No. 14 was the wife of Defendant No. 1, and Defendants 13, 15, 16 and 17 were their children.
The subject matter of the appeals related only to one item of property known as "Naroda Chawl" measuring 7 acres and 2 gunthas of land, where 115 rooms and huts stood con structed, out of which 114 rooms had been let out to ten ants, and one room was retained for the caretaker.
According to Defendants No. 6 to 12 this property exclu sively belonged to defendant No. 6 and was not liable to partition.
The other defendants however supported the plain tiff 's case that it belonged to the 233 joint family and was liable to partition.
Defendants 6 to 12 pleaded that the plaintiff 's father Bapalal orally gifted this property to his daughter in law Defendant No. 6 in March 1946 and made a statement before the Revenue authorities on .
the basis of which her name was mutated and she was put in possession thereof, that although she came in peaceful possession, the management which in cluded realisation of rent was in the hands of Defendant No. 1, that as some dispute arose in 1952 she assumed direct charge of the chawl and had remained in possession thereaf ter, and that she had acquired good title therein by adverse possession before the suit was filed in 1960.
The City Civil Judge who tried the suit, held that there was a joint Hindu family and a business was carried on for the benefit of the family and the income therefrom was thrown into the common pool and all the properties including the disputed chawl were treated as belonging to the family.
As the case of Defendant No. 6 about the gift, the mutation of her name, and her exclusive possession from 1946 till the date of the suit was found correct, it was held that she had acquired title by adverse possession, and the suit was dismissed with respect to the disputed chawl.
The plaintiff appealed to the High Court.
Some of the defendants also filed appeals in respect of the other items of property.
All these appeals were heard and disposed of by a common judgment.
The High Court reversed the finding of adverse posses sion in regard to the disputed chawl and granted a decree for partition.
It held that Defendant No. 6 remained in exclusive possession of the property only since 1952, the period was thus short of the time required for prescription of title.
It further held that since the rents of the chawl from 1952 were collected by her husband and after his death by her son (Defendant No. 7), she was liable to render accounts till the death of her husband, and she along with Defendant No. 7 would be jointly liable for the period thereafter.
Separate Appeals were preferred by Defendant Nos. 6 and 7 to this Court.
Allowing the Appeals, setting aside the decision of the High Court and restoring that of the Trial Court.
234 HELD: 1.
The principle that revenue entry furnishes presumptive evidence of title is inapplicable in the instant case.
It cannot be denied that title to Naroda Chawl could not have passed to Defendant No. 6 by virtue of the entry Ext.
The value of the chawl even in 1946 was large and no registered instrument of transfer was executed.
Besides Ext.
247 describes the plaintiff 's father (Bapalal) and Defendant No. 6 (Chandrakanta) as Kabjedar, that is occu pant.
In such circumstances, the presumption which can be raised in favour of Defendant No. 6 from this entry is with respect of her possession and possession only.
[238F G] Gangabai and others vs Fakirgowda Somaypagowda Desai and others, AIR 1930 Privy Council 93; and Desai Navinkant Kesarlal vs Prabhat Kabhai, 9 Gujarat Law Reporter 694, referred to.
The account books have to be rejected as not reli able.
It is apparent from the evidence that nobody takes the responsibility of supporting the correctness of the entries therein.
Many of the documents produced by Defendant No. 1 were accepted, but the account books which were section Nos.
123 75 to 123 97 of Ext.
123 were in express terms not admitted.
The plaintiff filed his objection Ext.
Defendant No. 6 also filed her objection Ext.
The books were admitted in evidence and marked as exhibits on the statement of the plaintiff which he made in cross exami nation.
The plaintiff by saying that he had written as per the instructions of Defendant No. 1 made it clear that he Could not vouchsafe for its reliability.
Defendant No. 1 could not summon courage to support them either personally or through any witness.
No reason has been suggested as to why he did not produce other important documents in his possession which could have supported the account books and the joint case of the parties resisting the appellant 's claim.
[243B E] 3.
Defendant No. 1 cannot be treated to be in joint possession as he was actually collecting the rents from the tenants.
it is well settled that the possession of the agent is the possession of the principal and in view of the fidu ciary relationship, Defendant No. 1 cannot be permitted to claim his own possession.
[247D E] David Lyeii vs John Lawson Kennedy, [1889] XIV H.L.(E) 437; Williams vs Pott, L.R. XII Equity Cases 149 and Secre tary of State for India vs Krishnamoni Gupta, 29 Indian Appeals 104, referred to.
It is the intention to claim exclusive title which makes 235 possession adverse and this animus possidendi must be evi denced and effectuated by the manner of occupancy which again depends upon the nature of the property.
The manner of possession depends upon the kind of possession which the particular property is susceptible.
That possession to the extent to which it is capable of demonstration must be hostile and exclusive and will cover only to the extent of the owner 's possession.
[246E F] (b).
The title to the chawl as owner, subject to the tenancy was an interest in immovable property so as to be covered by Article 144 of the Indian Limitation Act, 1908, which specifically mentioned, ".
or any interest therein".
[246E] In the instant case, the parties have been fighting for the rent from the chawl so long as it continued in posses sion of the tenants.
Before the gift of 1946 the Defendant No. 1 was collecting the rent and he continued to do so even thereafter till 1952.
The appellant has, however, estab lished her case that the Defendant No. 1 acted as her agent after 1946 and when he repudiated this agency in 1952 he was effectively removed from the management of the chawl.
Since 1946 the tenants attorned to the Defendant No. 6 and paid rent to her under printed receipts announcing her ownership, but of course through her agent the Defendant No. 1.
The fact that the tenants have been in actual physical posses sion of the chawl is, in the circumstances, of no assistance to the respondents.
What is material is that they paid the rent to the Defendant No. 6.
Defendant No. 6 was in adverse possession from the period 1946 to 1952 through her agent Defendant No. 1 and thereafter through her husband and son Defendant No. 7 till 1960 when the suit was filed, the total period being more than 12 years.
[246G H; 248G] Uppalapati Veera Venkata Satyanarayanaraju and another vs Josyula Hanumayamma and another, and Hari Prasad Agarwalla and another vs Abdul Haw and others, A.I.R. 1951 Patna 160, referred to.
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6013.txt
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Civil Appeal Nos.
1768 1769/ 72.
Appeals by Special Leave from the Judgment and order dated 15 7 1971 of the Delhi High Court in Sales Tax Reference No. 8 of 1969.
F. section Nariman, (In CA 1768/72), V. section Desai (in C.A. 1769).
M. C. Bhandare (C.A. 1768/72) and Mrs. section Bhandare and Miss M. Poduval for the Appellants.
P. A. Francis, R. N. Sachthey and Miss A. Subhashini for the Respondent.
Y. section Chitale, Vinay.
Bhasin, A. K. Srivastava and Vineet Kumar for the Interveners.
The Judgment of the Court was delivered by PATHAK, J.
This and the connected appeal are directed against the judgment of the High Court of Delhi disposing of a reference made to it under section 21(3) of the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi on the following question: "Whether the service of meals to casual visitors in the Restaurant is taxable as a sale: (i) when charges are lumpsum per meal or (ii) when they are calculated per dish ?" The High Court has answered the question in the affirmative.
The appellant runs a hotel in which lodging and meals are provided on "inclusive terms" to residents.
Meals are served to non residents also in the restaurant located in the hotel.
In the assessment proceedings for the assessment years 1957 58 and 1958 59 under the Bengal Finance (Sales Tax) Act, 1941, the appellant contended that the service of meals to residents and non residents could not be regarded as a sale and therefore sales tax could not be levied in respect thereof.
The contention was rejected by the Sales Tax authorities, who treated a portion of the receipts from the residents and nonresidents as representing the price of the foodstuffs served.
At the instance of the appellant, the High Court called for a statement of the case on two questions.
One was whether the supply of meals to residents, who paid a single all inclusive charge for all services in the 559 hotel, including board, was exigible to sales tax.
The second was the A question set forth above.
The High Court answered the first question in favour of the appellant and the second against it.
And now these appeals by special leave.
Tax is payable by a dealer under section 4 of the Bengal Finance (Sales Tax) Act, 1941 on sales effected by him, and the expression "sale ' has been defined by section 2 (g) of the Act to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration including a transfer of property in goods involved in the execution of a contract. ".
The question is whether in the case of non residents the service of meals by the appellant in the restaurant constitutes a sale of foodstuffs.
It appears to us that after the view taken by this Court in State of Punjab vs M/s Associated Hotels of India Ltd.,(1) the approach to the question before us is clearly indicated.
This is a case where the origin and historical development of an institution as profoundly influenced the nature and incidents it possesses in law.
In the case of an hotelier this Court proceeded on the footing that his position in law was assimilable to that of an inn keeper.
At common law an innkeeper was a person who received travellers and provided lodging and necessaries for them and their attendants and employed servants for this purpose and for the protection of travellers lodging in his inn and of their goods(2).
It was hospitality that he offered, and the many facilities that constituted the components of that hospitality determined the legal character of the transactions flowing from them.
Long ago, in Crisp vs Pratt(3) it was pointed out that innkeepers do not get their living by buying and selling and that although they buy provisions to be spent in their house, they do not sell them but what they do is to "utter" them.
"Their gain", it was added, "is not only by uttering of their commodities, but for the attendance of their servants, and for the furniture of their house, rooms, lodgings, for their guests. '`.
This test went to the root and we find it repeated in Parker vs Flint.(4) In Newton vs Trigg(5) Holt, C.J., defined the true status of an inn keeper by reference to the services afforded by him? that he was an "hospitator", and was "not paid upon the account of the intrinsic value of his provisions, but for other reasons: the recompence he receives, is for care and pains and for protection and security. . but the end of an inn keeper in (1) ; (2) Halsbury 's Laws of England, 3rd Edn.
21 p. 442 paras 932.
(3) [1639] Cro. Car. 549.
(4) [1699] 12 Mod 254.
(5) 3 Mod .
2 549SCI/78 560 his buying, is not to sell, but only a part of the accommodation he is bound to prepare for his guests.
" And for the purpose of the question before us is would be relevant to quote Professor Beale(1): As an inn keeper does not lease his rooms, so he does not sell the food he supplies to the guest.
It is his duty to supply such food as the guest needs, and the corresponding right of the guest is to consume the food he needs, and to take no more.
Having finished his meal, he has no right to take food from the table, even the uneaten portion of food supplied to him, nor can he claim a certain portion of good as his own to be handed over to another in case he chooses not to consume it himself.
The title to food never passes as a result of an ordinary transaction of supplying food to a guest." Having proper regard to those particular considerations, it is not surprising that the principle was extended in England to the service OF food at eating places or restaurants.
The keeper of an eating house, or victualler, was regarded fundamentally as providing sustenance to those who ordered food to eat in the premises.
That eminent and learned Judge, Lord Mansfield, saw no distinction, in Saunderson vs Rowles(2), between an innkeeper and a victualler.
He observed: '.
The analogy between the two cases of an inn keeper and a victualler is so strong that it cannot be got over.
And we are all clear that this man (victualler) is not within these laws; upon the authority of a determined case of an inn keeper, and also upon the reason of the thing.
He buys only to spend in his house, and when he utters it again it is attended with many circumstances additional to the mere selling price.
" Like the hotelier, a restaurateur provides many services in addition to the supply of food.
He provides furniture and furnishings, linen, crockery and cutlery, and in the eating places of today he may add music and a specially provided area for floor dancing and in some cases a floor show.
The view taken by the English law found acceptance on American soil, and after some desultory dissent initially in certain states it very soon became firmly established as the general view of the law.
The first edition of American Jurisprudence sets(3) forth the statement of the law in that regard, but we may go to the case itself, Electa B. Merrill vs James W. Hodson(4), from which the (1) Innkeepers & Hotels, para 169.
(2) (3) Vol.
46 p. 207 para 13.
(4) 561 statement has been derived.
Holding that the supply of food or drink A to customers did not partake of the character of a sale of goods, the Court commented: "The essence of it is not an agreement for the transfer of the general property of the food or drink placed at the com command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst.
The customer does not become the owner of the food set before him, or of that portion which is carved for his use, or of that which finds a place upon his plate, or in side dishes set about it.
No designated portion becomes his.
He is privileged to eat, and that is all.
The uneaten food is not his.
He cannot do what he pleases with it.
That which is set before him or placed at his command is provided tc enable him to satisfy his immediate wants, and for no other purpose.
He may satisfy those wants; but there he must stop.
He may not turn over unconsumed portions to others at his pleasure, or carry away such portions.
The true essence of the transaction is service in the satisfaction of a human need or desire, ministry to a bodily want.
A necessary incident of this service or ministry is the consumption of the food required.
This consumption involves destruction, and nothing remains of what is consumed to which the right of property can be said to attach.
Before consumption title does not pass; after consumption there remains nothing to become the subject of title.
What the customer pays for is a right to satisfy his appetite by the process of destruction.
What he thus pays for includes more than the price of the food as such.
It includes all that enters into the conception of service, and with it no small factor of direct personal service.
It does not contemplate the transfer of the general property in the food supplied as a factor in the service rendered.
" Subsequent cases drew on these observations, notably Mary Nisky vs Childs Company.
(1) The position was radically altered in the United States by the enactment of the Uniform Commercial Code, which provides in effect that the serving for value of food or drink to be consumed either on the premises or elsewhere constitutes a sale.
Nonetheless it is affirmed in the second edition of American Jurisprudence(2) that where the Code does not operate, "in general the pre Code distinction between a contract for sale and one for the giving of services should continue.
" (l) (2) Vol.
67 p. 142 para 33.
562 It has already been noticed that in regard to hotels this Court has in M/s. Associated Hotels of India Limited (supra) adopted the concept of the English law that there is no sale when food and drink are supplied to guests residing in the hotel.
The Court pointed out that the supply of meals was essentially in the nature of a service provided to them and could not be identified as a transaction of sale.
The Court declined to accept the proposition that the Revenue was entitled to split up the transaction into two parts, one of service and the other of sale of foodstuffs.
If that be true in respect of hotels, a similar approach seems to be called for on principle in the case of restaurants.
No reason has been shown to us for preferring any other.
The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need.
What has been said in Electa B. Merrill (supra) appears to be as much applicable to restaurants in India as it does elsewhere.
It has not been proved that any different view should be taken, either at common law, in usage or under statute.
It was urged for the respondent that in Associated Hotels of India Ltd. (supra) this Court drew a distinction between the case of meals supplied to a resident in a hotel and those served to a customer in a restaurant.
We are unable to find any proposition of law laid down by the court there which could lead to that inference.
We may point 13 out that in the view which appeals to us we find ourselves unable to agree with the observations to the contrary made by the Punjab High Court in M/s. Associated Hotels of India Ltd., Simla vs Excise and Taxation officer, Simla(1) and by the Delhi High Court in Municipal Corporation of Delhi vs Laxmi Narain Tandon and another.
(2), In the result, we hold that the service of meals to visitors in the restaurant of the appellant is not taxable under the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi, and this is so whether a charge is imposed for the meal as a whole or according to the dishes separately ordered.
In the circumstances of the case, we make no order as to costs.
N.V.K. Appeals allowed (1) A. I. R. 1966 Punjab 449.
(2) A, I. R. 1970 Delhi 244.
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The appellant runs a hotel in which meals are served to non residents also in the restaurant located in the hotel.
The sales tax authorities treated a portion of the receipts as representing the price of foodstuffs served and levied tax.
The High Court affirmed the view of the sales tax authorities.
On the question whether the transaction constituted sale of foodstuffs.
Allowing the appeals ^ HELD. 1.
Service of meals to non residents in the restaurant of 'the appellant is not taxable under the Bengal Finance (Sales Ta%) Act 1941, as extended to the Union Territory of Delhi.
This is so whether a charge is imposed for the meal as a whole or according to the dishes separately ordered.
[562 F; 2.
In State of Punjab vs M/s. Associated Hotels of India ; this Court held that there was no sale when food and drink were supplied to guests residing in the hotel.
The Court pointed out that the supply of meals was essentially in the nature of a service provided to the guests and could not be identified as a transaction of sale.
This Court declined to accept the position that the Revenue was entitled to split up the transaction into two parts, one of service and the other of sale of foodstuffs.
If that be true in respect of hotels, a, similar approach seems to be called for on principle in the case of restaurants.
Like the hotelier, a restaurateur provides many services in addition to the supply of food.
He provides furniture and furnishings, linen, crockery and cutlery, and he may add music, an area for floor dancing and in some cases a floor show.
The classical legal view being that a number of services are concomitantly provided by way of hospitality, the supply of meals must be regarded as ministering to a bodily want or to the satisfaction of a human need.
No reason has been shown for preferring any other view.
[562 B, 560 F G, 562 C] State of Punjab vs M/s. Associated Hotels of India Ltd. ; applied.
M/s. Associated Hotels of India Ltd., Simla vs Excise and Taxation Officer Simla not approved.
Municipal Corporation of Delhi vs Laxmi Narain Tandon and Another not approved.
Crisp vs Pratt [1639] Cro.
Car 549, Parker vs Flint [1699] 12 Mod.
254 Newton v .
Trigg 3 Mod.
327, Saunderson vs Rowles Electa B. 558 Merrill vs James W. Hodson , and Mary Nisky vs Child Company SO A.L.R. 227 referred.
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3871.txt
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Appeals Nos.
2200, 2200A and 2200B of 1968.
Appeals from the judgment and order dated November 30, 1967 of, the Allahabad High Court in Income tax Reference No. 366 of 1963.
M. C. Chagla and P. N. Tiwari, for the appellant (in all the appeals).
B. Sen, G. L. Sharnia and R. N. Sachthey, for the respondent (in all the appeals).
239 The, judgment of the Court was delivered by Hegde J.
In these appeals by certificate the question that falls for decision is whether oil the facts and in the circumstances of the case registration under section 26(A) of the Indian Income Tax Act, 1922 (to be hereinafter referred to as the act) was rightly refused to the appellant firm on the ground that the partnership in question violated the provisions of section 4 of the Indian Companies Act, 1913.
The authorities under the Act as well as the High Court of Allahabad have answered that question in the affirmative.
The assessee challenges that conclusion.
The above appeals relate to different assessment years of the same assessee, the relevant assessment years being 1952 53, 1953 54 and 1954 55.
In all these years the Income Tax Officer had refused to register the appellant firm under section 26A.
All the partnership deeds are, we are told, similar in terms.
We have before us the deed executed on July 7, 1950.
It shows that the firm consists of 18 partners.
Ex facie that deed does not show that any of the partners had joined the deed as representatives of their Hindu Undivided Families.
From the tenor of the document, they appear to be partners in their own right.
The Income Tax Officer, the Appellate Assistant Commissioner and the Tribunal have come to the conclusion that some of them had joined the partnership as Kartas of their respective Hindu Undivided Families.
All the authorities under the Act as well as the High Court have opined that the partnership in question is not lawful in view of section 4(3) of the Indian Companies Act, 1913.
The material portion of that provision reads (4).
(1). (2) No company, association or partnership consisting of more than twenty persons shall be formed for the purpose of carrying on any other business that has for its object the acquisition of gain by the company, association or partnership or by the individual members thereof, unless it is registered as a company under this Act, or is formed in pursuance of an Act of Parliament of the United Kingdom or some other Indian law or Royal Charter or Letters Patent.
(3) This section shall not apply to a joint family carrying on joint family trade or business and where two or more such joint families form a partnership, in computing the number of persons for the purpose of this section, minor members of such families shall be excluded.
240 (4) Every member of a company, association or partnership carrying on business in contravention of this section shall be personally liable for all liabilities incurred in such business.
(5). . . .
The Income Tax Officer, the Appellate Assistant Commissioner as well as the Tribunal were of the opinion that some partners of the assessee firm having entered into the partnership as representatives of their respective Hindu Undivided Families, the adult members of those families should be taken into consideration for determining whether or not the total number of partners exceeded twenty.
On that basis they have arrived at the conclusion that the firm has more than twenty partners and the same having not been registered as a company under the Companies Act, nor having formed 'in pursuance of an Act of Parliament of the United Kingdom or some other Indian law or Royal Charter or Letters Patent, it must be held to be an unlawful partnership.
When the question formulated earlier was referred to the High Court under section 66(1) of the Act, it was heard by Jagdish Sahai and Beg, JJ.
Jagdish Sahai J. was of the opinion that the partnership in question was not lawful.
Beg J. differed from him and answered the question in favour of the assessee.
In view of this difference of opinion, the matter was referred to Takru J.
He agreed with Jagdish Sahai J. By a majority the question referred to the High Court was answered in favour of the revenue.
Hence these appeals.
Mr. Chagla appearing on behalf of the assessee urged that no Hindu joint family as such can Join a partnership and it is now well settled that when a karta of Hindu Undivided Family joins a firm as a partner even if he contributes his share from out of the family funds, the other members of his family do not ipso facto 'become partners of that firm.
So far as the partnership is concerned, he is the only partner though he may be accountable to the members of his family as regards the profits earned.
According to the learned counsel, for the purpose of working out the rights and liabilities of the partners inter se one cannot go behind the partnership deed.
Proceeding further he urged that in considering whether a partnership should be registered under section 26A or not, the Income tax Officer has merely to see, whether the requirements of section 26A of the Act and the relevant rules are complied with or not.
He is not entitled to investigate into the question as to who are beneficially interested in the partnership.
According to him if the requirements of section 26A and the relevant rules are complied with, the Income tax Officer is bound to register the partnership.
The counsel urged that the second limb of section 4(3) of the Indian Companies Act, 1913, proceeds on the erroneous impression that 241 a joint Hindu family can enter into a partnership, which in law it cannot as it has no legal personality.
Mr. B. Sen, learned counsel for the department did not contest the position that when a karta or a member of a Hindu Joint family joins a partnership the other members of his family do not become partners ipso facto.
But according to him it is open to the department to go behind the partnership deed and find out whether the individual who has joined as a partner has joined in his own right or as a representative of any other body.
His contention was that in view of section 4(3) of the Indian Companies Act, 1913, once the Income tax Officer comes to the conclusion that one of the partners of a firm is a representative of a joint family, he must deem that the adult members of that family are also partners of that firm and on that 'basis find out whether the total number of partners exceed twenty.
If they exceed twenty he cannot register the partnership, as such a partnership contravenes section 4 (2) of the Indian Companies Act, 1913, Section 2 (6B) of the Act provides that the expression 'firm ', partner ' and 'partnership ' in the Act have the same meaning respectively as in the .
Section 4 of the Partnership Act, 1932 prescribes "Partnership" 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.
Persons who have entered into partnership with one another are called individually 'partners" and collectively "a firm" and the name under which their business is carried on is called the 'firm name '.
In view of the aforementioned provision only "persons" can join as partners.
Section 2(42) of the General Clauses Act says a "Person" shall include any company or association or body of individuals whether incorporation or not.
But this definition applies when there is nothing repugnant in the subject or context.
After examining the provisions of the Partnership Act, the Privy Council in SenaJi Kapurchand vs Pannaji Devichand(1) and this Court in Dulichand Laxminarayana vs Commissioner of Income Tax, Nagpur(2) , have held that an association of persons is not a person within the meaning of that expression in the Partnership Act, It is true that section 2(9) of the Act says that unless the context otherwise requires "person" includes Hindu Undivided Family, This definition cannot be imported into the Partnership Act, the provisions of which alone are relevant for finding as to who could join as partners.
It is only partnership constituted according to (1) A.I.R. 1930 P.C. 300.
(2) 242 the provisions of the Partnership Act that can be considered as partnerships under the Act.
The definition of 'person ' in the Act is intended for the purpose of levying income tax and for other cognate matters.
On the basis of certain observations of the Judicial Committee in Lala Lachman Das vs Commissioner of Income Tax(1), it Was contended on behalf of the department that a joint Hindu family can enter into a partnership.
Those observations have to be read in the context in which they were made.
The department in that case had requested the tribunal to refer the question "can there 'be a partnership within the meaning of section 2 sub section
6(B) of the Indian Income tax Act, 1922 between a Hindu Undivided Family as such on the one part and one of its undivided members in his indi vidual capacity on the other part.
" But that question was ultimately not referred as being unnecessary on the facts of the case.
But the following observations of the Judicial Committee in its judgment are relevant : "It is unnecessary to consider in this case the question relating to the validity of a partnership between a Hindu Undivided family as such of the one part and one of its undivided members in his individual capacity of the other.
With reference to the latter kind of partnership there seems to be some authority favouring the view that such a partnership cannot exist under the rules.
of Hindu law but their Lordships do not propose to deal with that question in this case.
" In that case the partnership was between the karta of a joint Hindu family and an undivided member of that family.
Hence the observations in the judgment that the Hindu Undivided family was a partner has really reference to the karta who was a partner as representing the family.
In Commissioner of Income tax,, West Bengal vs Kalu Babu Lal Chand(2), this Court observed that it is now well settled that Hindu Undivided Family cannot as such enter into a contract of partnership with another person or persons.
,Several other decisions have taken the same view.
No decision taking a contrary view was ' brought to our notice.
The concept of a Hindu Undivided Family joining a partnership presents considerable difficulty.
A Hindu Undivided Family is a fleeting body.
Its composition changes by births, deaths, marriages and divorces.
Such a partnership is likely to have a precarious existence.
The assumption in section 4(3) of the Companies ' Act, 1913 that a Hindu Joint family can be a partner in a partnership appears to be based on an erroneous view of the law.
(1) 74.
I.A. 277.
(2) 243 The next question is whether when a deed of partnership does not on the face of it show that any Hindu Undivided Family has joined the partnership, is it open to the Income tax Officer to behind the deed and find out for the purpose of registration under section 26A whether the ostensible partner is the representative of someone else.
The Judicial Committee in P. K. P. section Pichappa Chettiar and Ors.
vs Chokalingam Pillai and Ors.
(1) ruled that where a managing member of a joint family enters into a partnership with a stranger, the other members of the family do not ipso facto become partners in the business so as to clothe them with all the rights and obligations of a partner as defined by Contract Act.
In such a case the family as a unit does not become a partner but daily such of its members as in fact enter into contractual relationship with the stranger.
In Kshetra Mohan Sannyasi Charan Sadhukhan vs Commr. of Excess Profits Tax, West Bengal,(1) this Court laid down that a Hindu Undivided Family is included in the expression "person, as defined in the Indian Income tax Act but it is not a juristic person for all purposes; when two kartas of Hindu Undivided Families.
enter into a partnereship agreement, the partnership though popularly known as one between two Hindu Undivided Families in the eye of the law, it is a partnership between the two kartas and the other members of the families do not ipso facto become partners; there is, however, nothing to prevent the individual members of one Hindu Undivided Family from entering into a partnership with the individual members of another Hindu Undivided Family and in such a case it: is a partnership between the individual members and it is wholly inappropriate to describe such a partnership as one between two Hindu Undivided Families.
In Firm Bhagat Ram Mohan Lal vs Commissioner of Excess Profits Tax, Nagpur and anr.(3), this Court ruled that when the karta of a joint family enters ' into a partnership with the stranger, the members of the family do not ipso facto become partners in that firm.
They have no right to take part in its management or to sue for its dissolution.
The creditors of the firm would no doubt be entitled to proceed against the joint family assets including the shares of the non Partner co parceners for realisation of their debts.
But that is because under the Hindu law, the karta has.
the right when properly carrying on business to pledge the H credit of the joint family to the extent of its assets, and not because the junior members become partners in the business.
The liability (1) A.I.R. 1934, P.C. 192.
(3) (2)(1953) 244 of the latter arises by reason ' of their status as coparceners and not by reason of any contract of partnership by them.
In Commissioner of Income tax, Bombay City vs Nandlal Gandalal(1), this Court again observed that the position in Hindu law with 'regard to a coparcener, even when he is the karta entering into partnership with others in carrying on a business is well settled.
The partnership that is created is a contractual partnership and is governed by the provisions of the .
The partnership is not between the family and the other partners; it is a partnership between the _coparcener individually and his other partners.
The coparcener is undoubtedly accountable to the family for the income received, but the partnership is exclusively one between the contracting members, including the individual coparcener and the strangers.
On the death of the coparcener, the surviving members of the family cannot claim to continue as partners with the others or institute a suit for dissolution of partnership; nor can the stranger partners sue them as partners for the coparcener 's share of the loss.
Therefore, so far as the partnership is concerned, both under partnership law and under Hindu law, the control and management is in the hands of the individual coparcener who is the partner, and not in the family.
In Commissioner of Income tax, Madras vs Bagyalakshmi and Co. Udamalpet(2), this Court observed that contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership.
it only regulates the rights and liabilities of the partners.
A partner may be the karta of a joint Hindu family, he may be a trustee, he may enter into sub partnership with others, he may under an agreement express or implied, be the representative of a group of persons; he may be a benamidar for another.
In all such cases he occupies a dual position qua the partnership, he functions in his personal capacity; qua the third parties in his representative capacity; third parties, whom one of the partner represents, cannot enforce their rights against the other partners nor can the other partners do so against the said third parties.
Their right is only to a share in the profits of their partner representative in accordance with law or in accordance with the terms of the agreement, as the case may be.
The law of partnership and Hindu law function in different fields.
A divided member or some of the divided members of the erstwhile joint family can certainly enter into a partnership, with third parties under some arrangement among the members of the divided family.
Their shares in the partnership depend on the terms of the partnership; the shares of the members of the divided (1) (1960) 40 I.T.R.1.
(2) ; 245 family in the interest of their representative in the partnership depend upon the terms of the partition deed.
From these decisions it follows that for the purpose of finding, out as to who are all partners of.
a firm, one has only to look to the partnership deed and not to go behind it.
Another contention urged by Mr. Chagla was that the scope of the enquiry I under section 26A is a limited one; if the application made for registration complies with the requirements of that section and the rules framed thereunder.
, then it is not open to the income tax Officer to refuse to register the firm.
Section 26A says : (1) Application may be made to the Income7tax officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes, of this Act and of any other enactment for the time being in force relating to the Income tax or super tax.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with by the Income tax Officer in such manner as may be prescribed.
" The conditions of registration prescribed in this section and the relevant rules are : (1) on behalf of the firm, an application ,should be made to the Income tax Officer by such person and at such times and containing such particulars, being in such form and verified in such manner as are prescribed by the rules;, (2) the firm should be constituted under an instrument of partnership; (3) the instrument must specify the individual shares of the part ners and (4) the partnership must be valid and genuine and must actually exist in the terms specified in the instrument.
If all the above conditions are fulfilled, the Income tax Officer is bound to register the firm unless the assessee has contravened section 23(4) of the Act.
In Commissioner of Income Tax, Madras vs Sivakashi Match Exporting Co. (1) this Court held that the combined effect of section 26A and the rules made thereunder was that the Income tax Officer could not reject an application made by a firm if it gave the necessary particulars prescribed by the rules and if there was a firm in existence as shown in the instrument of partnership.
A firm is said to be not in existence if it was a bogus and not a (1) , Sup.
Cl/70 2 246 genuine one or if in law the constitution of the partnership was void.
The jurisdiction if the Income tax Officer was, therefore, confined to ascertaining two facts namely (1) whether the application for registration was in conformity with the rules framed under the Act and (2) whether the firm shown in the document presented for registration was a bogus one or had no legal existence.
Further the discretion conferred on the Income tax Officer under section 26A was a judicial one and he could not refuse to register a firm on mere speculation.
He had to base his conclusion on relevant evidence.
Therein this Court further held that there was no prohibition under the Partnership Act against a partner or partners of other firms combining together to form a separate partnership to carry on a different business.
The fact that such a partner entered into sub partnership with others in respect of his share did not detract from the validity of the partnership; nor was the manner in which he dealt with his share of the profits of any relevance to the question of the validity of the partnership.
In Commissioner of Income Tax Gujarat vs A. Abdul Rahim and Co. (1), this Court ruled that registration of a partnership deed under s.26A of the Act could not 'be refused on the ground that one of the partners was a benamidar for someone else.
Therein this Court observed that it is a settled law that if a partnership is a 'genuine and valid one, the Income tax Officer has no power to reject its registration if the other provisions of s.26A and the rules framed thereunder are complied with.
When a firm makes an application under s.26A for registration, the Income tax Officer can reject the same if he comes to the conclusion that the partnership is not genuine or the instrument of partnership does not specify correctly the individual share of the partners.
But once he comes to the conclusion that the partnership is genuine and a valid one, he cannot refuse registration on the ground that one of the partners is a benamidar of another.
If the partnership is genuine and legal, the share given to the benamidar will be the correct specification of his individual share in the partnership.
The beneficial interest in the income pertaining to the share of the said benamidar may have relevance to the matter of assessment but none in regard to the question of registration.
His beami character does not affect the benaamidar 's capacity as partner or his relationship with the other members of the partnership.
If a partner is only a benamidar for, another, it can only mean that he is accountable to the real owner for the profits earned by him from and out of the partnership.
Therefore a benamidar is a mere trustee of the real owner and he has no beneficial interest in the property or the business of the real owner.
But, in law, just as in the case of a trustee, he can also enter into a partnership with (1) 247 others.
The benamidar of a partner, qua the other partners, has separate And real existence; he is governed by the terms of the partnership deed, his rights and liabilities are governed by the terms of the contract and by the provisions of the partnership Act; his liability to third parties for the acts of the partnership is coequal with that of the other partners; the other partners have no concern with the real owner; they can only look to him for enforcing their rights or discharging their obligations under the partnership deed.
Any internal arrangement between him and ,another is not governed by the terms of the partnership; that arrangement operates only on the profits accruing to the benamidar; it is outside the partnership arrangement.
If a benamidar possesses the legal character to enter into a partnership with another, the fact that he is accountable for his profits to, and has the right to be indemnified for his losses by a third party or even by one of the partners does not discharge him of the said character.
As mentioned earlier, the persons who are shown in the part nership deed with which we are concerned in these appeals as partners, appeared to have joined the same in their individual capacity.
There is nothing in the partnership deed to indicate that they have joined the partnership as kartas of their respective families.
It was not open to the Income tax Officer to go behind the deed and find out, for the purposes of registration under section 26A whether the partners mentioned in the deed have joined the partnership in their own right or as representing others.
Hence the partnership must be held to have been validly formed as law did not at the relevant time prohibit any one, otherwise competent to contract from entering into a contract of partnership even though, the beneficial interest in his share may vest in others.
The application made for registration complies with the requirements of section 26A and the rules framed thereunder.
Therefore the Income tax Officer was bound to register the partnership.
For the reasons mentioned above, we allow these appeals, set aside the order made by the High Court and answer the question referred to the High Court in the negative and in favour of the assessee.
The department shall pay the costs of the assessee in this Court as well as in the High Court.
One hearing fee.
R.K.P.S. Appeals allowed.
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A firm consisted of 18 partners.
The partnership deed did not show that any of the partners joined the deed as representatives of their Hindu Undivided Families.
The firm applied for registration under section 26A of the Income Tax Act, 1922.
The income tax Officer, the Appellate Assistant Commissioner and the Tribunal were of the opinion that some partners of the firm having entered into the partnership as representatives of their respective Hindu undivided families, in view of section 4(3) of the Companies Act, 1913, the adult members of these families should be taken into consideration for determining whether or not the total number of partners exceeded twenty.
On that basis they arrived at the conclusion that the firm had more than 20 partners and the same having not been registered as a company under the Companies Act, the partnership was un lawful.
The High Court answered a reference made to it in favour of the revenue.
In the appeal to this Court it was contended; (i) Section 4(3) of the Companies Act, 1913 proceeded on the erroneous impression that a joint Hindu Family can enter into a partnership which in law it cannot as it has no legal personality; (ii) it was not open to the Income Tax Officer to go behind the deed for the purpose of registration under section 26A and (iii) if the application, for registration complied with the requirements of that section and the rules made thereunder, it was not open to the Income Tax Officer to refuse to register.
Allowing the appeal, HELD : (i) It is only partnership constituted according to the provisions of the partnership Act that can be considered as partnership under the Act.
Under the Partnership Act only "persons" can join as partners.
An association of persons is not a person within the meaning of that expression in the Partnership Act.
The definition of "Person" in the Income Tax Act including within the definition Hindu Undivided Family is intended for levying income tax and other cognate matters and cannot be imported into the Partnership Act, the provisions of which alone are relevant for finding as to who could join as partners.
A Hindu undivided family cannot as such enter into a contact of Partnership with another person or persons.
The concept of a Hindu undivided family joining a partnership presents considerable difficulty.
It is a fleeting body and such a partnership is likely to have a precarious.
existence.
Therefore, the assumption in section 4(3) of the Companies Act, 1913, that a Hindu Joint Family can be a partner in a partnership appear& to be based on an erroneous view of the law.
[241 H 242 G H] 238 Senaji Kapurchand V. Pannaji Devichand, A I.R. 1930 P.C. 300, Dulichand Laxminarayana vs Commissioner of income tax Nagpur, and Commissioner of Income tax West Bengal vs Kalu Babu Lal Chand, , referred to.
Lala Lachman Das vs Commissioner of Income Tax, 74 I.A. 277, distinguished '.
(ii) For the purpose of finding out as to who are all partners of a firm, one has only to look to, the partnership deed and not to go behind it.
It is well settled that when a co parcener, even when he is the Karta, enters into partnership with others the partnership that is created is a contractual partnership; that partnership is not between the family and the other partners, it is a partnership between the coparcener individually and his other partners.
[244 B C] P. K. P. section Pichappa Chettiar vs Chokalingam Pillai.
A.I.R. 1934 P.C. 192, Kshetra Mohan Sannyasi Charan Sadhukhan vs Commr.
of Excess Profits Tax, West Bengal, , Firm Bhagat Ram Mohan Lal vs Commissioner of Excess Profits Tax, Nagpur and And.
and Commissioner of Income tax, Bombay City vs Nandlal Gandalal, , referred to.
(iii) The Income tax Officer has no, power to reject an application for registration under section 26.A if the provisions of the section and the rules framed thereunder are complied with.
The jurisdiction of the Income tax Officer is confined to ascertaining two facts, namely, (1) whether the application for registration is in conformity with the rules framed under the Act and (2) whether the firm shown in the document %,as a bogus one or had no legal existence.
It is not open to the Income tax Officer to go behind the deed and find out for the purpose of registration whether the, partners mentioned in the deed have joined the partnership in their own right or as representing others.
In the present cast the application made for registration complies with the requirements of the section and the rules framed thereunder.
Hence the partnership must be held to have been validly formed as law did not at the relevant time prohibit anyone, otherwise competent to contract from entering into a contract of partnership even though the beneficial interest in his share may vest in others.
[246 A B, 247 E F] Commissioner of Income tax, Madras vs Sivakashi Match Exporting Co. and Commissioner of Income Tax Gujarat vs ,I. Abdul Rahim and Co., , referred to.
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2825.txt
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Nos. 661, 1380, 1885 & 1886 of 1967.
209 Appeal from the judgment and order dated February 25, 1965 of the Patna High Court in First Appeals Nos. 437 and 438 of 1959.
section V. Gupte, B. P. Rajgarhia and U. P. Singh, for the appellants in C.A. Nos. 661 and 1380 of 1967) and for respondent No. 1 C.A. Nos.
1885 and 1886 of 1967).
D. Goburdhun, for the respondent (in C.A. Nos. 661 and 1380 if 1967 and for the appellant (in C.A. Nos. 1885 and 1886 of 1967).
The Judgment of the Court was delivered by P. laganmohan Reddy, J.
These appeals are by certificate against the judgment of the Patna High Court in land acquisition appeals.
Two notifications dated 7 7 1954 under section 4 of the.
Land Acquisition Act 1894 (Act 1 of 1894) (hereinafter called 'the Act '), were issued one in respect of a portion of Plot Nos. 178 and 1784 admeasuring 2.65 acres and the other in respect of the whole of the plot No. 1783 admeasuring 2 acres situated in Ward No. 3 of Ranchi Municipality.
Section 6 notification in respect of these lands was published on 7 9 1954 and possession was taken on 23 9 1954 under section 17(1) after making a declaration under section 17(4) that the provisions of section 5A shall not apply.
The Collector awarded compensation of Rs. 1,20,419 6 11 in respect of the first acquisition and Rs. 47,648 13 6 in respect of the second.
Thereafter, at the instance of the claimant, a reference under section 18 of the Act was made to the Judicial Commissioner of Chhota Nagpur, Ranchi who.
while maintaining the market value, of the land, awarded by the Collector, gave further compensation for severance at the rate of 5% and 10% in respect of potential value of the land.
The Judicial Commissioner, however, did not grant the 15% solatium under section 23(2) of the Act.
Being dissatisfied, the claimants preferred appeals to the High Court.
The High Court revised the compensation and awarded Rs. 90,000/ per acre and 15% as solatium on the market value under section 23(2) of the Act but did not grant them the 5% towards severance.
Interest at 6% per annum on the amount of enhanced compensation from 23 9 1954 together with costs was also decreed.
Against the judgment and decree, the claimants have filed Civil Appeals 661 & 1380/67 while the State has filed Civil Appeals 1885 86/67.
The lands in question which have been acquired were earlier leased on 22 9 1944 to the Military authorities on a rent of Rs. 600/ per month for a period of 6 months under a registered deed with option Lo renew for a maximum period of 10 years 2lO which period expired on 21 9 1954.
One of the conditions of the lease was that on the termination of the lease, the lessor would exercise the option given under the lease to purchase all buildings, structures, gardens and any other structures constructed by the lessee during their occupation of the leased property, at 75 per cent of the valuation that would be determined by the Superintending Engineer, Chhota Nagpur Circle, and in case the lessors refused to purchase, the lessee was entitled to dismantle and take away the materials.
Towards the end of the lease period, the Govern ment of Bihar decided to acquire the property for the State Soldiers, Sailors and Airmen 's Board and initiated proceedings as aforesaid.
In these appeals the only question that has to be determined is : What is the market value of the property as on the date of section 4 notification ? In the valuation report given by the Land Acquisition Officer, Ranchi, Ex 1, the principle of capitalisation on the basis of 20 times the annual rental of Rs. 7,200/ at the rate of Rs. 600/ p.m. was adopted as the price of the lands.
In that report it was also pointed out that the sale price of 1.08.5 acres out of the premises of the Ranchi Club as per registered sale deed, exhibit C 1 dated 1 4 1953, was Rs. 41,470/ per acre.
which was not fair.
Apart from these 25 other sale transactions in respect of portions of Plot No. 1789 between 1952 and 1953 were also referred in that report.
Some of these lands were situated opposite to the Ranchi Club and the sale price came to Rs. 1092/ per katha, which is about Rs. 60,000/ per acre.
He was further pointed out that some other lands a little further away from the main road but belonging to the same Plot No. 1789 were sold at the rates between Rs. 250 / / to Rs. 800/ per katha.
This report formed the basis of the award made by the Collector.
The High Court took judicial notice, and in our view rightly so, that after the termination of the Second World War in 1945 there was a rise in land values due to the increased demand of homestead lands for building purposes.
It also considered various sale deeds produced and proved on behalf of the claimants along with the oral evidence to determine the market value of the land.
The objections from both the appellant and the respondent were taken into account in respect of each of these and most of them were considered as not furnishing a proper or adequate valuation either having regard to the distance of the lands which were the subject matter of the sale or the inadequacy of the information pertaining thereto.
The High Court, however, adopted the price in the sale deed Ex C 1 executed on 6 5 1953 by the Ranchi Club Ltd., in favour of the President of India in respect of 1.085 acres 3 bighas 5 kathas 10 chhataks in Plot No. 1221 for Rs. 45,000/:as the basis for arriving at the market value of the acquired land.
211 Though the land in question was situated on the main Ranchi Chaibasa Road, a strong objection was taken against adopting the price as a basis because it was not only 1/2 mile away from the land under acquisition but what was sold was only the leasehold right in the land.
These objections were rejected on the ground that for all,practical purposes the interest that was held or sold by the Ranchi Club under Ex.
C 1 was not inferior to an absolute title.
The area of the land, the subject matter of the sale, was considered to be fairly large being more than 1 acre and the situation was also the same as the land under acquisition except that it was farther away from it.
In these circumstances, the High Court thought, after a proper allowance is made for the difference in distance, the transaction yields a more acceptable guide for determining the market value of the land under acquisition and accordingly, it adopted twice the price.
as charged for the land in Ext.
C 1 as indicating a fair market value of the land in question.
The High Court further added Rs. 7060/ per acre as the difference between tenure rights and lease hold rights that were held by the President of India and awarded Rs. 90,00O./ per acre.
it did notwithstanding the fact that it was conscious that there was no definite data for the two additions that have been made, because in its view, in cases of this nature a certain amount of estimate has to be made which may even be arbitrary.
Accordingly, it awarded compensation for the 4.65 acres of land which was acquired by the Government at Rs. 90,000/ per acre together with 15% solatium Payable under clause (2) of section 23 of the Act.
5% compensation for severance of land from the claimants ' other portion of the land that remained with them after acquisition, which was awarded by the Judicial Commissioner, Chhota Nagpur, was disallowed on the ground that there was an entrance to the back portion of the land which was left with the #owners and also because there was no evidence to show that in fact there had been any depreciation in he value of the remaining area and if so, to what extent.
On the other hand, it main tained the 10% on the market value of the land awarded by the Land Acquisition Court on account of the increase in the potentialities of the land.
The basis adopted by the High Court is challenged on the ground that they are contrary to the well established principles applicable for determining the value of lands acquired under the Act.
The general principles for determining compensation have, been set out in sections 23 & 24 of the Act.
The compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonably expect to obtain from a willing purchaser, bat as this may not be possible to ascertain with any amount of precision, the authority charged with the duty to award compensation is bound to 212 make an estimate judged by an objective standard.
The land acqui red has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act but its potential value also must be taken into account.
The sale deeds of the lands situated in the vicinity and the comparable benefits and advantages which they have, furnish a rough and ready method of computing the market value.
This, however, is not the only method.
The rent which an owner was actually receiving at the relevant point of time or the rent which the neighbouring lands of similar nature are fetching can be taken into account by capitalising the rent which according to the present prevailing rate of interest is 20 times the annual rent.
But this also is not a conclusive method.
This Court had in Special Land Acquisition Officer, Bangalore vs T. Adinarayan Setty(1), indicated at page 412 the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notificatioa under section 4(1) which are : (i) opinion of experts, (ii) the price paid within a reasonable time in bona fide transactions of purchase ,of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages; and (iii) a number of years ' purchase of the actual or immediately prospective profits of the lands acquired.
These methods, however, do not preclude the Court from taking any other special circumstances into consideration, the requirement being always to arrive as near as possible an estimate of the market value.
In arriving to a reasonably correct market value, it may be necessary to take even two or all of those methods into account inasmuch as the exact valuation is not always possible as no two lands may be the same either in respect of the situation or the extent or the potentially nor is it possible in all cases to have reliable material from which that valuation can be accurately determined.
Bearing these principles in mind, we do not think that the High Court was justified in adopting the registered sale deed, Ex.
C 1 executed by the Ranchi Club, in favour of the President of India, because that land is farther away not only from the, land acquired but from the town though it is on the main RanchiChaibasa Road.
Even the High Court recognised that there was no definite data for the two additions that have been made and in our view it would not be a proper method of ascertaining the value of the land 'acquired.
The only two documents that may be considered are Ex.10 and Ex 11 which are in respect of the lands situated in the vicinity and on either side of the land ac quired.
The other sale deeds are of smaller areas and do not furnish a proper basis for ascertaining the market value and have been quite properly not relied upon by the learned Advocate for (1) (1959) (Supp1. 1) S.CR.
213 the claimants ' The annual rental value of the land acquired, namely, Rs. 7 200/ will also not furnish a proper method of computation because that was a rent fixed in 1944 when that land was not of such great value as it had acquired at the time when sec.
4 notification was issued.
A perusal of the correspondence between the owners of the land and the Deputy Commissioner of Ranchi would show that the land owners had given it at consessional rate to ' the Military authorities having regard to the purpose for which it was being put to use.
On behalf of the claimants great reliance is placed on Ex.11 which is a sale deed executed on 16 12 1946 by the claimants the Ranchi Automobiles of an area of 1 bigha 17 kathas equal to .617 acres for Rs. 1,45,000/. After deducting Rs. 15,403/ the price of the structures according ;to the Engineer 's report in 1959 (Ex 25), the net value of the land is Rs. 1,29,697/ .
This value would work out to Rs. 2,08,135.70 per acre.
The High Court rejected this computation on the ground that though the land was contiguous to the land under acquisition, neither the value of the pump and the other structures belonging to Burmah Shell nor the value of the structures that might have been on the land on the date of the sale which were built by the vendees as lessees could be ascertained either from the sale deed or the evidence.
Ex.10 is a lease in respect of 1/3 acre granted by the owners to Thakur Chandra Bali Shah and others executed on 20 2 1950 on a monthly rent of Rs. 157/ .
The High Court calculated the monthly rental of the land under acquisition at that rate to be not less than Rs. 2,000/ per month or Rs. 24,000/ per year.
On the basis of 20 times the annual rent if computed Rs. 4,80,000/as the market value which works out at Rs. 1,03,226/per acre.
It is, however, pointed out on behalf of the claimants that the High Court made a mistake in thinking that the rent for the land leased under Ex.10 was Rs. 157/ p.m. and on that basis it calculated the annual rental value of 4.65 acres of the ' acquired land.
We have checked the figures from the original lease and find that in fact the rent is Rs. 175/ and not Rs. 157/ .
On this basis the rate per acre of 20 times annual rental value would come to Rs. 1,26,000/ .
Even if exhibit 11 is to be taken as, the basis and ,the value of the structures as given by the Engineer in Ex.25 is to be accepted that cannot furnish a proper basis because the land in question is a small area of .617 acres or just over 1 an acre.
A smaller area such as this on a main road Would certainly fetch a higher price compared to a larger un developed area even though it may have a frontage on the main road.
In order to develop that area atleast the value of 1/3 of the land will have to be deducted for roads, drainage and other amenities.
On this basis, the value of the land at Rs. 2,08,135.70 per acre would, after deduction of 1/3 come to Rs. 1,38,757/per acre.
On the basis of the rental of Rs. 175/ p.m. in Ex.10, 214 the value at 20 times the rental will work out as already seen at Rs. 1,26,000/ .
Allowing for an increase in rents from 1950 to 1954, the date of section 4 notification, say at 5% the value per acre may be Rs. 1,33,000/ or thereabout.
If we take the average of Ex.10 and Ex.11 as computed by us the value per acre would come to about Rs. 1,35,878/ .
In our view, Rs. 1,35,000/ per acre would be a reasonable rate at which compensation could be awarded to the claimants.
The High Court was not justified in giving 10% towards potential value because that element is inherent in the fixation of the market value of the land and could not be assessed separately.
The High Court was also not justified in disallowing 5% awarded by the Judicial Commissioner, Chhotanagpur as compensation for severance merely because there was an entrance to the land.
When a portion left out there would be a diminution in the value of ;the land that is left out for which some compensation has to be allowed.
The 5% allowed by the Judicial Commissioner, Chhotanagpur is reasonable.
In this view, the claimants would be entitled to a decree as follows in respect of the lands acquired : (1) At the rate of Rs. 1,35,000 per acre for 4.65 acres; (2) 5% severence and 15% solatium on the market value computed as in (1); (3) Interest at 6% from the date of taking possession.
The appeals of the claimants are allowed to the extent of the variation and those by the Government are dismissed with costs.
The claimants will be entitled to proportionate costs on the difference between the amounts decreed and those that are now awarded in each of the two appeals filed by them.
K.B.N. 864SupCI/72 2500 12 4 73 GIPF.
|
According to the general principles set out in sections 23 and 24 of the Land Acquision Act, 1894, for determining compensation, the compensation payable to the owner of the land is the market value which is determined by reference to the price which a seller might reasonable expect to obtain from a willing purchaser; but since it may not be possible to ascertain this with any amount of precision the authority charged with the duty to award compensation is bound to make an estimate judged by an objective standard.
The land acquired, has, therefore, to be valued not only with reference to its condition at the time of the declaration under section 4 of the Act, but its potential value also must be taken into account.
This Court has laid down the methods of valuation to be adopted in ascertaining the market value of the land on the date of the notification under section 4, which are : (i) opinion of experts (ii) the price paid within a reasonable time in bona fide transactions of the purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages and (iii) a number of years purchase of the actual or immediately prospective profits of the lands acquired.
These methods, however, do not preclude the Court from taking any other special circumstance into consideration, the requirement being always to arrive as near as possible an estimate of the market value.
In arriving at a reasonable correct market value it may be necessary to take even two or all these methods into account in as much as the exact valuation is not always possible as no two lands may be same either in respect of the situation or the extent or the potentiality, nor is it possible in all cases to have reliable material from which that valuation can be accurately determined.
[211 H] Special Land Acquisition Officer Bangalore vs T. Adinarayan Setty, [1959] Supp.
1 S.C.R. 404, referred to.
In the present case, the High Court was not justified in adopting the sale deed in respect of a land which was farther away not only from the land acquired, but from the town.
The annual rental value of the land acquired, based on the rent fixed in 1944 when that land was not of such great value as , it had acquired at the time when section 4 notification was issued, would also not furnish a proper method of computation.
The High Court was not justified in giving 10 per cent towards potential value, be.
cause, that element was inherent in the fixation of market value of the land and could not be assessed separately.
The High Court was also not justified in disallowing 5 per cent awarded by the Judicial Commissioner Is compensation for severance merely because there was an entrance to the land.
When a portion of the land is acquired and a large portion left out there would be diminution.
in the value of land that is left out for which some compensation has to be allowed.
[214 B]
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3110.txt
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ivil Appeal No. 173 of 1986.
From the Judgment and Order dated 29.3.
1985 of the Andhra Pradesh Administrative Tribunal, Hyderabad in Repre sentation Petition No. 1589 of 1983.
WITH Writ Petition (Civil) Nos.
11135 37 of 1984.
485 (Under Article 32 of the Constitution of India).
C. Sitharamaiah, G. Prabhakar, D. Prakash Reddy, B. Rajeshwar Rao and Vimal Dave for the Appellants.
Subodh Markandeya, W.A. Nomani, Seshagiri Rao, Mrs. Chitra Markandeya and A. Subba Rao for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
Civil Appeal No. 173 of 1986: By the judgment under appeal the Andhra Pradesh Adminis trative Tribunal has accepted the claim of seniority pressed by the respondents in their Representation Petition No. 1589 of 1983.
The respondents were working as Lower Division Clerks (LDCs) in the district police offices/units in Andhra Pra desh, when the question of appointing LDCs in the Chief Office arose.
It was decided to give an opportunity to the LDCs working in the district police offices/units on the condition that they would be willing not to rely upon their service rendered in the district police offices/units for the purpose of seniority and that their seniority would be counted with effect from the date they joined the Chief Office.
Accordingly a Memorandum Rc.
No. 1020/S1/68 dated 21.11.
1968 (Annexure 'A ') was issued to the district police offices/units.
The choice was limited to probationers and approved probationers having good service records.
The letter expressly stated that the appointees were to be put at the bottom of the list of probationers or approved proba tioners already working in the Chief Office.
Immediately thereafter the respondents and two other LDCs, who are not parties to the present case, expressed their desire to join the Chief Office on the condition as mentioned in the said memorandum.
They in positive terms declared in Annexure 'C ' series their willingness to forego their seniority.
After examination of their service records, orders were passed and accordingly Memorandum Rc.
No. 1020/S1/68 dated 1.6.
197 (1 Annexure '0 ') was issued to the heads of departments of the concerned district police offices/units.
A pointed reference to the memorandum of 21.11.
1968 was made stating that the clerks in question were to take their seniority from the date of their joining the duty in the Chief Office as already mentioned in their letters.
Accordingly, all the five respondents joined their duty in the Chief Office after submitting, with reference to the memorandum dated 1.6.
1970, separate letters (at pages 40 44 of the 486 paper book) addressed to the Inspector General of Police, stating that: "I submit that I am willing to take the last rank in senior ity in the category of LDCs.
in Chief Office from the date reporting duty in Chief Office.
" Their respective dates of joining the Chief Office are detailed in the Memorandum dated 7.9.1970, Annexure 'H ' (page 47 of the paper book).
They were placed on probation with the condition that if they failed to complete their probation satisfactorily they would be sent back to their original district/unit offices.
The respondents satisfactorily completed their proba tion and were substantively confirmed in the Chief Office and their seniority was counted with effect from the dates they joined the Chief Office.
In 1983 they filed an applica tion before the Andhra Pradesh Administrative Tribunal claiming that they were entitled to count their service rendered in the district police offices/units for the pur pose of their seniority in the Chief Office, which has been allowed by the impugned judgment.
In support of their claim the respondents relied on the Memorandum Rc.
No. 1020/S1/68 dated 18.1.
1969 (Annexure 'B ') issued by the office of the Inspector General of Police to the heads of the district police organisations/units, stating that, "In continuation of the Chief Office memorandum cited, the Commissioner of Police, all Superintendents of Police and Commandants etc., are requested to state whether there are any L.D. Clerks willing to come on transfer to Chief Office, if the condition stipulated in the Memorandum cited regarding taking of last rank is not insisted upon.
The records of the L.D. Clerks recommended should be good.
" It has been argued before the Tribunal as also before us that this letter clearly indicates that adequate number of clerks from the district police offices/units were not available and a decision to forgo the condition in regard to the seniority of the clerks was taken.
It has been contended that in view of this departmental decision the respondents should not be bound down by their statements made in Annex ures 'C ' series and in their letters Annexures 'E ' series.
The Tribunal has accepted their plea.
487 5.
Mr. C. Sitharamaiah, the learned counsel appearing in support of the appeal, has urged that the Memorandum Annex ure 'B ' does not indicate any final decision taken by the Department.
The learned counsel appears to be right.
A perusal of the letter makes it clear that the office of the Inspector General of Police was only making an inquiry in the terms indicated therein.
It is true that presumably.
sufficient number of volunteers from the district police offices/units were not available which promoted the authori ty concerned to issue the letter Annexure 'B ', but it does not go beyond circulating a query.
It cannot be suggested on its basis that there was a reversal of the policy with respect to the counting of the seniority of the incoming LDCs from the district police offices/units.
It has been asserted in the counter affidavit of the State filed before the Tribunal that not a single person was allowed to join the Chief Office on the condition indicated in Annexure 'B ', and it has not been denied on behalf of the respondents either before the Tribunal or before us.
The respondents have not been able to produce a copy of any decision taken on the lines indicated in Annexure 'B ' nor have they been able to cite even a single case of an LDC joining the Chief Office on such a supposed decision.
We have, therefore, no hesitation in holding that the condition mentioned in Annex ure 'B ' is of no avail to the respondents.
The learned counsel for the respondents referred to r. 16 of the A.P. Ministerial Service Rules (hereinafter referred to as the Rules) and urged that when the respond ents were permitted to join the Chief Office, they were allowed to do so by way of a regular transfer from one department to another and this was done for administrative exigencies of the Police Department, within the meaning of the said Rules, and not on their own request.
They are, therefore, entitled to count their earlier service for the purpose of seniority.
It is alleged that the fact that the respondents were paid travelling allowances for joining the Chief Office corroborates their stand.
We have considered the argument addressed on behalf of the respondents along with the relevant documents but do not find any merit in their stand.
It has to be appreciated that the cadre of the Chief Office is altogether different from cadre,of the district police offices/units where the respondents were earlier appointed and they were not liable to be transferred to the Chief Office.
The service conditions at the Chief Office were better, which was presumably the reason for the respondents to give up their claim based upon their past services.
It is true that the differential advantage was not so substantial as to attract every LDC working in the dis trict offices/units, and in that situation the letter Annex ure 'B ' had to be circulated.
However, so far the respond ents and the two others 488 were concerned, they found it in their own interest to forego their claim of seniority on the Oasis of their past services and they did so.
It is significant to note that their letters Annexures 'E ' series were sent to the Inspec tor General of Police many months after the issuance of Annexure 'B ' and they were allowed to join the Chief Office on clear Understanding that they would not be entitled to count their past services.
It is, therefore, idle to suggest that the respondents can.now turn back and repudiate their commitment expressly made many months after Annexure 'B '.
So far the allegation regarding payment of travelling allowance is concerned, the same has been dealt with in paragraph 6 of the counter affidavit of the appellant filed before the Tribunal in the following terms: "They cannot claim seniority now after a lapse of 13 years on the ground that they were given T.T.A. at the time of their transfer.
No orders were issued from this office to the Subordinate Officer that the petitioners are eligible for T.T.A. and joining time.
In fact the Dy.
Inspr.
of Police, Hyderabad Range in his order No. 534/E/256/70 Hr.
Dt. 5.6.70, addressed to Supdt.
of Police, Medak had specif ically informed that the petitioners No. 1 and 2 are not entitled for any T.T.A. and joining time." [t is urged that inspite of the clarification made by the Deputy Inspector General of Police, as stated above, if some officers permitted the respondents to draw travelling allow ance, this cannot be a ground to hold that it was a case of regular departmental transfer.
The '.
16 cannot, therefore, be held to be applicable in the present case.
Mr. Sitharamaiah urged that having regard to the entire circumstances as spelt out of the different documents on the records of the present case, it should be held that the Memorandum Annexure A ' issued by the Office of the 'Inspector General of Police was a mere invitation to the LDCs in the district police offices/units to apply for appointment in the Chief Office with the condition mentioned therein.
and availing of the opportunity, the respondents accordingly requested by their statements and letters for appointment in the Chief Office.
It is suggested by the learned counsel that if the case be treated to be one of transfer, it has to be held, in the circumstances, to be at the request of the LDCs concerned within the meaning of r. 16 of the Rules.
There considerable substance in the alter native argument of Mr. Sithara 489 maiah also, but, it is not necessary to go into this ques tion deeper as the absorption of the respondents in the Chief Office cannot be treated by way of transfer within the meaning of the Rules.
Besides the above infirmities there are two other important considerations which weigh heavily against the respondents.
The petition before the Tribunal was filed by the respondents after a period of 13 years of their initial appointment in the Chief Office, during which period many orders consistent with the terms of service as indicated in the Memorandum Annexure 'A ' must have been passed in favour of the other incumbents of the service.
The courts and tribunals should be slow in disturbing the settled affairs in a service for such a long period.
Besides, the respond ents, in the application before the Tribunal, did not im plead their colleagues who have been prejudicially affected by the impugned judgment.
It cannot be assumed that the respondents had no knowledge about them.
As was rightly pointed out by Mr. Sitharamaiah, although in paragraph 4(d) of their application before the Tribunal (page 53 of the paper book) the respondents mentioned one Vijaya Chand alleged to be an officiating LDC who was put over them, they did not implead even him.
We are, therefore, of the view that apart from the merits of the case, the petition of the respondents before the Tribunal was fit to be rejected on the ground of the above mentioned last two points.
Finally the learned counsel for the respondents said that in any event they should not be put below those persons who had not successfully completed their probation in the Chief Office on the date the respondents joined there.
We do not find any merit in this submission either.
Accordingly, the judgment under appeal passed by the Andhra Pradesh Administrative Tribunal is set aside and the Representation petition of the respondents is dismissed.
The appeal is allowed, but, in the circumstances, there will be no order as to costs.
Writ Petitions (Civil) Nos.
11135 37 of 1984: 11.
These applications under Article 32 of the Constitu tion have been filed by the three petitioners who were appointed during the years 1965 67 in the Central Office of the Inspector General of Police (now redesignated as Direc tor General and Inspector General of Police), Andhra Pra desh.
Since they had not passed the general examination held for the purpose, a special qualifying examination was held in 1968 to facilitate the petitioners and other similarly situated persons to pass at the test.
The petitioners, however, did not appear at this 490 examination.
Another special qualifying examination was held in 1974 and the petitioners successfully cleared the same.
Thereafter, by an order dated 17.6.
1976 (Annexure 'E '), their services were regularised with effect from 1.8.1972.
Their claim in the present case is for counting their sen iority with effect from their initial dates of appointment in the years 1965 67 12.
It has been contended by the learned counsel for the petitioners that they were not qualified for the 1968 exami nation and at the very first opportunity available to them in 1974, they passed the special qualifying examination and, therefore, they should not be penalised by ignoring their services rendered before 1.8. 1972.
It is significant to note that although the impugned order was passed in 1976, the petitioners did not commence any legal remedy before the year 1984 when they filed the present application directly before this Court after a period of 8 years.
By way of a preliminary objection, Mr. Subbarao, the learned counsel appearing for some of the officers impleaded as respondents in this petition, has drawn our attention to the fact that earlier a writ application, being W.P. No. 106 of 1980, was filed by some of the employees of the central office making similar claim of seniority and the present petitioners specifically stated that their case would be governed by the judgment in the earlier writ petition which was ultimately dismissed by this Court on August 8, 1986 (M. Nirmala and Others vs State of Andhra Pradesh and Others, Mr. Subbarao contends that after the dismissal of the earlier case, the petitioners now cannot be permitted to urge any new ground in support of their claim.
The reply on behalf of the petitioners is that if the earli er writ application had been allowed, they would also be entitled to succeed, but after its dismissal their claim cannot be rejected without examination of the additional questions which did not arise in the earlier case.
On merits the reply on behalf of the Government of Andhra Pradesh is that the respondent officers had joined the office of the Inspector General of Police after qualify ing at the general examination held for the purpose, and since the petitioners did not appear at the examination, they cannot be equated with the respondent officers.
The general examinations for recruitment to the central office were held in 1964, 1965, 1966, 1967 and 1968, but the peti tioners did not choose to avail of the ordinary method for joining the service.
Instead 491 they entered the service by the side door and their depart ment, taking an attitude liberal to them and other similar officers, decided to hold special qualifying examinations.
It is contended that in these circumstances the rule as laid down in Memorandum No. 473/Y1/70 5 dated 24.7.
1970 (Annex ure 'VII ') is clearly applicable, and for the purpose of seniority the petitioners were given the advantage of two years of service rendered by them prior to their successful ly completing the special qualifying examination.
The argu ment is well founded.
The learned counsel also pointed out that the standard of the special qualifying examination was not the same as that of the general examination held for recruitment.
Besides the weakness in the case of the petitioners as mentioned above, the delay of 8 years on their part to initiate legal remedy is fatal and these writ petitions are fit to be rejected on this ground alone.
The writ applica tions are, therefore, dismissed with costs payable to the respondents represented by Mr. Subbarao.
G.N. Appeal allowed and writ petition dismissed.
|
The respondents in the Civil Appeal, were working as Lower Division Clerks in the district police offices/units.
Some posts of Lower Division Clerks fell vacant in the Chief Office and it was decided to fill up the same by appointing Lower Division Clerks with good service record from the district police offices.
Accordingly a Memorandum was issued on 21.11.
1968 which expressly stated that the appointees would be put at the bottom of the list of Lower Division Clerks already working in the Chief Office.
The respondents and two others expressed their willingness to join and also to forego their seniority.
Accordingly an order was passed and the respondents joined duty in the Chief Office in 1970 and were placed on probation.
They completed the probation satisfactorily and were confirmed with their seniority counted from the dates they joined Chief Office.
Later, in 1983 they filed a Representation Petition before the State Administrative Tribunal that in view of Memorandum dated 18.1.1969 which stated that the condition regarding taking last rank would not be insisted upon, the respondents were entitled to count their service rendered in the district police offices/units for the purpose of senior ity in the Chief Office.
The Tribunal allowed the petition.
The State has preferred the appeal against the said order.
The petitioners in the Writ Petitions were appointed in the years 1965 to 1967.
Since they did not pass the general examination, a special qualifying examination was held in 1968.
They did not appear at the examination.
Another chance was given in 1974 and the petitioners successfully cleared the same.
By an order dated 17.6.1976, their services were regularised with effect from 1.8.1972.
The petitioners challenged the validity of the order, claiming, that their seniority 483 should be counted from the dates they were appointed.
Allowing the appeal and dismissing the Writ Petitions, HELD: 1.
It has to be appreciated that the cadre of the Chief Office is altogether different from the cadre of the district police offices/ units where the respondents were earlier appointed and they were not liable to be transferred to the Chief Office.
The service conditions at the Chief Office were better, which was presumably the reason for the respondents to give up their claim based upon their past services.
It is true that the differential advantage was not so substantial as to attract every Lower Division Clerk working in the district offices/units, and in that situation the letter dated 21.11.1968 had to be circulated.
However, so far the respondents and the two others were concerned, they found it in their own interest to forego their claim of seniority on the basis of their past services and they did so.
It is significant to note that their letters expressing their willingness to join Chief Office by foregoing their seniority were sent to the Inspector General of Police many months after the issuance of circular dated 18.1.1969 stat ing that the condition of foregoing seniority would not be insisted upon and they were allowed to join the Chief Office on clear understanding that they would not be entitled to count their past services.
It is, therefore, idle to suggest that the respondents can now turn back and repudiate their commitment expressly made many months after the said circu lar.
[297G H; 298A B] 2.
So far the allegation regarding payment of travelling allowance is concerned, if some officers permitted the respondents to draw travelling allowance, this cannot be a ground to hold that it was a case of regular departmental transfer.
Rule 16 of the Andhra Pradesh Ministerial Service Rules cannot, therefore, be held to be applicable in the present case.
[298C E] 3.
The petition before the Tribunal was filed by the respondents after a period of 13 years of their initial appointment in the Chief Office, during which period many orders consistent with the terms of service as indicated in the Memorandum dated 21.11.1968, must have been passed in favour of the other incumbents of the service.
The courts and tribunals should be slow in disturbing the settled affairs in a service for such a long period.
Besides, the respondents, in the application before the Tribunal, did not implead their colleagues who have been prejudicially affect ed by the impugned judgment.
It cannot be assumed that the respondents had no knowledge about them.
Apart from the merits of the case, the petition of the respondents before the Tribunal 484 was fit to be rejected on these grounds.
[298B D] 4.
There is also no merit in the contention that the respondents should not be put below those persons who had not successfully completed their probation in the Chief Office on the date the respondents joined there.
[299E] 5.1 As regards the Writ Petitions, it is significant to note that although the impugned order was passed in 1976, the petitioners did not commence any legal remedy before the year 1984 when they filed the present application directly before this Court after a period of 8 years.
[300C] 5.2 Though a Writ Petition was filed by some of the employees of the Central Office making similar claim of seniority the same was ultimately dismissed by this Court on August 8, 1986.
[300E] M. Nirmala and others vs State of Andhra Pradesh and Others, , referred to.
5.3 The respondent officers had joined the Central Office after qualifying at the general examination held for the purpose, and since the petitioners did not appear at the examination, they cannot be equated with the respondent officers.
The general examinations for recruitment to the Central Office were held in 1964, 1965, 1966, 1967 and 1968, but the petitioners did not choose to avail of the ordinary method for joining the service.
Instead they entered the service by the side door and their department, taking an attitude liberal to them and other similar officers, decided to hold special qualifying examinations.
However, for the purpose of seniority the petitioners were given the advan tage of two years of service rendered by them prior to their successfully completing the special qualifying examination.
Even the standard of the special qualifying examination was not the same as that of the general examination held for recruitment.
[300G H; 301A B]
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6571.txt
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Appeals Nos. 1061 and 1627 to 1629 of 1966.
Appeals by special leave from the judgment and order dated March 9, 10, 1965 of the Bombay High Court in Revision Applications Nos.
1428, 1427, 1430 and 1676 of 1961.
M. C. Chagla, J. L. Hathi, K. L. Hathi and K. N. Bhat for the appellants (in all the appeals).
R. P. Bhat, Janendra Lal, R. A. Gagrat and B. R. Agarwala, for the respondent (in all the appeals).
The Judgment of the Court was delivered 'by Shah, J.
Under an indenture dated August 2, 1950, Dossibai respondent in this appeal granted a lease of 555 sq. yards in village Pahadi, Taluka Borivli to Mathura Prasad appellant herein for constructing buildings for residential or,business purposes.
The appellant constructed buildings on the land.
He then submitted an application in the Court of the Civil Judge, Junior Division, Borivli, District Thana, that the standard rent of the land be determined under section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The Civil Judge rejected the application holding that the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for constructing buildings for residence, education, business, trade or storage.
This order was confirmed on September 28, 1955, by a single Judge of the Bombay High Court in a group of revision applications : Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar : Nos. 233 to 242 of 1955.
But in Vinayak Gopal Limaye vs Laxman Kashinath Athavale(1) the High Court of Bombay held that the question whether section 6(1) of the Act applies to any particular lease must be determined on its terms and a building lease in respect of an open plot is not ex (1) I.L.R. 832 cluded from section 6(1) of the Act solely because open land may be used for residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh petition in the Court of the Small Causes, Bombay, for an order determining the standard rent of the premises.
The application was filed in the Court of Small Causes because the area in which the land was situated had since been included within the limits of the Greater Bombay area.
The Trial Judge rejected the application holding that the question whether to an open piece of land let for the purpose of constructing buildings for residence.
education, business or trade section 6 (1) of the Act applied was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by a Bench of the Court,of Small Causes and by the High Court of Bombay.
With special leave, the appellant has appealed to this Court.
The view expressed by the High Court of Bombay in Mrs. Dossibai N. B. Jeejeebhoy vs Hingoo Manohar Missar (Civil) Revision Application No. 233 of 1955 (decided on September 28, 1955) was overruled by this Court in Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1).
In the latter case the Court affirmed the view expressed by the Bombay High Court in Vinayak Gopal Limaye 's case (2).
But all the Courts have held that the earlier decision of the High Court of Bombay between the same parties and relating to the same land is res judicata.
Section II of the Code of Civil Procedure which enacts the general rule of res judicata, insofar as it is relevant, provides : "No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court." The Civil judge, Junior Division, Borivli, was competent to try the application for determination of standard rent, and he held that s 6(1) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, did not apply to open land let for construction of residential and business premises.
The rule of res judicata applies if "the matter directly and substantially in issue" in a suit or proceeding was directly and sub (1) I.L.R. (2) 833 stantially in issue in the previous suit between the same parties and had been heard and finally decided by a competent Court.
The Civil Judge, Junior Division, Borivli, decided the application between the parties to the present proceeding for determination of standard rent in respect of the same piece of land let for construction of buildings for residential or business purposes.
The High Court has held that a decision of a competent Court may operate as res judicata in respect of not only an issue of fact, but mixed issues of law and fact, and even abstract questions of law.
It was also assumed by the High Court that a decision relating to the jurisdiction of the Court to entertain or not to entertain a proceeding is binding and conclusive between these parties in respect of the same question in a later proceeding.
But the doctrine of res judicata belongs to the domain of procedure : it cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpretation of enactment affecting the jurisdiction of a Court finally between them, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby.
A decision of a competent Court on a matter in issue may be res judicata in another proceeding between the same parties : the "matter in issue" may be an issue of fact, an issue of law, or one of mixed law and fact.
An issue of fact or an issue of mixed law and fact decided by a competent court is finally determined between the parties and cannot be re opened between them in another proceeding.
The previous decision on a matter in issue alone is res judicata : the reasons for the decision are not res judicata.
A matter in issue between the parties is the right claimed by one party and denied by the other, and the claim of right from its very nature depends upon proof of facts and application of the relevant law thereto.
A pure question of law unrelated to facts which give rise to a right, cannot be deemed to be a matter in issue.
When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties.
A previous decision of a competent Court on facts which are the foundation of the right and the relevant law applicable to the determination of the , transaction which is the foundation of the right and the relevant law applicable to the determination of the transactions which is the soured of the right is res judicata.
A previous decision on a matter in issue is a composite decision: the decision of law can not be dissociated from the decision on facts on which the right is founded.
A decision on an issue of law will be as res judicata in a subsequent proceeding between the same parties, if the cause of action of the subsequent Proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor 834 when the law has since the earlier decision been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law.
The authorities on the question whether a decision on a question of, law operates as res judicata disclose widely differing views.
In some cases it was decided that a decision on a question of law can never be res judicata in a subsequent proceeding between the same parties : Parthasardhi Ayyangar vs Chinnakrishna Ayyangar(1); Chamanlal vs Bapubhai (2) ; and Kanta Devi vs Kalawati(3).
On the other hand Aikman, J., in Chandi Prasad vs Maharaja Mahendra Mahendra Singh(1) held that a decision on a question of law is always res judicata.
But as observed by Rankin, C.J., in Tarini Charan Bhattacharjee vs Kedar Nath Haldar(5) : "Questions of law are of all kinds and cannot be dealt with as though they were all the same.
Questions of procedure, questions affecting jurisdiction, questions of limitation, may all be questions of law.
In such questions the rights of parties are not the only matter for consideration.
" We may analyse the illustrative cases retating to questions of law, decisions on which may be deemed res judicata in subsequent proceeding.
In Bindeshwari Charan Singh vs Bageshwari Charan Singh(1) the Judicial Committee held that a decision of a court in a previous suit between the same parties that section 12A of the Chota Nagpur Encumbered Estates Act 6 of 1876 which renders void a transaction to which it applies was inapplicable, was Yes judicata.
In that case the owner of an impartable estate, after his estate was released from management, executed a maintenance grant in favour of his minor son B, but without the sanction of the Commissioner as required by section 12A of the, Act.
B on attaining majority sued his father and brothers for a maintenance grant at the rate of Rs. 4,000 per annum.
The claim was decreed, and the plaintiff was awarded a decree for a grant of Rs. 4,000 inclusive of the previous grant of 1909, and the Court held that the grant of 1909 was valid in law.
The father implemented the decree and made an additional maintenance grant upto the value of the decreed sum.
In an action by the sons of B 's brothers challenging the two grants on the plea that the grants were illegal and not binding upon them, the Judicial Committee held that the plea was barred as res judicata in respect of both the grants in respect of the first because there was an express decision on the validity of the first grant in the earlier suit, and in respect of the second the (1) I.L.R. (3) A.I.R. [1946] Lah. 419.
(5) I.L.R. (2) I L.R, (4) I.L.R. 23 All.
(6) L.R. 63 I.A. 53.
83 5 decision in the first suit was res judicata as to the validity of the second grant which was made in fulfillment of the obligation under the Court 's decision.
The Judicial Committee held that in respect of the first grant, the decision that section 12A did not apply to the grant, was res judicata, and in respect of the second grant the construction between the same parties of section 12A was res judicata.
Validity of the second grant was never adjudicated upon in any previous suit; the second grant was held valid because between the parties it was decided that to the grant of maintenance of an impartible zamindari section 12A of the Chota Nagpur Encumbered Estates Act had no application.
This part of the judgment of the Judicial Committee is open to doubt.
Where the law is altered since the earlier decision, the earlier decision will not operate as res judicata between the same, parties : Tarini Charan Bhattacharjee 's case(1).
It is obvious that the matter in issue in a subsequent proceeding is not the same as in the previous proceeding, because the law interpreted is different.
In a case relating to levy of tax a decision valuing property or determining liability to tax in a different taxable period or event is binding only in that period or event, and is not binding in the subsequent years, and therefore the rule of, res judicata has no application; see Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill(2) A question of jurisdiction of the Court, or of procedure, or a pure question of law unrelated to the right of the parties to a previous suit, is not res judicata in the subsequent suit.
Rankin, observed in Tarini Charan Bhattacharjee 's case(1) : "The object of the doctrine of res judicata is not to fasten upon parties special principles of law as applicable to them inter se, but to ascertain their rights and the facts upon which these rights directly and substantially depend; and to prevent this ascertainment from becoming nugatory by precluding the parties from reopening or recontesting that which has 'been finally decided.
" A question relating to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the Court holds that it has no jurisdiction, the question would not, in our judgment, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does.
not possess under the statute, the question cannot operate as res judicata bet (1) I.L.R. (2) 83 6 ween the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
It is true that in determining the application of the rule of res judicata the Court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be, reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned a subsequent proceeding between the same parties.
But, where the decision is on a question law, i.e. the interpretation of a statute, it will be res judicata in a subsequent proceeding between the same parties where the cause of action is the same for the expression "the matter in issue" in section 11 Code of Civil Procedure means the right litigated between the parties, i.e. the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded from challenging the validity of that order under the rule of res judicata,for a rule of procedure cannot supersede the law of the land.
In the present case the decision of the Civil Judge, Junior Division, Borivli, that he had no jurisdiction to entertain the application for determination of standard rent, is, in view of the judgment of this Court, plainly erroneous : see Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal & Others(1) If the decision in the previous proceeding be.
regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction 'of the Court in derogation of the rule declared by the Legislature.
The appeals are allowed, and the orders passed by the High Court and the Court of Small Causes are set aside and the proceedings are remanded to the Court of First Instance to deal with and dispose them of in accordance with law.
There will be no order as to costs throughout.
Y.P. Appeals allowed.
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The appellant obtained lease of an open land for construction of buildings.
After the constructions, the appellant applied for determination of standard rent under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The application was rejected holding that the provi sions of the Act did not apply to open land let for construction.
This view was confirmed by the High Court.
Sometime thereafter in another case the High Court held that the question whether the provisions of the Act applied to any particular lease must be determined on its terms and a building lease in respect of an open plot was not excluded from the provisions of the Act solely because open land may be used from residence or educational purposes only after a structure is built thereon.
Relying upon this judgment, the appellant filed a fresh application for determining the standard rent.
The Trial Judge rejected the application holding that question of the applicability of the Act was res judicata since it had been finally decided by the High Court between the same parties in respect of the same land in the earlier proceeding for fixation of standard rent.
The order was confirmed by first appellate court and on further appeal by the High Court.
HELD:The judgment did not operate as res judicata.
A question relating.
to the jurisdiction of a Court cannot be deemed to have been finally determined by an erroneous decision of the Court.
If by an erroneous interpretation of the statute the court holds that it has no jurisdiction, the decision will not, operate as res judicata.
Similarly by an erroneous decision if the Court assumes jurisdiction which it does not possess under the statute, the decision will not operate as res judicata between the same parties, whether the cause of action in the subsequent litigation is the same or otherwise.
in determining the application of the rule of res judicata the court is not concerned with the correctness or otherwise of the earlier judgment.
The matter in issue, if it is one purely of fact, decided in the earlier proceeding by a competent court must in a subsequent litigation between the same parties be regarded as finally decided and cannot be reopened.
A mixed question of law and fact determined in the earlier proceeding between the same parties may not, for the same reason, be questioned in a subsequent proceeding between the same parties where the cause of action is the same, for the expression "the matter in issue" in section 11, Code of Civil Procedure means the right litigated between the parties, i.e., the facts on which the right is claimed or denied and the law applicable to the determination of that issue.
Where, however, the question is one purely of law and it relates to the jurisdiction of the Court or a decision of the Court sanctioning something which is illegal, by resort to the rule of res judicata a party affected by the decision will not be precluded_ from challenging the validity of that order because of the rule of res judicata, for a rule of procedure cannot supersede the law of the land.
83 1 if the decision in the previous proceeding be regarded as conclusive it will assume the status of a special rule of law applicable to the parties relating to the jurisdiction of_the Court, in derogation of the rule declared by the Legislature.
[835G 836 F] Parthasardhi Ayyangar vs Chinnakrishna Ayyangar, I.L.R. , Chamanlal vs Bapubhai, I.L.R. , Kanta Devi vs Kalawati, A.I.R. 1946 Lah.
419,, Tarini Charan Bhattacharjee vs Kedar Nath Haldar, I.L.R. , and Broken Hill Proprietary Company Ltd. vs Municipal Council of Broken Hill, , approved.
Chandi Prasad vs Maharaja Mahendra Mahendra Singh, I.L.R. 23 All.
,5, disapproved.
Bindeshwari Charan Singh vs Bageshwari, Charan Singh, L.R. 63 I.A. 53, doubted.
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2800.txt
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Civil Appeal No. 4 (NCE) of 1987.
From the Judgment and order dated 2.12.1986 of the High Court of Gauhati in Election Petition No. 2 of 1986.
Govind Mukhoty, Anil Nauriya and Mrs. Rekha Pandey for the Appellant.
Miss Halida Khatoon, Abdul Sattar and R.C. Kaushik for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
This appeal is filed by the appellant Dewan Joynal Abedin against the judgment dated December 2, 1986 of the High Court at Gauhati setting aside his election to the Legislative Assembly of Assam at the election held on the 16th December, 1985 from the 22 Salmara South Legislative Assembly Constituency on an election petition filed by respondent No. 1 Abdul Wazed alias Abdul Wazed Miah in Election Petition No. 2 of 1986.
The last date for making nominations for election from the aforesaid constituency was 22nd November, 1985 and the date for the scrutiny of nominations was November 23, 1985.
The appellant, the Ist respondent and the second respondent Bazlul Basit were the three candidates on whose behalf nomination papers had been filed before the expiry of the time fixed for making nominations.
Respondent No. 3, M. Bhattacharjee, was the Returning officer.
At the time of the scrutirly respondent No. 2 raised objection to the nomination of respondent No. 1 on the ground that respondent No. 1 had not comp 374 leted 25 years of age on the date of scrutiny as required by Article 173(b) of the Constitution which provided that a person was not qualified to be chosen to fill a seat in the Legislature of a State unless he was in the case of a seat in the Legislative Assembly not less than twenty five years of age and in the case of seat in the Legislative Council not less than thirty years of age.
The proposer of one of the nomination papers filed on behalf of the respondent No. 1 prayed for some time to refute the objection.
The Returning officer, however, proceeded to reject the nomination papers filed on behalf of the Ist respondent on 23.11.1985 holding that the Ist respondent had not completed 25 years of age and therefore was not qualified to be a member of the Legislative Assembly.
The election process continued with only the appellant and the second respondent as the candidates and after the poll the appellant was declared as having been elected on the basis of the larger number of votes secured by him.
Thereupon the Ist respondent filed the election petition before the High Court out of which this appeal arises contending that he had infact completed 25 years of age on the date of his nomination and that the rejection of his nomination papers was erroneous.
The Ist respondent further contended that on account of the rejection of his nomination papers the election of the appellant was liable to be set aside under section 100(1)(c) of the Representation of the People Act, 1951 (hereinafter referred to as 'the Act ') which provided that the election of a successful candidate was liable to be set aside on the ground that any nomination had been improperly rejected.
In the course of his written statement the appellant raised several pleas, and of them three were material for purposes of this case.
First he pleaded that the Ist respondent had not completed 25 years of age on the date of scrutiny of nominations and therefore the nomination papers had been rightly rejected, secondly he pleaded that the Ist respondent had not subscribed an oath as required by Article 173(a) of the Constitution and therefore the Ist respondent was not qualified to contest the election and thirdly he pleaded that the Ist respondent was also disqualified to be chosen to fill a seat in the Legislature of the State as on the date of scrutiny of the nominations the Ist respondent had a subsisting contract entered into by him with the Government on Assam under which he had been treated as a lessee of the Phulbari Ghat Ferry for the period between 1.4.1985 and 31.3.1986.
The Ist respondent pleaded that he had completed the age of twenty five years on the date of scrutiny of nomination that he had subscribed an oath as required by Article 173(a) of the Constitution and that while it was true that he had entered into such a contract he had been released from the said contract on 21.11.1985 by the Executive Engineer concerned and therefore there was no subsisting 375 contract between him and the Government of Assam on the date of A scrutiny.
On the basis of these pleas Issue No. S and Issue No. 6 were framed by the High Court which read as follows: 5.
Whether the nomination paper of the petitioner has been improperly rejected? If so, whether the election of the respondent is void? or, Whether the nomination paper of the petitioner was liable to be rejected as alleged in para 7 of the written statement? 6.
Whether the petitioner had incurred disqualification under section 9A of the Representation of the People Act? After recording the evidence produced by the parties the learned Judge of the High Court who tried the election petition held that the Ist respondent had completed the age of 25 years on the date of scrutiny and therefore he had the necessary qualification for being a member of the Legislative Assembly.
He accordingly held on the first part of issue No. S in favour of the Ist respondent.
On the second part of issue No. S the learned Judge held that the appellant had not proved that the Ist Respondent had not subscribed on oath as required by law.
On issue No. 6 the learned Judge held that the.
Ist respondent had been relieved from the charge of Phulbari Ghat Ferry with effect from 21.
1985 and therefore there was no subsisting contract between the Ist respondent and the Government of Assam on the date of scrutiny of nominations and therefore the Ist respondent was not disqualified under section 9 A of the act.
In view of his findings recorded on Issues Nos. 5 and 6 the learned Judge came to the conclusion that the rejection of the nomination papers filed on behalf of the Ist respondent was improper and therefore the election was liable to be set aside.
He accordingly set aside the election of the appellant.
Aggrieved by the judgment of the learned Judge the appellant has filed this appeal under section 116 A of the Act.
When this appeal was taken up for hearing on the first date it was noticed that the High Court had not considered the question whether section 9 A of the Act was attracted at all to the contract in question as it appeared to be not one of those contracts which had the effect of disqualifying a candidate under section 9 A of the Act.
The case thereafter was adjourned to a subsequent date for hearing to enable the learned counsel to make their submissions on the above question also.
By the next date of hearing the appellant filed a petition before the 376 Court seeking an amendment of the written statement raising the plea that the Ist respondent was also disqualified from contesting the election as he held an office of profit under the State Government by virtue of the contract that had been entered into by him with the State Government even though the contract in question may not be one of those contracts specified in section 9 A of the Act.
In other words it was contended that the Ist respondent was disqualified under Article 191(1)(a) of the Constitution which provided that a person would be disqualified for being chosen as, and for being, a member of the Legislative Assembly of a State if he held any office of profit under the Government of India or the Government of any State specified in the First Schedule, other than an office declared by the Legislature of the State by law not to disqualify its holder.
It is necessary to refer to one aspect of the case.
Although before the High Court it was urged by the appellant that the Ist respondent had not subscribed on oath in compliance with the provisions of Article 173 of the Constitution and thus he was not eligible to contest the t) election and that the High Court had negatived the said contention, no arguments were addressed before us by the learned counsel for the appellant questioning the finding of the High Court on the above question.
We do not, therefore, find it necessary to discuss the evidence relating to the above issue.
Three questions arise for consideration in this appeal: (i) whether the 1st respondent had not completed the age of 25 years on the last date for filing nomination?; (ii) whether the contract in question said to have been entered into by the Ist respondent with the Government of Assam to collect the toll at the ferry was a contract for the execution of any works undertaken by the Government of Assam attracting section 9 A of the Act and if so whether the said contract was subsisting on the date of scrutiny of nomination?; and (iii) whether the Ist respondent held an office of profit under the Government of Assam by virtue of being a lessee of the right to collect the toll at the ferry? on the question of the age of the Ist respondent there is practically no evidence adduced on behalf of the appellant.
The Electoral Roll, which was marked as Exhibit 7, in the case showed that the Ist respondent was aged 29 years.
In support of his case 7 the Ist respondent had examined three witnesses, P.W. 2 Aripulla, P.W. 3 Sirajul Islam and P.W. 6 Habibar Rahman.
He also produced his High School Leaving Certificate (Exhibit 12) which showed that he was above 25 377 years on the date of the nomination.
The High Court has summed up its conclusion of the above question at paragraph 14 of its judgment thus: "14.
As already held that the High School leaving Certificate (Ext 12) and admission register cannot be rejected.
The oral evidence of the witnesses relating to the age has not been shaken in the cross examination.
As regards age, the relatives are best witnesses.
Considering the High School Leaving Certificate (Ext 12) Electoral Roll (Ext 7) and oral evidence of PW 2 Aripulla, PW 3 Silajul Islam and PW 6 Habibar Rahman, it is concluded on the age of the petitioner on the date for making nomination or scrutiny of nomination that he had completed the age of 25 years.
We have gone through the evidence bearing on the above question.
We are of the view that the High Court was right in upholding that the Ist respondent was more than 25 years of age on the date of scrutiny and he was eligible to be a member of the Legislative Assembly.
Thus the ground on which the Returning officer had rejected his nomination papers is untenable.
This takes us to the next question, namely, whether the Ist respondent was disqualified for being chosen as a member of the Legislative Assembly on account of the contract entered into by him in the course of his trade or business with the Government of Assam subsisting on the date of scrutiny of nominations as provided by section 9 A of the Act.
Section 9 A of the Act reads thus: "9 A. Disqualification for Government contracts, etc.
A person shall be disqualified if, and for so long as, there subsists a contract entered into by him in the course of his trade or business with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by that Government.
" There is a public ferry at Phulbari ghat, which is under the control of the Executive Engineer, Public Works department, Goalpara (Roads) Division.
It is admitted by the Ist respondent that he was the lessee of the tolls of the said public ferry for the period between 1.4.1985 and 31.3.1986 but his case, however, was that he had been relieved from the said contract on 21.11.
But the appellant 378 pleaded in the course of his written statement that only on 25.
l 1.1985, that is on the date of scrutiny of the nomination papers, the Executive Engineer had at the request of the appellant, allegedly made on 18.11.1985 released the petitioner from the contract and that the order of release had been made after the scrutiny was over.
The High Court had, therefore, to consider the question whether the order of release had been made on the 21.11.1985 or on 25.11.1985 after the scrutiny of nomination papers.
On a consideration of the evidence led by the parties, the High Court held that the Ist respondent had been relieved of the charge of the ferry on 21.
11.1985 and that he was not disqualified under section 9 A of the Act.
As stated earlier when the matter was argued before us on the first date of hearing the learned counsel for the parties were asked to make their submission on the question whether a lease of the ferry tolls attracted the provisions of section 9 A of the Act and the learned counsel have made their submissions in that behalf.
The management of a public ferry is governed by the provisions of the Northern India Ferries Act, 1878 (hereinafter referred to as 'the Ferries Act ') which has been extended to the State of Assam.
section 8 of the Ferris Act reads thus: "8.
Letting ferry tolls by auction The tolls of any public ferry may, from time to time, be let by public auction for a term not exceeding five years with the approval of the Commissioner, or by public auction, or otherwise than by public auction, for any term with the previous sanction of the State Government.
The lessee shall conform to the rules made under this Act for the management and control of the ferry, and may be called upon by the officer in whom the immediate superintendence of the ferry is vested, or, if the ferry is managed by a municipal or other public body under section 7 or section 7 A, then by that body, to give such security for his good conduct and for the punctual payment of the rent as the officer or body, as the case may be.
thinks fit.
When the tolls are put up to public auction, the said officer or body, as the case may be, or the officer conducting the sale on his or its behalf may, for reasons recorded in writing, refuse to accept the offer of the highest bidder, and may accept any other bid, or may withdraw the tolls from auction.
379 Section 9 of the Ferries Act provides for the recovery of arrears from the lessee.
Section 10 of the Ferries Act provides for the cancellation of the lease by the Government.
Section 11 of the Ferries Act provides for the surrender of the lease by the lessee.
Section 12 of the Ferries Act makes provision for the promulgation of rules which inter alia may provide for the control and the management of all public ferries within a division and for regulating the traffic at such ferries; for regulating the time and manner at and in which, and the terms on which, the tolls of such ferries may be let by auction, and prescribing the persons by whom auctions may be conducted and when the tolls of a ferry have been let under section 8 of the Ferries Act for collecting the rents payable for the tolls of such ferries.
Section 13 of the Ferries Act prohibits plying of any ferry within two miles of a public ferry without sanction from the appropriate authority.
Section 14 of the Ferries Act provides that whoever uses the approach to, or landing place of, a public ferry is liable to pay the tool payable for crossing such ferry.
Under section 15 of the Ferries Act provision is made for fixing the rates of tolls.
It says that the tolls, according to such rates as are, from time to time, fixed by the State Government? shall be levied on all persons, animals, vehicles and other things crossing any river by a public ferry and not employed or transmitted on the public service.
The State Government is, however, given power to declare that any persons, animals vehicles or other things shall be exempt from payment of such tolls.
Where tolls of a ferry have been let under section 8 of the Ferries Act any such declaration, if made after the date of the lease, shall entitle the lessee to such abatement of the rent payable in respect of the tolls as may be fixed by the Commissioner of the Division or such other officer as the State Government may, from time to time, appoint in this behalf by name or in virtue of his office.
The Rules have been framed by the Chief Engineer, Assam under section 12 of the Ferries Act for purposes of the control and management of and for regulating the traffic at all Government ferries.
Under the said Rules, for Government ferries suitable ferry boats, engines or mars are supplied at the expense of the Public Works Department.
The lessee shall be responsible as a bailee for these boats, engines and mars and he shall, on the expiry or earlier termination of his lease, return them to the Executive Engineer in good condition, allowance being made for fair wear and tear.
The lessee who acquires the right to collect toll is bound to cross over on tender of payment in cash of the authorised toll or on production of a season ticket or pass, all persons desiring to cross within the hours for which the ferry according to the terms of the lease is open.
He is precluded from carrying persons whom he may know or suspect to be fugitives from justice or to be bent upon an unlawful 380 purpose.
He cannot carry over at any one time in his ferry boat or mar more than the number of persons, animals, vehicles or other things specified in his lease as permitted to be so ferried.
He has to provide a shed 15 feet long by 15 feet broad, on each side of the ferry for the temporary accommodation of persons wishing to cross.
The lessee has to furnish monthly a return in the prescribed form supplied to him by the Executive Engineer giving particulars which are required to be furnished through it.
The approach roads to all Government ferries and low level bridges are constructed and maintained by the Public Works Department The lessee is responsible for conveying immediate information of damage to approaches to the concerned authorities.
The Public Works Department has to provide sufficient means for embarking and disembarking all persons, animals, vehicles and things which a lessee is bound to cross over at his ferry with the exception of ropes and tying posts for securing the mar.
All Government ferries shall generally be let by public auction; provided that, for special reasons to be recorded in writing, the Executive Engineer or Sub Divisional officer, Public Works Department, may reserve any ferry from lease and may work it direct.
Collection of tolls by departmental agency will only be resorted to when absolutely unavoidable.
The auction sale of the right to carry passengers at the ferry is held by the Deputy Commissioner/Civil Sub Divisional officer or some officer deputed by him for the purpose.
The person whose bid is accepted has to pay the purchase money in accordance with the Rules.
If there is any default on the part of the lessee in paying the amount payable by him, the lease is liable to be cancelled.
These are broadly the features of the contract between a lessee of a ferry and the Government.
The question for consideration is whether a person who takes on lease a ferry under section 8 of the Ferries Act becomes disqualified for contesting the election to the State Legislature under section 9 A of the Act.
At this stage it is necessary to set out the history of the provisions contained in section 9 A of the Act.
When the Act was enacted originally there was section 7 of the Act the relevant part of which reads as follows: "7.
A person shall be disqualified for being chosen as and for being a member of the either House of Parliament or of the Legislative Assembly or Legislative Council of a State . . . . . . . . (d) If, whether by himself or by any person or body of persons in trust for him or for his benefit or on his 381 account he has any share or interest in a contract for the supply of goods to, or for the execution of any works or the performance of any services undertaken by the appropriate Government .
" In 1958 this provision was amended.
In the Statement of objects and Reasons of the Representation of the People (Amendment) Bill, 1958.
which was enacted as the Representation of the People (Amendment) Act, 1958 it was stated as follows: "The language of section 7(d) of the 1951 Act which provides for disqualification in case of contracts with the Government is wide and vague enough to bring any kind or category of contract within its scope and it has been a fruitful source of election disputes in the past.
Persons who only occasionally broadcast any talk from the radio station or contribute article to any Government publication may come within the mischief of this section.
" The Bill was referred to a Select Committee of Parliament.
The said Select Committee reported on December 15, 1958 with regard to the proposed redrafting of Section 7(d).
The Select Committee suggested as follows: "The Committee have carefully considered the proposed substituted clause (d) of section 7 of the Representation of the People Act, 1951.
The Committee feel that in view of the expanding activities of the Central and State Governments as the biggest purchasers and suppliers of goods including food grains and other essential commodities, a large number of persons in the country will have some contractual relationship with the Governments in these matters.
Under the circumstances it will not be proper to disqualify all such persons who are having contractual dealings with the Governments from standing for election or being elected as members of Parliament or State Legislatures.
The Committee, therefore feel that the better course would be altogether to omit the existing clause (d) of section 7 of the Act.
" This suggestion was not, of course accepted.
After the amendment in 1958 section 7(d) of the Act read thus: H 382 "7.
A person shall be disqualified for being chosen as, and for being a member of either House of Parliament or of the Legislative Assembly or Legislative Council of a State . . . . . . . . . (d) If there subsists a contract entered into in the course of his trade or business by him with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by that Government.
" By the Representation of the People (Amendment) Act, 1966 some of the provisions of the Representation of the People Act were amended.
On that occasion sections 7, 8, 9 and some other provisions of the Act, which provided for the disqualification of persons for being chosen as members of Parliament or of the State Legislature were substituted by new sections 7, 8, 8A, 9, 9A, 10 etc.
The present section 9 A was enacted in the place of the former section 7(d).
Section 9 A of the Act was enacted in the same pattern in which section 7(d), stood after the amendment in 1958.
An explanation was, however, added to it which provided that only by reason of the fact that the Government had not performed its part of the contract either wholly or in part, it could not be said that the contract which attracted section 9 A was subsisting where a contract had been fully performed by the person by whom it had been entered into with the appropriate Government.
An analysis of section 9 A of the Act shows that only in two cases a person would be disqualified if he has entered into a contract with the appropriate Government in the course of his trade or business which is subsisting on the date of scrutiny of nomination.
They are (i) when the contract is one for supply of goods to the appropriate Government and (ii) where the contract is for the execution of any works undertaken by that Government.
If a contract belonging to either of the two categories is subsisting on the date of the nomination, the person will be disqualified for being chosen as a member.
In the present case the contract is not one for supply of goods to the Government.
It does not, therefore, fall under the first class of contracts which create the disqualification.
The question for determination is whether the contract to collect toll at a Government ferry entered into in accordance with the Ferries Act amounts to a contract for the execution of any works undertaken by the Government.
At this stage we should remember that the words 'or the performance of any services ' 383 were omitted from section 7(d) by the amendment made in the year 1958.
In N. Satyanathan vs K. Subramanyan and others; , this Court had occasion to construe section 7(d) of the Act before its amendment in 1958.
In that case the appellant was a contractor who had entered into an agreement with the Central Government whereby he had contracted with the Governor General for the provision of a Motor Vehicle Service for the conveyance of postal articles and mail bags.
Under the contract the Governor General had agreed to pay to the contractor 200 per month during the subsistence of the agreement as his remuneration for service to be rendered by him.
The appellant therein was held to be disqualified under section 7(d) of the Act, as it stood then, as he had undertaken to carry out a service which the Government had undertaken to do.
The Court said that "it cannot be gainsaid that the Government in the Postal Department is rendering a very useful service and that the appellant has by his contract with the Government undertaken to render that kind of service on a specified route.
The present case is a straightforward illustration of the kind of contract contemplated by section 7(d) of the Act.
" The Court took the above view in view of the presence of words 'the performance of any service ' under section 7(d) of the Act, as it stood then.
Those words were omitted from section 7(d) on its amendment in the year 1958 and section 9 A of the Act as it stands today also does not contain those words.
In Ram Padarath Mahto vs Mishri Singh & Anr., [1961] 2 S .C .
R. 470 a similar question arose for consideration .
The appellant in that appeal was a member of a joint Hindu family which carried on the business of Government stockists of grain under a contract with the Government of Bihar.
His nomination for election to the Bihar Legislative Assembly was rejected on the ground that he was disqualified under section 7(d) of the Act, as he had an interest in a contract for the performance of services undertaken by the Bihar Government.
The appellant contended that the service undertaken by the Government was the sale of foodgrains under the Grain Supply Scheme and the contract was not for the sale of such foodgrains and did not attract the provisions of section 7(d) of the Act.
This Court held that the contract was not one for the purpose of any service undertaken by the Government and the appellant therein was not disqualified under section 7(d) of the Act.
The Court held that a contract of bailment which imposed on the bailee the obligation to stock and store the foodgrains in his godowns was not a contract for the purpose of the service of sale of grain which the Government had undertaken.
The Government had undertaken the work of supplying grain but the contract was not one for the supply of grain.
The Court distinguished the decision in N. Satyanathan vs K. Subramanyam, 384 (supra) while reaching the conclusion that the appellant was not disqualified for being chosen as a member of the Bihar Legislature.
So even at a time prior to the amendment of section 7(d) of the Act in the year 1958 it was possible to take the view that certain types of contracts entered into with the appropriate Government, even though they were subsisting on the date of scrutiny of nomination did not disqualify a person from being chosen as a member of the State Legislature.
It is pertinent to refer to the observation made by Gajendragadkar, J. in Ram Padarath Mahto 's case (supra) which runs as under: "It may sound technical, but in dealing with a statutory provision which imposes a disqualification on a citizen it would be unreasonable to take merely a broad and general view and ignore the essential points of distinction on the ground that they are technical.
The narrow question is: if the State Government undertook the work of supplying the grain, is the contract one for the supply of grain?; In our opinion, the answer to this question must be in the negative; that is why we think the High Court did not correctly appreciate the effect of the contract when it held that the said contract brought the appellant s case within the mischief of section 7(d).
" Unless the contract in question is one which clearly falls under section 9 A of the Act, it would not be proper to hold that the person who is a party to the contract is disqualified for being chosen as a member to the State Legislature.
In B. Lakshmikantha Rao vs D. Chinna Mallaiah and others the question that arose for consideration was whether a person who was carrying on the business in arrach and toddy under a contract with the Government under the provisions of the Andhra Pradesh Excise Act, 1968 was disqualified for being chosen as a member of the Legislature.
The facts of that case briefly stated were thus.
There was an agreement between the highest bidder, i.e., the returned candidate and the Government in respect of the carrying on the business in arrack and toddy.
A perusal of the relevant provisions i.e., sections 15 and 17 of the Andhra Pradesh Excise Act and rule 21 of the Rules framed under that Act as well as the agreements signed by the returned candidate, showed that the highest bidder had to deposit the monthly rentals and purchase the arrack from the Government at the issue price and sell the same to the public.
If there were any arrears in the monthly rentals the same could be recovered as arrears of land revenue.
Similarly with regard to the toddy shop he had to tap the toddy from the trees allotted to him by 385 the Government by paying the tree tax and sell the toddy to the public.
For the toddy shop also he had to pay monthly rentals and if he fell in arrears the same could be recovered as arrears of land revenue.
There were other incidental conditions in the agreements.
The Andhra Pradesh High Court held that since the contracts entered into by the successful candidate with the State Government to sell arrack and toddy did not come within the mischief of section 9 A of the Act as they were neither for supply of goods to the Government nor for the execution of any works undertaken he did not suffer from any disqualification for being chosen as a member of the Legislative Assembly.
We have gone through the above decision carefully.
We are of the view that the High Court was right in the said case in holding that the returned candidate had not suffered from any disqualification by reason the fact that he was an excise contractor.
In the present case the position of the Ist respondent is more or less similar to the position of the returned candidate in the decision of the Andhra Pradesh High Court.
The Ist respondent had acquired in the public auction the right to collect the toll by paying the amount which he had offered to pay under the contract.
He had not undertaken thereby any contract for execution of any works undertaken by the Government.
The word 'works ' in the expression in 'execution of any works ' appearing in section 9 A of the Act is used in the sense of 'projects ', 'schemes ', 'plants ', such as building works, irrigation works, defence works etc.
The Ist respondent in this case had not undertaken to carry on any such work.
According to the Shorter oxford English Dictionary the expression 'work ' means a structure or apparatus of some kind; an architectural or engineering structure, a building edifice.
When it is used in plural, i.e., as 'works ' it means 'architectural or engineering operations; a fortified building; a defensive structure, fortification; any of the several parts of such structure '.
The word 'works ' used in Entry 35 of List II of the Seventh Schedule of the Constitution of India which reads as "works, lands and building vested in or in the possession of the State" is used in the same sense.
The running of boats across inland waterways in a topic which falls under Entry 32 of List III of the Seventh Schedule which reads thus: "Shipping and navigation on inland waterways as regards mechanically propelled vessels, and the rule of the road on such waterways, and the carriage of passengers and goods on inland waterways subject to the provisions of List I with respect to national waterways.
" It is, therefore, difficult to hold that when a person acquires the right to collect toll at a public ferry under section 8 of the Ferries Act he is performing a contract of execution of works undertaken by the Government.
It 386 may have been perhaps different if the words 'in performance of any services ' which were present in section 7(d) of the Act, as it stood prior to its amendment in 1958 had been there is section 9 A of the Act.
We do not find any substance in the argument urged on behalf of the appellant that because under Condition No. 10 of the form of lease prescribed under the Ferries Act the lessee is under an obligation during the period of lease to mark buoys or in any other suitable manner, all submerged obstruction or dangerous rocks in the rivers within half a mile of the landing ghats and shall be held responsible for any loss of damage caused to the marboats striking against such submerged obstructions or dangerous rocks it should be held that the Ist respondent had undertaken to execute works undertaken by the Government.
The above condition only requires the lessee to mark buoys or in any other suitable manner the places where there were any submerged obstruction or dangerous rocks within half a mile of the landing ghats.
Having regard to the conditions of the lease and the provisions of the Act and the Rules made thereunder we are clearly of the view that the activity undertaken by the lessee under the agreement cannot be considered as an agreement for execution of works undertaken by the State Government.
We are, therefore, of the view that the contract which the Ist respondent had entered into with the State Government even though it was subsisting on the date of scrutiny of nominations would not have the effect of disqualifying him for being chosen as a member of the State Legislative Assembly since section 9 A of the Act is not at all attracted to such a case.
The learned counsel for the appellant however tried to justify the rejection of the nomination papers of the Ist respondent on the ground that the appellant was holding an office of profit under the State Government when the contract to ply the boats at the ferry was subsisting.
We find it difficult to agree with the learned counsel that under the contract in question the Ist respondent had been inducted into any office under the State Government.
An 'office ' means a public or private employment with certain duties to be performed.
The words 'office ' and 'officer ' are used sometimes in a wide sense and sometimes in a narrow sense.
A lawyer is sometimes called an officer of the Court.
But still he is not holding any office profit as such for purposes of the law of elections.
A lessee of tolls under the Ferries Act is only a contractor who under the lease acquires the right to collect whatever toll is paid by persons who the ferry against payment to Government in 387 advance whatever amount he had agreed to pay at the time of auction.
Whether he makes any profit in that business or not depends ultimately on the amount of toll he is able to realise during the whole period of lease.
Such a contract is essentially in the nature of a business.
It cannot be termed as an office in any sense.
A transaction of lease under the Ferries Act is not a lease of an office.
In State of Uttar Pradesh vs Satya Narain Prasad, ; this Court dealing with a case in which the question involved related to the termination of lease under section 10 of the Ferries Act has referred to the right of a lease as one having the character of a business in the following passage at page 200: "In construing section 10 of the Act it has to be borne in mind that it deals with the cancellation of a lease of tolls of a public ferry.
In other words, once the notice in effective valuable rights of a lessee came to an end.
This is recognised by the Legislature by providing a six month 's notice.
This period is given so that he can wind up this particular business. " (underlining by us) It is urged that since the Ist respondent had the right to secure the services of the police whenever needed the Ist respondent should be deemed a person holding an office of profit.
The right to requisition the services of the police again did not make the Ist respondent a person holding an office of profit.
In fact for that matter anybody may complain to the police and seek their assistance when there is threat to public property or to the person or property of any person.
We hold that the Ist respondent was not holding an office of profit when he was a lessee under the Ferries Act just like an Excise contractor or a fair price shop dealer who sells grains supplied by Government is not such a holder of office of profit.
In view of the above findings it is not necessary to decide the question whether the lease was subsisting on the date of scrutiny of nomination or not Thus in any view of the matter it cannot be held that the Ist respondent was disqualified for being chosen as a member of the State Legislature.
The rejection of his nomination papers was, therefore, improper.
The election of the appellant was, therefore, rightly set aside by the High Court on the ground mentioned in section 100 1)(c) of the Act.
388 The appeal, therefore, fails and it is dismissed.
Having regard to the peculiar features of the case we direct the parties to bear their own costs both in this Court and in the High Court.
N.P.V. Appeal dismissed.
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% The first respondent filed an election petition before the High Court for setting aside the election of the appellant to the State Legislative Assembly under section 100(1)(c) of the Representation of the People Act, 1951, contending that the rejection of his nomination papers by the Returning officer was erroneous as he had, in fact, completed 25 years of age on the date of his nomination.
The petition was opposed by the appellant contending that as the first respondent had not completed 25 years of age on the date of scrutiny of nominations, the nomination papers had been rightly rejected, that as the first respondent had not subscribed the oath as required by article 173(a) of the Constitution, he was not qualified to contest the election, and that the first respondent was also disqualified to be chosen to fill a seat in the Legislature of the State, as on the date of scrutiny of the nominations he had a subsisting contract entered into by him with the Government, under which he had been treated as a lessee of the Ferry for the period between 1.4.85 to 31.3.86.
The High Court framed issues on the basis of pleas raised by parties and, after recording their evidence held that the first respondent had completed the age of 25 years on the date of scrutiny and, therefore, had necessary qualification for being a member of the Legislative 371 Assembly, that the appellant had not proved that the first respondent had not subscribed the oath as required by law, and that as the first respondent had been relieved from the charge of the Government ferry with effect from 21.11.85, there was no subsisting contract between the first respondent and the Government on the date of scrutiny of nominations and, therefore, he was not disqualified under section 9 A of the Act.
It accordingly came to the conclusion that the rejection of the nomination papers filed on behalf of the first respondent was improper and set aside the election of the appellant.
In the appeal before this Court, a further plea was raised on behalf of the appellant that the first respondent was also disqualified from contesting the elections as he held an office of profit under the State Government by virtue of the contract entered into by him with the State Government, even though the contract in question may not be one of those contracts specified in section 9 A of the Act.
Dismissing the appeal, ^ HELD: 1.
The first respondent was not disqualified for being chosen as a member of the State Legislature.
The rejection of his nomination papers was improper.
The election of the appellant was, therefore, rightly set aside by the High Court, on the ground mentioned in Section 100(1)(c) of the Representation of the People Act 1951.
[387G H] 2.1 An analysis of section 9 A of the Representation of the People Act, 1951 shows that only in two cases a person would be disqualified if he has entered into a contract with the appropriate Government in the course of his trade or business which is subsisting on the date of scrutiny of nomination.
They are (1) when the contract is one for supply of goods to the appropriate Government and (2) where the contract is for execution of any works undertaken by that Government.
Unless the contract in question is one which clearly falls under section 9 A of the Act it cannot be held that the person who is a party to the contract is disqualified for being chosen as a member of the State Legislature.[382F G] In the instant case, the contract is not one for supply of goods to Government.
The first respondent had acquired in the public auction the right to collect the toll by paying the amount offered by him under the contract and had not undertaken any contract for execution of any works undertaken by the Government.
When a person acquires a right to collect toll at a public ferry under section 8 of the Ferries Act.
it cannot be 372 held that he is performing a contract for execution of works undertaken by the Government.
[385D, G H] Merely because under one of the conditions of the Form of lease prescribed under the Ferries Act, the lessee is under an obligation during the period of lease to mark buoys or in any other suitable manner all submerged obstructions or dangerous rocks in the rivers within half a mile of the landing ghats, and shall be held responsible for any loss or damage caused to the marboats striking against such submerged obstructions or dangerous rocks it cannot be held that the first respondent had undertaken to execute works undertaken by the Government.
[386B C] Having regard to the conditions in the lease and the provisions of the Ferries Act and the rules made thereunder the activity undertaken by the lessee under the agreement cannot be considered as an agreement for execution of works undertaken by the State Government and, therefore, the contract, which the first respondent had entered into with the State Government, even though it was subsisting on the date of the scrutiny of nominations, would not have the effect of disqualifying him for being chosen as a member of the State Legislative Assembly, since section 9 A of the Representation of the People Act, 1951 is not at all attracted to such a case.
[386D E] B. Lakshmikantha Rao vs D. Chinna Mallaiah and others, approved.
N. Satyanathan vs K. Subramanyan and others; , explained.
Ram Padarath Mahto vs Mishri Singh & Anr., ; referred to.
2.2 A lessee of tolls under the Ferries Act is only a contractor who under the lease acquires the right to collect whatever toll is paid by persons who use the ferry against payment to Government in advance whatever amount he has agreed to pay at the time of auction.
Whether he makes any profit in that business or not depends ultimately on the amount of toll he is able to realise during the whole period of lease.
Such a contract is essentially in the nature of a business.
It cannot be termed as an office in any sense.
A transaction of lease under the Ferries Act is not a lease of an office.
The first respondent was, therefore, not holding an office of profit when he was a lessee under the Ferries Act just like an 373 Excise Contractor or a fair price shop dealer who sells grains supplied by Government is not such a holder of office of profit.[386H; 387A B, F] State of Uttar Pradesh vs Satya Narain Prasad, ; , referred to.
2.3 The High Court was right in upholding, on the basis of the evidence of the three witnesses examined by the first respondent and the electoral roll and the High School Leaving Certificate, that the first respondent was more than 25 years of age on the date of scrutiny and was thus eligible to be a member of a Legislative Assembly.
[377D]
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5567.txt
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vil Appeal No. 308 of 1964.
Appeal by special leave from the judgment and order dated September 10, 1962 of the Calcutta High Court in Income tax Reference No. 115 of 1957.
A.V. Viswanatha Sastri, B. Sen Gupta and P.K. Ghosh, for the appellant.
N.D. Karkhanis and R.N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Shah, J.
The appellant is a Hindu undivided family and carries on business as a dealer in "iron scrap and hardware".
Messrs Hoare Miller and Company Ltd. hereinafter called 'the Company ' were owners of a jute pressing factory installed on a piece of land belonging to the Company.
Adjacent to that land were two pieces of land: one was leasehold, and the other held by the Company as a licensee from the Government of West 604 605 Bengal.
On January 21, 1941 the Company leased out to one Ramnath Bajoria the jute pressing factory together with the machinery standing on the land owned by the Company for ten months commencing from January 10, 1941.
Ramnath Bajoria failed to vacate and deliver up possession of the premises demised to him, after the expiry of the period of the lease, and the Company instituted a suit in ejectment against him.
By an agreement dated October 31, 1942 the appellant agreed to purchase all the rights of the Company in the factory and the appurtenant premises for Rs. 2,45,000.
On November 14, 1942 the Company delivered to the appellant possession of the property agreed to be sold, save and except the factory demised under the lease to Ramnath Bajoria and the machinery included in the lease.
On February 26, 1943 the Company executed a conveyance in favour of the appellant conveying the factory and the appurtenant premises.
On June 12, 1943 the appellant agreed to sell to one Ranada Prasad Saha the property purchased from the Company for Rs. 4,73,364/3/6 free from all encumbrances.
On August 10.
1943 the appellant was substituted as a plaintiff in the suit filed by the Company against Ramnath Bajoria, and obtained possession of the factory premises.
By a deed of conveyance dated September 30, 1943 the appellant conveyed to Ranada Prasad Saha the factory and the appurtenant premises and delivered possession thereof.
In the deed of conveyance the property sold was described in three separate Schedules.
Schedule I, Press House, office, residential buildings and three warehouses on land owned by the Company: Schedule 11 ; leasehold land together with a warehouse known as Kalibari godown: Schedule II1; two warehouses on land held as licensee by the Company from the Government of West Bengal.
The Income tax Officer.
District Ii(1), CAlcutta.
brought to tax in the hands of the appellant Rs. 2,24,864 bring the profit arising out of the sale of the property to Ranada Prasad Saha.
The Income tax Appellate Tribunal partially modified the order and reduced the total income by Rs. 7,000.
The Tribunal then drew up a statement of case and referred the following question to the High Court of Judicature at Calcutta: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the surplus of Rs. 2,35,211 received by the assessee as a result of the sale of the jute press referred to in the Appellate order arose out of an adventure in the nature of trade and was therefore rightly assessed to tax?" The High Court answered the question in the affirmative.
With special leave granted by this Court, the appellant has appealed to this Court.
L/P(N)4SCI 12 606 At the material time, capital gains were not taxable, and the only question failing to be determined is whether profit made by the appellant by sale of the property to Ranada Prasad Saha was taxabIe under section 10 of the Indian Income tax Act.
The Tribunal found the following facts proved: The appellant was carrying on business in iron scrap and hardware and never carried on any business in jute or in pressing jute.
At the material time when the purchase of the Jute Press was made, the appellant had, because of abnormal conditions prevailing in the town of Calcutta, closed its business in iron scrap and hardware.
The appellant purchased the jute press and the premises appurtenant thereto subject to litigation pending in the High Court, effected certain repairs and kept the factory in running condition, but made no attempt to start or organise the business of pressing jute, and his plea that he was not able to secure labour for working the press was not true.
Soon after he bought the factory, the appellant received an offer from Ranada Prasad Saha to buy the factory and he immediately accepted the offer to sell it to him.
These facts in the view of the Tribunal indicated that the appellant purchased the jute press, subject to litigation, with the sole object of reselling at profit at the earliest opportunity, and therefore the transaction was in the nature of a trading venture.
The High Court substantially agreed with this view.
Section 10 of the Indian Income tax Act, 1922 makes profits and gains of business, profession or vocation carried on by an assessee taxable.
The expression "business" is defined in section 2(4) as inclusive of "any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture".
It is common ground that the transaction of purchase and sale of the factory and appurtenant premises was an isolated venture.
To reiterate the sequence of material events: the appellant agreed to purchase the Jute Press from the Company on October 31, 1942 subject to litigation pending in the High Court of Calcutta: possession of the property except the premises in the occupation of the tenant was obtained on November 14, 1942 and the sale deed was obtained on February 26, 1943: on June 12, 1943 the appellant agreed to sell the press to Ranada Prasad Saha: on August 10, 1943 the appellant was substituted as plaintiff in the suit flied by the Company against Ramnath Bajoria, and after obtaining possession of the demised premises the appellant executed on September 30, 1943 a sale deed conveying the property and delivered possession to Ranada Prasad Saha.
Do these facts make out the case that the transaction was an adventure in the nature of trade? It is for the revenue to establish that the profit earned in a transaction is within the taxing provision and is on that account liable to be taxed as income.
The nature of the transaction must 607 be determined on a consideration of all the facts and circumstances which are brought on the record of the income tax authorities.
It has consistently been held by this Court that the question whether profit in a transaction has arisen out of an adventure in the nature of trade is a mixed question of law and fact: see G. Venkataswami Naidu & Company vs The Commissioner of Income tax(1) in which case this Court held that the expression "adventure in the nature of trade" in sub section
(4) of section 2 of the Act postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business and that a tribunal while considering a question whether a transaction is or is not an adventure in the nature of trade, before arriving at its final conclusion on facts, has to address itself to the legal requirements associated with the concept of trade or business.
Such a question is one of mixed law and fact and the decision of the tribunal thereon is open to consideration under section 66(1) of the Act.
See also Saroj Kumar Maiumdar vs Commissioner of Income tax, West Bengal(2).
A large number of cases were cited at the Bar in support of the respective contentions of the Commissioner and the assessee.
Passages from judgments in the same case were often cited claiming support for the respective contentions.
No useful purpose would be served by entering upon a detailed analysis and review of the observations made in the light of the relevant facts, for no single fact has decisive significance, and the question whether a transaction is an adventure in the nature of trade must depend upon the collective effect of all the relevant materials brought on the record.
But general criteria indicating that certain facts have dominant significance in the context of other facts have been adopted in the decided cases.
If, for instance, a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an adventure in the nature of trade may readily be inferred.
A similar inference would arise where a commodity is purchased and sub divided, altered, treated or repaired and sold, or is converted into a different commodity and then sold.
Magnitude of the transaction of purchase, the nature of the commodity, subsequent dealings and the manner of disposal may be such that the transaction may be stamped with the character of a trading venture: for instance, a man who purchases a large quantity of aeroplane linen and sells it in different lots, and for the purpose of selling starts an advertising campaign, rents offices, engages an advertising manager, a linen expert and a staff of clerks, maintains account books normally used by a trader, and passes receipts and payments in connection with the linen through a separate banking account: Martin vs Lowry(3): a person who carries on a money lending business purchases very cheaply a (2) [1959] Supp. 1 S.C.R. 640.
(2) (3) 608 vast quantity of toilet paper and within a short time thereafter sells the whole consignment at a considerable profit: Rutledge vs The Commissioner of Inland Revenue(1); a person even though he has no special knowledge of the trade in wines and spirits, purchases a large quantity of whisky sells it without taking delivery of it at a considerable profit: Commissioners of Inland Revenue vs Fraser(2), may be presumed having regard to the nature of the commodity and extent of the transaction coupled with the other circumstances, to be carrying on an adventure in the nature of trade.
These are cases of commercial commodities.
But a transaction of purchase of land cannot be assumed without more to ' be a venture in the nature of trade.
A director of a company carrying on the business of ware houseman purchasing a number of houses with a view to resale, and selling them at a profit some years after the purchase: Commissioners of Inland Revenue vs Reinhold(3): a person carrying on business in various lines, including an Engineering Works, purchasing land which was under requisition by the Government, negotiating sale thereof before the land was derequisitioned, and selling it after the land was released: Saroj Kumar Mazumdar vs Commissioner of Income tax, West Bengal(4); and a syndicate formed to acquire, an option over a rubber estate with a view to earn profit, and finding the estate acquired too small acquiring another estate and selling the two estates at a profit: Leeming vs Jones(3) may not be regarded as commencing a venture in the nature of trade.
These are cases in which the commodity purchased and sold is not Ordinarily commercial, and the manner of dealing with the commodity does not stamp the transaction as a trading venture.
It may be emphasized from an analysis of these cases that a profit motive in entering a transaction is not decisive, for, an accretion to capital does not become taxable income, merely because an asset was acquired in the expectation that it may be sold at profit.
Purchase of the property by the appellant was an isolated transaction not related to the business of the appellant.
The Tribunal and the High Court were, in our judgment, in error in holding that the right of the Company was not sold to the appellant in the lands in Sch.
II and Sch.
III properties.
The land in Sch.
II was leasehold, and on it was constructed a warehouse and the land in Sch.
III was held as a licensee and two warehouses were standing thereon.
The conveyance by the Company to the appellant is not on the record, but the recitals in the deed dated September 30, 1943 definitely indicate that the rights of the Company without any reservation were purchased by the appellant, and the appellant sold its entire rights in the properties in Schs.
I, (1) (2) (3) (4) 11 T.C.297.
(5) 15 T.C.333.
609 II and III without any reservation.
It is true that the appellant had put the factory in a working condition, but had not organized a jute pressing business, had not obtained a licence for working the factory, had not attempted to secure orders for pressing jute, and had not employed labourers, The appellant 's claim that it was not s9 done because the appellant could not secure labourers has not been accepted.
But that is not a decisive circumstance.
The factory was in the occupation of the lessee Ramnath Bajoria and possession was obtained after August 10, 1943.
But before the 10th of August an agreement of sale was executed by the appellant in favour of Ranada Prasad Saha.
In the light of the sequence of events, the inference that the appellant had no intention to commence doing jute pressing business does not necessarily follow.
Even if that inference be regarded as binding upon the Court it cannot be presumed that the sole intention of the appellant was to start a venture in the nature of trade.
Barring the expectation of profit and realization of profit by sale of the property, there is no evidence bearing on the intention with which the property was purchased.
In the deed of conveyance dated September 30, 1943 there is a reference to delivery of "joists, girders, fabricated steel, C.I. roofs, bolts, nuts, hooks and ceiling planks, being portions of the materials of the godowns and structures" standing on the land described in the third schedule.
It was submitted that after purchasing the factory and the appurtenant premises the appellant demolished "certain godowns" in Sch.
III land and sold the material as scrap.
This, it was claimed, was if not part of the business = a venture similar to the normal business of the appellant.
But there is no evidence on the record as to how many warehouses stood originally on Sch.
III land.
The sale deed dated September 30, 1943 clearly states that there were two warehouses on steel frames on the land held as licensee by the Company and possession of these was given to the purchaser Ranada Prasad Saha.
Beside these warehouses there were three warehouses on the land described in Sch.
I and one warehouse on the land described in Sch.
It is not claimed that these warehouses were insufficient for carrying on the business of jute pressing: nor is there any evidence that the warehouse or warehouses which were demolished were in a serviceable condition.
The only fact which may be taken to be established is that a warehouse or warehouses were demolished by the appellant and the materials were sold as part of the property sold under the deed dated September 30.
From this circumstance, an inference that the entire property was purchased with intent to demolish and dispose of as scrap cannot be raised.
Granting that the appellant made a profitable bargain when he purchased the property.
and granting further that the appellant had when he purchased it a desire to sell the property if a favourable offer was forthcoming.
these could not without other 610 circumstances justify an inference that the appellant intended by purchasing the property to start a venture in the nature of trade.
Absence of advertisement inviting offers for purchasing the property, and absence of brokers in the negotiations for sale between the appellant and Ranada Prasad Saha, are circurmtances which lead to no positive inference.
There is nothing to show that the appellant desired to convert the property to some other use.
No brokers were employed for entering into a transaction of sale.
It appears that Ranada Prasad Saha on coming to learn that the factory was for sale approached the Company after the sale deed was executed in favour of the appellant and he was informed that it had already been sold to the appellant.
Thereafter Saha contacted the appellant and agreed to purchase the property.
The property purchased was not sudh that an inference that a venture in the nature of trade must have been intended by the appellant in respect thereof may be raised.
A person purchasing a jute press may intend to start his own business even if he is not already in that business, or he may let it out on favourable terms.
The property purchased by the appellant was capable of being let out and it had in fact been let out by the Company before the date of sale in favour of the appellant.
It was capable of fetching annual income, and there is no evidence that at the material time it could not be reasonably let out.
We therefore discharge the answer given by the High Court in respect of the question submitted by the Tribunal and record a negative answer.
The appeal is allowed.
The Commissioner to pay the costs in this Court and the High Court.
Appeal allowed.
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The assessee who was dealing in iron scrap and hardware had purchased a jute press and sold it at a profit.
The Income tax Officer brought to tax in the hands of the assessee, the profit arising out of this sale.
The Appellate Tribunal modified the order and reduced the total income.
At the instance of assessee the Tribunal referred to the High Court, the question, whether the surplus received by the assessee as a result of the sale of the jute press arose out of an adventure in the nature of trade and was, therefore, liable to tax.
The High Court answered the question in affirmative.
In appeal; HELD: The question must be answered in the negative.
Granting that the assessee made a profitable bargain when he purchased the property and granting further that the assessee had, when he purchased it, a desire to sell the property, if a favourable offer was forthcoming, these could not without other circumstances, justify an inference that the assessee intended by purchasing the property to start a venture in the nature of trade.
[609H 610A] A profit motive in entering a transact on is no decisive, for, an accretion to capital does not become taxable income, merely because an asset was acquired in the expectation that it may be sold at a profit.
[608F] Purchase of the property by the assessee was an isolated transaction not related to the business of the assessee.
[608G] Case law referred to.
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1963.txt
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appeal No. 1923 of 1966.
Appeal by special leave from the order dated February 14, 1966 of the Central Govt.
Labour Court, Rajasthan, Jaipur in Misc.
Application No. CLC 4 of 1964.
G. L. Sanghi and P.M. Tiwari for the appellant.
111 M. K Ramamurthi, J. Ramamurthi and Vineet Kumar, for the respondent.
The Judgment of the Court was delivered by Mitter, J.
This appeal by special leave is from an order of the Central Government Labour Court, Rajasthan passed on February 14, 1966 on an application under section 33 C (2) of the filed by the respondent, Hari Har Nath Bhargava, holding that the latter was entitled to supervisory allowance under paragraph 164 (b) (9) of the Sastry Award even for the period when the latter was not actually performing supervisory duties.
The facts in this case may be shortly stated.
The respondent was appointed a clerk by the State Bank of Jaipur in 1949.
He was transferred to Kota in the year 1952.
He was entrusted with supervisory work from 6th April, 1954.
The bank executed a power of attorney in his favour on May 31, 1954 in pursuance of a resolution of its Board of Directors passed on 20th May, 1954.
He was transferred from Kota to Jaipur on July 12, 1955.
On December 27, 1955 he was posted at Sikar where he had to perform supervisory duties.
On January 1, 1956 he was promoted to the cadre of junior officers of the bank.
On March 31, 1964 the respondent filed an application before the Central Government Labour Court, Rajasthan under section 33 C (2) praying for computation of special allowance under what is known as the Sastry Award on the ground that he had been discharging supervisory duties from 6th April, 1954 to 1st January, 1956.
By this time the Bank of Jaipur had amalgamated with the Bank of Bikaner and the amalgamated bank, the appellant before us, came to be known as the State Bank of Bikaner and Jaipur.
The execution of the power of attorney dated 29th May, 1954 was admitted but the appellant denied "that the duties entrusted to the respondent constituted performance by him of any supervisory nature of work".
A point was also taken that although no period of limitation is laid down by any statute with regard to applications under section 33 C of the Act the respondent 's claim being a stale one should not be entertained.
112 The appellant amended its written statement in 1965 wherein it was stated that the respondent was only required to perform the functions enumerated in the power of attorney as and when so directed by the bank.
As a matter of fact, he had been entrusted with supervisory duties from 6th April, 1954 to 12th July, 1955 and thereafter from 27th December, 1955 to 6th January, 1956.
The respondent was examined before the Labour Court where he said that he was "the second signatory at Kota during the period, April 1954 to middle of July 1955".
At the Jaipur branch where he was transferred, there were many signatories above him, while at Sikar there was only another such signatory and he was the second officer.
Obviously what he meant by the word "signatory" was a person authorised by the bank to discharge the functions covered by the power of attorney.
The relevant portion of the said power of attorney read "The Bank do here by nominate constitute and appoint Shree Hari Har Nath Bhargava in the service of the said bank at Kota to be the true and lawful attorney of the said bank at its registered office at Jaipur aforesaid or at any other place or places in India where the said bank may have or establish branches or agencies and to which he may from time to time or at any time be appointed by the said bank as Branch Manager, Agent, Sub Agent, Accountant, or in any capacity whatever for and in the name of and on behalf of the said bank to do, transact jointly with Secretary, Manager, Sub Manager etc.
the matters and things mentioned thereafter.
" The matters mentioned included the endorsement of "hundies, drafts, cheques, warrants, railway receipts, pension bills and other negotiable and mercantile instruments and to commence, prosecute, enforce, defend, answer and oppose any suit or other legal proceedings and demands touching any matters in which the bank was or may thereafter be interested or concerned.
" 113 It is worthy of note that after the execution of the power of attorney the respondent was empowered to, discharge functions which could only be described as.
supervisory in nature and unless there was a command or direction that he should not act thereon or unless the power of attorney was cancelled his authority, to act in a supervisory capacity would continue in force.
The Sastry Award is not on record in extenso but paragraph 164 thereof quoted by the Labour Court shows; that certain categories of employees were to be considered as fit for special allowances.
These included inter alia stenographers, cashiers (other than routine clerks), supervisors, clerks in charge, departmental in charges and head clerks.
The award noted that although scales of basic pay and dearness allowance for clerical and subordinate staffs had been laid down for doing ordinary duties, there were certain posts even in these grades for which an incumbent required special qualifications or skill for the efficient discharge of the duties assigned and an extra payment in such cases was necessary by way of, recognition of and compensation for the skill or responsibility.
The award further noted that : "Having regard to the numerous banks of varying sizes and resources, it is not possible to have one general pattern of allowances for such special types of work. .
It is neither easy nor desirable to bring them all into one fairly general rule regardless of the bank 's past practice or present capacity." Paragraph 162 of the award shows that there were three, ways in which this extra payment might be provided for (1) The employee might be given additional increments in the same scale.
(2) He might be paid a lump sum allowance in addition to his other emoluments.
This was said to have the advantage of carrying a man even beyond the usual maximum limit.
(3) He might be given a higher scale leading up to a higher maximum. 114 According to the award it was on the whole better to adopt either the first or the second method or sometimes even a combination of both.
According to the Labour Court the underlying idea behind the said award was that when one general scale for clerical service had been provided in the award, it was thought just and proper that persons with special qualifications or skill required for discharging work carrying with it greater responsibility than the usual work should definitely get higher emoluments than the ordinary workmen.
The Labour Court said that "this did not mean that the person of the same qualifications and skill who had been granted the powers of attorney by the bank should be allowed special allowance only for any particular period unless a man was temporarily appointed to do supervisory work".
In the result, the Labour Court allowed the respondent supervisory allowance at Rs. 40 p.m. with ,effect from 6th April, 1954 to 31st December, 1955 with, consequential benefits.
It is to be noted however that although a point had been taken in the written statement of the bank about the delay in the filling of the application under section 33 C it had not been pressed before the Labour Court.
Mr. Sanghi appearing for the appellant was prepared to concede that so far as the periods 6th April, 1954 to 12th July, 1955 and 27th December, 1955 to 31st December, 1955 were concerned he was not contesting the claim.
But in so far as the period 13th July, 1955 to 27th December, 1955 was concerned, his client was pressing the appeal as a matter of principle as this would constitute a test case by which other similar cases might fall to be decided.
This Court had to deal with a case where an identical question arose.
In State Bank of Hyderabad vs V. A. Bhide (1) this Court had to consider the claims of the respondents in that appeal for payment of special allowance granted to supervisors under what were known as the Sastry and Desai awards.
It was there contended on behalf ,of the appellant bank that in order to claim the supervisory allowance the parties must establish that the main or essential duties entrusted to them and actually discharged by (1)[1969] them were duties and functions of a supervisory nature.
This Court considered the Sastry and Desai awards and observed (at p. 727) : ". before a person can claim the supervisory special allowance, he must establish that he has discharged the duties and functions which are similar to 0r the same as the duties or functions assigned to supervisors coming under category 9.
This decision [Lloyds Bank Ltd. vs Panna Lal Gupta and others (1)] also makes it clear that in deciding the status of an employee claiming the special allowance, the designation of the employee is not decisive and what determines the status is a consideration of the nature of the duties and functions assigned to the employee concerned.
" In our view the payment of a special allowance is called for when an employee discharges duties of a supervisory nature or is accorded the status of a person competent to discharge functions of a supervisory character.
If no power of attorney is execute& as in this case but in fact the employee is asked to render services of a supervisory character and the employee does such work at the request of the bank, he becomes entailed to the allowance.
Once however a power of attorney giving the wide powers of agency as was done in this case is executed, it should be held that the management had placed him in a category of persons with responsibility and the employee was to discharge the responsibility without any further request in that behalf.
It may be that the initial giving of power of attorney was necessitated by the fact that at Kota there was only one officer besides the respondent who could discharge duties like endorsing hundies, drafts etc.
and it became necessary for the bank to have a second officer who could carry on this kind of work.
But the power of attorney does not show that the bank thought it necessary to clothe the respondent with the said powers only for discharging his duties when he was at Kota.
The power of attorney was operative at any branch of the bank irrespective of the capacity which might be occupied by the respondent at a particular point of time.
It may be (1) 116 that at Jaipur there was a number of officers superior to the respondent who were empowered to discharge duties mentioned in the power of attorney but this does not necessarily lead to the inference that the respondent lost his responsibility or was denuded of the powers while he was at Jaipur.
If he discharged any of the duties men tioned in the power of attorney the same would be lawful and would be binding on the bank.
The fact that he was not actually called upon to discharge such functions did not take away from his responsibility or status of a person ,competent to discharge functions of a supervisory character and we see no reason why he should be deprived of supervisory allowance unless the bank gave him notice that he was not to act on the power of attorney while at Jaipur.
We therefore hold that the Labour Court had come to the correct conclusion.
Mr. Sanghi tried to urge the point that the Labour ,Court should not have entertained the application as being inordinately belated and that even though the Labour Court did not adjudicate on this point it was open to the bank to urge it before us.
We made it clear that we were not going to entertain this plea in view of the fact that although the point had been taken in the written statement of the bank, it was not agitated before the Labour Court and further was not taken even in the special leave petition.
In the result, the appeal is dismissed.
The order for costs made at the time of the grant of the special leave will stand.
S.C. Appeal dismissed.
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The respondent, a clerk of the appellant bank, was entrusted with supervisory work and a general power of Attorney was executed in his favour to endorse Hundies cheques, warranty, Railway receipts, pension bills and other negotiable and mercantile instruments and to prosecute, defend, answer and oppose any suit etc.
on behalf of the appellant bank.
The respondent filed an application before the Labour Court, Rajasthan under section 33C (2) of the , praying for computation of special allowance under the Sastri Award, on the ground that he was discharging supervisory duties.
The Labour Court, allowed supervisory allowance of Rs. 40 p.m. with consequential benefits.
In appeal to this Court the appellant bank ,contended that since the respondent was not called upon to perform the functions enumerated in the power of attorney, he is not entitled to any special allowance.
Dismissing the appeal.
HELD : (i) The payment of a special allowance was called for when an employee discharged duties of a supervisory nature or was accorded the status of a person competent to discharge functions of a supervisory character.
[115d] (ii) Since the Management by the power of Attorney, had placed the respondent in a category of persons with responsibility and entrusted him with functions of a supervisory character and the employee was to discharge that responsibility, he was entitled to supervisory allowance no matter, whether he was actually called upon to discharge such functions or not for a certain period of time.
[1 15F, 11 6B] State Bank of ' Hyderabad vs V. A. Bhinde, [1969] 2 L. L. J. 713, referred to.
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2974.txt
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Appeal No. 21 of 1956.
Appeal from the judgment and decree dated August 12,1954, of the Bombay High Court in Appeal No. 45 of 1954, arising out of the judgment and decree dated February 17, 1954, of the said High Court in Suit No. 246 of 1956.
H. J. Umrigar, N. N. Keswani and R. H. Dhebar, for the appellant.
M. C. Setalvad, Attorney General of India, section M. Dubash and G. Gopalakrishnan, for the respondents.
March 25.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal on a certificate granted by the Bombay High Court.
The brief facts necessary for its disposal are these.
Messrs. section section Miranda Ltd (hereinafter called the respondent) is a company and was holding a trade and import licence of foreign liquor as well as a vendor 's licence under the Bombay Abkari Act (Bom.
V of 1878) (hereinafter 399 called the Act), upto the end of March 1949.
It used to keep the liquor in a bonded warehouse.
On April 2, 1948, the respondent was informed by the State of Bombay (hereinafter called the appellant) to remove S, the liquor from the bonded warehouse after paying the necessary excise duty.
In pursuance of this letter, the respondent paid the duty and got transport permits from the appellant.
It may be mentioned that the bonded warehouse was in the premises of the respondent itself and all that happened after the payment of the duty was that the liquor no longer remained in bond but came into possession of the respondent.
The transport permits were issued on April 5, 1948, and thereafter the respondent took over the liquor and some of it was sold.
On December 16, 1948, a notification was issued by the appellant (hereinafter referred to as the Notification) whereby the duty on foreign liquor was doubled.
Thereupon the respondent was asked by the appellant to pay the additional duty upon the liquor which was still lying in its godown and was also told that it would not be permitted to deal with that liquor until the additional duty was paid.
The respondent objected to this demand but paid the duty, which came to over two lacs of rupees, under protest.
Thereafter a notice was given by the respondent under section 80 of the Code of Civil Procedure to the appellant and was followed by a suit on the original side of the Bombay High Court.
The main contention of the respondent was that the Notification in so far as it imposed and levied additional duty on the stock of foreign liquor on which the duty had already been paid at the time of its issue ' from the bonded warehouse was illegal, invalid and ultra vires the Act and in particular beyond the scope of section 19 of the Act.
The respondent therefore claimed refund of the duty which it had paid under protest and also interest at 6 per cent.
per annum from the date of payment till the date of recovery.
The suit was resisted by the appellant, and its case was that the Notification was valid and that the respondent was bound to pay the duty prevailing on 400 the transport of the excisable articles at the time of transporting the same from its premises to another place within the State of Bombay.
Thus the only question that fell for consideration was whether the additional duty imposed and levied under the Notification was legally levied.
The learned judge, who tried the suit, was of the opinion that it was competent for the legislature to impose tax on excisable articles whenever they were transported from one place to another and that that power was delegated to the State Government which was thus competent to impose a duty on excisable articles not only once when they were transported in the beginning but also thereafter whenever they were transported from one place to another within the State before the goods passed into the hands of the consumer, and dismissed the suit.
The respondent went in appeal against the dismissal.
The appeal was heard by a Division Bench and was allowed and the suit was decreed with interest at certain rates.
The Division Bench was of the opinion that reading sections 10 and 19 together it was clear that when the duty mentioned in section 19 had been paid, the prohibition contained in section 10 must disappear subject to the Explanation to section 19.
It also held that the first proviso to section 19A of the Act was really a proviso to section 19 and determined the rate at which the duty was to be paid and that there could be no further imposition of duty against the terms of that proviso by the Notification.
The main contention on behalf of the appellant before us is that it is open to the legislature to impose excise duty at more points than one and that that was what has been done by the legislature in this case and the Government when it made the Notification in December 1948 was carrying out the provisions of the Act.
Reliance in this connection was placed on sections 3(10), 10 and 19 of the Act, and it is urged that reading these three sections, together it will be clear that the Notification was valid and within the powers of the State Government.
The relevant portion of the Notification is in these terms: 401 " In exercise of the powers conferred by section 19 of the Bombay Abkari Act, 1878 (Bombay V of 1878), and in partial supersession of all previous orders and notifications issued thereunder, that is to say, in so far as they relate to the imposition of excise and countervailing duties charged on the excisable articles specified in column 1 of Schedules A and B hereto annexed, the Government of Bombay is pleased to direct that (a) excise or countervailing duty, as the case may be, shall be imposed on the excisable articles specified in column 1 of Schedule A at the rate specified in columns 2 and 3 thereof, when such excisable articles are (i) imported into the Province in accordance with the provision of sub section (1) of section 9 of the said Act; or (ii) issued from any brewery, distillery 'or a warehouse established under the said Act in the Province; or (iii) transported from the premises of persons holding a Trade and Import license under the said Act to any place within the Province: Provided that no such duty shall be imposed on the excisable articles which have been imported into British India and were liable on such importation to duty under the Indian Tariff Act, 1934, or the : Provided further that if excise or countervailing duty has already been paid on such excisable articles for their import, issue or transport for consumption into, to or within any place in the Province, the amount of duty to be imposed shall be the difference between the amount of duty leviable at the rates specified in the said Schedule and that already paid on such articles; and (b). . . . . . . ".
Then follow the Schedules Which it is unnecessary to set out.
By the notification excise duty at the rates specified in the Schedules is imposed on excisable articles when they are transported from the premises of persons holding a trade and import licence under the said Act to any place within the State.
The second 402 proviso, however, provides that where some excise duty has already been paid in connection with transport, the amount of duty to be imposed under the Notification would be the difference between the duty leviable under the Notification and the duty already Paid.
The narrow question therefore is whether this additional duty can be legally levied by the State of Bombay and the answer to it will depend on the three provisions of the Act relied upon by the appellant.
3(10) defines "to transport" to mean "to move to one place from another place within the State ".
This definition is very wide and would cover any movement of excisable article at any stage from one place to another within the State.
Then comes section 10, the relevant portion of which is in these terms " No intoxicant and no hemp shall be exported or transported unless (a) the duty, if any, payable under Chapter VI has been paid or a bond has been executed for the payment thereof.
" This section thus forbids the transport of any excisable article unless the duty payable under Chapter VI (which deals with the subject of duties) has been paid.
Lastly, we come to section 19 which is the charging section and is in these terms " An excise duty or countervailing duty, as the case may be, at such rate or rates as the State Government shall direct may be imposed either generally or for any specified local area, on any excisable article (a) imported in accordance with the provision of sub section (1) of section 9; or (b) exported or transported in accordance with the provisions of section 10; or (c) manufactured under a license granted in accordance with the provisions of section 14 or section 15; Provided that (i) duty shall not be so imposed on any article which has been imported into India and was liable on such importation to duty under the Indian Tariff Act, 1894 or the : 403 Explanation Duty may be imposed under this section at different rates according to the places to which any excisable article is to be removed for consumption, or according to the varying strengths and quality of such article.
" This section gives power to the State Government to fix the rate or rates on which the duty will be levied on transport of excisable articles.
The Explanation to the section gives powers to the State Government to impose duties at different rates according to the places to which any excisable article is to be removed for consumption or according to the varying strengths and quality of such article.
The argument on behalf of the appellant is that in view of the very wide definition of the word " transport " and the prohibition of transport contained in section 10 without payment of duty it is clear that every time there is transport the duty becomes payable at the rate fixed by the State Government under section 19 and that there is nothing in these sections which in any way limitsthe power to levy duty at every stage of transport.
If this argument is accepted it will logically mean that every time there is transport of an excisable article duty will have to be paid till the excisable article has been actually consumed.
In other words when for example, the excisable article is transported from the bonded warehouse by a wholesaler he will have to pay duty on it; when a wholesaler sells to a retailer there is bound to be transport from the wholesaler 's premises to the retailer 's premises and the duty will have to be paid again.
Finally when the retailer sells it to a consumer there will again be transport from the retailer 's place to the consumer 's place and duty will have to be paid a third time.
Further if the interpretation as urged on behalf of the appellant is accepted, the duty will have to be paid again and again in the cases mentioned above, even though the rate remains the same.
The fact that in this particular case the rate was changed and that the State Government only demanded the extra duty will not affect the question of interpretation of the three provisions of the Act with which we are concerned.
Was it then the intention of the legislature when it 404 made these provisions to levy duty irrespective of the fact whether the rate was changed or not, again and again as an excisable article passed from the bonded warehouse to the wholesaler, from the wholesaler to the retailer and from the retailer to the consumer ? It is true that it was competent for the legislature to make such a provision; but the question is whether the three provisions which we have set out above, amount to making such a provision.
Sri Umrigar for the appellant fairly admits that if the rate of duty had not been changed there would not have been any demand of any further duty on any sale by the respondent which might have resulted in transport and that the practice was not to charge the same duty over again on sale by the wholesaler to the retailer or by the retailer to the consumer even though these sales resulted in transport except where the Explanation to section 19 applies.
If this practice is in accordance with law when there is no change in duty we cannot see how the excisable article which had been subjected to duty once will be liable to further duty equal to the difference when there is increase in the rate, (except of course where the Explanation to section 19 applies).
We see nothing in section 10 which lays down that every time there is transport, duty must be paid even though the duty has already been paid when the first transport of an excisable article takes place.
What section 10 prohibits is the transport of excisable article unless the duty has been paid thereon.
Once the duty has been paid the prohibition under section 10 no longer applies, unless the case is covered by the Expla.
nation to section 19.
However wide may be the definition of " transport " what has to be seen is whether the prohibition under section 10 is to apply even to those excisable articles on which duty has been paid.
On a plain reading of section 10, the prohibition under that section cannot apply to transport of excisable articles on which duty has been paid.
Section 19, which is the charging section, provides for levying of duty on transport in accordance with the provisions of section 10.
This brings us back to section 10 and the question again is whether the prohibition having been removed by payment of duty once, there is anything in section 10 which 405 requires that the duty should be paid again for transporting the goods on which duty has been paid.
As we read section 10 we find nothing in it which requires that duty should be paid again for transport once the duty has been paid and the prohibition removed subject always to the Explanation to section 19.
Under that Explanation if there are different duties in different regions and the excisable article which has paid duty of one region is removed to another region where the duty is different the excess will have to be paid in order that prohibition of transport in that region may be removed.
But apart from the cases covered by the Explanation we can see no justification for reading section 10 as giving power to impose duty on the same excisable article again and again as it moves in the course of trade from, say, the bonded warehouse to the wholesaler and from the wholesaler to the retailer and from the retailer to the consumer.
Plainly, therefore, once the duty has been paid and the prohibition under section 10 is removed the transport of the duty paid excisable article can take place free from any further imposition, except where it is transported to a region where the duty is different from the region where the duty is paid.
Nor do we find any power in the State Government to impose a duty at every movement during the course of trade in the words of section 19.
All that section 19 empowers the State Government to do is to fix the rate of duty on transport in accordance with section 10.
There is no delegation to the State Government anywhere in the Act of the power to impose duty from stage to stage during the movement of excisable articles in the course of trade.
It is true that the legislature has the power if it so chooses, to levy duty on every movement; but as we read the three provisions on which reliance has been placed we do not find any exercise of that power by the legislature.
Nor do we find any delegation by the legislature of any such power to the State Government.
The view therefore taken by the Division Bench that once the duty mentioned in section 19 has been paid the prohibition con tained in section 10 must disappear, (subject always to the Explanation to s, 19), and that there is nothing in 52 406 s.19 delegating any power to the State Government of levying excise duty more than once and at more than one point during the progress of the excisable goods from the time they leave the bonded warehouse till the time they reach the consumer is in our opinion correct.
It is not in dispute in this case that the Explanation to section 19 does not apply.
Turning now to the first proviso '.to section 19 A, it may be noticed that that section deals with the manner of levying duty.
But the first proviso goes further and lays down that where the duty is levied on issue from a bonded warehouse it will be at the rate in force on the date of issue.
We agree with the Division Bench that this proviso has no logical connection with section 19 A and would more properly be a proviso to section 19.
It has nothing to do with the manner of payment but is concerned with the liability to pay at the rate prevalent on the date of issue from the bonded warehouse.
If that is so, the quantum of tax is once for all determined by this proviso subject always to the Explanation to section 19 and cannot be increased thereafter.
Reference in this connection was made to section 15 A also.
But that section seems to have been inserted as a measure of abundant caution and does not appear to go further than section 10.
It seems to determine the time and manner of payment in cases where excisable articles are kept in a distillery or brewery or warehouse or other place of storage established or licensed under the Act where duty may not have been paid before such storage.
It is not the charging section and cannot be read to go beyond section 19 which is the charging section.
We are therefore of opinion that on this ground also no additional duty could be charged from the respondent in this case as the Explanation to section 19 has admittedly no application here.
The appeal therefore fails and is hereby dismissed with costs.
Appeal dismissed.
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The respondent held a trade and import licence for foreign liquor as well as a vendor 's licence under the Bombay Abkari 51 398 Act.
It kept liquor in a bonded warehouse.
On April 2, 1948, the appellant asked the respondent to remove the liquor from the bonded warehouse after paying the necessary excise duty.
The respondent paid the duty, got the transport permits and took over the liquor, some of which it sold.
On December 16, 1948, the appellant issued a notification doubling the duty on foreign liquor and called upon the respondent to pay the additional duty on the liquor which was still lying in its godown.
The respondent contended that the imposition of additional duty on the stock on which duty had already been paid at the time of its issue from the bonded warehouse was illegal.
The appellants case was that the respondent was bound to pay the duty prevailing on the transport of liquor at the time of transporting the same from its premises to another place within the State of Bombay: Held, that the imposition of the additional excise duty was illegal.
Once the duty had been paid the liquor could be transported free from any further imposition, except where it was transported to a region where the duty was different from the region where the duty was paid.
There was no power in the State Government to impose duty at every movement during the course of the trade.
Though there was power in the legislature to levy duty at every movement of liquor, it had not exercised that power; nor had it delegated such power to the State Government.
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Appeals Nos. 292 and 312 of 1950.
Appeals from the Judgment and Order of the High Court of Judicature at Hyderabad (Ansari, Qamar Hasan and Manohar Pershad JJ.) in Cases Nos. 180 181 of 1954 F. Ved Vyas, (section K. Kapur and Ganpat Rai, with him) for the appellant.
M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondent.
April 1.
The Judgment of the Court was delivered by BHAGWATI J.
These are two appeals from the judgment and decision of the High Court of Judicature at Hyderabad answering certain questions referred at the instance of the appellants by the Commissioner of Excess Profits Tax, Hyderabad, and adjudging the liability of the appellants for excess profits tax in regard to the amounts recieved by them as remuneration from the Dewan Bahadur Ramgopal Mills Com pany Ltd. as its Agents.
The Mills Company was registered on the 14th February, 1920, at Hyderabad in the then territories of His Exalted Highness the Nizam.
The appellants were registered as a private limited company at Bombay on 395 agreement was entered into between the Mills Company.
and the appellants appointing the appellants its Agents for a period of 30 years on certain terms and conditions therein recorded.
The appellants throughout worked only as the Agents of the Mills Company and for the Fasli years 1351 and 1352 they received their remuneration under the terms of the Agency agreement.
A notice was issued under section 13 of the Hyderabad Excess Profits Tax Regulation by the Excess Profits Tax Officer calling upon the appellants to pay the, amount of tax appertaining to these chargeable account , ing periods.
The appellants submitted their accounts and contended that the remuneration received by them from the Mills Company was not taxable on the ground that it is was not income, profits or gains from business and was outside the pale of the Excess Profits Tax Regulation.
This contention of the appellants was negatived and on the 24th April, 1944, the Excess Profits Tax Officer made an order assessing the income of the appellants for the accounting periods 1351 and 1352 Fasli at Rs. 8,957 and Rs. 83,768 respectively and assessed the tax accordingly.
An appeal was taken by the appellants to the Deputy Commissioner of Excess Profits Tax who disallowed the same.
An application made by the appellants under section 48(2) for statement of the case to the High Court was rejected by the Commissioner and the appellants filed a petition to the High Court under section 48(3) to compel the Commissioner to state the case to the High Court.
An order was made by the High,Court on this petition directing the Commissioner to state the case and the statement of the case was submitted by the Commis sioner on the 26th February, 1946.
Four questions were referred by the Commissioner to the High Courts as under: (1) Whether the Petitioner Company is a partnership firm or a registered firm ? (2) Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business ? 396 (3)Whether the remuneration received from the MILLs is on account of service or is the remuneration for business ? (4)Whether the principle of personal qualification referred to in section 2, clause (4), of the Excess Profits Regulation is applicable to the Petitioner Company ? These questions were of considerable importance and were referred for decision to the Full Bench of the High Court.
The Full Bench of the High Court delivered their judgment the majority deciding the questions (2) and (3) which were the only questions considered determinative of the reference against the appellants.
The appellants appealed to the Judicial Committee.
But before the Judicial Committee heard the appeals there was a merger of the territories of Hyderabad with India.
The appeals finally came for hearing before the Supreme Court Bench at Hyderabad on the 12th December, 1950, when an order was passed transferring the appeals to this Court at Delhi.
These appeals have now come for hearing and final disposal before us.
The questions (1) and (4) which were referred by the Commissioner to the High Court at Hyderabad have not been seriously pressed before us.
Whether the appellants are a partnership firm or a registered company the principle of exclusion of the income from the category of business income by reason of its depending wholly or mainly on the personal qualifications of the assessee would not apply because the income could not be said to be income from profession and neither a partnership firm nor a registered company as such could be said to be possessed of any personal qualifications in the matter of the acquisition of that income.
The principal questions which were therefore argued before the High Court at Hyderabad and before us were the questions (2) and (3) which involved the determination of the position of the appellants whether they were servants or agents of the Mills Company and the determination of the character of their remuneration whether it was wages or salary or income, profits or gains from business.
397 The appellants were registered as a private limited company having their registered office in Bombay and the objects for which they were incorporated were the following: (1)To act as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business.
(2)To carry on in India and elsewhere the trade or business of merchants, importers exporters in all ', their branches etc.
etc. .
Under Article 115 of the Articles of Association of the Mills Company the appellants and their assigns were ' appointed the agents of the Company upon the terms, provisions and conditions set out in the Agreement referred to in clause 6 of the Company 's Memorandum of Association.
Article 116 provided that the general management of the business of the Company subject to the control and supervision of the Directors, was to be in the hands of the Agents of the Company, who were to have the power and authority on behalf of the Company, subject to such control and supervision, to enter into all contracts and to do all other things usual, necessary and desirable in the management of the, affairs of the Company or in carrying out its objects and were to have power to appoint and employ in, or.
for the purposes of the transaction and managment of the affairs and business of the Company, or otherwise for the purposes thereof, and from time to time to remove or suspend such managers, agents, clerks and other employees as they thought proper with such powers and duties and upon such terms as to duration of employment, remuneration or otherwise as they thought fit and were also to have powers to exercise all rights and liberties reserved and granted to them by the said agreement referred to in clause 6 of the Company 's Memorandum of Association including the rights and liberties contained in clause 4 of the agreement.
Article 1 18 authorised the agents to sub delegate all or any of the powers, authorities and discretions for the time being vested in them, and in particular 398 from time to time to provide by the appointment of an attorney or attorneys, for the management and transaction of the affairs of the Company in any specified locality, in such manner as they thought fit.
The Agency agreement which was executed in pursuance of the appointment under Article 115, provided that the appellants and their assigns were to be the Agents of the Company for a period of 30 years from the date of registration of the Company and they were to continue to act as such agents until they of their own will resigned.
The remuneration of the appellants as such Agents was to be a commission of per cent on the amount of sale proceeds of all yarn cloth and other produce of the Company (including cotton grown) which commission was to be exclusive of any remuneration or wages payable to the bankers, Solicitors engineers, etc., who may be employed by the appellants for or on behalf of the Company or for carrying on and conducting the business of the Company.
The appellants were to be paid in addition all expenses and charges actually incurred by them in Connection with the.
business of the Company and supervision and management thereof and the appelants were entitled to appoint any person or persons in Bombay to act as their Agents in Bombay and any other places in connection with the business if the Company.
Clauses 3 and 4 of the agency agreement are important and may be set out in extenso : 3.
Subject to the control and supervision of the Directors, the said Lachminaravan Ramgopal and Son Limited shall have the general conduct and management of the business and affairs of the company and shall have on behalf of the company to acquire by purchase lease or otherwise lands tenements and other Buildings and to erect maintain alter and extend factores ware houses, engine house and other buildings in Hyderabad and ' elsewhere in the territories of His Exalted Highness the Nizam and in India and to purchase, pay for, sell, resell, and repurchase machinery, engines, plant, raw cotton, waste, jute, wool and 399 other fibres and produce, stores and other materials and to manufacture yarn cloth and other fabrics and to sell the same either in the said territories as well as elsewhere in India and either on credit or for cash, or for present or future delivery, and to execute become parties to and where necessary to cause to be registered all deeds, agreements, contracts, receipts and other documents and to insure the property of the Company for such purposes and to such extent and in such manner as they may think proper; and to institute, conduct, defend, compromise, refer to arbitration and abandon legal and other proceedings, claims and disputes in which the Company is concerned and to appoint and employ discharge, re employ or replace engineers.
managers, retain commission dealers, muccadums, brokers, clerks, mechanics, workmen and other officers and servants with such powers and duties and upon such terms as to duration of office remuneration or otherwise as they may think fit ; and to draw, accept endorse, negotiate and sell Bills of Exchange and Hundies with or without security and to receive and give receipts for all moneys payable to or to be received by the company and to draw cheques against the moneys of the company and generally to make all such arrangements and do all such acts and things on behalf of the Company, its successors and assignsas may be necessary or expedient and as are not specifically reserved to be done by the Directors.
4.The said Lachminarayan Ramgopal & Son Ltd., shall be at liberty to deal with the Company by way of sale to the Company of cotton all raw materials and articles required for the purpose of the Company and the purchase from the Company of yarn cloth and all other articles manufactured by the Company and otherwise, and to deal with any firm in which any of the shareholders of the said Lachminarayan Ramgopal & Son Ltd., may be directly or indirectly concerned provided always such dealings are sanctioned passed or ratified by the Board of Directors either before or after such dealings.
Clause 8 provided that two of the members for the time being of the appellants were at the option of the 400 appellants to be the ex officio Directors of the Company and clause 9 empowered the appellants to assign the agreement and the rights of the appellants thereunder subject to the approval and sanction of the Board to any person, firm or Company having authority by its constitution to become bound by the obligations undertaken by the appeallants.
No materials other than these 'were placed by the appellants either before the Income tax Authorities or the High Court and the questions that arise before us have to be determined only on these materials.
If on the construction of these documents we arrive at the conclusion that the position of the appellants was not that of servants but the agents of the Company the further question would have to be determined whether the activities of the appellants amounted to the carrying on of business.
If they were not the servants of the Company, the remuneration which they received would certainly not be wages or salary but if they were agents of the Company the question would still survive whether their activities amounted to the carrying on of business in which case only the remuneration which they received from the Company would be income, profits or gains from business.
The distinction between a servant and an agent is thus indicated in Powell 's Law of Agency, at page 16 : (a)Generally a master can tell his servant what to do and how to do it.
(b) Generally a principal cannot tell his agent how to carryout his instructions.
(c) A servant is under more complete control than an agent, and also at page 20: (a)Generally, a servant is a person who not only receives instructions from his master but is subject to his master 's right to control the manner in which he carries out those infructions.
An agent receives his principal 's instructions but is generally free to carry out those instructions according to his own discretion 401 (B) Generally, a servant, qua servant, has no authority to make contracts on behalf of his master ' Generally, the purpose of employing an agent is to authorise him to make contracts on behalf of his principal.
(c) Generally, an agent is paid by commission upon effecting the result which he has been instructed by his principal to achieve.
Generally, a servant is paid by wages or salary.
The statement of the law contained in Halsbury 's Laws of England Hailsham Edition Volume 22, page 113, paragraph 192 may be referred to in this connection : "The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
" The position is further clarified in Halsbury 's Laws of England Hailsham Edition ,Volume 1, at page.
193, article 345 where the positions of an agent, a a servant and independent contractor are thus distinguished : " An agent is to be distinguished on the, one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference, and merely undertakes to produce a specified resulted employing his own means to produce that result.
An ament, though bound to exercise his authority in accordance with all lawful instructiOns which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not a servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant ' "Considering the position of the appellants in the light of the above principles it is no doubt true that the 52 402 appellants were to act as the agents of the Company and carry on the general management of the business of the Company subject to the control and supervision of the Directors.
That does not however mean that they acted under the direct control and supervision of the Directors in regard to the manner or method of their work.
The Directors were entitled to lay down the general policy and also to give such directions in regard to the management as may be considered necessary.
But the day to day management of the business of the Company as detailed in Article I 1 6 of the Articles of Association and clause 3 of the Agency Agreement above set out was within the discretion of the appellants and apart from directing what work the appellants had to do as the agents of the Company the Directors had not conferred upon them the further right to direct how that work of the general management was to be done.
The control and supervision of the directors was a general control and supervision and within the limits of their authority the appellants as the agents of the Company had perfect discretion as to how that work of general management was to be done both in regard to the method and the manner of such work.
The appellants for instance had perfect latitude to enter into agreements and contracts for such purpose and to such extent and in such manner as they thought proper.
They had the power to appoint, employ, discharge, reemploy or replace the officers and servants of the Company with such powers and duties and upon such terms as to duration of office remuneration or otherwise as they thought fit.
They had also the power generally to make all such arrangements and to do all such things and acts on behalf of the Company, as might be necessary or expedient and as were not specifically reserved to be done by the Directors.
These powers did not spell a direct control and supervision of the Directors as of a master over his servant but constituted the appellants the agents of the Company who were to exercise their authority subject to the control and supervision of the Directors but were not subject in such exercise to the direct control or supervision of the principals.
The liberty given to the appellants under clause 4 of the Agency 403 Agreement to deal with the Company by way of sale and purchase of commodities therein mentioned also did not spell a relation as between master and servant but empowered the appellants to deal with the Company as Principals in spite of the fact that under clause 8 of the Agreement two of their members for the time being were to be the ex officio Directors of the Company.
The power to assign the Agreement and the rights of the appellants thereunder reserved to them under clause 9 of the Agency Agreement though subject to the approval and sanction of the Board was hardly a power which could be vested in a servant.
There was further the right to continue in employment.
as the agents, of the Company for a period of 30 years from the date of the registration thereof and thereafter until the appellants of their own will resigned, which also would be hardly consistent with the employment of the appellants as mere servants of the Company.
The remuneration by way of commission of 2 1/2 per cent.
of the amount of sale proceeds of the produce of the Company savoured more of the remuneration given by a principal to his agent in the carrying out of the general management of the business of the principal@ than of wages or salary which would not normally.
be on such a basis.
All these circumstances together with the power of sub delegation reserved under Article 118 in our opinion go to establish that the appellants were the agents of the Company and not merely the servants of the Company remunerated by wages or salary.
Even though the position of the appellants qua the Company was that of agents and not servants as stated above it remains to be determined whether the work which they did under the Agency Agreement amounted to carrying on business so as to constitute the remuneration which they received thereunder income, profits or gains from business.
The contention which was urged before us that the appellants only worked as the agents of the Mills Company and no others and therefore what they did did not constitute a business does not avail the appellants.
The activities in order to constitute a business need not necessarily be concerned with several.
individuals or concerns.
They would constitute 404 business in spite of their being restricted to only one individual or concern.
What is relevant to consider is what is the nature and scope of these activities though either by chance or design these might be restricted to only one individual or concern.
It is the nature and scope of these activities and not the extent of the operations which are relevant for this purpose.
The activities of the appellants certainly did not come within the inclusive definition of business which is given in section 2 clause 4 of the Excess Profits Tax Regulation, Hyderabad.
Business is there defined to include any trade, commerce or manufacture or any adventure in the 'nature of a trade, commerce or manufacture or any profession or vocation but not to include a profession carried on by an individual or by individuals in partnership if the profits of the profession depend wholly or mainly on his or their personal qualifications unless such profession consists wholly or mainly in the making of contracts on behalf of other persons or giving to other persons of advice of a commercial nature in connection with the making of contracts.
The work which the appellants did under the terms of the Agency Agreement constituted neither trade, commerce or manufacture or any adventure: in the nature of trade, commerce or manufacture nor was it a profession or vocation.
, The activities which constitute carrying on business need not necessarily consist of activities by way of trade, commerce or manufacture or activities in the exercise of a profession or vocation.
They may even consist of rendering services to others which services may be of a variegated character.
The considerations which apply in the case of individuals in the matter of determining whether the activities constitute a business within the meaning of the, inclusive definition thereof set out above may not apply in the case of incorporated companies.
Even though the activities if carried on by individuals might constitute business in that sense they might not constitute such business when carried on by incorporated companies and resort must be had to the general position in law in order to determine whether the incorporated company was carrying on business ad 405 as to constitute the income earned by it income ' profits or gains from business.
Reference may be made in this context to William Esplen, Son and Swainston, Limited vs Commissioners of Inland Revenue (1).
In that case a private limited company was incorporated for carrying on business as naval architects and consulting engineers.
: Before the formation of the company, a partnership had existed for many year between three persons who, on incorporation, became the sole shareholders and directors of the company.
The partnership had carried on the profession.
of naval architects and consulting engineers and the work done by the company was identical in character with that formerly done by the partnership which it succeeded.
The work done by the company was identical in all respects with the work of a professional naval architect and consulting engineer, and was performed by the said three shareholders and directors of the company personally.
A question arose whether the company was carrying on a profession within the meaning of section 39 paragraph C of the Finance (No. It was contended that it carried on a profession of naval architects and consulting engineers because the members composing it were three naval architects.
That contention was however negatived and it was held that even though what was to be looked at was the character of the work done by the company, it was not carrying on the profession of the naval architects within the meaning of the section, because for that purpose it was of the essence of a profession that the profits should be dependent mainly upon the personal qualifications of the person by whom it was carried on and that could only bean individual.
A company such as that could only do a naval architect 's work by sending a naval architect to its customers to do what they wanted to be done and it was held that the company was not carrying on a profession but was carrying on a trade or business in the ordinary sense of the term.
When a partnership firm comes into existence it can be predicated of it that it carries on a business, because partnership according to section 4 of the Indian Partner.ship Act is the relation between persons who have (1) (1919] 2 K.B. 731.
406 agreed to share the profits of a business carried on by all or any of then acting for all.
(See Inderchand Hari Ram V. COMMissioner of Income tax, U.P & C.P.(1)).
But when a company is incorporated it may not necessarily come into existence for the purpose of carrying on a business.
According to section 5 of the Indian Companies Act any seven or more persons (or, where the company to be formed will be a private company, any two or more persons) associated for any lawful purpose may by subscribing their names to a memorandum of association. . . . . form an incorporated company, and the lawful purpose for which the persons become associated might not necessarily be the carrying on of business.
When a company is incorporated for carrying out certain activities it would be relevant to enquire what are the objects for which it has been incorporated.
As was observed by Lord Sterndale, M.R., in Commissioners of Inland Revenuev.
The Korean Syndicate Limited(2) : " If you once get the individual and the company spending exactly on the same basis, then there would be no difference between them at all.
But the fact that the limited company comes into existence in a different way is a matter to be considered.
An individual comes into existence for many purposes, or per.
haps sometimes for none, whereas a limited company comes into existence for some particular purpose, and if it comes into existence for the particular purpose of concessions and turning them to account, then that is a matter to be considered when you come to decide whether doing that is carrying on a business or not." Justice Rowlatt followed the above view of Lord Sterndale, M.R., in Commissioners of Inland Revenue vs Birmingham Theatre Royal Estate Co., Limited(1), and held that " when you are considering whether a certain form of enterprise is carrying on business or not, it is material to look and see whether it is a company that it; doing it.
" The objects of an incorporated company as laid down in the Memorandum of Association are (1) (2) at P. 202.
(3) (1923) I2 Tax Cas.
580 at P. 584.
407 certainly not conclusive of the question whether the activities of the company amount to carrying on of business.
(See Indian Law Reports 55 Calcutta 1059 and (1951] But they are relevant for the purpose of determining the nature and scope of such activities.
The objects of the appellants in this case inter alia were to act as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business.
This object standing by itself would comprise within its ambit the activities of the appellants as the agents of the Company and constitute the work which they did by way of general management of the business of the company an agency business.
The words " carry on all kinds of agency business " occurring at the end of the object as therein set out were capable of including within their general description the work which the appellants would do as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers and others when they acted as agents of the Company which were manufacturers inter alia of cotton piece goods they would be carrying on agency business within the meaning of this object.
Apart however from this there is the further fact that there was a continuity of operations which constituted the activities of the appellants in the general management of the Company a business.
The whole work of management which the appellants did for the Company within the powers conferred upon them under Article 116 of the Articles of Association and clause 3 of the Agency Agreement consisted of numerous and continuous operations and comprised of various services which were rendered by the appellants as the agents of the Company.
The appellants were also entitled though with the sanction or ratification by the Board of Directors either before or after the dealings to enter into dealings with the Company by way of sales and purchases of various commodities.
There was nothing in the Agency Agreement to prevent the appellants from acting as the agents of other manufacturers, Joint Stock Companies etc., and the appel lants could have as well acted as the agents of other 408 concerns besides the Company.
All these factors taken, into consideration alongwith the fixity of tenure, the nature of remuneration and the assignability of their rights, are sufficient to enable us to 'come to the conclusion that the activities of the appellants as the agents of the Company constituted a business and the remuneration which the appellants received from the Company under the terms of the Agency Agreement was income, profits or gain from business.
The appellants were therefore rightly assessed for excess profits tax and these appeals must stand dismissed with costs.
Appeal dismissed.
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The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
The positions of an agent, a servant and independent contractor are distinguished as under: An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.
An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not 9, servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant.
Held, that the position of the appellants in the light of the principles stated above and the terms of the Agency Agreement was that of the agents of the Dewan Bahadur Ram Gopal Mills Ltd., and they carried on the general management of the business of the company subject to the control and supervision of the Directors.
394 The control and supervision of the Directors was, however, a general control and supervision and within the limits of their authority the appellants as the agents of the company had perfect discretion as to how that work of general management was to be clone both in regard to the method and the manner of such work and therefore the circumstances of the case together with the of power of sub delegation reserved under the Articles of Association established beyond doubt that the appellants were the agents of the company and not merely the servants of the company remu nerated by wages or salary.
Held further, that various factors along with the fixity of tenure, the nature of remuneration and the assignability of their rights were sufficient to prove that the activities of the appellants as the agents of the company constituted a business and the remuneration which the appellants received from the company under the terms of the Agency Agreement was income, profits or gains from business and the appellants were rightly assessed under the provisions of Hyderabad Excess Profits Tax Regulation.
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N: Criminal Appeal Nos.
844 845 of 1985.
From the Judgment and Order dated 1.12.1982 of the Delhi High Court in Crl.
(Main) No. 551 of 1982.
Anil Deo Singh, R.N. Poddar and P.K. Mukharjee for the Appellants.
Anil Kumar Gupta, Amicus Curiae for the Respondents.
The Judgment of the Court was delivered by 814 B.C.RAY, J.
The only question involved in these two appeals is whether the criminal proceedings initiated against the appellants, i.e. Balbir Singh Sub Inspector and Ram Shanker, Constable of Delhi Police Force is maintainable in the absence of any prior sanction obtained from the Lt. Governor as required under s.197 (3) of the Code of Criminal Procedure.
Section 197(1) of the Code of Criminal Procedure envisages that no court can take cognizance of any offence alleged to have been committed by a Judge or Magistrate or a public servant while acting or purporting to act in the discharge of his official duty without previous sanction of the Government.
Sub section (2) of that Section further provides that no court shall take cognizance of any offence alleged to have been committed by any member of the Armed Forces of the Union while acting or purporting to act in discharge of his official duty, without obtaining the prior sanction of the Central Government.
Sub section (3) of the said Section further provides that the State Government may by notification direct that the provisions of Sub section (2) shall apply, to such class or category of members of the Forces charged with the maintenance of public order as may be specified in the said order, and upon such notification being made, the provisions of Sub section (2) will apply as if for the expression "Central Government" occurring therein, the expression "State Government were substituted.
The appellants are undoubtedly the members of Delhi Police Force.
It is also not in dispute that these appellants do not fall within the category of officers mentioned in Sub Section (1) of Sec.
197 of Criminal Procedure Code and as such no prior sanction of the Government is necessary in order to launch a prosecution against these officers.
The only question remains to be considered is whether the appellants being members of the Delhi Police Force are entitled to get the benefit of Sub Section (3) of Section 197 of Criminal Procedure Code by virtue of the notification No. S.O. 183(E) dated 20th March, 1974 issued by the Under Secretary of India read with the notification dated 7th April, 1980 issued by the Lt. Governor, Delhi under No.
F.10/77/78 HP II.
Delhi is a Union Territory within the meaning of Article 1 read with the First Schedule to the Constitution as amended by the Constitution (7th amendment) Act 1956.
The power to administer the Union Territory is vested in the President under Article 239 of the Constitution and Clause 1 of the said Article empowers the President to administer the Union Territory through 815 and Administrator to be appointed by him.
The Administrator appointed by the President under article 239(1) of the Constitution with the designation of Lt. Governor of Delhi derives only such powers, functions and duties as are entrusted to him by the President under article 239(1).
In accordance with the provisions of this Art 239(1) the aforesaid notification dated 20th March, 1974 has been made whereby the President had directed that the Administrators of all the Union Territories other than Arunachal Pradesh and Mizoram exercise, subject to the control of the President, the powers and discharge the functions under the Code of Criminal Procedure 1973 as mentioned in Schedule annexed thereto, subject to the condition mentioned therein.
The said notification was enforced on 1st April, 1974.
In this Schedule all powers and functions of the State Government except those conferred by Sections 8 and 477 of the Code were conferred on the Administrator.
Therefore, by virtue of this notification, the President empowered the Administrator of Union Territories, i.e. Lt. Governor of Delhi to exercise the powers and functions of the State Government as provided in the Code of Criminal Procedure except the powers and functions provided in Sections 8 and 477 of the said Act.
It also appears from the notification dated 7th April, 1980 that the Lt. Governor directed that the provisions of Sub Section (2) of Sec.197 "shall apply to serving police officials of all ranks of Delhi Police Force" charged with the maintenance of public order.
This notification was made in exercise of powers conferred upon the administrator under Sub Section (3) of Sec.
197 of the Code of Criminal Procedure read with the Government of India Notification Dated March 20, 1974 mentioned before Reading these two notifications together, it is crystal clear that to start a proceeding against the members of all ranks of Deli Police Officials in a Criminal Court, previous sanction of the Lt. Governor is imperative, provided the offence alleged to have been committed by such members of the Delhi Police Force has been committed while acting or purporting to act in discharge of their official duty.
In the instant case the act of tampering of the Search Memos by the two appellants i.e. Balbir Singh and Ram Shankar cannot be said to have been done in discharge of their official duties inasmuch as the said Search Memos were in the custody of the Court.
The complaint was filed by the Special Railway Magistrate alleging that Search Memos which were signed by the Sub Inspector Balbir Singh did not bear any signature of the witness Ram Shankar at the time when the said Search Memos were in the custody of the Court.
Subsequently, it has been interpolated by getting the same signed by the accused Ram Shankar.
This 816 act of tampering and interfering with the records of the Court by the two petitioners by any stretch of imagination cannot be said to have been done or purported to have been done by the petitioners in discharge of their official duty.
It is pertinent to refer in this connection to the decision of this Court in Matajog Dobey vs HC.
Bhari, [1955] 2 S.C.R. 925, where this Court laid down the scope of the protection afforded by Sec.
197 of the Code of Criminal Procedure in the following terms : "There must be a reasonable connection between the act and the discharge of official duty; the act must bear such relation to the duty that the accused could lay a reasonable, but not a pretended or fanciful claim, that he did it in the course of the performance of his duty.
" These observations have been followed by this Court in Pukhraj vs State of Rajasthan & Anr., ; In that case the Post Master General of Rajasthan abused and kicked a Clerk of the Head Post Office when a clerk of the Head Post Office of Jodhpur went to make some oral representations to the Post Master General.
The clerk filed a complaint against the Post Master General under Sec. 323 and 504 I.P.C. before the Additional Munsif Magistrate of Jodhpur city.
An application was filed praying that no cognizance of the offence would be taken without the sanction of the Government under Sec.
197 of Criminal Procedure Code.
It was held that the acts alleged were not done in due discharge of his official duty and so no prior sanction of the Government was necessary under Section 197 of the Code.
In Bhagwan Prasad Srivastava vs N.P. Misra, [1971] 1 S.C.R. 317, the respondent filed a complaint alleging that the appellant, a Civil Surgeon used defamatory and abusive words and got him pushed out by the cook of the hospital.
It was found that the case was not covered by Sec.
197 of the said Act as those acts were not done in discharge of his official duty.
In the case of Darshan Kumar vs Sushil Kumar Malhotra & Ors., , it was found that the acts complained of against Respondents Nos.
1,3 and 4 were purported to have been done by them in discharge of their official duties and it was reasonably connected with their official duties.
As such it was held that prior sanction of the State Government was necessary in prosecuting them in respect of the offence, if any, made out from the commission of such acts.
817 As regards scope and ambit of Sec.
197(3) of the Code of Criminal Procedure it has been rightly observed by the Division Bench of the Gujarat High Court in Bhikhaji Vaghji vs L.K Barot and Ors. , that after the issuance of the notification by the Government under Sec.
197(3) of the Criminal Procedure Code directing that the provisions of Sub Sec.(2) of Sec. 197 shall apply to the Police Officers charged with the maintenance of public order, the same could not be questioned on the ground of non application of mind as it is within the scope and ambit of Sub Sec.
(3) of Sec. 197 of the Code.
It was also observed that : "Before the protection of sub sec.(2) of Section 197 of the Code could be had and the proceedings are dropped on that count, the learned Magistrate is under an obligation to decide that the alleged acts attributed to the members of the police force are acts done in the discharge of their official duties, or at any rate, they purport to be, or bear the colour or semblance of, the acts that could be done in the discharge of their official duties.
" We have already said that the alleged acts of tampering the Search Memo while the same was in custody of the Court cannot be deemed to be an act purported to have been done by these two appellants in discharge of their official duties.
Therefore, the previous sanction of the Lt. Governor as provided in Section 197(3) Criminal Procedure Code was, in our considered opinion, not at all necessary for initiating the proceedings against these two appellants, who are members of the Delhi Police Force.
For the reasons stated hereinbefore the Appeal filed by the Delhi Administration succeeds and is allowed and the Appeal filed by the accused is dismissed.
The Judgment and Order of the High Court declaring the impugned notification dated 7th April, 1980 issued by the Lt. Governor of Delhi to be ultra vires is set aside and the learned Magistrate is directed to proceed with the case in accordance with law.
We are thankful to Sri Anil Kumar Gupta for the assistance he has rendered as Amicus Curiae.
M.L.A. Criminal Appeal 844/85 dismissed.
Criminal Appeal 845/85 partly allowed.
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A Complaint was filed by the Special Railway Magistrate against the appellants, Balbir Singh and Ram Shankar, members of Delhi Police Force, alleging that the Search Memos which were signed by the sub Inspector Balbir Singh did not bear any signature of the witness Ram Shankar at the time when the said Search memos were in the custody of the Court and that they were interpolated subsequently by getting the same signed by the accused, Ram Shankar.
The appellants contended before the Trial Court that the aforesaid complaint was not maintainable since prior sanction as required by section 197(3) Cr.
P.C. was not obtained by the complainant to prosecute them.
The trial court rejected the contention and the High Court confirmed the same in appeal by the appellants.
The High Court, however, held that the Notification No. F.10/77/78 HP II dated 7th April 1980 issued by the Lt. Governor directing that the provisions of sub s.(2) of section 197 "shall apply to serving police officials of all ranks of Delhi Police Force" charged with the maintenance of public order, was bad in law as the Lt. Governor had no authority to issue the said Notification under sub s.(3) of section 197 Cr.
Allowing Criminal Appeal No. 845/85 partly and dismissing the other appeal, ^ HELD: 1(i) The Judgment and order of the High Court declaring the impugned notification dated 7th April 1980 issued by the Lt. Governor of Delhi to be ultra vires is set aside and the learned Magistrate is directed to proceed with the case in accordance with law.
[817 F] (ii) By virtue of the Notification No. S.O.183(E) dated 20th March 1974, the President empowered the Administrator of Union Territories, i.e. Lt. Governor of Delhi to exercise the 813 powers and functions of the State Government as provided in the Code of Criminal Procedure except the powers and functions provided in sections 8 and 477 of the said Act.
The Notification dated 7th April 1980 issued by the Lt. Governor was made in exercise of powers conferred upon him under sub section (3) of Sec. 197 of the Code of Criminal Procedure read with the Government of India Notification dated March 20, 1974 mentioned before.
Therefore, the Notification is not ultra vires the Constitution.
[815 D E] 2.
Reading the two notifications together, it is crystal clear that to start a proceeding against the member of all ranks of Delhi Police Officials in a Criminal Court, previous sanction of the Lt. Governor is imperative, provided the offence alleged to have been committed by such members of the Delhi Police Force has been committed while acting or purporting to act in discharge of their official duty.
[815 F] In the instant case, the previous sanction of the Lt. Governor as provided in Section 197 (3) Criminal Procedure Code was, not at all necessary for initiating the proceedings against the two appellants, since the act of tampering of the Search Memos by them cannot be said to have been done in discharge of their official duties inasmuch as the said Search Memos were in the custody of the Court.
[817 E F] Matajog Dobey vs H.C. Bhari, ; ; Pukhraj vs State of Rajasthan & Anr., ; ; Bhagwan prasad Srivastava vs N.P.Misra, [1971] 1 S.C.R. 317 and Darshan Kumar vs Sushil Malhotra & Ors. 1980 Crl.
L.J. 154 relied upon.
Bhikhaji Vaghaji vs L.K. Barot and Ors., 1982 Cr.
L.J. 2014 approved.
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5053.txt
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minal Appeal No. 62 of 1953.
Appeal under.
Article 134(1)(c) of the Constitution from the Judgment and Order dated the 27th March 1953 of the High Court of Judicature at Patna in Criminal Revision No. 1290 of 1951 arising out of 79 the Judgment and Order dated the 12th November 1951 of the Court of Sessions Judge, Singhbhum in Criminal Revision No. 16 of 1951.
Mahabir Prasad, Advocate General for the State of Bihar (Shyam Nandan Prasad and M. V. Sinha, with him), for the appellant.
section N. Mukherji, for the respondent.
March 24.
The Judgment of the Court was delivered by SINHA J.
In this appeal we did not think it necessary to hear the counsel for the respondents on the merits of the decision appealed from in the view we have taken, as will presently appear, of the terms of the surety bond which was being sought to be enforced against the sureties, the respondents in this Court.
The surety bond in question was taken in circumstances which clearly appear from the follow ing resolution of the Government of Bihar dated the 17th October 1946: "Whereas one Maulavi A. Ali Khan, who was convicted under section 120 B read with section 420, Indian Penal Code by the First Special Tribunal, Calcutta and sentenced to four years ' rigorous imprisonment and a fine of rupees one lac which conviction and sentence have been subsequently upheld by the Patna High Court, has submitted to the Provincial Government a petition praying for suspension of his sentence in order to enable him to prefer an appeal against the said conviction and sentence to the judicial Committee of the Privy Council And Whereas the Provincial Government have granted the prayer of the petitioner subject to the conditions hereinafter specified which the petitioner has accepted: Now, therefore, the Governor of Bihar hereby orders that the execution of the aforesaid sentence of Maulavi A. Ali Khan be suspended pending the hearing of the proposed appeal to the Judicial Committee of the Privy Council on his furnishing security worth Rs. 50,000 with two sureties of Rs. 25,000 each to the 80 satisfaction of either the Sub Divisional Officer, Jamshedpur or the Deputy Commissioner of Singhbhum and undertaking (1) to furnish proof by the 1st December, 1946 of his having taken all necessary steps for the filing of the appeal and also (2) to surrender to the Deputy Commissioner of Singhbhum within three days of the receipt of the notice of the order or judgment of the Judicial Committee if by the said order or judgment the sentence is upheld either partly or wholly.
The petitioner, if in custody, may be released if he complies with the above conditions.
By order of the Governor of Bihar, (sd.) T.G.N. Ayyar, Secretary to Government".
In pursuance of that resolution the surety bond in question was taken from the respondents.
The material portion of the bond (exhibit 2) is in these terms: "We, section T. Karim, son of Abdul Wahab, by caste Mohammedan, by occupation Contractor and Proprietor Jamshedpur and Star Talkies, Jamshedpur, residing at Sakchi, police station Sakchi in Town Jamshedpur, district Singhbhum, (2) Manik Homi, son of late Homi Engineer, by caste Parsee, by occupation zamindar of Mango, residing at Mango, police station Sakchi, district Singhbhum, Stand surety for the amount of Rs. 25,000 only each and bind ourselves to the Government of Bihar of which we bind ourselves, our heirs, executors and successors firmly for payment of Rs. 50,000 only in case Mr. Ali Khan fails to furnish proof by the 1st December 1946 of his having taken all necessary steps for the filing of the appeal and to surrender to the Deputy Commissioner of Singhbhum within three days of the receipt of the notice of the order or judgment of the Judicial Committee if by the said order or judgment the sentence is upheld either partly or wholly".
It is dated the 19th October, 1946.
As a result of the constitutional changes the jurisdiction of the Privy Council came to be transferred to the Federal Court by virtue of the Abolition of the Privy Council Juris 81 diction Act (Constituent Assembly Act V of 1949) which came into force on the 10th October, 1949.
As, from that date ("the appointed day") all appeals ' pending before the Judicial Committee of the Privy Council by virtue of section 6 stood transferred to the Federal Court.
Ali Khan 's appeal to the Privy Council thus got transferred to the Federal Court and in due course was heard by this Court.
This Court dismissed the appeal in November 1950.
In the meantime Ali Khan, the convicted person, who had gone to London to look after his appeal there, migrated to Pakistan and thus placed himself beyond the jurisdiction of the courts in India.
In December 1950 the Deputy Commissioner of Singhbhum issued notice to the sureties, the respondents, to produce Ali Khan within three days.
On their failure to do so, the Deputy Commissioner called upon the sureties to show cause why their bond should not be forfeited.
The sureties raised certain legal objections to the proceedings taken by the Deputy Commissioner.
They contended that he had no jurisdiction to initiate the proceedings.
The Deputy Commissioner postponed the decision of the preliminary objections and directed that all the points in controversy shall be heard and determined at the final hearing.
Against that order the respondents moved the Sessions Judge of Singhbhum who by his orders dated the 12th November, 1951 overruled their objections and held that the Deputy Commissioner had jurisdiction to initiate the proceedings.
It is not necessary to set out his reasons.
The respondents moved the High Court in revision against the orders aforesaid of the Sessions Judge.
A Division Bench of the High Court allowed the application holding that the Deputy Commissioner had no such jurisdiction as he purported to exercise in the matter of enforcing the terms of the surety bond against them.
Accordingly, the High Court quashed the proceedings before the Deputy Commissioner.
Hence this appeal by the State of Bihar.
From the terms of the surety bond quoted above it would appear that the sureties bound themselves for 11 82 payment of Rs. 50,000 "only in case Mr. Ali Khan fails. . . . . to surrender to the Deputy Commissioner of Singhbhum within three days of the receipt of the notice of the order or judgment of the Judicial Committee if by the said order or judgment the sentence is upheld either partly or wholly".
In view of this clear provision in the bond the terms of which being penal in nature must be very strictly construed, it cannot be said that the contingencies contemplated by the parties has occurred.
There was no judgment or order of the Judicial Committee upholding either in part or in whole the sentence against Ali Khan.
As the terms of the bond so construed cannot be said to have been fulfilled, the penalty stipulated has not been incurred.
It must therefore be held that the proceedings taken against the respondents were entirely misconceived.
It was in these circumstances that we did not think it necessary to hear the appeal on its merits, that is to say, on the point of jurisdiction on which the case had been decided by the High Court.
It was contended by the Advocate General of Bihar who appeared in support of the appeal that in the events which had happened there could be no judgment or order of the Judicial Committee and that therefore the judgment of this Court, which by virtue of the constitutional changes had come by the jurisdiction vested in the Privy Council, should be deemed to be the judgment or order contemplated by the parties to the surety bond.
In our opinion, there is no substance in this contention, firstly, because there is no term in the bond to the effect that the surety would be bound by any judgment or order given by such other court as may succeed to the jurisdiction then vested in the Judicial Committee of the Privy Council to hear the appeal preferred by Ali Khan against his conviction by the courts in India: and secondly, because there is no room, while construing the penal clause of a surety bond, for the application of a legal fiction as suggested on behalf of the appellant.
The Government through their legal advisers were not 83 circumspect enough to insert any such alternative clause as would have given the judgment or order of, this Court the same effect as is contemplated by the terms of the surety bond quoted above.
The appeal must therefore be dismissed in limine.
Appeal dismissed.
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In a surety bond the sureties bound themselves for payment of Rs. 50,000 "only in case Mr. Ali Khan fails. . to surrender to the Deputy Commissioner of Singhbhum within three, days of the receipt of the notice of the order or judgment of the Judicial Committee if by the said order or judgment the sentence is upheld either partly or wholly".
As a result of the constitutional changes the jurisdiction of the Privy Council came to be transferred to the Federal Court, and eventually Ali Khan 's appeal to the Privy Council was heard and dismissed by the Federal Court.
Thereupon the Deputy Commissioner issued notice to the sureties to produce Ali Khan within three days.
Held, that the proceedings taken against the sureties were entirely misconceived as the penalty stipulated had not been incurred, in view of the terms of the bond set out above.
Provisions in a surety bond which are penal in nature must be very strictly construed and there is no room for the application of a legal fiction that the judgment of the Federal Court must be deemed to be the judgment or order contemplated by the parties to the surety bond.
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320.txt
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ivil Appeal No. 177 (NL) of 1984.
From the Judgment and order dated 5.9.1983 of the High Court of Bombay in Special Civil Application No. 59 of 1983 Dr. Y.S. Chitale and V.N. Ganpule for the Appellant.
G.B. Pai, Parveen Kumar and Vivek Ghambir for the Respondents.
606 The Judgment of the Court was delivered by VENKATARAMIAH, J.
The short question which arises for consideration in this case is whether a teacher employed in a school falls within the definition of the expression 'workman ' as defined in section 2(s) of the (hereinafter referred to as 'the Act ').
The appellant, Miss A. Sundarambal, was appointed as a teacher in a school conducted by the Society of Franciscan Sisters of Mary at Caranzalem, Goa.
Her services were terminated by the Management by a letter dated 25th April, 1975.
After she failed in her several efforts in getting the order of termination cancelled she raised an industrial dispute before the Conciliation officer under the Act.
The conciliation proceedings failed and the Conciliation officer reported accordingly to the Government of Goa, Daman and Diu by his letter dated 2nd May, 1982.
On receipt of the report the Government considered the question whether it could refer the matter for adjudication under section 10(1)(c) of the Act but on reaching the conclusion that the appellant was not a 'workman ' as defined in the Act which alone would have converted a dispute into an industrial dispute as defined in section 2(k) of the Act, it declined to make a reference.
Thereupon, the appellant filed a writ petition before the High Court of Bombay, Panaji Bench, Goa for issue of a writ in the nature of mandamus requiring the Government to make a reference under section 10(1)(c) of the Act to a Labour Court to determine the validity of the termination of her services.
The said writ petition was registered as Special Leave Application No. 59 of 1983.
That petition was opposed by the respondents.
After hearing the parties concerned, the High Court dismissed the writ petition holding that the appellant was not a workman by its judgment dated 5th September, 1983.
Aggrieved by the judgment of the High Court, the appellant has filed this appeal by special leave.
Two questions arise for consideration in this case; (1) whether the school, in which the appellant was working, was an industry, and (2) whether the appellant was a 'workman ' employed in that industry.
It is, however, not disputed that if the appellant was not a 'workman ' no reference under section 10(1)(c) of the Act could be sought.
The first question need not detain us long.
In University of Delhi & Anr.
vs Ram Nath, ; a bench consisting of three learned judges of this Court held that the University of Delhi, which 607 was an educational institution and Miranda House, a college affiliated to the said University, also being an educational institution would not come within the definition of the expression 'industry ' as defined in section 2(j) of the Act.
Section 2(j) of the Act states that 'industry ' means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.
Gajendragadkar, J., (as he then was) who decided the said case, held that the educational institutions which were predominantly engaged in teaching could not be considered as industries within the meaning of the said expression in section 2(j) of the Act and, therefore, a driver who was employed by the Miranda House could not be considered as a workman employed in an industry.
The above decision came up for consideration in Bangalore Water Supply & Sewerage Board, etc.
vs R. Rajappa & others; , before a larger bench of this Court.
In that case the decision in University of Delhi & Anr.
vs Ram Nath, (supra) was overruled.
Krishna Iyer, J. who delivered the majority judgement observed at Page 283 of the Report thus: "(a) Where a complex of activities, some of which qualify for exemption, others not, involves, employees on the total undertaking, some of whom are not 'workmen ' as in the University of Delhi case or some departments are not productive of goods and services if isolated, even then, the predominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur, will be true test.
The whole undertaking will be 'industry ' although those who are not 'workmen ' by definition may not benefit by the status.
" The learned Judge, however, observed that while an educational institution was an industry it was possible that some of the employees in that industry might not be workmen.
At page 261 of the Report with reference to the case of University of Delhi & Anr.
vs Ram Nath, (supra) the learned Judge observed thus: "The first ground relied on by the Court is based upon the preliminary conclusion that teachers are not 'workmen ' by definition.
Perhaps, they are not, because teachers do not do manual work or technical work.
We are not too sure whether it is proper to disregard, with contempt, manual work and separate it from education, nor are we too sure whether in our technological universe, edu 608 cation has to be excluded.
However, that may be a battle to be waged on a later occasion by litigation and we do not propose to pronounce on it at present.
The Court, in the University of Delhi, proceeded on that assumption viz. that teachers are not workmen, which we will adopt to test the validity of the argument.
" Thus it is seen that even though an educational institution has to be treated as an industry in view of the decision in the Bangalore Water Supply & Sewerage Board, etc.
vs R. Rajappa & others, (supra) the question whether teachers in an educational institution can be considered as workmen still remains to be decided.
Section 2(s) of the Act defines 'workman ' thus: "2(s). 'workman ' means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person (i) who is subject to the (46 of 1940), or the (45 of 1950), or the Navy (Discipline) Act, 1934 (34 of 1934); or (ii) who is employed in the police service or as an officer or other employee of a prison; or (iii) who is employed mainly in managerial or administrative capacity; or (iv) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
" 609 In order to be a workman, a person should be one who satisfies the following conditions: (i) he should be a person employed in an industry for hire or reward; (ii) he should be engaged in skilled or unskilled manual, supervisory, technical or clerical work; and (iii) he should not be a person falling under any of the four clauses, i.e., (i) to (iv) mentioned in the definition of 'workman ' in section 2(s) of the Act.
The definition also provides that a workman employed in an industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, an industrial dispute, or whose dismissal, discharge or retrenchment has led to that dispute.
We are concerned in this case primarily with the meaning of the words 'skilled or unskilled manual, supervisory, technical or clerical work '.
If an employee in an industry is not a person engaged in doing work falling in any of these categories, he would not be a workman at all even though he is employed in an industry.
The question for consideration before us is whether a teacher in a school falls under any of the four categories, namely, a person doing any skilled or unskilled manual work, supervisory work, technical work or clerical work.
If he does not satisfy any one of the above descriptions he would not be workman even though he is an employee of an industry as settled by this Court in May and Baker (India) Ltd. vs Their Workmen., [1961] (II) L.L.J. 94.
In that case this Court had to consider the question whether a person employed by a pharmaceutical firm as a representative (for canvassing orders) whose duties consisted mainly of canvassing orders and any clerical or manual work that he had to do was only incidental to his main work of canvassing could be considered as a workman as defined in the Act.
Dealing with the said question Wanchoo, J. (as he then was) observed thus: "As 'workman ' was then defined as any person employed in any industry to do any skilled or unskilled manual or clerical work for hire or reward.
Therefore, doing manual or clerical work was necessary before a person could be called a workman.
This definition came for consideration before industrial tribunals and it was consistently held that the designation of the employee was not of great moment and what was of importance was the nature of his duties.
If the nature of the duties is manual or clerical, then the person must be held to be a workman.
On the other hand if manual or clerical work is only a small part of the duties of 610 the person concerned and incidental to his main work which is not manual or clerical, then such a person would not be a workman.
It has, therefore, to be seen in each case from the nature of the duties whether a person employed is a workman or not, under the definition of that work as it existed before the amendment of 1956.
The nature of the duties of Mukerjee is not in dispute in this case and the only question therefore is whether looking to the nature of the duties it can be said that Mukerjee was a workman within the meaning of section 2(s) as it stood at the relevant time.
We find from the nature of the duties assigned to Mukerjee that his main work was that of canvassing and any clerical or manual work that he had to do was incidental to his main work of canvassing and could not take more than a small fraction of the time for which he had to work.
In the circumstances the tribunal 's conclusion that Mukerjee was a workman is incorrect.
The tribunal seems to have been led away by the fact that Mukerjee had no supervisory duties and had to work under the directions of his superior officers.
That, however, would not necessarily mean that Mukerjee 's duties were mainly manual or clerical.
From what the tribunal itself has found it is clear that Mukerjee 's duties were mainly neither clerical nor manual.
Therefore, as Mukerjee was not a workman, his case would not be covered by the and the tribunal would have no jurisdiction to order his reinstatement.
We, therefore, set aside the order of the tribunal directing reinstatement of Mukerjee along with other reliefs." The Court held that the employee Mukerjee involved in that case was not a workman under section 2(s) of the Act because he was not mainly employed to do any skilled or unskilled manual or clerical work for hire or reward, which were the only two classes of employees who qualified for being treated as 'workman ' under the definition of the expression 'workman ' in the Act, as it stood then.
As a result of the above decision, in order to give protection regarding security of employment and other benefits to sales representatives, parliament passed separate law entitled the .
It is no doubt true that after the events leading to the above decision took place section 2(s) of the Act was amended by including persons doing technical work as well as supervisory work.
The question for consideration is whether even after the inclusion of the above two classes of employees in the definition of the expression 611 'workman ' in the Act a teacher in a school can be called a workman We are of the view that the teachers employed by educational institutions whether the said institutions are imparting primary, secondary, graduate or post graduate education cannot be called as 'workmen ' within the meaning of section 2(s) of the Act.
Imparting of education which is the main function of teachers cannot be considered as skilled or unskilled manual work or supervisory work or technical work or clerical work.
Imparting of education is in the nature of a mission or a noble vocation.
A teacher educates children, he moulds their character, builds up their personality and makes them fit to become responsible citizens.
Children grow under the care of teachers.
The clerical work, if any they may do, is only incidental to their principal work of teaching.
We agree with the reasons given by the High Court for taking the view that teachers cannot be treated as 'workmen ' as defined under the Act.
It is not possible to accept the suggestion that having regard to the object of the Act, all employees in an industry except those falling under the four exceptions (i) to (iv) in section 2(s) of the Act should be treated as workmen.
The acceptance of this argument will render the words 'to do any skilled or unskilled manual, supervisory, technical or clerical work ' meaningless.
A liberal construction as suggested would have been possible only in the absence of these words.
The decision in May and Baker (India) Ltd. vs Their Workmen, (supra) precludes us from taking such a view.
We, therefore, hold that the High Court was right in holding that the appellant was not a 'workman ' though the school was an industry in view of the definition of 'workman ' as it now stands.
We may at this stage observe that teachers as a class cannot be denied the benefits of social justice.
We are aware of the several methods adopted by unscrupulous managements to exploit them by imposing on them unjust conditions of service.
In order to do justice to them it is necessary to provide for an appropriate machinery so that teachers may secure what is rightly due to them.
In a number of States in India laws have been passed for enquiring into the validity of illegal and unjust terminations of services of teachers by providing for appointment of judicial tribunals to decide such cases.
We are told that in the State of Goa there is no such Act in force.
If it is so, it is time that the State of Goa takes necessary steps to bring into force an appropriate legislation providing for adjudication of disputes between teachers and the Managements of the educational institutions.
We hope that this lacuna in the legislative area will be filled up soon.
This appeal, however, fails and it is dismissed.
Before we con 612 clude we record the statement made on our suggestion by the learned counsel for the Management, Shri G.P. Pai that the Management would give a sum of Rs 40,000 to the appellant in full and final settlement of all her claims.
The learned counsel for the appellant has agreed to received Rs 40,000 accordingly.
We direct the Management to pay the above sum of Rs 40,000 to the appellant in six instalment.
They shall pay Rs 6,000 on 1.9.1988, Rs 6,000 on 1.10.1988, Rs 6,000 on 1.11.1988, Rs 6,000 on 1.12.1988, Rs 6,000 on 1.1.1989 and Rs 10,000 on 1.2.1989.
There is no order as to costs.
G.N. Appeal dismissed.
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The appellant was a school teacher and her services were terminated by the Management.
She made several efforts in getting the order of termination cancelled but without success.
Ultimately she raised an industrial dispute before the Conciliation officer under the Act.
The conciliation proceedings failed and the conciliation officer reported accordingly to the Government.
The Government considered the question of referring the matter for adjudication under section 10 of the Act But on reaching the conclusion that the appellant was not a 'workman ' as defined in the Act.
it declined to make a reference.
The appellant filed a writ petition before the High Court for issue of.
a Writ of Mandamus requiring the Government to make a reference under section 10(1)(c) of the Act to a Labour Court to determine the validity of the termination of her services.
The High Court dismissed the petition holding that the appellant was not a workman.
This appeal by special leave is against the Judgment of the High Court.
Dismissing the appeal, this Court, ^ HELD: 1.1 Even though an educational institution has to be treated as an industry the teachers employed by educational institutions whether the said institutions are imparting primary, secondary, graduate or post graduate education cannot be called as 'workmen ' within the meaning of section 2(s) of the Act.
Imparting of education which is the main function of teachers cannot be considered as skilled or unskilled manual work or supervisory work or technical work or clerical work.
Imparting of education is in the nature of a mission or a noble vocation.
A teacher educates children, he moulds their character, builds up their personality and makes them fit to become responsible citizens.
Children grow under the care of teachers.
The clerical work, if any they may do, is only incidental to their principal work of teaching.
[608B C; 610A C] 605 1.2 If an employee in an industry is not a person engaged in doing work falling in any of the categories as mentioned in Section 2(s) of the Act, he would not be a workman at all even though he is employed in an industry.
It is not possible to accept the suggestion that having regard to the object of the Act, all employees in an industry except those falling under the four exceptions (i) to (iv) in section 2(s) of the Act should be treated as workmen.
The acceptance of this argument will render the words 'to do any skilled or unskilled manual, supervisory, technical or clerical work ' meaningless.
A liberal construction as suggested would have been possible only in the absence of these words.
[609C D; 611C E] Bangalore Water Supply & Sewerage Board, etc.
vs R. Rajappa & others; , , relied on.
(2) University of Delhi & Anr.
vs Ram Nath, ; and May and Baker (India) Ltd. vs Their Workmen, referred to.
Teachers as a class cannot be denied the benefits of social justice.
It is necessary to provide for an appropriate machine y so that teachers may secure what is rightly due to them.
In a number of States in India laws have been passed for enquiring into the validity of illegal and unjust terminations of service of teachers by providing for appointment of judicial tribunals to decide such cases.
It is time that State of Goa takes necessary steps to bring into force legislation providing for adjudication of disputes between teachers and the Managements of educational institutions.
[611F G] [At the instance of this Court, the Management of the School agreed to pay the appellant Rs.40,000 which this Court directed to be paid in 6 monthly instalments commencing from September, 1988.] [612B]
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5764.txt
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Civil Appeal NO. 1055 (NL) of 1981.
From the Award of Central Government Industrial Tribunal, Calcutta dated 29 8.1980) in Reference No 13 of 1977 dated 27.9 1980.
T.S. Krishnamurthi, S.K. Nandy and C.S. Vaidyanathan, for the Appellants.
S.N. Kacker, section Chatterjee and A.K. Panda, for the Respondents.
1070 Food Corporation of India ( 'Corporation ' for short) was set up under an Act of Parliament being the ( 'Act ' for short) to provide, amongst other, for the establishment of Food Corporations for the purpose of trading in food grains and other food stuffs and for matters connected therewith and incidental thereto.
For performance of the functions statutorily prescribed under Sec. 13 of the namely, to undertake the purchase, storage, movement, transport, distribution and sale of foodgrains and other foodstuffs, the Corporation has to set up godowns/depots and other storage facilities and to engage labour for handling foodgrains at the godowns or in transit.
The Corporation adopted different methods at different places for employing labour for handling foodgrains .
One such depot has been setup by the Corporation at Siliguri in West Bengal State Number of workmen designated as handling Mazdoor were employed at Siliguri Depot.
At the relevant time, 464 workmen were attached to this depot.
It appears initially a contractor was engaged by the Corporation for handling storage and transit of foodgrains at Siliguri Depot.
Subsequently, by negotiations and settlements.
the contract system was abolished and the workmen were directly paid the wages, presumably at piece rate for the service rendered by them by the Corporation.
A further attempt was made to bring about a basic change in the system by reinducting the intermediary contractor.
This attempt to change the status of the workmen from being workmen of the Corporation to becoming the labour employed by the contractor was resisted by 'Food Corporation of India Workers ' Union appellant herein( 'Union ' for short) and it led to negotiations between the Corporation and the Union resulting in a settlement as evidenced by Union 's letter dated January 18, 1973.
Two terms of the settlement may be noticed here.
They read as under: "(i) the FCI management agrees to take a final decision by 1.4.73 on the demand of the Union for departmentalisation of the workers working in the Corporations ' permanent owned large size go downs, where work goes on all the year round in West Bengal, Bihar, Orissa, Assam and New Delhi.
(ii) . . . (iii). . . 1071 (iv) In the meantime the Food Corporation of India management agrees to introduce the direct payment system to the workers working in their owned godowns as also in the hired godowns at the same stations at which this system is introduced for the owned godowns in the aforesaid States.
. . . The payment to the workers will be made at the rates at which the contractors are being paid now".
These terms of settlement have been set out in the aforementioned letter of the Union.
The Managing Director in his reply dated January 20, 1973 confirmed the decision taken as indicated in the letter under reply.
It would thus appear that the negotiations ended in a settlement.
The Corporation addressed communication No. A 50(38)/72 Labour dated April 28, 1973 to its various Regional Managers in the aforementioned five States pointing out therein that the procedure in respect of direct payment to labourers laid down in the communication shall be followed.
The method adopted is that the bills for the piece rate wages payable to handling Mazdoors should be prepared by the Depot Staff, and the Sardar/Mondal would accept payment and sign bills on their behalf and distribute the wages to the handling labour.
A copy of this letter was also sent to the Joint Secretary of the Union By the letter dated October 29, 1973 of the District Manager of the Corporation at Siliguri addressed to the Joint Secretary of the Union, the Union was informed to advise the local representatives of the workmen to submit the wage bill in time in which particulars of per head out turn by name ' was required to be mentioned.
The expression 'per head out turn ' means the quantum of work rendered by each workman with his name so that his wage at piece rate can be calculated and paid to him .This system of payment was being implemented and was in vogue, till January 27, 1975.
On account of some other industrial dispute, the members of the Union who were workmen attached to Siliguri Depot went on strike.
On and from January 28, 1975.
This strike was called off on March 9, 1975 .
The usual management response followed and effective from March 10, 1975 the Corporation changed the method of payment superseding the direct payment system and reintroducing contractor system and that too without giving any 1072 notice of change as contemplated by Sec 9A of the ( 'I.D. ' for short).
As a direct consequence of this change, the Corporation discontinued employment of 464 workmen attached to Siliguri Depot and brought in the intermediary contractor and treated the afore mentioned workmen as the workmen employed by the contractor.
The Union protested against this illegal action alleging that apart from being an unfair labour practice, the change over was illegal and vindictive and malacious in character.
According to the Union these 464 workmen were already accepted as the workmen of the Corporation and unless their services were legally terminated, they cannot be discontinued from service of the Corporation and some other master imposed upon them.
An industrial dispute in this behalf raised by the Union was referred by the Central Government to the Central Government Industrial Tribunal, Calcutta under Sec.
10 of the l D. for adjudication.
The reference was in the following terms: "Whether the discontinuance of employment of 464 worker of their Siliguri Depot with effects from 21.7.75 by the management of Food Corporation of India is lawful and justified ? If not, to what relief are the workers entitled ?" The Corporation contested the reference inter alia contending that ordinarily the handling of foodgrains at various depots was entrusted to a contractor who employs his own workmen and that this system of employing the contractor was unavoidable because the receipt and distribution of foodgrains at various depots is not a continuous process but solely depends upon the transport system and work is of a fluctuating nature.
It was admitted that direct payment system was introduced at Siliguri Depot and the contractors were replaced by workers working under their Sardars and they were never accepted as direct workmen of the Corporations.
It was contended that the Sardars replaced the contractor but the system remains the same and that the workers were paid the same rate as were paid to the contractors and at no point of time the workmen ever became the direct workmen of the Corporation.
A reference to the strike of the workmen at the Siliguri Depot was made in the written statement and it was stated that the strike was not called 1073 off by the workmen unanimously but it had to be discontinued on account of prohibitory order made by the appropriate Government while exercising its power to make a reference of the existing industrial dispute under Sec.
10 of the I.D. for adjudication.
It was contended that Sec.
9 A of the I.D. is not attracted because there was no change which necessitated a notice.
The allegation of victimisation and unfair labour practice were denied.
The rival contentions and the nature of reference necessitated a decision on the question: whether the workmen represented by the union and attached to Siliguri Depot were or had become at any point of time the workmen of the Corporation and whether an illegal change made with regard to their conditions of service by the Corporation ? Chapter II A was introduced in the by Sec. 6 of the Amending 36 of 1956 which came into force on March 10, imposed an obligation on the employer to give a notice of change, if he proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule.
Item No 1 in the Fourth Schedule reads: 'wages, including the period and mode of payment '.
Thus if mode of payment in vogue is sought to be changed by the employer, Sec.
9A imposes an obligation to give a notice of change to the workmen likely to be affected by such change in the prescribed manner cogently setting out the nature of the change proposed to be effected.
Any change effected without following the procedure prescribed in Sec.
9A will be punishable under Sec.
31(2 of the I.D.
The dispute between the parties revolves round the status of 464 workmen whose discontinuance from employment resulted in the industrial dispute which was referred for adjudication.
In short the dispute is: whether the workmen covered by the reference were the workmen of the Corporation or employed by the contractor and were therefore, the workmen of the contractor ? The Union contends that even though the workmen were initially engaged by the contractor when the work of handling foodgrains brought to Siliguri Depot was entrusted to a contractor but subsequently at least from April, 1973, the intermediary contractor 1074 was removed and they became the workmen directly employed by the Corporation and were therefore, the workmen of the Corporation.
On the other hand, the Corporation contends that the work of handling foodgrains at Siliguri Depot was always entrusted to a contractor because the work is of a fluctuating and intermittent nature and therefore, it was not possible to have regular work force for handling the same.
According to the Corporation, even when the so called direct payment system was introduced after removing the contractor, it was basically a spill over of the old contract system save and except that the contractor was replaced by Sardars/Mondals to whom total payment on piece rate was made and who distributed the wages to the individual workman, the rate of payment remaining the same as was in vogue at the time the contractor handled the work.
It was therefore, submitted on behalf of the Corporation that at no point of time, the concerned workmen ever became the direct workmen of the Corporation and therefore, no question of giving a notice of change arose as required by Sec.
9A of the I.D.
The Tribunal held that initially there was a contractor engaged to undertake handling of foodgrains.
The contractor engaged the workmen for handling the foodgrains.
It was how ever, held that prior to the introduction of 'direct payment system ' in January 1973 at no point of time the handling of foodgrains which means loading and unloading from wagons, trucks and then storing and stacking in the godowns, was ever undertaken by the Corporation and always the work was entrusted to a contractor who engaged his own workmen.
The Tribunal accepted the contention of the Union that since January 2, 1973, the contractor system was discontinued and what is called the direct payment system was introduced .
The Tribunal however proceeded to observe that this did not bring about any change in the status of the workmen and therefore, they never became the workmen of the Corporation.
As a corollary, the Tribunal held that reintroduction of the contractor system in 1975 did not constitute discontinuance of the services of the affected workmen.
In accordance with these findings, the Tribunal negatived the claim of the workmen and made the award to that effect.
Hence this appeal by special leave.
The first and the foremost question is: what is the effect of the introduction of direct payment system from January 2, 1075 1973 on the status of the workmen involved in the reference ? A The Tribunal proceeded to examine the evidence about the existence of contractor system prior to January, 1973 That is hardly relevant.
Parties are agreed that prior to January 2, 1973 the work of handling foodgrains at Siliguri Depot was entrusted by the Corporation to a contractor and the contractor engaged the workmen and the workmen received their salaries or wages or remuneration from the contractor as determined by the contractor or as agreed between the contractor and the workmen and therefore, the workmen were not the workmen of the Corporation.
It is merely adding to the length of the judgment to examine evidence in respect of an admitted position.
Correct approach is to accept this uncontroverted finding of the Tribunal.
It is not in dispute that since January 2, 1973 direct payment system was introduced.
What does this direct payment system imply? Has it any impact on the relation between the Corporation and the workmen to whom by the change introducing direct payment system, the Corporation removed the contractor, took work from the workmen and agreed to pay each workman by name on piece rate basis according to his out turn work ? Has it any bearing on the issue involved in the dispute, name on the status of the workmen ? Briefly stated, when Corporation engaged a contractor for handling foodgrains at Siliguri Depot, the Corporation had nothing to do with the manner of handling work done by the contractor, the labour force employed by him, payments made by him etc.
In such a fact situation, there was no privity of contract or employer and workmen between the Corporation and the workmen 'Workman ' has been defined (omitting the words not necessary) in the Industrial disputes to mean any person (including an apprentice) employed in any industry to do. '.
The expression employed has at least two known connotations but as used in the definition, the context would indicate that it is used in the sense of a relationship brought about by express or implied contract of service in which the employee renders service for which he is engaged by the employer and the latter agrees to pay him in case or kind as agreed between them or statutorily prescribed.
It discloses a relationship of command and obedience.
The essential condition of a person being a workman within the terms of the definition is that he should be employed 1076 to do the work in that industry and that there should be, in other words, an employment of his by the employer and that there should be a relationship between the employer and him as between employer and employee or master and servant.
Unless a person is thus employed there can be no question of his being a `workman ' within the definition of the term as contained in the .
(Dharangadhara Chemical Works Ltd. vs State of Saurashtra(1).
Now where a contractor employs a workman to do the work which he contracted with a third person to accomplish on the definition as it stands, the workman of the contractor would not without something more become the workman of that third person.
Therefore, when the contract system was in vogue, the workmen employed by the contractor were certainly not the workmen of the Corporation and no claim to that effect has been made by the Union.
On January 2, 1973 pursuant to the agreement arrived at between the parties evidenced by the letter dated January 18,1973, the parties agreed to introduce and did introduce the direct payment system to workmen working in the godowns owned by or hired by the Corporation.
Introduction of this system is confirmed by the letter dated January 20, 1973 and was not disputed before us.
What constitutes direct payment system becomes clear from the letter dated April 28, 1977 addressed by the Corporation to all its Regional Managers working at Calcutta, Patna, Gauhati and Bhubaneswar.
As this has a direct bearing on the understanding of the concept of direct payment ill contra distinction to the earlier prevailing system of engaging contractor and in supersession of it, the same may be reproduced in extenso.
Says the letter: "The procedure in respect of direct payment to labourers laid down as under should be followed strictly: (1) The bills would be prepared by the Depot Staff.
(2) The Labour should authorise their Sardar/Mondal to accept payment and sign bills on their behalf and give acquittance.
(3) The authorised Sardars/Mondals may then receive the money after giving acquittance.
(1) 1077 (4) The bill with acquittance in original should be with A FCI" .
Further amplifying this method, the Corporation by its letter dated October 22, 1973, directed as under: "I have been directed by Zonal Manager (East) that the payment to be made to the workers directly by us after the Direct Payment System.
You are therefore, requested to advise your local representatives to submit the bill in time in which particulars of per head out turn by name should be mentioned, so that we do not feel any difficulty to pass the bill and to pay the workers in time.
If formalities as directed by Zonal Manager are not observed we will not be able to pay the worker from next fortnight.
" Examining the system of direct payment as setout in the letter dated April 28, 1973 further amplified by the letter dated October 29, 1973, it becomes crystal clear that name of every workman engaged to handle foodgrains at Siliguri Depot will be mustered in a register and his daily out turn will be specified.
The payment will be by piece rate as was in vogue at the time of contractor system.
The bill will be prepared setting out the names of the workmen and the out turn of each.
The pay bill will be prepared by the Depot staff who are regular employees of the Corporation.
The payment will be made by the Corporation but will be distributed to each workman according to the piece rate by what are called Sardar/Mondal.
The bill with the acquittance in original evidencing payment would be filed with the Corporation.
It must at once be made clear that a salary or wages of a workman in an industrial undertaking can be monthly rated which requires the workmen to render service daily for specified number of hours but the rate per month is fixed.
It can be piece rate correlated to daily production with an obligation to render service daily for specified number of hours, the monthly wage bill being worked out according to production.
Both the systems are known to be in vogue in industrial employment.
When the contractor system was in vogue, the contractor was being paid in lump sum arrived at by multiplying the rate per bag to total number of bags.
What number of workmen and for what length of time they were to be engaged for doing the 1078 handling work was loft to the discretion of the contractor.
The Corporation had nothing to do how many workmen were employed nor the rate or method of payment by the contractor to the labour force employed by him.
Corporation was solely concerned with the number of bags handled by the contractor.
It was not an contract for supply of labour but it was specifically a contract for handling bags of foodgrains.
When the direct payment system was introduced, the intermediary contractor disappeared from the picture.
The work rendered by each workman had to be entered into a muster roll register.
The Corporation will distribute the wages calculated on piece rate to each workman was required to be a party to the acquittance roll to be retained by the Corporation.
The wages were distributed by Sardar/Mondals.
Can there be any doubt about the relationship between the Corporation and the workmen since the date of abolition of the contract system and introduction of direct payment system as discussed herein ? It is nowhere suggested that Sardars/Mondals were contractors.
They were merely the agents of the Corporation for distributing the salary/wages earned by each workman as set out in the register to be maintained in respect of each workman by his name and the wages earned by him at the piece rate.
Assuming as was contended by Mr. Kacker on behalf ofthe respondent Corporation that once the rate remained unchanged even after the removal of the contractor, direct payment system does not bring about any qualitative change in the status of workmen, a fact that stares into the eye and the one that cannot be overlooked is that the contractor had not undertaken the contract obligation for some altruistic motives.
He had done so for earning for profits.
Now accepting what Mr. Kacker and Mr. Pai submitted that the rates remained unchanged the qualitative change in the position of workmen consequently would be, that the workmen 's earnings at piece rate accelerated upward because the contractor 's commission whatever he retained unto himself became available to the workmen and they benefitted.
Therefore, the abolition of the contract system and the introduction of direct payment system hereinbefore discussed brought about a basic qualitative change in the relationship between the Corporation and the workmen engaged for handling foodgrains in that on the disappearance of the intermediary contractor, a direct relationship of matter and servant came into existence between the contractor and the workmen.
To illustrate this point succinctly, let it be made clear that it was obligatory for the Corpo 1079 ration to arrange for handling the bags of foodgrains.
The work A men handled the foodgrains for the Corporation and none else.
For this service rendered, the Corporation agreed to pay and paid wages at piece rate to each workman whose name appeared in the register to be maintained for the purpose as per the directions given by the District Manager.
If the pay packets were actually distributed by Sardars/Mondals.
they can be said to be doing clerical work on behalf of the Corporation in the same manner as a clerk in the Accounts Department prepares and distributes pay packet for each employee of the Corporation month to month.
lf the clerk cannot be said to be the employer, ipso facto the Sardars/Mondals could not be clothed with the status of the replaced contractor.
The intermediary screen having disappeared, the direct relationship came into existence and the conclusion is inescapable that since the introduction of the direct payment system, the workmen became the workmen of the Corporation and a direct master servant relationship came into existence.
The Tribunal fell into error when it failed to draw the logical and inescapable conclusion from the facts hereinbefore discussed and completely misdirected itself when it observed something contrary to record that `the contractor system was not discontinued but it was really snatched away by the Mazdoors from the contractor '.
The finding apart from being perverse is contrary to record and overlooks two important letters dated January 18, 1973 and April 28, 1977 by which the Union and the Managing Director respectively affirmed the voluntary settlement arrived at between the parties, both for abolishing the contract system and introducing the direct payment system.
Therefore, the Tribunal fell into a serious error in overlooking relevant evidence and drawing surmises contrary to the record.
Its finding, therefore, becomes unsustainable and cannot be upheld.
The next question to which we must address ourselves is whether once on the introduction of the direct payment system, the workmen acquired the status of the workmen of the Corporation, was it open to the Corporation to unilaterally discontinue the system without the consent of the workmen and reinduct contractor so as to again introduce a smoke screen which may on paper effectively deny the status of being the workmen of the Corporation, acquired by these workmen.
And on discontinuance of the system of direct payment, without ordering retrenchment of their services by the 1080 Corporation, they obtained a fresh employment under the Contractor Is it legally permissible ? The question provides its own correct and effective answer.
No employer since the introduction of the I.D. Act, 1947 and contrary to its Certified Standing Orders as statutorily required to be drawn up under the can dispense with the service of any workman without complying with the law in force.
Any termination of service contrary to the provisions of the Standing Orders and the provisions of the J.D. Act, 1947 would be void.
It is not necessary to call in aid precedents to substantiate this too obvious and well established proposition.
Then workmen working under an employer are told that they have ceased to be the workmen of that employer, and have become workmen of another employer namely, the contractor in this case, in legal parlance such an act of the first employer constitutes discharge, termination of service or retrenchment by whatsoever name called and a fresh employment by another employer namely, the contractor.
If the termination of service by the first employer is contrary to the well established legal position, the effect of the employment by the second employer is wholly irrelevant.
No attempt was made to justify the termination of service of the afore mentioned workers of the Corporation by the subtle device of introducing a contractor so as to bring about a cessation of contract of employment between the workmen and the Corporation and a fresh contract of employment between the workmen and the contractor.
If what was intended to be done was retrenchment, ex facie the action is contrary to the provisions of Sec.
25F of the I.D. Act, 1947.
Viewed from either angle, the action of introducing so as to displace the contract of service between the Corporation and the workmen would be illegal and invalid and ab initio void and such action would not alter, charge or have any effect on the status of the afore mentioned 464 workmen who had become the workmen of the Corporation.
Mr. Kacker and Mr. Pai, learned counsel on behalf of the Corporation urged that having regard to the functions for which the Food Corporation of India was set up under the , it can without incurring the l ability of employing workmen where work is of an intermittant nature, employ a contractor for supply of labour or for handling certain works of the Corporation.
Without in any way reflecting upon the bona fides of a public sector Corporation to engage a contractor for supply of labour treating it as a commodity, we may assume that the Corporation can 1081 engage a contractor for supply of labor, the question is whether it A has done so.
The long title of the Act shows that the Act was enacted to provide for the establishment of Food Corporations for the purpose of trading in foodgrains and other foodstuffs and for matters connected therewith and incidental thereto.
By Sec. 3 the Central Government was authorized to establish a corporation to be known as the Food Corporation of India.
5 provides for the initial capital and for acquiring power to increase the capital in such manner as the Central Government or the State Government as the case may be may determine, initial capital being provided by Central Government.
Sec. 7 provides for the constitution of the Board of Directors.
The management of the Corporation is to vest in a Board of Directors and the Board of Directors in discharging its functions shall act amongst others according to the instructions on questions of policy as may be given by the Central Government.
The annual net profit of the Food Corporation of India has to be paid to the Central Government (Sec. 33).
Every Food Corporation has to submit to the Central Government an annual report of its working and affairs and the same has to be laid before the Houses of Parliament.
45 confers power on the food Corporation to make regulations not inconsistent with the Act and the rules mad thereunder to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act.
Without prejudice to the generality of the power conferred by Sec 45(1) the regulations must provide for, amongst others, the methods of appointment, the conditions of service and the scales of pay of the officers and employees of a Food Corporation other than the Secretary of the Food Corporation of India.
From the perusal of the scheme of the Act, it is undeniable that the Food Corporation of India is an instrumentality of the State comprehended in the expression 'other authority ' is Art 12 of the Constitution and is subject amongst other things to Part III of the Constitution.
If so, it must act fairly so as not to violate article 14 of the Constitution.
Now we fail to understand how this scheme of the Act would permit the Corporation, an instrumentality of the State, to act in a manner thoroughly arbitrary by first keeping a contractor, removing him and reinducing him without a semblance of consideration for the fate of the workmen working for it or for its benefit or for some work connected with the functions of the Corporation.
Therefore, the scheme of the Act has hardly any relevance save and except that its action is likely to be struck down 1082 as arbitrary being violative of article 14, but it is not necessary to go so far because the relief under the is readily available to the workmen.
The submission that it was open to the Corporation to engage a contractor for handling of foodgrains may be true or legally acceptable; the question, however, is whether once some workmen became the workmen of the Corporation as here in before discussed, was it open to the Corporation to induct a contractor and treat its workmen as workmen of the contractor.
The answer is in the negative, for the reasons here in before discussed.
The agony consequent upon such submission may be unmasked While the trend is in the direction of abolition of contract labor, this public sector undertaking appears to be completely oblivious to the trend and the pace setter as enacted by the Parliament in the Contract Labor (Regulation and Abolition) Act, 1970.
An assertion in the Statement of Objects and Reasons accompanying the Bill, which was enacted into the law, may help the Corporation in freeing itself from the traditional master servant relationship and help it in becoming an ideal employer where exploitation in any form is wholly eschewed.
The statement reads as under: ' The system of employment of contract labor lends itself to various abuses.
The question of its abolition has been under the consideration of government for a long time.
In the Second Five Year Plan, the Planning Commission made certain recommendations, namely, undertaking of studies to ascertain the extent of the problem of contract labor, progressive abolition of system and improvement of service, conditions of contract labor where the abolition was not possible.
" The Act was enacted with a view to abolishing wherever possible or practicable, the employment of contract labour.
The proposed Bill aimed at abolition of contract labor in respect of such categories as may be notified.
The Corporation attempted by its action to reverse that trend which does no credit to it.
We say no more save and except saying that where the law helps, such anti labor practices must be thwarted or nipped in the bud.
It is at this stage necessary to examine the implication of Sec.
9A of the I.D. Act, 1947.
As hereinbefore pointed out, Sec.
9A 1083 makes it obligatory upon an employer who proposes to effect any A change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule to give a notice of desired or intended change.
It cannot do so without giving to the workman likely to be affected by the change, a notice in the prescribed manner of the nature of the change proposed to be effected and within 21 days of giving such notice.
There is a proviso to Sec 9A which has no relevance here.
However, incidentally it may be pointed out that if the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defense Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply no notice of change would be necessary before effecting a change.
No attempt was made on behalf of the respondent Corporation to urge that any of the aforementioned rules would govern the conditions of service of the workmen involved in the dispute.
Now after introducing the direct payment system agreed to between the parties, if the Corporation or the employer wanted to introduce a change in respect of any of the matters set out in Fourth Schedule, it was obligatory to give a notice of change.
Item l in the Fourth Schedule provides: 'wages, Including the period and mode of payment '.
By canceling the direct payment system and introducing the contractor, both the wages and the mode of payment are being altered to the disadvantage of the workmen.
Therefore, obviously a notice of change was a must before introducing the change, otherwise it would be an illegal change.
Any such illegal change invites a penalty under Sec.
31(2) of the l.D. Act, 1947.
Sch a change which is punishable as a criminal offence would obviously be an illegal change.
It must be held that without anything more such an illegal change would be wholly ineffective.
In view of the discussion, this appeal has to be allowed and the award of the Tribunal rejecting the reference and denying the benefit must be quashed and set aside and an award be made that the aforementioned 464 workmen who had become the workmen of the Corporation continued to be the workmen employed by the Corporation and shall be entitled to all the rights, liabilities, obli 1084 gations and duties as prescribed for the workmen by the Corporation.
A formal award to that effect shall be made by the Tribunal.
As it was stated before this Court that these workmen continued need to be employed, undoubtedly under the contractor since the illegal change was introduced, the question of paying backwages does not arise.
The Tribunal, however, must satisfy itself before making the final award whether any workman was denied work and consequently wages.
The Corporation shall pay costs quantified at Rs. 10,000 to the appellant Union.
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There were 464 workmen designated as handling Mazdoors for handling foodgrains at Siliguri Depot set up by the respondent Food Corporation of India in West Bengal.
Prior to January 2, 1973, the work of handling foodgrains at the said depot was entrusted by the respondent to a contractor who used to engage workmen and the workmen received their salaries or wages or remuneration from the contractor as determined by the contractor or as agreed between the Contractor and the workmen.
The respondent introduced direct payment system with effect from January 2, 1973 pursuant to an agreement arrived at between the parties and the intermediary contractor disappeared from the picture.
The method adopted was that the bills for the piece rate wages payable to handling Mazdoors were prepared by the Depot staff.
The work rendered by each workmen had to be entered into a muster roll register.
The respondent Corporation distributed the wages calculated on piece rate to each workman through Sardars/Mondals and each workman was required to be a party to the acquittance roll to be retained by the respondent.
The Sardars Mondals used to accept payment and sign bills on behalf of the aforesaid workmen.
The respondent changed this method of direct payment with effect from March 10, 1975 superseding the direct payment system and reintroducing contractor system and that too without giving any notice of change to the Workmen 's Union appellant herein as contemplated by section 9(A) of the (I.D. Act, for short) Consequently the respondent discontinued employment of the aforesaid 464 workmen and brought in the intermediary contractor and treated the workmen as the workmen employed by the contractor.
The appellant Union raised an industrial dispute as to whether the discontinuance of employment of 464 workers of their Siliguri Depot w.e f. 21st July 1974 by the respondent is lawful and justified and the same was referred to the tribunal which negatived the claim of the appellant union and held that the discontinuance of contractor system in the year 1973 and 1066 introduction a direct payment system did not bring about any change in the status of the workmen and therefore they never became the workmen of the respondent Corporation.
As a corollary, it further held that reintroduction of the contractor system in 1975 did not constitute discontinuance of the services of the affected workmen.
Hence this appeal by special leave.
The appellant Union contended (i) that oven though the workmen were initially engaged by the contractor when the work of handling food grains brought to Siliguri Depot was entrusted to a contractor, but subsequently at least from April 1973, the intermediary contractor was removed and they became the workmen directly employed by the Corporation and wore therefore, the workmen of the respondent; and unless their services were legally terminated, they cannot be discontinued from service of the Corporation and some other master imposed upon them.
(ii) that apart from being an unfair labour practice, the changeover was illegal and vindictive and malicious in character and that the respondent was legally bound to give a notice of the said change to the Union as contemplated section 9A of the I.D. Act.
On the other hand, the respondent Corporation argued (i) that even when the so called direct payment system was introduced after removing the contractor.
it was basically a spill over of the old contract system save and accept that the contractor was replaced by Sardars/Mondals to whom total payment on piece rate was made and who distributed the wages to the individual workmen, the rate of payment remaining the same as was in vogue at the time the contractor handled the work and therefore at no point of time, the concerned workman ever became the direct workmen of the Corporation and no question of giving a notice of change arose as required by section 9(A) of the I.D. Act Allowing the appeal, ^ HELD: (1) 'Workmen ' has been defined in the Industrial disputes Act to mean any person (including an apprentice) employed in any industry to do. ".
The expression employed has at least two known connotations but as used in the definition, the context would indicate that it is used in the sense of a relationship brought about by express or implied 1 ' contract of service in which the employee renders service for which he is engaged by the employer and the latter agrees to pay him in cash or kind as agreed between them or statutorily prescribed.
It discloses a relationship of command and obedience.
The essential condition of a person being a workman within the terms of the definition is that he should be employed to do the work in that industry and that there should be, in other words, an employment of his by the employer and that there should be a relationship between the employer and him as between employer and employee or master and servant.
Unless a Person is thus employed there can be no question of his being a 'workman ' within the definition of the term as contained in the I.D. Act.
[1075F H; 1076A B] Dharangadhara Chemical Works Ltd. vs State of Saurashtra, [l957] SCR 152; referred to.
1067 (2) No employer since the introduction of the I.D. Act, 1947 and A contrary to its Certified Standing Orders as statutorily required to be drawn up under the can dispense with the service of any workman without complying with the law in force Any termination of service contrary to the provisions of the Standing orders and the provisions of the I.D. Act, 1947 would be void.
It is not necessary to call in aid precedents to substantiate this too obvious and well established proposition.
Section 9A also makes it obligatory upon an employer who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule to give a notice of desired or intended change.
It cannot do so without giving to the workman likely to be affected by the change a notice in the prescribed manner of the nature of the change proposed to be effected and within 21 days of giving such notice.
[1080B C;1082H;1083A B] 3(i) It is nowhere suggested that Sardars/Mondals were contractors.
They were merely the agents of the Corporation for distributing the salary/ wages earned by each workman as set out in the register to be maintained in respect of each workman by his name and the wages earned by him at the piece rate.
Once the rate remained unchanged even after the removal Of the contractor, the qualitative change in the position of workmen consequently would be, that the workmen 's earnings at piece rate accelerated upward because the contractor 's commission whatever he retained unto himself became available to the workmen and they benefitted Therefore, the abolition of the contract system and the introduction of direct payment system brought about a basic qualitative change in the relationship between the Corporation and the workmen engaged for handling foodgrains in that on the disappearance of the intermediary contractor, a direct relationship of master and servant came into existence between the contractor and the workmen .
[ 1078D G] 3(ii) Moreover, it was obligatory for the Corporation to arrange for handling the bags of foodgrains.
The workmen handled the foodgrains for the Corporation and none else For this service rendered, the Corporation agreed to pay and paid wages at piece rate to each workman whose name appeared in the register to be maintained for the purpose as per the directions given by the District Manager.
If the pay packets were actually distributed by Sardars/Mondals, they can be said to be doing clerical work on behalf of the Corporation in the same manner as a clerk in the Accounts Department prepares and distributes pay packets for each employee of the Corporation month to month.
If the clerk cannot be said to be the employer, ipso facto the Sardars/Mondals could not be clothed with the status of the replaced contractor.
The intermediary screen having disappeared, the direct relationship came into existence and the conclusion is inescapable that since the introduction of the direct payment system, the workmen became the workmen of the Corporation and a direct master servant relationship came into existence.
[1079A C] 3(iii) The findings of the tribunal when it observed something contrary to record that the contractor system was not discontinued but it 1068 was really snatched away by the Mazdoors from the contractor apart from being perverse is contrary to record and overlooks two important letters dated January l8, 1973 and April 28, 1977 by which the Union and the Managing Director respectively affirmed the voluntary settlement arrived at between the parties, both for abolishing the contract system and introducing the direct payment system.
The tribunal feel into a serious error in overlooking relevant evidence and drawing surmises contrary to the record.
Therefore, the award of the Tribunal rejecting the reference and denying the benefit must be quashed and set aside and an award be made that the aforementioned 464 workmen who had become the workmen of the Corporation continued to be the workmen employed by the Corporation and shall be entitled to all the rights, liabilities, obligations and duties as prescribed for the workmen by the Corporation.
[1019D E; 1083G H] (4) When workmen working under an employer are told that they have ceased to be the workmen of that employer, and have become work men of another employer namely, the contractor in this case, in legal parlance such an act of the first employer constitutes discharge, termination of service or retrenchment by whatsoever name called and a fresh employment by another employer namely, the contractor.
If the termination of service by the first employer is contrary to the well established legal position the effect of the employment by the second employer is wholly irrelevant.
No attempt was made to justify the termination of service of the aforementioned workers of the Corporation by the subtle device of introducing a contractor so as to briny about a cessation of contract of employment between the workmen and the Corporation and a fresh contract of employment between the workmen and the contractor.
If what was intended to be done was retrenchment, ex facie the action is contrary to the provisions of Sec.
25F of the I Act, 1947.
Viewed from either angle, the action of introducing so as to displace the Contract of service between the Corporation and the workmen would be illegal and invalid and ab initio void and such action would not alter, change or have any effect on the status of the afore mentioned 464 workmen who have become the workmen of the Corporation.
[1080C F] (5) If the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Services (Classification Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply no notice of change would be necessary before effecting a change.
No attempt was made on behalf of the respondent Corporation to urge that any of the aforementioned rules would govern the conditions of service of the workmen involved in the dispute Now after introducing the direct payment system agreed to between the parties, if the Corporation of the employer wanted to introduce a change in respect of any of the matters set out in Fourth Schedule.
it was obligatory to give a notice of change.
Item 1 in the Fourth Schedule provides: 'wages, including the period and 1069 mode of payment '.
By cancelling the direct payment system and introducing the contractor, both the wages and the mode of payment are being altered to the disadvantage of the workmen.
Therefore, obviously a notice of change was must before introducing the change, otherwise it would be an illegal change.
Any such illegal change invites a penalty under Sec. 31 (2) of the I.D. Act, 1947.
Such a chance which is punishable as a criminal offence would obviously be an illegal change it must be held that without anything more such an illegal change would be wholly ineffective.
[1083C P] (6) The Food Corporation of India was set up under the The scheme of the would not permit the Corporation an instrumentality of the State, to act in a manner thoroughly arbitrary by first keeping a contractor, removing him and reinducting him without a semblance of consideration for the fate of the working for it or for its benefit or for some world connected with the functions of the Corporation.
Therefore, the scheme of the Act has hardly any relevance save and except that its action is likely to be struck down as arbitrary being violative of article 14, but it is not necessary to go so for because the relief under the is readily available to the workmen.
While the trend is in the direction of abolition of contract labour, this public sector undertaking appears to be completely oblivious to the trend and the pace setter as enacted by the Parliament in the .
The Act was enacted with a view to abolishing wherever possible or practicable, the employment of contract labour.
The Corporation attempted by its action to reverse that trend which does not credit to it.
Where the law helps, such anti labour practices must be thwarted or nipped in the bud [1081G H;1082C D]
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4959.txt
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Appeals Nos.
590591 of 1963 Appeals from the judgment and decree dated February 6, 1963 of the Mysore High Court in Second Appeals Nos. 471 and 472 of 1960.
H. N. Sanyal, Solicitor General, M. M. Gharekhan and I.N. Shroff, for the appellant (in C.A. No. 590/1963).
H. N. Sanyal, Solicitor General, M.C. Setalvad, M.M. Gharekhan and I.N. Shroff, for the appellant (in C.A. No. 591/ 63).
Naraindas C Malkani, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents (in both the appeals).
March 30, 1964.
The judgment of DAs GUPTA and AyYANGAR JJ. was delivered by AYYANGAR J. SARKAR J. delivered a separate opinion.
SARKAR, J.
The appellant is a company carrying on business as supplier of electricity in a certain area in the State of Bombay.
The respondents Bhathena and Tendulkar were consumers of electrical energy supplied by the appellant.
The 505 present appeals arise out of disputes between these consumers and the appellant concerning the legality of the charges made by the appellant for electricity supplied by it.
The supply of electrical energy is controlled by two statutes and the questions involved in the present cases will turn on them.
These statutes are the Electricity Act, 1910 and the . 1 will first consider the Act of 1910.
Section 3 of this Act gives power to the Government to grant a licence to a party to supply electrical energy in any specified area and to prescribe in the licence the limits of price to be charged by it for the supply.
This section further provides that the provisions in the Schedule to the Act would, unless otherwise directed, be deemed to be incorporated in the licence.
Paragraph XI of that Schedule states that a licensee would not be entitled to exceed the limits of price fixed in his licence.
This paragraph, however, gives power to the Government to alter these limits on the recommendation ,of an Advisory Board appointed under section 35 of the Act.
It is not necessary to refer to the other provisions of this Act.
The appellant had been supplying electricity under a licence issued in 1932 by the Government of Bombay under the Act of 1910.
The licence fixed the limits of the prices which the appellant could charge but these limits were altered by an order made by the Government on December 30, 1942 under paragraph XI of the Schedule and stood thereafter as follows: A. For lights and fans annas /5/ (= 31 nP.) per unit and, B.
For motive power, (i) upto 4 B.H.P. anna /1/ (=O.06 nP.) per unit in addition to standing charge of Rs. 2 / per month per B.H.P connected.
(ii)over 4 B.H.P. / /19 pies (=O.05 nP.) per unit in addition to the standing charge at the same rate of Rs. 2/ per B.H.P. per month.
Due to the conditions brought about by the Second World War, certain orders were made from time to time permitting the licensees to add a surcharge not exceeding 33 1/2 per cent to the existing charges.
Lastly, on September 30, 1946 an Act was passed by the Bombay legislature called the Bombay Electricity (Surcharge) Act, 1946, hereinafter referred to as the Surcharge Act, which continued the surcharge specified therein for a period of three years.
This Act expired on September 30, 1949.
It is said that even thereafter the appellant continued charging the consumers at rates which included the surcharge under the Surcharge Act, and, therefore, at rates in excess of those fixed by the Order of December 30, 1942 and that was illegal.
The appellant on its part claims 506 that its charges after the expiry of the Surcharge Act were all Justified under the Act of 1948 the relevant provisions of which came into force on September 10, 1948.
This Act will be referred to later.
The respondent Bathena commenced taking electricity from the appellant sometime in 1954.
Soon thereafter he started disputes about the legality of the charges realised from him by the appellant in respect of energy supplied for purposes of motive power of over 4 B.H.P. and in 1955 filed a suit against the appellant for refund of amounts alleged to have been illegally collected from him in excess of the limits.
fixed by the order of December 30, 1942, namely, an excess standing charge of 0.69 nP. per B.H.P. per month over that fixed by the Order of December 30, 1942 and a similar excess unit charge of 0.01 nP. per unit.
That suit is still pending and with the disputes involved in it I am not concerned in this judgment.
On September 25, 1958, the appellant gave notice to its customers that with effect from November 1, 1958 it would charge for motive power 0.09 nP. per unit plus a standing charge of Rs. 2.69 per B.H.P. per month.
The unit charge mentioned in the notice was in excess of that prescribed in the order of December 30, 1942 by 0.04 nP. per unit.
There is no dispute that this notice revised the unit charge existing at its date but it seems that it did not enhance the then existing standing charge.
The notice gave rise to further disputes as a result of which two suits were filed against the appellant on March 31, 1959 in the court of the Civil Judge, Belgaum.
The first of these suits was filed by the respondent Bathena acting for himself and all other consumers of electricity supplied by the appellant for purposes of motive power over 4 B.H.P. for the following reliefs: "(a) That a declaration be granted by this Hon 'able Court that the standing charges of 2.69 nP. per B.H.P. per month and the excess sum of 0.04 nP. per unit of energy consumed, for motive power whether connected or otherwise, are illegal and unauthorised, inoperative and ultra vires of the Defendant company and the Plaintiff is not bound to pay the same and that the Defendant Company have no authority to control or interfere in the supply of electric energy or its use, and that the restrictions imposed in Notice dated 25 9 58 are illegal, bad in law, and, (b) an injunction restraining the Defendant Company, its servants, its agents or its representatives from levying and recovering the excess and illegal charges, (such as standing charges and per unit 507 of consumed energy at 0.04 nP.) from the plaintiff, by means of any coercive measures and from interfering or controlling with the electric Supply".
The other suit was filed by the respondent Tandulkar also in a representative capacity in respect of the charge of 0.37 nP. per unit for electricity supplied for lights and fans, and it sought the following reliefs: "(a) That a declaration be granted by this Hon 'able Court that the excess sum of 0.06 nP. per unit of energy consumed for lights and fans, are and unauthorised, inoperative and ultra vires of the Defendant Company and the plaintiff is not bound to pay the same.
(b) An injunction restraining the Defendant Company its servants, its agents or its representatives from levying and recovering the excess and illegal charges, i.e. 0.06 nP. per unit of consumed energy from the plaintiff by means of any coercive measures and from interfering or controlling with the electric supply".
Various persons were on their own applications later added as plaintiffs in these suits.
The suits were decreed by the trial Court but that decision was reversed on appeal by a District Judge.
On second appeal, however, the High Court of Mysore set aside the decision of the learned District Judge and restored that of the trial Court.
The present appeals are against the judgment of the High Court.
I will first take up the suit relating to the charges for motive power.
To clear the ground it may be stated that this suit is not concerned with any charge made prior to the date that it was filed.
As earlier stated, it asks for a declaration and art in junction.
An injunction cannot of course be in respect of a past period and the declaration sought must also, therefore, be confined to the future.
In any case, since the declaration is sought in respect of the charges as revised by the said notice as from November 1, 1958 it is clear that no question as to the legality of any charge made before November 1, 1958 was sought to be raised.
It would have been noticed that the suit was concerned with disputes about two charges, namely, the unit charge of 0.09 nP. per unit fixed by the notice of September 25, 1958 and the standing charge of Rs. 2.69 per B.H.P. per month.
I will first consider the dispute about the unit charge.
Could the appellant enhance the charge? It is not disputed that a licensee can on his own enhance his charges upto the maximum limit fixed in the licence or otherwise fixed by the Government.
The dispute is as to the right to enhance them 508 beyond that limit, and in this judgment I will be discussing such enhancement only.
It is not in controversy that under the Electricity Act of 1910 it could not do so but as already stated, the appellant bases its claim to enhance the charge on the as amended by Act 10th of 1956 with effect from December 30, 1,956.
It will be noticed that this amendment was in force When the revised rate came into force under the notice of September 25, 1958.
The relevant provisions of this Act so amended are these: section 57.
"The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority (a) in the case of a licence granted before the commencement of this Act, from the date of the commencement of the licensee 's next succeeding year of account; and, (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provisions of the (9 of 1910), and the licence granted to him thereunder and of another law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules".
section 57A. "(1) Where the provisions of the Sixth Sche dule and the Seventh Schedule are under section 57 deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to) the said licensee, namely:,(a) the Board or where no Board is constituted under this Act, the State Government (i) may, if satisfied that the licensee has failed to comply with any of the provisions of the Sixth Schedule; and, (ii) shall, when so requested by the licensee in writing, constitute a rating committee to examine the licensee 's charges for the supply of electricity and to make recommendations in that behalf to the State Government: (c) a rating committee shall report to the State Government making recom mendations regarding the charges for electricity which the licensee may make 509 (d) within one month after the receipt of the report under clause (c), the State Government may make an order in accordance therewith fixing the licensee 's charges for the sup ply of electricity and the licensee shall forthwith give effect to such order".
Sixth Schedule 1.
"Notwithstanding anything contained in the (9 of 1910), and the provisions in the licence of a licensee, the licensee shall so adjust his rates for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return; Now the first paragraph of the Sixth Schedule to the Act of 1948 clearly gives a licensee the power to adjust and there fore also to enhance his.
rates on his own.
It, however, fixes a limit for the enhancement and that, is, so as not, as far as possible, to make his "clear profit", for the year exceed the amount of "reasonable return".
The methods of determining "clear profit" and "reasonable return" are stated respectively in cls.
(2) and (9) of paragraph XVII of the Schedule but it will not be necessary for me to go into, their details.
Now under paragraph 1 of the Sixth Schedule the rates can be enhanced "Notwithstanding anything contained in the (9 of 1910), , and the provisions in the licence of a licensee".
Nothing to the contrary, therefore, contained in the Act of 1910 or the licence can make the enhancement of the rates by the licensee in terms of this paragraph illegal.
It would follow that the power under paragraph 1 of the Sixth Schedule would justify an enhancement of the rate beyond that fixed by the licence or any order of the Government.
This seems to me to be perfectly plain.
It will be remembered that paragraph XI of the Schedule to the Act of 1910 prohibited a licensee from charging a rate in excess of the maximum fixed by the licence.
That provision, however, was repealed by Act 101 of 1956.
This was obviously done because it was realised that paragraph 1 of the Sixth Schedule to the Act of 1948 made the prohibition in paragraph XI of the Schedule to the Act of 1910 quite ineffective.
Then we have section 70(1) of the Act of 1948 which provides that "No provision of the (9 of 1910), or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it is inconsistent with any of the provisions of this Act, have any effect".
This provision also supports the view that the power to 510 enhance the rates given by the Act of 1948 is not in any way affected by anything in the Act of 1910 or the licence granted Under it.
Learned counsel for the respondents, however, first con tended that the power to enhance cannot be exercised by the licensee on its own.
If, it wants an increase in its rates it has first to ask the Government under section 57A of the Act of 1948 to constitute a rating committee.
This contention appears to me to be entirely unfounded.
No doubt a licensee can ask the Government to constitute a rating committee under that section and if the Government does so and fixes rates on the basis of the recommendations of that committee, the licensee would be bound by such fixation of rates.
But I find nothing in section 57A or anywhere else in the Act of 1948 to lead to the view that the licensee cannot increase his rates except after a rating committee has recommended such increase and the Government has permitted it.
Such a view would largely render paragraph 1 of the Sixth Schedule nugatory.
Nor do think that there is any conflict between section 57A and paragraph 1 as was contended by the respondents.
Quite clearly section 57A gives a licensee the power to call for the constitution of rating committee.
If he does so.
he does not take the risk of fixing an enhanced rate on his own with the possible consequences of having to refund Dart of the amounts collected under provisions to which reference will be made later.
That seems to be the only reason why the licensee has been given the right to ask for the constitution of a rating committee.
If he does not mind taking the risk of these consequences, I find nothing in the Act of 1948 requiring him to ask for the constitution of a rating committee before he can proceed to enhance the rates on his own.
Learned counsel for the respondents then relied on subs.
(2) of section 70 of the Act of 1948 which states that "Save as otherwise provided in this Act, the provisions of this Act shall be in addition to, and not in derogation of, the ".
He contended that this showed that an attempt has to be made to harmonise the two Acts and, therefore, the power to enhance the rates given by the Act of 1948 must be confined to an enhancement upto the maxima limits specified in the licence granted or any order made by the Government.
I am wholly unable to agree that sub section (2) of section 70 of the Act of 1948 requires the two Acts to be harmonised.
In fact sub section
(1) of section 70 of the Act of 1948 provides that when there is inconsistency between the two Acts, the earlier Act is not to have effect.
There can be no question of harmonising unless there is inconsistency and sub section
(1) says what is to happen in case of inconsistency; it is that one is to give way to the other and not that 511 an attempt should be made to harmonise the two.
Furthermore sub section
(2) of section 70 of the Act of 1948 says that "Save as otherwise provided in this Act" the later Act is not to be read as in derogation of the earlier Act.
When, therefore, it is otherwise provided in the Act of 1948, this Act might be read as in derogation of the Act of 1910.
Now section 57 of the Act of 1948 and paragraph 1 of the Sixth Schedule to it clearly provide that the provisions therein contained are to override the provisions of the earlier Act.
It would thus be against the express terms of the Act of 1948 to attempt to harmonise the power to enhance the rates given to the licensee by it with any of the provisions of the licence or the Act of 1910.
Lastly, learned counsel for the respondents relied on Babulai Chaganlal Gujerathi vs Chopda Electric Supply Co. Lid.(1) to support his contention that under paragraph 1 of the Sixth Schedule to the Act of 1948 a licensee had the power to enhance the rates only upto the maxima limits specified in the licence or Government 's order but not beyond those limits.
It was no doubt so decided in that case but then it turned on paragraph 1 of the Sixth Schedule as it stood before the amendment in 1956.
Before the amendment, that paragraph did not contain the words "Notwithstanding anything contained in the (9 of 1910) and the provisions in the licence of a licensee".
It seems to me plain that these words have made a material change in the provision and as it now stands, it cannot be said that the enhancement permitted must be restricted to the limit fixed in the licence or an order by the Government.
The decision cited, therefore, is of no assistance in interpreting paragraph 1 of the Sixth Schedule as it stands after the amendment in 1956.
Whether Chhaganlal 's case(1) was correctly decided in view of the terms of paragraph 1 as it stood before the amendment is not a question which arises for determination in this case and on that question I express no opinion.
I think that it must be held on the terms of paragraph 1 of the Sixth Schedule to the Act of 1948 as it stood at the time of the notice that a licensee had power to enhance the rates and such power was not limited to an enhancement up to the limits fixed by the licence or otherwise by any order of the Government.
On the question whether under paragraph I of the Sixth Schedule to the Act of 1948 a licensee could enhance his rates beyond the limits fixed by the Government or in the licence the High Court took the same view as I have done and held that the respondents could not claim any relief solely on the ground that the rates charged had exceeded those limits.
The High Court, however, observed that the appellant had failed to establish that it had revised its rates (1) I.L.R. 512 as provided by the Act of 1948 before its amendment in 1956 and, therefore, held that the appellant must be taken to have illegally continued the surcharge which it was levy ing under the Surcharge Act, 1946 even after its expiry on October, 1, 1949.
It is somewhat difficult to understand these observations.
As I have earlier said, no question as to the legality of any charge made before the suit or at any rate, before November 1, 1958, arises in this case.
Therefore, even if the appellant had not revised its charges prior to the amendment, no grievance on that account can be made on the plaint on which the present suit is based.
Furthermore I do not see why the burden of proving that those charges were the charges duly revised under the Act of 1948 prior to its amendment should be upon the appellant.
No issue on this question also appears to have been framed by the trial Court at all.
Even the plaint does not say that what the appellant had done was to continue an illegal charge.
I repeat that whether the charges made before November 1, 1958 were illegal or not, is not a question that arises for decision in these cases.
Admittedly the notice of September 25, 1958, revised the unit charge and, therefore, in fact there was no continuation of an earlier illegal charge, assuming the earlier charge to have been illegal.
The High Court, however, also held that the appellant was under a statutory duty under the Act of 1948 to adjust its rates so that its clear profit did not exceed the amount of reasonable return and it had not established that it had done so after the Act was amended, nor bad it proved that the enhancement mentioned in the notice of September 25, 1958 would not result in its clear profits exceeding the amount of reasonable return.
Lastly, the High Court observed that "even otherwise the enhancement is the continuation of the illegal charges and that by itself is invalid".
It was on these grounds that the High Court decided the cases in favour of the respondents.
I am unable to agree with the High Court on any of these points.
I will take the last point first.
With respect to the learned Judges of the High Court, I do not understand what exactly is meant by the enhancement being the continuation of the illegal charge.
That there was a revision of the rates by the notice of September 25, 1958 is the respondent 's own case in the plaint.
I will assume that the revision raised the rates to the figures that were chargeable under the expired Surcharge Act of 1946.
But the identity of the figures cannot by itself make the enhancement illegal if it was legal under the Act of 1948 as amended.
Indeed as there was admittedly a revision there was really no continuation of a previous charge.
This point must, therefore, be rejected.
513 The other points on which, as stated above, the High Court based itself, appear me to be equally untenable.
These points are really one and that is whether the appellant has established that the revised rate fixed by the notice of September 25, 1958 would not make its clear profit exceed the amount of reasonable return.
As already stated, it is admitted in the plaint that there was a revision of the unit ,charge by the notice.
So it is not in dispute that after the amendment of paragraph 1 of the Sixth Schedule the appellant had revised its unit charge.
I am unable to agree that the onus of establishing that the revision did not make the appellant 's clear profit exceed the amount of a, reasonable return should be on the appellant.
I think that onus should be on the respondents because it is they who allege that "the rates mentioned by the defendant are exceeding the reasonable return".
The more serious objection to this point, however, is that it does not seem to me that it is competent for a Civil Court to go into the question whether the enhanced rates are illegal because they take the clear profit beyond the amount of the reasonable return, and to give any relief on that basis.
The reasons for this view will now be stated.
Paragraph 1 of the Sixth Schedule to the Act of 1948 no doubt prohibits the licensee from enhancing his rates beyond a figure which would make his clear profit exceed the amount of reasonable return.
The Act, however, at the same time provided the consequences of a breach of the prohibition.
Thus the fourth and the last proviso in paragraph 1 of the Sixth Schedule to the Act of 1948 states, "Provided further that if the rates of supply fixed in pursuance of the recommendations of a rating committee constituted under section 57A are lower than those notified by the licensee under and in accordance with the preceeding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them".
One consequence of the breach of the prohibition, therefore, is the liability to refund the difference between the enhanced rate which has to be notified under the third proviso and that fixed by the rating committee.
But a rating committee may not have been constituted for it is constituted only where the licensee wants it, or the Government is entitled to constitute it under section 57(1) of the Act of 1948.
Where a rating committing is not constituted, there is no liability to refund but the provisions of paragraph II of the Schedule would then apply and this equally whether there is an en hancement of the charge under paragraph 1 and where there is none.
That paragraph is in these terms: Paragraph 11.
(1) If the clear profit of a license, in any year of account is in excess of the amount of L/P(D)ISCI 17 514 reasonable return, one third of such excess, not exceeding five per cent of the amount of reasonable return, shall be at the disposal of the undertaking.
Of the ,balance of the excess.
One half shall be appropriated to a reserve which shall be called the 'tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct.
This provision shows that where there was a, revised rate and that rate exceeded the limit prescribed in paragraph 1, a consumer might get a refund of a part of the excess but that too only at the discretion of the government.
He had clearly no right to any refund even in such a case.
Quite obviously if the consumer could obtain refund of the whole excess as determined by a civil court, these provisions would be completely meaningless.
Equally obviously if a civil court could decide that the charge made had exceeded the limit and was, therefore, illegal, it could also direct a refund of the amount illegally realised.
Therefore, it seems to me clear that the question of a breach of the terms of the first part of paragraph 1 of the Sixth Schedule was not intended to be canvassed in a civil court; a civil court has no power to decide that question nor can it give any relief in respect thereof.
Indeed if this were not so, the consequences would be most anomalous.
If the Civil Court could decide the question whether the enhanced rate resulted in the clear profit exceeding the amount of the reasonable return, then it is conceivable that different courts might come to different conclusion on different materials placed before them and the result of that would be to destroy the uniformity of rate chargeable by a licensee.
Such a situation could not have been intended.
Again the Act of 1948 did not give to the consumer the right to have a rating committee constituted.
This was obviously because it would be impossible to work a public utility concern like an electric supply business if every consumer could get a rating committee to go into the question of rates.
There may then be a continuous succession of rating committees and there would be no fixity of the rates chargeable.
The convenience of all had to be kept in mind.
Power was hence given only to the Government to take steps when a licensee committeed a breach of its obligations.
Therefore, in my opinion, the High Court was in error in holding that the appellant should have shown that the enhancement did not result in its clear profit exceeding the amount of reasonable return and in deciding in favour of the 515 respondents on that basis.
I hold that the respondents were not entitled to canvass in a Civil Court any question as to the rates of a licensee being in excess of the limit pres cribed in paragraph 1 of the Sixth Schedule to the Act of 1948.
A Civil Court could not declare that the rates charged by a licensee were illegal as they made its clear profit exceed the reasonable return.
If there was such excess.
the relief could be obtained only if the Government set up a, rating committee, a refund became due thereupon under the last proviso to paragraph 1 of the Sixth Schedule to the Act of 1948 or if relief was available under paragraph 11 (1) of that Schedule.
Then it was said that the revision by the notice of Septem ber 25, 1958 was bad in any case because under the third proviso to paragraph I in the Sixth Schedule there could be no revision of rates under that paragraph unless a notice in writing of the intention to enhance was given by the licensee to the Government or to the State Electricity Board and no such notice was in fact given.
That proviso no doubt requires a notice to be given but the contention is none the less clearly without foundation for, as I shall immediately show such a notice was in fact given.
Now exhibit 62 is a copy of a letter received by the appellant from the Secretary of the State Electricity Board and it refers to a letter "No. AMAL/BEL/ C 2, dated 7 8 1958" written by the appellant to the Board and the letter last mentioned, which is exhibit 60, is the notice by the appellant to the Board expressing its intention to revise the, rates.
It is quite clear, therefore, that notice had been given to the Board of the proposed enhancement.
This point it may be stated does not seem to have been taken in the High Court.
It was also said that the notice was bad as it did not state that the standing charge was being increased from Rs. 2/to Rs. 2.69 per B.H.P. per month.
This again is an unfounded contention for the standing charge had not been increased by the notice at all.
Indeed the plaint itself in paragraph 5 states that prior to November 1, 1958 the appellant had been levying standing charges at the rate of Rs. 2.69.
So there was no enhancement of this charge by the notice and, hence no question of giving any notice of any enhancement of the standing charge arises.
Lastly, it was said that in the notice to the consumers it was stated that the power supply would be restricted between certain hours but the notice to the Government did not mention this restriction in the supply.
The notice to the consumers no doubt stated that the revised unit charge would be in respect of restricted hours of supply but that does not make the contention of any substance.
There was nothing in the notice to show that the supply would be restricted.
Further L/P(D)ISCI 17(a) . 516 it is neither alleged in the plaint nor does it appear from anything on the record, that there was in fact any restriction in the supply.
That being so, the failure to give notice to the Government of the restriction in the supply is wholly immaterial.
I have not, further been shown any provision under which notice to the Government of a restriction in the supply of electricity is necessary.
It is certainly not required by anything in paragraph 1 in the Sixth Schedule to the Act of 1948.
I am, therefore, of the opinion that there is no reason to hold that the appellant was not entitled to levy the charge mentioned in its notice of September 25, 1948.
I come now to the standing charge of Rs. 2.69 per B.H.P. per month.
As in the case of the other charge and for the same reasons, I am not concerned with any question as to its legality in respect of any period prior to the suit.
It has to be remembered that there is no complaint that this rate had been increased by the notice.
Lastly, as already stated, a Civil Court cannot go into the question whether a charge is illegal inasmuch as it has been revised to an amount exceeding the limit mentioned in paragraph 1 of the Sixth Schedule to the Act of 1948.
The only ground on which this charge is questioned is put in paragraph 23 of the plaint in these words: "any standing charges along with the usual Unit Charges is against equity and law, it being double charge for the industry to pay for the enrichment of the defendants"; the legality of the standing charge is not challenged on any other ground.
Now where a charge is permitted by a statute no question of its being inequitable can be raised in a Court of law, neither can the question whether the charge is in excess of the limit justified by the statute be canvassed in such a Court.
Therefore, the respondents cannot in these cases challenge the legality of the standing charge.
What I have said so far disposes of the appeal in the suit concerning the rates charged for the supply of motive power.
That appeal must, therefore, be allowed.
The appeal in the suit with regard to the charges for light and fans can be disposed of substantially on the grounds earlier discussed.
The High Court also placed its decision in respect of this matter on the same ground on which it had disposed of the other matter.
The only point made in this case is that the appellant had been wrongfully charging a rate in excess of the limit fixed by the order of December 30, 1942 by 0.06 nP. per unit.
On this basis a declaration that the excess charge was illegal was sought and also an injunction restraining the appellant from levying it.
It will be observed that in this case there was no notice given by the appellant of any increase in the charge.
No question of the charge being illegal by reason of any enhancement, therefore, arises.
The only complaint is 517 that the charge is illegal as it is in excess of the limit fixed by the Government.
As I have said, under paragraphs 1 and 11 of the Sixth Schedule to the Act of 1948 a licensee can charge any amount so that his clear profit does not exceed his reasonable return and if he exceeds the limit he only exposes himself to the consequences mentioned in them and a consumer cannot go to a court of law for relief on the round that the licensee had exceeded this limit.
Therefore, the respondent cannot ask for any relief in a civil court on the basis that the appellant had exceeded the limit.
As in the other case, in this case also I am not concerned with the legality of any charge made prior to the date of the suit; the only question is the legality of the charge made since March 31, 1959.
That question has to be decided under the Act of 1948 as amended in 1956.
It follows that in this case also the respondents can get no assistance from the decision in Babulal Chhaganlal(1) even if that case was rightly decided.
1, therefore, think chat this appeal also succeeds.
In the result I would allow both the appeals with costs throughout.
AYYANGAR, J. These two appeals which come before us by virtue of special leave granted by this Court are against a common judgment of the High Court of Mysore in two Second Appeals preferred to it by the respective respondents in the two appeals.
They raise for consideration a question of the legality of certain rates charged by the Appellant company for the supply of electricity to the respondents for power and for light and fans respectively.
The Appellant company is a licensee who is engaged in the business of supplying electricity in the town of Belgaum and other places.
A licence for the supply of electricity in the town of Belgaum was ranted in 1932 to two persons B. section Ankle and A.S. Ankle.
These two assigned their licence to a concern by name the Belgaum Electricity Co. Ltd. and by a further assignment by these assignees, the licence came to be owned by the Appellant who are now effecting the distribution and supply of electricity in Belgaum.
The original licence was granted by the Government of Bombay under section 3 of the of 1910 (Act IX of 1910) which we shall hereafter refer to as the "Electricity Act, 1910" to whose provisions some reference would be necessary to be made later.
Broadly speaking, under the provisions of this enactment the maximum and minimum rates which a licensee might charge its consumers were fixed by Government and licensees were afforded freedom to fix the rates to be actually charged within these limits.
Under the powers so vested in them in that behalf the Government of (1) I.L.R. 518 Bombay within whose jurisdiction Belgaum then was, passed an order on December 30, 1942 fixing the maximum rates which could be charged by licensees for supply to consumers and these rates which applied to the Appellant were to be effective from February 1, 1943.
The maximum rates for the supply of energy under the licence were, under this order, to be (1) where the energy was supplied for lights and fans 5 annas per unit; (2) where energy was supplied for power purposes i.e., for purpose other than lights and fans the maximum rate was to be (a) upto and including 4 B.H.P. one anna per unit in addition to a standing charge of Rs. 2/ per month per B.H.P. connected, and (b) for over 4 B.H.P. rate was 0.75 annas unit in addition to a standing charge of Rs. 2/ per month per B.H. P. connected.
Thereafter charges at the maximum permitted rate were levied and collected by the Appellant.
While so, on March, 11, 1943 a notification was issued by the Government of Bombay in exercise of powers conferred by rule 81(2)(b) of the Defence of India Rules by which relaxation was made as regards the maximum rates for the supply of electrical energy chargeable by a licensee under the Electricity Act.
Such licensees were permitted to charge amounts not exceeding 33 1/2 per cent over the permitted maximum rates.
Later this surcharge under the Defence of India Rules fixed by the notification of 1943, was withdrawn and simultaneously what is known as "War Costs Surcharge" was permitted to be levied, but it did not make any practical difference as the permitted increases over the mnaximum was identical.
The War Costs Surcharge was continued up to the year 1946 when the Government of Bombay enacted a statute entitled the Bombay Electricity (Surcharge) Act of 1946 which came into force on September 30, 1946.
It was a temporary enactment which under sub s.(4) of section 1 was to be in force for a period of three years only so that it lapsed on October 1, 1949.
The Provincial Government was under section 3 of that Act empowered to fix rates of surcharge and under section 5 of that Act the existing surcharge viz., the War Cost Surcharge were to be deemed surcharges fixed under section 3.
As a result of this piece of legislation the position that emerged was that though the original licence issued under the Electricity Act, 1910 which empowered the Government to fix the maximum of the rates that could be charged by licensees for the supply of energy was determined by the order dated December 30, 1942, still practically almost from the commencement of the operation of that order a 33 1/2 per cent.
surcharge was permitted to be levied by the licensees over the permitted maximum charge and this state of things continued until October 1, 1949.
Notwithstanding the lapse of the Act of 1946 the Appellant has continued to demand and collect practically the same charges for the supply of energy as it had done during the 519 period when it was in force, with a slight variation by way of increase in regard to the supply of power to which we shall immediately advert.
In the case of supply for power, while the standing charges are being levied at the maximum permitted by the notification of December 30, 1942, with the addition of the surcharge, the unit charge has been increased even beyond this figure by resort to the provisions of the Electricity Supply Act, 1948 (Central Act 54 of 1948) which it will be convenient to refer to as the Supply Act.
The legality of the continuance of the surcharge in regard to the standing charge from and after 1st October, 1949 and of the increase in the unit rate even beyond it are challenged in the suit which has given rise to Civil Appeal 590 of 1963.
In the case of the charge for the supply of energy for lights and fans there has been no chance since the 30th September 1949, but the maximum as increased by 33 1/3 per cent still continues and it is the legality of this continuance of the surcharge that is impugned in Civil Appeal No. 591 of 1963.
The levy or the rates impugned is in every case justified by the Appellant by reference to the terms of the Supply Act to the relevant provisions of which we shall have to make detailed reference later.
Pausing here, we might advert to the fact that the Supply Act was enacted to provide "for the rationalisation of the purchase and supply of electricity and generally for taking measures conducive to the electrical development".
The Act came into force from September 10, 1948.
The principal question that arises for decision in these appeals relates to the effect of the Supply Act, 1948 and the provisions that it contains on the ,rates to be charged by licensees which had been fixed under the Electricity Act, 1910 a matter which we shall examine in its proper place.
We might even at this stage refer to section 70 of the Supply Act which enacts, .lm15 (1) No provision of the , 19 1 0, or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it is inconsistent with any of the provisions of this Act, have any effect; deemed to prevent the State Government from granting, after consultation with the Board, a licence not inconsistent with the provisions of the , to any person in respect of such area and on such terms and conditions as the State Government may think fit.
(2) Save as otherwise provided in this Act, the provisions of this Act shall be in addition to, and not in derogation of, the .
" 520 We are drawing attention to this provision to indicate the inter relation between the two Acts the Electricity Act, 1910 and the Supply Act, 1948.
We shall now briefly narrate the course of the proceedings which have led to the present appeals.
Two suits were filed by consumers of electrical energy in Belgaum receiving their supplies from the Appellant in the court of Civil Judge, Belgaum, both being representative suits under O.I.r.8 (if the Civil Procedure Code.
The first suit No. 133 of 1959 was in relation to the supply of energy for power.
In the plaint it was pointed out that before November 1, 1958 the Appellant was charging the plaintiffs Rs. 2 /11 / per B.H. Power per month as standing charges plus one anna per unit of energy consumed.
It was stated that the Appellant had by a notice to the consumers dated September 25, 1958 whose terms were set out, proposed to raise from and after Novomber 1, 1958 the unit charge from one anna per unit to 1 1/2 anna or 9 naye paise per unit.
It recited that the plaintiffs had protested and addressed letters to the Government of Mysore, (Belgaum having been made part of this State by the State Reorganisation Act) but without any result.
Reference was made to the circumstance that the Appellant justified the increase with reference to the provisions of the Supply Act, particularly after the same was amended by Central Act 101 of 1956.
The material averment on the basis of which relief was claimed in the plaint was that the revision effected by the notice of September 25, 1958 was illegal because it exceeded the maximum prescribed by the Government of Bombay in its order dated December 30, 1942 which, it was stated, still bound the Appellant.
The plaintiffs, therefore, sought a declaration that any increase beyond the rates fixed by the notification of the year 1942 was illegal and sought a declaration (a) that the standing charge was illegal to the extent of the excess of 0.69 nP. per B.H.P. over the 2 rupees and the increase by 4 naye paise per unit of energy consumed was also illegal and prayed for an injunction restraining the Appellant from levying or collecting these illegal and excess charges.
The other suit in relation to supply of energy for lights and fans was No. 135 of 1959.
That plaint pointed out that under the order of Government of Bombay dated December 30, 1942 the Appellant could charge only 5 annas per unit or decimal coinage 31 nP. and taking advantage of the surcharges that were permitted during the war period and subsequently under the Bombay Electricity (Surcharge) Act, 1946 it bad been charging 6 annas per unit, and after the decimal coinage came into force 37 nP.
The main point that was urged in the plaint was that on the ]at )se of the Bombay Electricity (Surcharge) Act, 1956 on September 30, 1959 the right of the Appellan to charge anyhting above 31 nP. ceased but that notwith 521 standing this want of legal sanction it had continued to levy the same rates even afterwards.
On this basis a prayer was made seeking a declaration about the invalidity of any charge beyond 31 nP. per unit and an injunction restraining the Appellant from charging this illegal excess.
The defence of the Appellant was based on the provisions contained in the Supply Act of 1948, the contention being that the charges they continued to levy or which they intended to levy by virtue of the notice of September 25, 1958, were well within the limits prescribed by the Supply Act of 1.948 and consequently the plaintiffs in neither suit were entitled to any relief.
The learned trial Judge held on an examination of the pro visions of the two Acts the Electricity Act and the Supply Act and their schedules that even after the coming into force of the Supply Act the maximum limit of charge fixed by Government under the Electricity Act of 1910 continued to govern the maximum rate that could be cleared and as admittedly the rates charged or threatened to be charged by the Appellant were in excess of those rates, it granted to the plaintiffs in each suit the declaration and injunction they sought.
The Appellant thereupon filed appeals to the learned Dis trict Judge and contended that the Supply Act of 1948 effected such a radical change in the method of determining the reasonable rate as to completely supersede the rates and the maxima fixed under the Electricity Act of 1910.
This contention was accepted by the Appellate Court and the appeals were allowed and the suits directed to be dismissed.
The plaintiffs thereafter filed second appeals to the High Court.
The learned Single Judge of the Mysore High Court who heard the appeals accepted in part the submission made by the Appellant that the maxima prescribed by the Government under the powers vested in them by the Electricity Act of 1910 ceased to be in force on the enactment of the Supply Act.
He nevertheless held that the procedure prescribed for the fixing of rates to be charged by the licensees by the Supply Act of 1948 had not been followed by the Appellant with the result unit it could not sustain the contention that the charges levied or to be levied were legal.
On this reasoning the learned Judge allowed the appeals and restored the decrees of the trial Court in the two suits.
It is from these judgments of the High Court that the present appeals have been brought by special leave of this Court.
Before setting out the arguments addressed to us on behalf of the Appellant and to appreciate them it is necessary to read the statutory provisions which bear upon the controversy in the appeal.
The Appellant was, as stated earlier, the transferee of a licence granted under the Electricity Act, 1910.
Section 3 of 522 this Act enables the State Government, on application made to it, to grant to any person a licence to supply energy in any specified area.
Under sub s.(2) of that section "the provisions which shall have effect on licences granted under the Act" are set out and of these those relevant for our purpose are those contained in cl.
(d) and cl.
(f) which read: " (d) a license under this Part: (i) may prescribe such terms as to the limits within which.
and the conditions under which, the supply of energy is to be compulsory or permissive, and as to be limits of price to be charged in respect of the supply of energy, and generally as to such matters as the state Government may think fit. . . . . . . . "(f) the provisions contained in the Schedule shall be deemed to be incorporated with, and to form part of, every license granted under this Part, save in so far as they are expressly added to, varied or excepted by the license, and shall, subject to any such ad ditions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the license: (the clause contains a proviso which is omitted as immaterial).
Section 23 requires the licensee not to show undue preference to any person and enacts that "save as aforesaid, make such charges for the supply of energy as may be agreed upon, not exceeding the limits imposed by his license".
In the schedule that is referred to in s.3(2)(f) which is headed "Provisions to be deemed to be incorporated with, and to form part of, every license granted under Part 11, so far as not added to, varied or excepted by the license", Paragraph XI which is the one material for our purpose reads: "Save as provided by clause IX, sub clause (3) (a saving not now relevant) the prices charged by the licensee for energy supplied by him shall not exceed the maxima fixed by his license, or, in the case of a method of charge approved by the State Government, such maxima as the State Government shall fix on approving the method.
" It was in exercise of the powers conferred by the State Government under s.3(2) of this Act that the notification dated December 30, 1942 to which reference has already been made was issued and under it the charges for supply were fixed.
523 While narrating the facts we have already set out the maximum rate which was fixed as that which could be levied by licensees under the Act both for the supply of energy for power as well, as for lights and fans.
This notification came into force on and was effective from February 1, 1943.
We have already seen how by virtue first of the notification under the Defence of India Rules and later under the War costs Surcharge and still later under the Bombay Act of 1946, the maximum was raised by 33 1/3 per cent.
of that specified in the notification of December 30, 1942 and how these rates continued to be validly charged by the Appellant till September 30, 1949 when the Bombay Act of 1946 lapsed.
The question that now falls to be considered is as regards the legality of the continuance of this rate beyond the maximum prescribed by the notification of December 30, 1942 subsequent to September 30, 1949.
For this purpose, it is necessary to refer to the Supply of 1948 and it is on the proper construction of it ', provisions and their effect on the limitations prescribed by the previous law on the rates to be charged that the decision of these appeals turns.
Reference has already been made to section 70 of the Supply Act, 1948 and this provision would show that where there is any inconsistency between the two Acts, the Supply Act, 1948 would prevail and it is only to the extent that the two enactments do not cover the same field that the provisions of the Electricity Act, 1.910 would continue in operation.
Coming now to the provision relating to the fixation of the rates to be charged by a licensee for the supply of energy the relevant provisions of the supply Act dealing with it are those contained in ss.57 and 57A and read with Sch.
VI to the Act.
Pausing here it is necessary to mention that some of the provisions of the Supply Act of 1948 were amended by Central Act 101 of 1956 and among them was section 57.
Section 57, as originally enacted, contained substantially the same provisions as are after amendment contained in section 57 and 57A, and as thus there has been no material change effected by the Amendment for the purposes of the present appeal, we shall set out sections 57 and 57A which were in force when the present proceedings were commenced: "57.
The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority (a) in the case of a licence granted before the commencement of this Act, from the date or the commencement of the licensee 's next succeeding year of account; and 524 (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provisions of the , and the licence granted to him thereunder and of any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules." "57A. (1) Where the provisions of the Sixth Schedule and the Seventh Schedule are under section 57 deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely: (a) the Board or where no Board is constituted under this Act, the State Government (i) may, if satisfied that the licensee has failed to comply with any of the provisions of the Sixth Schedule; and (ii) shall, when so requested by the licensee in writing, constitute a rating committee to examine the licensee 's charges for the supply of electricity and to make recommendations in that behalf to the State Government.
Provided that where it is proposed to constitute a rating committee under this section on account of the failure of the licensee to comply with any provisions of the Sixth Schedule, such committee shall not be constituted unless the licensee has been given a notice in writing of thirty clear days (which period if the circumstances so warrant may be extended from time to time) to show cause against the action proposed to be taken.
Provided further that no such rating committee shall be constituted if the alleged failure of the licensee to comply with any provisions of the Sixth Schedule raises any dispute or difference as to the interpretation of the said provisions or any matter arising therefrom and such difference or dispute has been referred by the licensee to the arbitration of the Authority under paragraph XVI of that Schedule 525 before the notice referred to in the preceding proviso was given or is so referred within the period of the said notice: Provided further that no rating committee shall be constituted in respect of a licensee within three ,,cars from the date on which such a committee has reported in respect of that licensee.
unless the State Government declares that in its opinion circumstances have arisen rendering the orders passed on the recommendations of the previous rating com mittee unfair to the licensee or any of his consumers; (b) (c) (d) within one month after the receipt of the report under clause (e), the State Government shall cause ,he report to be published in the Official Gazette, and may at the same time make an order in accordance therewith fixing the licensee 's charges for the supply of electricity with effect from such date, not earlier than two months or later than three months, after the date of publication of the report as may be specified in the order and the licensee shall forthwith give effect to such order ; (e) (The other sub sections (2) to (8) are not material and so are omitted).
Schedule VI referred to in ss.57 and 57A has underdone modification as a result of the amendment effected by Act 101 of 1956 and some argument has turned on these changes.
We shall set out para 1 and also para 11 of this Schedule as they stood when originally enacted and as they now read.
As enacted the first two paragraphs ran: "1.
The licensee shall so adjust his rates for the sale of electricity by periodical revision that his clear profit in any year shall not as far as possible exceed the amount of reasonable return: Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the amount of the reasonable return by more than thirty per centum of the amount of the reasonable return.
(1) If the clear profit of a licensee in any year of ac count is in excess of the amount of reasonable return, one third of such excess, not exceeding 7 1/8 per 526 cent.
of the amount of reasonable return, shall be at the disposal of the undertaking.
Of the balance of the excess, one half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct.
(2) The Tariffs and Dividends Control Reserve shall be available for disposal by the licensee only to the extent by which the clear profit is less than the reasonable return in any year of account.
(3) On the purchase of the undertaking under the terms of its license any balance remaining in the Tariffs and Dividends Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve.
" These paragraphs were amended in 1956 to read: " Not withstanding anything contained in the , except sub section (2) of section 32A, and the provisions in the licence of a licensee, the licensee shall so adjust his rates for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonabe return: Provided that such rates shall not be enhanced more than once in any year of account: Provided further that the licensee shall not be deemed to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the amount of reasonable return by fifteen per centum of the amount of reasonable return: Provided further that the licensee shall not enhance the rates for the supply of electricity until after the expiry of a notice in writing of not less than sixty clear days of his intention to so enhance the rates, given by him to the State Government and to the Board: Provided further that if the rates of supply fixed in pursuance of the recommendations of a rating committee constituted under section 57A are lower 527 than those notified by the licensee 'under and in accordance with the preceding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them.
(1) If the clear profit of a licensee in any year of ac count is in excess of the amount of reasonable return, one third of such excess, not exceeding five per cent.
of the amount of reasonable return, shall be at the disposal of the undertaking.
Of the balance of the excess, one half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct.
(2) The Tariffs and Dividends Control Reserve shall be available for disposal by The licensee only to the extent by which the clear profit is less than the reasonable return in any year of account.
(3) On the purchase of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends "Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve.
" Paragraph 17 of this Schedule contains the definitions and among the terms there defined is 'clear profit ' an expression used in paragraphs 1 & 11.
As nothing material turns on the manner in which the 'clear profit ' is to be computed which is described in para 17 we do not think it necessary to refer to the details contained there.
The questions raised before us are principally three: (1) The effect of the Supply Act, 1948 on the maxima of rates fixed by Government under section (2) of the Electricity Act, 1910 which could be charged by a licensee.
The submission of the appellant which was accepted by the High Court but which was contested by the respondents before us was that any changes that might be effected by a licensee acting under the provisions under s.57 of the Supply Act read with paragraph 1 of Sch.
VI in revising his rates so as to derive the reasonable return permitted by these provisions, had still to be within the maxima prescribed by Government under the Electricity Act of 1910; (2) The next point was that assuming that the Appellant was right on point No. 1, whether the charges demanded by ,the appellant company from the respondents were legal and 528 justified by the Supply Act.
It is on this point that the learned Single Judge in the High Court has upheld the contention urged by the respondent; (3) Closely related to the 2nd point, the limits of the Jurisdiction of a Civil Court to afford relief to consumers who complained of excessive charges being demanded by licensees.
So far as the 1st point is concerned viz., whether the maxima prescribed by Government under the Electricity Act. 1910 still continues to bind the licensee after the coming into force of the Supply Act, we feel no hesitation in agreeing with the submission of the Appellant which found favour with the High Court.
Section 57 of the Supply Act, 1948 both as originally enacted and as amended in 1956 expressly provide that the provisions of the Vlth Schedule shall be deemed to be incorporated in the license of every licensee and "that the provisions of the and the license granted thereunder and any other law, agreement or instrument applicable to the licensee shall be void and of no effect in so far as they are, inconsistent with the provisions of the section and the said Schedule".
Read in the light of s.70 of the supply Act it would follow that if any restriction incorporated in the licence granted under the Electricity Act, 1910 is inconsistent with the rate which a licensee light charge under para 1 of Sch.
VI of the Supply Act, 1948, the former would, to that extent, be superseded and the latter would prevail.
Para 1 of Sch.
VI both as it originally stood and as amend ed, as seen already, empowered the licensee "to adjust his rates, so that his clear profit in any year shall not, as far ,is possible, exceed the amount of reasonable return".
We shall reserve for later consideration the meaning of the expression "so adjust his rates".
But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz., the rate charged does not yield a profit exceeding the amount of reasonable return.
The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the Supply Act, 1948 came into force, since the "clear profit" and "reasonable return" which determined the rate to be charged was to be computed on the basis of very different criteria and factors than what obtained under the Electricity Act.
In support of the submission that notwithstanding the Supply Act the maxima fixed by the State Government was still binding on the licensee and that any adjustment within 1st paragraph of Sch.
VI should be within the limits of this maxima we were referred to a decision of the Bombay High 529 Court reported as Babulal vs Chopda Electricity Supply Co.(1) It is sufficient to extract the headnote to understand the point of the decision: "Section 57(1) of the , or cl. 1 of the Sixth Schedule to the Act, does not confer a right upon a licensee unilaterally to alter the terms and conditions on which supply may be made by a licensee of electrical energy to consumers in the area of supply irrespective of the res trictions contained in the license and the .
Not only does section 57(1) of the , impose an obligation upon the licensee to conform to the provision is of the Sixth Schedule and the table appended to the Seventh Schedule to the Act, but the first clause of the Sixth Schedule imposes a further obligation to make periodical revisions and to adjust the profits so that his profits in any year do not as far as possible exceed a rea sonable return on his investment.
There, is nothing in s.57 or in the first clause of the Sixth Schedule which either expressly or by implication amends the provisions of the , contained in s.3(2)(d) or in section 21(2) of that Act or the rates and methods of charging the same as fixed by the licence.
The provision contained in s.3(2)(d) of the , which requires the State Government to prescribe the terms and conditions under which the supply of energy is to be made is not affected by the .
The right to amend the license is conferred by the , upon the State Government and that right is not affected by the Eectricity (Supply) Act, 1948.
" With great respect to the learned Judge we are unable to agree with this decision, for, in our opinion, the provisions of the Supply Act, 1948 to which we have adverted ,ire too strong to permit the construction, that the maxima prescribed under the Electricity Act of 1910 survives as a fetter on the rights of the licensee under paragraph 1 of the Vith Schedule.
If there was any room for any argument of this kind on the terms of para 1 of Sch.
VI as originally enacted, the matter is placed beyond possibility of dispute by the amendment effected by Act 101 of 1956 to the Vlth Schedule where the opening paragraph commences with the words 'notwithstanding anything (1) 56 Bom, L R. 994 530 contained in the and the provisions in the licence of a licensee '.
We, therefore, consider that the first submission of learned Counsel for the Appellant that the limit imposed by the maxima prescribed by the State Government ceased to be in force after the Supply Act of 1948 came into force is well founded.
The next question for consideration is whether the action of the appellant company in continuing to charge the rates that it was permitted to charge by virtue of the War Cost (Surcharge) Rules and the Bombay Electricity (Surcharge) Act, 1946 i.e., by making an addition of 33 1/3 per cent.
to the maxima which he was permitted by the notification dated December 30, 1942 is lawful.
This would have a vital bear ing on the point involved in Civil Appeal 591 of 1963 which relates to the unit charge for light and fans for domestic consumption as well as on the legality of the standing charges for the supply of power which is raised in Civil Appeal 590 of 1963.
It would be recalled that in these cases the Appellant has merely continued the charges that it was making before September 30, 1949 even after that date, there being no variation in the rates charged.
On October 1, 1949 the position was this.
The Bombay Act of 1946 having lapsed by efflux of time, the previous charge which was 33 1/3 per cent.
in excess of the maxima permitted could not be Continued unless recourse was had to the provisions of paragraph 1 of Sch.
VI of the Supply Act of 1948.
It was not suggested that on or before that day there was any conscious act on the part of the Appellant to determine (a) the "clear profit" on the basis formulated in Sch.
VI and (b) an adjustment of its rates so as not to exceed the amount of the reasonable return permitted by paragraph 1 of that Schedule.
In this connection there was some debate in the courts below as to the date the Appellant 's license came to be governed by the provisions of section 57(1) and the Vlth Schedule.
Section 57(a) fixes the period from which licenses previously in existence would be governed by Sch.
VI as "the commencement of the licensee 's next succeeding year of account".
The controversy was as to the period which would be the date of the commencement of the Appellant 's "next succeeding year of account".
Two possible interpretations were suggested of this provision: (1) As the year of account of the Appellant was the financial year it was contended on behalf of the respondents that the Act became applicable to it from April 1, 1949 onwards, the contention on the side of the Appellant being that it became applicable only on April 1, 1950, but for the purposes of the cases before us it makes little difference, because assuming that section 57 and the Supply Act 1948 became ap plicable to the Appellant from April 1, 1950 onwards, still the same question would arise as to whether at the commencement 531 of that year the requirements of paragraph 1 of the Vlth Schedule had been complied with.
The material words of paragraph 1 of the VIth Schedule are "The licensee shall so adjust his rates".
The normal inter pretation of these words would imply that there should be a conscious act on the part of the licensee, for the Act and the Schedule for the first time specified the criteria for determining the maximum profit that shall be made by a company and gave elaborate calculations as to how the 'clear profit ' and the reasonable return ' were to be computed and determined.
It is, however, possible to read the paragraph as meaning that it was only in those cases where either an increase or a decrease of the charge was necessary in order to ensure (a) that a licensee obtained a reasonable return or that the profit that he made exceeded or fell below the amount of reasonable return that the rates had to be modified.
In other words, where no change is needed, it might be presumed that no adjustment was needed.
In view of the machinery that is provided for complaints in the event of the licensee deriving more than a reasonable return as contemplated by the Vlth Schedule we consider that the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously does not constitute a failure "to adjust the rates" as required by paragraph 1.
This leads us to the further questions (1) as to whether as suming that the rates had been adjusted by the licensee as required by paragraph 1 and the licensee is charging the rates so adjusted whether the rates now charged (a) for lights and fans, and (b) as standing charges for the Supply Of motive power, could be successfully impugned as not conforming to the requirements of the Vlth Schedule, (2) and closely related to this, and that is the third question we have specified earlier, whether having regard to the provisions contained in sections 57 and 57A of the Supply Act, a Civil Court would have jurisdiction to entertain a suit for the reliefs claimed in the present plaints.
Taking up, first, the question of lights and fans (and the standing charges for the supply of power would be governed by similar considerations) the position would be that the Appellant must be deemed to have adjusted his rates under paragraph 1 of the Vlth Schedule when after the lapse of the Bombay Act of 1946 it continued to levy the same charges.
When in 1949 or 1950 it is deemed to have made this adjust ment paragraph 1 which empowered it to make this adjustment contained a proviso which we shall recall: "Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit 532 in any year of account has not exceeded by more than 30 per cent of the amount of the reasonable return".
The proviso, no doubt, uses a double negative "not be considered to have failed" but expressed in positive terms it would mean that where the licensee adjusted his rates so that his clear profit exceeds by more than 30 per cent the reasonable return to which it was entitled, it could not be said to have adjusted his rates.
In other words, such an adjustment would not be an adjustment at all as is contemplated by paragraph 1.
Paragraph 2 of the VIth Schedule proceeds on the basis that there is an adjustment within paragraph 1 in other words, that the rate charged would yield to the licensee a clear profit which would not exceed the reasonable return by more than 30 per cent.
It is only on that basis that the percentages specified in paragraph 2 could be properly appreciated, for it proceeds to take the excess over the reasonable return, divide it by 3 and of that 1/3rd allot a proportion not exceeding 7 1/2 per cent.
over to the licensee himself.
Of the balance half is to be appropriated to the Tariffs and Dividend Control Reserve and the other half is directed to be given to the consumers by granting them proportional rebates.
From the percentage named in para it read in conjunction with the absolute prohibition against a rate which would yield more than 30 per cent.
over the reasonable return it appears to us that the lawfully adjusted rate contemplated by paragraph 1 is one where the amount of clear profit does not exceed the "reasonable return" by more than the maximum specified i.e., 30 per cent.
The other paragraphs of the Vlth Schedule deal with the creation and disposal of certain funds and reserves to which it is not necessary to refer.
We thus reach the position that there could be a unilateral adjustment of the rates by a licensee but that such an ad justment must not leave him with more than the reasonable return plus another 30 per cent, this being an absolute limitation on the power to "adjust".
Where the amount of "reasonable return" is exceeded paragraph 2 comes into play and the excess over the reasonable return is distributed in the manner laid down in that paragraph.
We have next to consider that effect of the amendment to para 1 of the Vlth Schedule brought about by Central Act 101 of 1956 by which the maximum rate permitted to a licensee became reduced from one which yielded him not more than 30 per cent.
beyond the "reasonable return" to one which yielded him not more than 15 per cent.
The result of this would obviously be that there should have been a further 533 adjustment by licensees so as to conform to the revised pat tern.
Here again, the question would arise whether there should be a conscious readjustment.
Applying the rule of construction we have explained earlier in relation to "adjustment" in 1949 or 1950 it would be seen that if the rate previously charged yielded a profit over the "reasonable return" of 15 per cent.
or less there need be no readjustment and if the rate charged yields more than this permitted profit there should be a readjustment.
The result would, therefore, be that unless it is established that the rate charged by the Appellant for lights and fans and for the standing monthly charge for supply of power resulted in a profit to it of more than 15 per cent.
over the "reasonable return", the Appellant would be held to have properly adjusted these rates in conformity with the requirements of the relevant provisions of the Supply Act as amended by Act 101 of 1956.
We shall.
when dealing with the question relating to the jurisdiction of a Civil Court to entertain suits relating to infractions by licensees of their obligations under Para 1 of the VIth Schedule which is the last of the matters debated before us, also examine the question as to the party on whom the burden of proof would lie to establish that the adjustment which is made or which could be deemed to be made by a licensee by the continuance of a preexisting rate contravenes the statutory provisions.
Coming next to the unit charge for supply for power, the impugned rate was that which had been stepped up from that which had been continued from before September 1949, by action taken in compliance with the 3rd proviso to paragraph 1 of Sch.
VI as amended by Act 101 of 1956.
The licensee notified to the consumers on September 25, 1958 his intention to enhance the unit rate for the supply of power.
Previous thereto in terms of that proviso a notice in writing had been issued to the State Government intimating its intention to enhance the rate, and thereafter the consumers were notified of this increase in rates.
It would be seen that the 3rd proviso to para 1 requires a notice to the State Government of the intention of the licensee to enhance the rates.
On August 7, 1958 the Appellant intimated the Government 'of Mysore setting out the clear profit it had made in 1957 58 and the estimated working position in 1958 59 and its intention to increase the unit rate for supply of power from 6 nP. to 9 nP. unit.
Thereafter, on September 25, 1958, it notified the consumers that on and after November 1, 1958 it would be charging the enhanced unit rate together with the previously existing standing charges of Rs. 2.69 per B.H.P. per month The only point that was suggested as invalidating the notice to the Government was that the Government were not informed that the licensee was effecting an 534 enhancement of the rates as regards the standing charges and that the notice was, therefore, bad.
We do not consider that there is any substance in this objection.
Rs. 2.69 was the charge which had been made prior to the notice as standing charges and if, as we have held, that was the rate which must be deemed to have been adjusted and which the appellant was entitled to charge when Sch.
VI as it originally stood, the continuance of the same charge after the amendment of the Schedule would not make it an enhancement.
There is however one circumstance to which it is necessary to advert.
As already stated, the rate charged prior to the Supply Act, 1948 and which was continued thereafter would be a lawful rate only if the profit that it left to the licensee was less than 30% over the reasonable return.
This was the position when the Supply Act, 1948 came into force.
By reason of the amendment effect by Act 101 of 1956 the percentage of permissible profit was reduced to 15% and so the adjusted rate Would be valid if it was within this per missible limit.
Unless the adjusted rate prior to the amendment of 1956 was in excess of 15 per cent permitted by the 1st proviso to paragraph 1 the continuance of such rate could not be objected to as an enhancement or as a violation of paragraph 1 of the Vlth Schedule.
The question as to the burden of proof as regards this requirement and whether the same has been discharged in these cases we shall reserve for later consideration.
Subject to this so far as regards the unit charge, the requirement of the third proviso to paragraph 1 was complied with.
There was thus no illegality or invalidity attaching to the notice to the Government issued under proviso 3 to paragraph 1 and the contention raised in that behalf by the respondents must be rejected.
The question next to be examined is as to the jurisdiction of the Civil Court to entertain the suits from which these appeals arise for the reliefs prayed for therein.
Section 57 of the Supply Act, 1948 which incorporates the Vlth Schedule in the licence of every licensee lays an obligation on the licensee to comply with the provisions of the said Schedule.
Then comes section 57 A under which where the Board or the State Government, where there is no Board, "if satisfied that the licensee has failed to comply with any of the provisions of the Vlth Schedule and shall when so requested by the licensee in writing, constitute a Rating Committee".
It is unnecessary to refer to the provisions relating to the procedure to be followed by the Rating Committee but it is sufficient to recall that the Rating Committee is empowered to fix the rates to be charged by licensees and the duty is cast on the Rating Committee to recommend a rate which would ensure to the licensee a clear profit sufficient to afford it a reasonable return as defined in the Vlth Schedule during the 535 next three years of account.
The provisions in section 57 A have to be read in conjunction with the last proviso to paragraph 1 of the Vlth Schedule under which where the rates are fixed in pursuance of the recommendations of the Rating Committee and they are lower than those adjusted by the licensee under the Schedule, the licensee is directed to refund to the consumers the excess amount recovered by him from them.
The argument of the learned Solicitor General was that as the Supply Act had by section 57A made special provision and ,created a special machinery for the determination of a pro per rate to be charged by a licensee on its consumers, a suit in a civil court by the consumer for obtaining the same relief was impliedly barred.
The procedure prescribed by section 57A was (1) where a consumer complained that a rate charged was excessively high he should first approach the Board or where there was no Board, the State Government, (2) the Board or the State Government should, on considering the ,complaint, be prima facie satisfied about the reasonableness of the complaint and it was in their discretion to appoint a Rating Committee, (3) if the Board or the State Government decided that it was not necessary to appoint a Rating Committee there was an end of the matter.
If, however, a committee was appointed the Rating Committee would take evidence and, applying the provisions of the Act and the Schedules, would arrive at a rate which would yield the licensee an amount not less than the reasonable return that is provided for him under the Act.
It was submitted that this procedure was wholly incompatible with the continued existence of the jurisdiction of the civil court to determine any question as to whether a licensee had failed to comply with the requirements of Sch.
VI and in particular as to the reasonableness of the rate to be charged.
Besides, attention was also drawn to the last proviso to paragraph 1 of the Vlth Schedule under which provision is made for refund to consumers in cases where an excess amount is collected from them beyond what was fixed as a reasonable rate by the Rating Committee.
It is undoubted that these provisions have laid down a specific procedure for violations by the licensee of the re quirements of Sch.
There being no express bar to the jurisdiction of the Rating Committee; or expressed in other scope and extent of the bar that could be implied from the existence of these provisions.
One thing, however, is clear; the bar cannot extend beyond the scope and limits of the jurisdiction of the Rating Committee; or expressed in other words, the jurisdiction 'of the civil court could not be held to be excluded in respect of those matters which are not assigned by section 57A to the Rating Committee, or in regard to which the Rating Committee cannot afford the consumer relief against an infraction of a statutory provision by which he is aggrieved 536 Before turning to the facts of the present case with a view to examine whether the relief sought by the respondents viz., a declaration and injunction could be granted by a civil court, we shall deal with the major argument of the learned Solicitor General that for no infraction by a licensee of his obligations under the schedule could a suit be filed in a civil court.
This was based on the words of section 57A (1)(a)(i) which empowers the Board or the State Government to appoint a Rating Committee if satisfied "that the licensee has failed to comply with any of the provisions of the Sixth Schedule".
The learned Solicitor General further contended that the provisions contained in section 57A were wholly incompatible with the existence of a right in a consumer to move a civil court for obtaining a refund even of an illegal collection which the licensee is prohibited from charging.
It was in this connection that he invited our attention to the provision for refund contained in the last proviso to paragraph 1 of Sch.
VI and relying on this he submitted that the scheme of section 57A could obviously not have contemplated a procedure by which one consumer went to a civil court and obtained redress, the civil court holding that the rate charged so far as the particular plaintiff was concerned was illegal and therefore entitling him to a refund of a particular sum, while another consumer approached the Government who appointed a Rating connection that he invited attention to the provision for it did provide, for a different amount of refund.
This is doubtless a serious argument which requires careful examination.
In this context and in support of this submission stress was laid down on the words "the licensee has failed to comply with any of the provisions of the Sixth Schedule" occurr in in section 57A (1)(a)(i) and it was urged that for any and every default of the licensee resort must be had to the Board or the Government and could not be had to the civil courts.
But from these provisions it does not, in our opinion, follow that the jurisdiction of a civil court is barred in respect of the infraction of every obligation cast on a licensee by Sch.
Broadly speaking, the utmost that could be urged would be that the bar to the jurisdiction of a civil court would be co extensive with and be restricted to the powers of the Rating Committee and the reliefs which the committee could grant under section 57A. A few examples of breaches of Sch.
VI which a licensee may commit and in regard to which a reference to the Rating Committee is not contemplated would make our meaning clear.
The first proviso to paragraph 1 specifies that "such rates shall not be enhanced more than once in any year of account".
Let us suppose that the licensee contra venes this prohibition and enhances the rate more than once.
There is no provision in section 57A for the Rating Committee to control the licensee in the event of his transgressing a positive 537 prohibition of this sort and, indeed, it would be most anomalous to say that the statute having made a provision that the rates shall not be enhanced more than once in a year, the consumer is left without a remedy if the Government does not choose to appoint a Rating Committee which, as we said earlier, has no power to afford redress to the affected consumer.
In such a case it appears to us that by no principle of construction can the jurisdiction of a civil court to grant a declaration and an injunction be denied.
It would also follow that if that rate is collected, the court could order a refund of the illegal collection.
Take next the case where a licensee in contravention of the 3rd proviso enhances the rates for the supply of electricity without giving the requisite notice of his intention to the Government and to the Board.
Here again, the Rating Committee does not come into the picture for preventing the continued charging of the rates in contravention of the 3rd proviso and here we consider it impossible to contend that the jurisdiction of the civil court to grant a declaration and an injunction are affected by the provisions of section 57A. We therefore arrive at this position that notwithstanding the generality of the words in section 57A(1)(a)(i) referring to the failure on the part of the licensee in complying with the requirements of the Sixth Schedule" there are some "failures" in regard to which the jurisdiction of the civil court it is clear, not barred.
The next question would be whether the same principle is not applicable to a case where the 2nd proviso is contravened i.e., where the licensee so adjusts his rates as to yield him a profit beyond 15% over the reasonable return.
The proviso casts an absolute obligation on the licensee not to exceed this limit.
There is thus a statutory prohibition against the licensee of fixing a rate which would yield such excessive profit, and if he does so he would not be acting in terms of the Vlth Schedule at all or by virtue of a power conferred by that Schedule and therefore he would be amenable to the jurisdiction of the court which would be competent to issue an in junction restraining him from charging that rate.
No doubt, the proviso also adds that if he does so he would be failing to comply with the requirement 'of the main part of paragraph 1.
It would therefore follow that in a case where in adjusting his rate the licensee fixes it so high as to contravene this proviso, it would be open to the a ,grieved consumer to approach the Board or the State Government to appoint a Rating Committee.
But from this circumstance we are not prepared to hold (a) that the action of the licensee in charging a prohibited rate is any the less an illegality not countenanced by the statute and (b) that where such an illegality is made out the jurisdiction of a civil court to afford relief is ousted.
It is possible to hold, and we do not desire 538 to express a final opinion on a point which is not directly involved in these appeals, that the jurisdiction of the court may be confined to granting a declaration as to the invalidity of the adjustment and injunction against the violation of the statutory prohibition, and not to grant a refund.
It is only necessary to add that the relief sought in these 2 suits was merely a declaration regarding the invalidity of the rates.
charged and an injunction restraining the Appellant from continuing to charge them.
We are, therefore, satisfied that the mere existence of section 57A does not by itself, and without reference to the parti cular violation complained of by the licensee, bar the jurisdiction of a civil court and the argument in the extreme form presented to us by the learned Solicitor General must be rejected.
The next and the last question that arises is whether the respondents have established that the appellant has violated any of the provisions of the Supply Act and in particular those contained in Sch.
VI, paragraph 1 of the Supply Act.
We have already dealt with the objection that there was no ,,adjustment" of rates in 1949 or 1950.
Again, we have al ready held that in regard to the unit rate for power in regard to which alone there was an enhancement there was a valid notice issued to Government as required by the 3rd proviso to paragraph 1.
In the circumstances of this case the only ground upon which the respondents would have been entitled to the relief of declaration and injunction that they claimed was that they had established that the rate charged by the Appellant offended the second proviso, in that it yielded a profit in excess of 15 per cent of the reasonable return.
The learned Judge in the High Court has held that the onus of proving that the rate which the Appellant charged was within this limit was on it and that as no evidence had been led by it on this point he granted the plaintiffs the declaration and injunction they sought.
We consider that the learned Judge was in error in this respect.
There is no presumption that the rate charged by a licensee contravenes the statutory prohibition.
It is for the party who alleges his right to relief to establish the facts upon which such relief could be obtained.
It was, therefore, for the plaintiffs to prove by facts placed before the court that the rate charged offended the statutory provision.
This they admittedly failed to do and we, therefore, hold that they were not entitled to the declaration and injunction which the learned Judge of the High Court granted.
We accordingly allow the appeals and direct the dismissal of the suits.
The appellant would be entitled to its costs here and in the High Court one hearing fee.
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The appellant company was supplying electricity under a licence issued in 1932 by the Government of Bombay under the .
The 'licence fixed the limits of the prices which the appellant could charge but these limits were altered by an order made by the Government on December 30, 1942, acting under para XI of the Schedule to that Act, Due to the conditions brought about by the second world war, the licensee was permitted to add a surcharge not exceeding 33 1/3% to the existing charges.
On September 30, 1946, the Bombay Electricity (Surcharge) Act, 1946, was passed which continued the surcharges for a period of three years.
Though the Surcharge Act of 1946 expired on September 30, 1949, the appellant continued charging the consumers at rates which included the surcharge and this was sought to be justified by resort to the provisions of the Electricity Supply Act, 1948, which came into force on September 10, 1948.
On September 25, 1958, the appellant gave notice to its customers that with effect from November 1,1958, it would charge them at certain rates which the customers considered to be illegal and unauthorised on the ground that they were in excess of those prescribed in the order of December 30, 1942.
In the suits instituted on behalf of the consumers challenging the legality of the rates levied by the appellant in excess of the maximum pres cribed by the Government of Bombay in its order dated Decem ber 30, 1942, the defence of the appellant was that the charges were well within the limits prescribed by the Electricity Supply Act, 1948, which according to its contention, effected such a radical change in the method of determining the reasonable rate as to completely supersede the rates and the maxima fixed under the Electricity Act of 1910.
The question was also raised as to whether having regard to the provisions contained in sections 57 and 57A of the Act of 1948 a civil court would have jurisdiction to en tertain a suit challenging the legality of the rates levied by the appellant.
Held (i) The maxima prescribed by the State Government which bound the licensee under the , no longer limited the amount which he could charge after the Electricity Supply Act, 1948, came into force and that the licensee had a statutory right to adjust his rates as provided by Part 1 of Sch.
VI of the latter Act.
(ii) Where a party challenged the legality of the rates on the ground that they contravened the provisions contained in Sch.
VI of the Act of 1948 there was no duty on the licensee to prove that the rates were within the limits indicated in Sch.
VI and it was for the party alleging his right to relief to prove his case.
504 Per Sarkar, J. The respondents were not entitled to canvass in a civil court any question as to the rates of a licensee being in excess of the limit prescribed in para 1 of Sch.
VI to the Act of 1948.
A civil court could not declare that the rates charged by a licensee were illegal as they made, its clear profit exceed the reasonable return.
If there was such excess, the relief could be obtained only if the Government set up a rating committee, a refund became due thereupon under the last proviso to para 1 of Sch.
VI or if relief was available under para II(1) of that Schedule.
Per Das Gupta and Rajagopala Ayyangar, JJ. (i) There could be unilateral adjustment of the rates by a licensee but such an adjustment must not leave him with more than the reason able return.
Where the amount of reasonable return is exceeded, para II of Sch.
VI comes into play and the excess over the reasonable return is to be distributed in the manner laid down in that paragraph.
(ii) In view of the machinery that is provided for complaints in the event of the licensee deriving more than a reasonable return as contemplated by Sch.
VI, the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously did not constitute a failure to adjust the rates as required by para 1.
(iii) There being no express bar to the jurisdiction of the civil court, its jurisdiction could not be held to be excluded in respect of such matters which were not assigned by section 57A of the Act of 1948 to the rating committee, or in regard to which the rating committee could not afford the consumer relief against an infraction of a statutory provision by which he was aggrieved.
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1784.txt
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vil Appeal No. 2080 (L) of 1977.
Appeal by Certificate from the Judgment and Order dated 20.12.74 of the Calcutta High Court in Appeal No. 104 of 1972.
R.N. Nath and Rathin Das for the Appellant S.P. Khera, M. Quamaruddin and Mrs. M. Quamaruddin for the Respondents.
G.S. Chatterjee for the State.
The Judgment of the Court was delivered by S.C. AGRAWAL, J.
This appeal, by certificate granted under Article 133(1)(a) of the Constitution, is directed against judgment and order of the High Court of Judicature at Calcutta dated December 20, 1974, in Appeal No. 104 of 1972.
Karnani Properties Ltd., appellant herein, is a company incorporated under the Companies Act, 1913.
It owns several mansion houses known as Karnani Mansions at Park Street, Calcutta.
There are about 300 flats in these mansions which have been let out to tenants.
The appellant provides various facilities to its tenants in these flats, e.g. free supply of electricity, washing and cleaning of floors and lavato ries, lift service, electric repairs and replacing, sanitary repairs and replacing, etc., and for that purpose the appel lant employ over 50 persons, namely sweepers, plumbers, malis, lift man, durwans, pumpmen, electric and other mis tries, bill collectors and bearers, etc., in connection with these properties.
A dispute arose between the employees of the appellant represented by Barabazar Zamandar Sangh (hereinafter referred to as 'the union ') and the appellant with regard to wages, scales of pay, dearness allowance and gratuity.
The Government of West Bengal, by order dated July 29, 1967, referred for adjudication to the 6th Industrial Tribunal, West Bengal, the industrial dispute relating to: (a) Fixation of Grades and Scales of pay of the different categories of workmen; (b) Dearness Allowance; and (c) Gratuity.
937 The appellant raised preliminary objections with regard to the validity of the reference before the Industrial Tribunal on the ground that the alleged dispute is not an industrial dispute and that the reference is barred by Section 19 of the (hereinafter referred to as 'the Act ') for the reason that in 1960 there was an Award on the basis of settlement made with the union, and the said Award has not been terminated by either of the parties and is still binding on the parties.
The Industrial Tribunal, by its order dated August 24, 1968, overruled the said preliminary objections raised by the appellant and thereafter the Tribunal gave the Award dated March 3, 1969.
The Industrial Tribunal expressed its inability to fix any grades and scales of pay of the workmen for the reason that the evidence adduced by the Union on this issue was scrappy, none too convincing and not very much acceptable.
As regards dearness allowance the Industrial Tribunal held that since November, 1964 the price index of working class in Calcutta has considerably gone up from 460 to 750 points (as was in October, 1968), i.e. roughly by 300 points.
The Industrial Tribunal awarded enhanced DA at the rate of Rs.60 per month (Rs.20 per 100 points) to the sweeper, bearer, helper, mali, mazdoor, lift man, head sweeper, durwan, pumpman, and as sistant electric mistry.
DA at the , 'ate of Rs.54 per month (Rs. 18 per 100 points) was awarded to the plumber, raj mistry, head durwan, electric mistry and driver and bill collector.
It was also directed that the said rates of DA would remain in force as long as the price index will remain between 600 to 800 points and if the price index goes up beyond 800 points the rate of DA will be revised according to the rates mentioned and if it goes below 600 points it also may be revised accordingly.
With regard to gratuity the Industrial Tribunal pointed out that under the existing scheme gratuity is payable to every workmen after completion of three years continued, faithful and satisfactory service at the rate of 10 days consolidated salary for every com pleted year of service since the date of appointment.
The Industrial Tribunal held that three years ' period was too short to make a workman entitled to gratuity and that "satisfactory" and "faithful" are vague terms.
The Industri al Tribunal framed a scheme of gratuity whereunder after completion of six years of continuous service with the appellant every workmen on retirement or on death will get an amount of gratuity at the rate of 10 days ' consolidated salary for every completed year of service since the date of appointment and a workman who resigns voluntarily would also be entitled to get the gratuity at the same rate provided he completed 10 years of continuous service.
The Industrial Tribunal also directed that if the termination of service is the result of misconduct which caused financial loss to the employer 938 that loss would first be compensated from the gratuity payable to employee and the balance, if any, should be paid to him.
It was also directed that the services of the work men prior to 1950 would not be taken into consideration for the purpose of payment of gratuity.
The appellant filed a writ petition in the High Court under Article 226 of the Constitution wherein the. order dated August 24, 1968 and the Award dated March 7, 1969 given by the Industrial Tribunal were challenged.
The said writ petition was heard by a learned single Judge, who by his judgment dated March 17 & 20, 1972, dismissed the said writ petition.
Before the learned single Judge it was urged that the Award made by the Industrial Tribunal was without jurisdiction for the reason that the appellant does not carry on an "industry" as defined in the Act and that the dispute between the appellant and the workmen cannot come within the ambit of industrial dispute, and also.
for the reason that there was a previous Award dated March 3, 1960 which has not been terminated and was still subsisting and in view of the said Award the present reference was invalid and further that no dispute was raised between the workmen and the appellant prior to the reference before the Indus trial Tribunal and as such the Tribunal has no jurisdiction to deal with the matter.
The learned single Judge rejected all these objections.
He held that in view of the nature of the activity carried on the appellant does carry on an industry within the meaning of the Act and the dispute between the appellant and its workmen come within the ambit of the Act.
As regards the Award dated March 3, 1960 the learned single Judge found that the workmen concerned had given notice to terminate the previous Award and as such the existence of previous Award and as such the existence of previous Award would not preclude a fresh reference.
The learned single Judge observed that no specific plea was raised by the appellant before the Industrial Tribunal challenging the order and the reference on the ground that there was no such dispute prior to the reference between the workmen and the appellant about the questions referred to in the order of reference and that whether there was any demand or not is a question of fact.
the learned single Judge, however, held that from the evidence it is clear that the workmen concerned had demanded before the order of reference in their charter of demands dearness allowance and provident fund and gratuity and as such there was a dispute between the workmen concerned and the employers before the order of reference was made.
The Award was challenged on merits before the learned single Judge on the ground that the Industrial Tribunal did not consider the appellant 's capaci ty to pay in granting dearness allowance to the workmen concerned.
The learned single Judge 939 rejected the said contention on the view that reading the Award as a whole it could not be contended that the Tribunal did not take into consideration either the capacity to pay or the leval of the cost of living.
The appellant filed an appeal against the judgment of the learned single Judge which was dismissed by a Division Bench of the High Court by its judgment and order dated December 20, 1974.
The learned Judges agreed with the deci sion of the learned single Judge that the appellant is carrying on an industry under Section 2(j) of the Act.
Before the Division Bench it was contended on behalf of the appellant that the earlier Award was made on the basis of a settlement between the two parties and that since the said Award was in a nature of settlement it could only be termi nated in accordance with the provisions of Section 19(2) of the Act relating to termination of a settlement.
The learned Judges of the Division Bench held that the said contention was not raised by the appellant before the Tribunal and also before the learned single Judge and it could not be raised for the first time at the stage of the appeal and that it cannot be considered to be a pure question of law because for a settlement under Section 2(p) of the Act the necessary requirements of settlement as laid down in the statute and the rules have to be satisfied and whether the necessary recruitments have been satisfied or not will involve inves tigation into facts.
The learned Judges were, however, of the view that even if the said plea was allowed to be raised it could not be accepted inasmuch as the materials on record do not establish that the requirement of "settlement" as defined in Section 2(p) of the Act are satisfied in respect of the earlier Award.
It was held that an Award does not necessarily cease to be an Award merely because the same was made on the basis of a settlement arrived at between the parties and that the earlier Award was an "Award" within the meaning of Section 2(b) of the Act and was not a settlement as contemplated by Section 2(p) of the Act.
With regard to the termination of the earlier Award, the learned Judges have held that in the facts and circumstances of the case it had been validly terminated in accordance with Section 19(6) as well as Section 19(2) of the Act.
Before the Division Bench it was urged on behalf of the appellant that the Tribunal has not considered the financial capacity of the appellant while making the Award with regard to dearness allowance and reliance was placed on certain documents which were filed before the Division Bench.
The learned Judges held that in considering the findings arrived at by the Tribunal the Court should generally consider the materials which were made available to the Tribunal and fresh or further materials which were not before the 940 Tribunal should not be allowed to be placed before the Court in a writ petition for determining whether the findings of the Tribunal are justified or not and that in the instant case no proper grounds have been made out for not producing the materials which were then available at the time of the hearing before the Tribunal and why the said documents could not be produced even before the learned single Judge.
The learned Judges further held that even if the said documents are taken into consideration the same would be of no partic ular assistance to the appellant inasmuch as the said docu ments consist mainly of balance sheets and assessment or ders, and that the legal position is settled that while computing gross profits for the purpose of revising wage structure and dearness allowance the provision made for taxation, depreciation and development rebate cannot be deducted and the provisions of the Companies Act contained in Sections 205 and 211 and the principles of accountancy involved in preparation of profit and loss accounts have no relevance or bearing while considering the revision of wages and dearness allowance.
The learned Judges have held that on the materials on record the Tribunal was justified in making the Award and that the materials on record before the Tribu nal establish that the amount ordered by the Tribunal was not beyond the financial capacity of the appellant.
Aggrieved by the decision of the Division Bench of the High Court the appellant has flied this appeal after obtain ing leave to appeal from the High Court under Article 133(1)(a) of the Constitution.
Shri R.N. Nath, the learned counsel for the appellant, has submitted that the High Court was in error in holding that the appellant is an industry under Section 2(j) of the Act.
Shri Nath has submitted that in arriving at the said conclusion the learned Judges of the Division Bench of the High Court have relied upon the decision of this Court in Management of Safder Jung Hospital vs Kuldip Singh Sethi, [ ; which decision was overruled by this Court in Bangalore Water Supply & Sewerage Board vs R. Rajappa and Others, ; The submission of Shri Nath is that in accordance with the principles laid down in Bangalore Water Supply & Sewerage Board Case, (supra) the appellant cannot be taken to be carrying on an "industry" under Section 2(j) of the Act.
In our opinion there is no substance in this contention.
It is no doubt true that the learned Judges of the Division Bench of the High Court have placed reliance on the decision of this Court in the Safdar Jung Hospital Case, (Supra) for holding that the appellant is carrying on an industry under Section 2(j) of the Act and the decision in Safdar Jung Hospital case, (supra) has 941 been overruled by a larger Bench of this Court in Bangalore Water Supply & Sewerage case, (supra).
But this does not mean that the view of the High Court that the appellant is carrying on an industry under Section 2(j) of the Act is erroneous.
In Safdar Jung Hospital case, (supra), a six member Bench of this Court had overruled the earlier deci sion in State of Bombay vs Hospital Mazdoor Sabha, ; and gave a restricted interpretation to the definition of "industry" contained in Section 2(j) of the Act.
Bangalore Water Supply & Sewerage Board, case (decided by a seven member Bench of this Court) by overruling the decision in Safdar Jung Hospital case, has restored the Hospital Mazdoor Sabha case.
In other words, the effect of decision on Bangalore Water Supply & Sewerage Board case, is that the expression "industry" as defined in Section 2(j) has to be given the meaning assigned to it by this Court in the earlier decisions in D.N. Banerjee vs P.R. Mukherjee, ; , Corporation of the of Nagpur vs Its employees, [ ; and the Hospital Mazdoor Sabha case Krishna Iyer, J., who delivered the main judgment in Bangalore Water Supply & Sewerage Board case, has summed up the principles which are decisive, positively and nega tively, of the identity of "industry" under the Act.
The first principle formulated by the learned Judge is as under: "I, Industry, as defined in Section 2(j) and explained in Banerjee has a wide import: (a) Where (i) systematic activity (ii) organised by cooper ation between employer and employee, (the direct) and sub stantial element is chimerical) (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss e.g. making, on a large scale prasad or food), prima facie, there is an industry in that enterprise.
(b) Absence of profit motive or gainful objective is irrele vant, be the venture in the public joint or other sector.
(c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer employee relations.
(d) If the organisation is a trade or business it does not cease to be one because of philanthropy animating the under taking.
" 942 If the said principles are applied to the facts of the present case and there can be no doubt that the activity carried on by the appellant satisfies the requirements of the definition of "industry" contained in Section 2(j) of the Act.
In this regard, it may be mentioned that the learned Judges of the Division Bench of the High Court have found as under: "(i) The Memorandum of Association of the appellant company indicate that the principal object for which the appellant company was incorporated is to acquire by purchase, trans fer, assignment or otherwise lands, buildings and landed properties of all description and in particular to acquire from the Karnani Industrial Bank Ltd., the immovable proper ties now belonging to the said Bank and to improve, manage and develop the properties and to let out the same on lease or otherwise dispose of the same.
(ii) The principal business of the company is to deal with the real property and it is a real estate company.
(iii) The income which the appellant derives is not from mere letting out the properties to the tenants and that the tenants pay not only for mere occupation of the property but also for enjoyment of the various services which are ren dered by the appellant to the tenants and to which services the tenants are entitled as a matter of right for the occu pation of the premises.
(iv) The services which are rendered to the tenants and about which there does not appear to be any dispute are: (a) elaborate arrangements for supply of water; (b) free supply of electricity; (c) washing and cleaning of floors and lavatories; (d) lift services; (e) electric repairs and replacing; and (f) sanitary repairs and replacing etc.
943 (v) For offering these services to the tenants, the appel lant has employed a number of workmen and these services which undoubtedly confer material benefits on the tenants and constitute material services, are rendered by the em ployees.
(vi) The employees of the appellant company are engaged in their respective calling or employment to do their work in rendering the services.
(vii) Activity carried on by the appellant company is un doubtedly not casual and is distinctly systematic.
(viii) The work for which labour of workmen is required is clearly productive of the services to which the tenants are entitled and which also form a part of the consideration for the payments made by the tenants.
(ix) The appellant carries on its business with a view to profits and it makes profits and declares dividends out of the profits earned.
From the aforesaid findings recorded by the High Court, with which we find no reason to disagree, it is evident that the activity carried on by the appellant falls within the ambit of the expression "industry" defined in Section 2(j) of the Act as construed by this Court in Bangalore Water Supply & Sewerage Board case (supra).
The Award of the Industrial Tribunal cannot, therefore, be assailed on the basis that the appellant is not carrying on an industry under the Act.
Shri Nath has next contended that the Industrial Tribu nal was not competent to make the Award as the earlier Award dated March 3, 1960, had not been validly terminated.
He has urged that the earlier Award was in the nature of a settle ment under Section 2(p) of the Act and it could be terminat ed only in accordance with Section 19(2) of the Act.
Shri Nath has pointed out that for terminating a settlement under Section 19(2) a written notice is necessary whereas for termination of an Award under Section 19(6) of the Act a written notice is not required and a notice is sufficient.
In our opinion this contention does not require consid eration in view of the finding recorded by the learned Judges of Division Bench of the High Court that the letter dated November 24, 1966 was a notice 944 under Section 19(6) as well as under Section 19(2) of the Act.
It has been found that the said letter of the union which was addressed to the Labour Commissioner was sent to the appellant company and that in the said letter there is a clear intimation of the intention of the employees to termi nate the Award and from the letter of the appellant dated February 13, 1967 it appears that the appellant had become aware of the intention of the union to terminate the Award and that the order of reference was made on July 29, 1967, long after the expiry of the period of two months.
It is not the requirement of Section 19(2) of the Act that there should be a formal notice terminating a settlement and notice can be inferred from the correspondence between the parties (See: Indian Link Chain Manufacturers Ltd. vs Their Workmen, ; In the aforesaid facts and circumstances the High Court was justified in holding that the Award dated March 3, 1960 had been validly terminated before the passing of the order of reference.
Shri Nath has urged that there has been non compliance of the provisions of Section 19(7) of the Act which lays down that no notice given under sub section (2) or sub sec tion (6) shall have effect unless it is given by a party representing the majority of the persons bound by the set tlement or Award as the case may be.
This question has been raised by the appellant for the first in this Court.
It involves an inquiry into questions of fact which cannot be made at this stage.
The same, therefore, cannot be allowed to be agitated.
Shri Nath has lastly urged that the Industrial Tribunal was in error in making the Award in relation to Dearness Allowance without examining the capacity of the appellant to pay the additional amount and that the High Court should have remanded the matter to the Tribunal for considering this issue in the light of the documents which were submit ted by the appellant before the High Court.
We find no substance in this contention.
The High Court has rightly held that in considering the finding arrived at by the Tribunal the High Court while exercising its jurisdiction under Article 226 of the Constitution should generally consider the materials which were made available to the Tribunal and fresh or further materials which were not before the Tribunal should not normally be allowed to be placed before the Court.
The appellant has not been able to show why the said documents were not produced before the Tribunal.
It is not the case of the appellant that the Tribunal had precluded the appellant from producing these documents.
In these circumstances we find no justification for accepting the plea of the learned counsel for the appel lant for 945 reconsideration of the Award of the Tribunal in the light of the documents submitted by the appellant during the pendency of the appeal before the High Court.
The appeal is, therefore, dismissed with costs.
During the pendency of this appeal, the appellant has made a deposit before the Tribunal.
The respondent .union will be entitled to withdraw the said amount along with the interest that has accrued on it.
T.N.A. Appeal dismissed.
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The appellant, a real estate company, was engaged in the business of letting out its property on lease, Besides it was also rendering various services to its tenants such as electricity and water supply, washing and cleaning, lift services, electrical and sanitary repairs on payment basis.
For rendering these services the appellant company employed a number of workmen.
A dispute arose between the employees and the appellant company with regard to wages, scales of pay, dearness allowance and gratuity.
The State Government re ferred the disputes to Industrial Tribunal for adjudication.
The appellant company contested the reference before the Tribunal by raising a preliminary objection that the alleged dispute was not an industrial dispute and that the reference was barred by Section 19 of the since there was an earlier binding award, based on settlement with the Union, which was not terminated by either parties.
934 By an order dated August 24, 1968 the Tribunal overruled the preliminary objection and gave the award dated March 3. 1969 enhancing the dearness allowance of the employees.
The Tribunal also framed a revised gratuity scheme but did not fix any grades and pay scales of workmen for want of con vincing evidence.
The appellant company filed a writ petition in the High Court challenging the Tribunal 's order dated August 24, 1968 as well as the Award dated March 7, 1969 contending: (i) that the Award was without jurisdiction because the appel lant company was not carrying on 'industry ' and the alleged dispute was not an 'Industrial Dispute ' and that the previ ous Award was not terminated and was still subsisting; (ii) that no dispute was raised between the workmen and the appellant prior to the reference before the Tribunal; and (iii) that the Tribunal did not consider the appellant 's capacity to pay dearness allowance to the workmen.
A single judge of the High Court dismissed the writ petition by rejecting all the contentions.
The appellant filed an appeal against the judgment of the single judge before a Division Bench of the High Court which was also dismissed.
Against the decision of the Division Bench of the High Court the appellant company filed an appeal to this Court, contending: (i) that the High Court was in error in holding that the appellant was an 'industry ' under Section 2(j) of the Act; (ii) that the Tribunal was not competent to make the Award since the earlier Award, which was in the nature of a settlement under Section 2(p), was not terminated in accordance with section 19(2) by giving a formal written notice; (iii) that there was non compliance with the provi sions of Section 19(7) of the Act; and (iv) that the Indus trial Tribunal was in error in making the Award in relation to Dearness Allowance without examining the capacity to pay the additional amount and that the High Court should have remanded the matter to the Tribunal for considering this issue in the light of the documents which were submitted by the appellant before the High Court.
Dismissing appeal, this Court, HELD: 1.
The activity carried on by the appellant compa ny falls within the ambit of the expression "industry" defined in Section 2(j) of the .
The Award of the Industrial Tribunal cannot, there fore, be assailed on the basis that the appellant is 935 not carrying on an 'industry ' under the Act.
[943E] Bangalore Water Supply & Swerage Board v .R. Rajappa and Ors., ; , applied.
Management of Safdar jung Hospital vs Kuldip Singh Sethi, ; ; State of Bombay vs Hospital Mazdoor Sabha, ; ; D.N. Banerjee vs P.R. Mukherjee, ; and Corporation of the City of Nagpur vs Its employees; , , referred to. 2.
It is not the requirement of Section 19(2) of the that there should be a formal notice terminating a settlement, and notice can be inferred from the correspondence between the parties.
[944B] Indian Link Chain Manufacturers Ltd. vs Their Workmen, [1972] I SCR 790, applied.
2.1 In view of the finding of the Division bench that the letter of employees Union dated November 24, 1966 was a notice under section 19(6) as well as section 19(2) of the and that the said letter contained a clear intimation of the intention of the employ ees to terminate the Award, the High Court was justified in holding that the earlier award had been validly terminated before the passing of the order of reference.
[943H; 944A B ] 3.
The High Court was right in taking the view that while exercising its jurisdiction under Article 226 of the Constitution the High Court should generally consider the materials which were made available to the Tribunal and fresh or further materials which were not before the Tribu nal should not normally be allowed to be placed before the Court.
[944F G] 3.1 In the instant case the appellant has not been able to show why the documents relied on by it were not produced before the Tribunal.
Therefore there is no justification for accepting the plea of the appellant for reconsideration of the Award of the Tribunal in the light of the documents submitted by the appellant during the pendency of the appeal before High Court.
[944G H] 4.
A question raised for the first time in the Supreme Court involving an inquiry into questions of fact cannot be allowed to be agitated.
[944E] 936
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6544.txt
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Appeal No. 687 of 1965.
Appeal by special leave from the judgment and decree dated October 3, 1961 of the Punjab High Court in Letters Patent Appeal No. 405 of 1958.
C. B. Agarwala and K. P. Gupta, for the appellant.
section N. Anand, for respondent No. 1.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judgment and order of the Punjab High Court in Letters Patent Appeal No. 405 of 1956.
The matter arises out of an application for execution of an order for possession passed on a compermise between the parties.
The Division Bench of the Punjab High Court felt itself unable to help the decree holder because of an earlier decision in the execution proceedings which was held to constitute res judicata against her.
The main question for consideration is, whether it was right in doing so.
The relevant facts are as follows.
As far back as April 1950.
Harbans Lal, the late husband of the appellant before us, obtained an order for eviction from the Rent Controller against Lal Chand and Ram Rattan Dass Jain in respect of certain, premises which were being used as a factory.
This decree was upheld in appeal and in July 1951 the decree holder applied for execution.
The court bailiff made a report dated the 14th July 1951 that on his going to give delivery of possession resistance was offered by a number of persons and being apprehensive of breach of peace he could not effect delivery of possession.
The judgment debtors appear to have approached the Department of Industries and informed them of the attempt at their eviction by the, decree holder.
The copy of a letter from the Extra Assistant Director of Industries to the Chief Inspector of Factories dated July 18, 1951 exhibited at the instance of the judgment debtors, goes to show that the machinery installed in the factory could not be removed without 7 Sup.
C.I./68 8 508 the prior permission of the Chief Inspector of Factories.
Obviously the judgment debtors wanted to thwart the decree holder from getting possession through court by invoking the aid of the East Punjab Factories (Control of Dismantling) Act XX of 1948, hereinafter referred to as the Act.
The judgment debtors applied for stay of execution of the decree on August 23, 1951.
The Subordinate Judge issued notices but did not grant stay.
On appeal the District Judge accepted the appeal noting that the Subordinate Judge had not given any finding about the applicability of the Act.
He had before him the report of the bailiff that possession of the premises could not be given over as there were machinery stored therein.
By order dated October 11, 1951 he directed the Subordinate Judge to decide the objections under the Act.
The Subordinate Judge framed a number of issues including one which read : 'whether the judgment debtors could not be dispossessed of the factory and machinery could not be dismantled without permission of the Government ?" Taking evidence of the parties and noting the contents of the letter of the Industries Department, he observed that the judgment debtors had not secured permission but the decree holder might follow up the matter through court.
He stayed execution of the decree in so far as it involved the dismantling or removal of the machinery but allowed the same for securing possession of the part of the premises where no machinery was stored.
This was on 7th February, 1953.
Both parties filed appeals from this order which were dismissed.
The appellate court was of the view that machinery and spare parts were lying practically in all the rooms of the building and the locking and sealing of the factory would result in its closure which would go against the provisions of the above mentioned Act.
The decree holder was therefore directed to pursue the matter with the State Government.
Incidentally, the court noted that the decree holder had not challenged the proposition that the court could not order delivery of possession without the requisite sanction for the dismantling of the factory.
This order dated 22nd April 1953 was not challenged by any appeal to the High Court.
It appears that the court consigned the execution proceedings to the record room on July 25, 1953.
On August 18, 1953 the decree holder applied for execution proceedings being restarted.
On November 7, 195 3 the executing court observed that a reply from the State Government had been received to the effect that permission for demolition of the factory could not be given.
execution file was therefore ordered to be consigned to the record room once more.
From this order.
an appeal was preferred by the 'decree holder.
The Additional District Judge held that in view of.the imperative provisions of section 3 of the Act the decree holder could not be granted posses 509 sion in execution of the decree and dismissed the appeal by order dated January 8, 1954.
On further appeal, a learned Judge of the High Court by order dated July 13, 1955 observed that in the execution proceedings no evidence had been adduced on the points arising under Punjab Act XX of 1948.
He therefore said as follows : "On the present record it is not possible for me to decide whether the execution of the decree would defeat the provisions of section 3 of the Punjab Act XX of 1948.
That being the position of matters, I set wide the order passed by the Subordinate courts and direct the court of execution to give fresh decision on the points that arise under section 3 of Punjab Act XX of 1948.
In proceedings pursuant to this order parties will be given opportunity to examine hearing on the points that arise under section 3 of Punjab Act XX of 1948.
" On remand the Subordinate Judge by order dated 30th De cember, 1955 hold that the Act was not intended to cover involuntary dismantling in execution of orders of competent courts : further the Rent Restriction Act, 1949 passed after Act XX of 1948 did not take any notice of the prohibition contained in the said Act ' In the result he found that the respondent was liable to be ejected in execution of the decree for eviction but as the application had become over a year old it would be struck off the file and the decree holder be at liberty to take out execution of the decree by a fresh application.
The judgment debtors went up in appeal to the court of the District Judge.
The District Judge by order dated December 31, 1956 hold that the Act did not apply to involuntary dismantling of factories and that the issue raised by the Subordinate Judge in this connection did not arise but in fact it had been decided against the landlord by the High Court in Revision.
According to him, the order of the High Court Went to show that section 3 of Act XX of 1948 covered delivery of possession even in execution of the order of the Rent Controller or otherwise the revision application would, have been accepted by him straightaway.
In the result he dismissed the execution petition.
The appellant went up in Second Appeal to the High Court at Chandigarh.
A single Judge of that Court dismissed the appeal.
The decree holder filed a Letters Patent Appeal.
Although of the view that delivery of possession was not barred in execution of the decree by Act XX of 1948, the Division Bench concluded that so far as the parties before it were concerned, the matter had become, res judicata inconsequence of the decisions of the executing court and the first appellate court on the 510 first execution application and the decision of a single Judge in revision on the previous occasion in the second execution application.
Section 3 sub section
(1) of East Punjab Act XX of 1948 provides as follows : "No person shall, without the written permission of the State Government or of an officer authorised in this behalf by the State Government, dismantle any factory or remove from a factory any spare parts kept for maintaining the machinery of the factory in order.
" The Act which contains only eight sections makes no reference to any decree for possession against the owner of a factory.
By ordering delivery of possession of the premises the executing court does not make an order for dismantling a factory and a bailiff charged with execution of a warrant for possession does not infringe the above provision of law by rendering possession of the property to the decree holder.
So far as the judgment debtor ' the owner of the factory, is concerned, it would be his look out to take the matter up with.
the State Government, if necessary and we have no doubt that in a 'case like this where there is no collusion between the decree holder and the judgment debtors the State Government would not prosecute the judgment debtors or refuse to accord sanction to the judgment debtors for removal of the machinery from the premises of which they could not lawfully continue in possession.
it appears that the Subordinate Judge, the District Judge and the Judges of the Punjab High Court were all of the view that the Act did not bar the delivery of possession in execution of a decree.
In our opinion there was no final order about the inexecut ability of the decree on the first application for execution which was consigned to the record room by order dated July 25, 1953.
Further, the judgment of the learned single Judge of the Punjab High Court dated July 13, 1955 did not decide the question as fin whether the decree for possession would be inexecutable in view of Act XX of 1948.
He stated expressly that It was not possible for him to decide whether, the execution of the decree would defeat the provisions of section 3 of Punjab Act XX of 1948 and being unable to come to a decision on the record he remanded the matter to the court of execution.
He found himself unable to interpret the section on the evidence before him.
The proceedings subsequent to the remand order culminated in the order of the Division Bench from which the present appeal arises.
The order dated July 13, 1955 was not a final order which put a seal on the proceedings.
The course of litigation subsequent to the order for eviction in 1950 is truly amazing.
For 17 years the decree holder has 511 been unable to reap the fruits of the decree although practically all the courts felt that the Act of 1948 could not be called in aid by the judgment debtors to resist execution by delivery of possession.
We cannot but condemn in very strong terms the attitude ,of the judgment debtors who, to say the least, are persons who have little regard for sanctity of their own solemn promise made before a court of law.
On June 29, 1,950 in Miscellaneous Civil Appeal No. 39 of 1950 they stated on oath that they had reached an agreement with the landlord that they would "remain on the premises only up till 31st March 1951 when they would of their own accord vacate the premises" and on their failure to do so the landlord would be entitled to take out execution against them.
Even before the time to vacate the premises came, one of the judgment debtors filed a suit for a perpetual injunction to restrain the decree holder from obtaining possession in terms of the consent order of 29th June 1950.
The suit was dismissed on July 11, 1951.
The judjement debtors also lost the appeal filed against that dismissal.
At every step and turn for nearly two decades they have successfully resisted delivery of possession by raising an illusory plea.
Learned counsel for the respondents argued that even now his clients can urge the plea that the decree was not executable because of the provisions of Act XX of 1 1948.
According to him, the agreement was in contravention of a statute and 'the respondents could not be estopped from pleading or proving facts which would render the agreement void.
His, case was that Act XX of 1948 being in force on June 29, 1950 any agreement arrived at between the parties in contravention of its provisions would not be binding on the parties.
No exception can be taken to the broad proposition of law but no question of estoppel ever arose in this case because Act XX of 1948 did not operate as a bar to the delivery of possession of premises in execution of a decree.
In the result, the appeal is allowed with costs throughout from the 18th August 1953 irrespective of any order in that behalf made at any time thereafter.
It is unfortunate the decree holder has been kept out of possession so long; but she is partly responsible for it herself.
If she had preferred an appeal from the order of the District Judge passed on 22nd April, 1953 to the High Court.
probably her troubles would have ended long ago.
Y.P. Appeal allowed.
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The eviction of the Respondent 'from the appellants premises, which was used as a factory, was decreed and application for execution of an order for possession was made.
The respondents resisted the execution on the plea that the machinery installed in the factory could not be re moved without the prior permission of chief Inspector of Factories as provided by the East Punjab Factories (Control of Dismantling) Act.
The premises was allowed.
Both parties appealed.
The appellate Court took of the machinery was stayed, but the Possession of the part the premises was allowed.
Both parties appealed.
The appellate Court took the view that the machinery and spare parts were lying practically in all the rooms, and the locking and sealing of the factory would result in its closure which would be against the provisions of the Act, and therefore directed the appellant to pursue the matter with the State Government.
The order dated April 22, 1953 was not challenged by any appeal.
But the appellant restarted the execution proceedings in which it was held that the State Government had refused permission for demolition of the factory, so the file was ordered to be consigned to the record room. 'Me appellant filed an appeal, which was dismissed, but in further revision the High Court by its order dated July 13, 1955 observed that on the record it was not possible to decide whether the execution of the decree would defeat the provisions of section 3 of the Act, so it set aside the order and directed the executing court to give decision on points that arose under section 3 of the Act. 'Me executing court found that the provisions of the Art did not prohibit the execution and as such the respondents were liable to ejectment but since the application had become over a year old it would be 'struck off the file with liberty to make a fresh application.
The respondents appealed.
The District Judge held that the Act did not apply to involuntary dismantling of factories and that the issue raised by the executing court did not arise but in fact it had been decided against the appellant by the High Court in revision.
The appellant 's appeal to High Court was dismissed by a Single Judge, and in the Letters Patent Appeal, it was held that the delivery of possession was not barred in execution of decree by the Act, but the matter had become res judicata in consequence of the decisions in the first execution application and the decision of the High Court dated July 13 1955 in the second execution applica tion.
Allowing the appeal, HELD : The Act does not bar the delivery of possession in execution, of a decree.
It makes no reference to any decree for Possession against the owner of a factory.
By ordering delivery of possession of the premises, the executing court does not make an order for dismantling a factory and a bailiff charged with execution of a warrant for possession, does not infringe the provision of law by rendering possession of the property to the decree holder.
[510 C D] 507 There was no final order about the inexecutability of the decree on the first application for execution.
Further the High Court by its order dated July 13, 1955, did Dot decide the question as to whether the decree for possession would be inexecutable in view of the Act.
It stated expressly that it was not possible for it to decide whether the execution of the decree would defeat the provisions of the Act, and being unable to come to a decision on the record it remanded the matter to the court of execution.
It found itself unable to interpret the section on the evidence beforeit.
The proceedings subsequent to the remand order culminated in theorder of the Division Bench from which the present appeal arose.
The order dated July 13, 1955 was not a final order which put a seal on the proceedings.
[510 F H]
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2374.txt
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Criminal Appeal No. 653 of 1986 From the Judgment and Order dated 31.1.1983 of the Karnataka High Court in Crl.
A. No. 451 of 1981 D.N. Diwede, M. Veerappa and Ashok Kumar Sharma for the Appellant.
R. Satish for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
The light hearted and casual manner of disposal of the case against the respondent in C.C. No. 442 of 1980 (P.R. No. 198/80) on the file of his court by the Additional Munsif cum Additional Judicial Magistrate (First Class) Madhugiri and the refusal of the High Court of Karna taka to enhance the sentence of the respondent in exercise of its powers under Section 377 Criminal Procedure Code in Criminal Appeal No. 451/81 preferred by the State has com pelled the State of Karnataka to approach this Court under Article 136 1105 of the Constitution to file this Appeal by Special Leave.
The respondent has entered appearance but has not con tested the appeal.
The respondent was charged under Sections 279,337, and 304 A Indian Penal Code and Sections 89(a) and 89(b) of the Motor Vehicles Act for having driven an Express bus bearing Registration No. MYT 30(36 in a rash and negligent manner at about 8.30 P.M. on 30.4.80 on the Madhugiri Hosakere Road and hitting a bullock cart as a result of which one of the persons travelling in the cart Rangappa alias Veeramallapa sustained fatal injuries and another passenger sustained simple injuries.
After the accident the respondent failed to secure medical assistance to the injured persons and also failed to report the accident to the police authorities.
The respondent pleaded guilty to all the charges and was accordingly convicted.
However, in awarding sentences to the respondent for the several convictions, the Magistrate imposed trivial amounts of fines which had the effect of making the trial and the convictions a mere farce.
The sentences awarded are as follows: Offence Sentence provided under Sentence Awarded I.P.C./M.V. Act 1.
Sec.279 IPC (Punishable with imprisonment Fine of Rs.25/ of either description for a i/d to undergo term which may extend to six S.I. for one months or with fine which week.
may extend to one thousand rupees or with both) 2.
Sec.337 IPC (Punishable with imprison Fine of Rs.50/ ment of either description i/d to undergo for a term which may extend S.I. for twenty to six months or with fine five days.
which may extend to five hundred rupees or with both. ) 3.
Sec.304 A (Punishable with imprisonment Fine of Rs.250/ IPC of either description for a i/d to undergo term which may extend to two S.I. for one years or with fine or with month.
both. ) 1106 4.
Sec.89(a) r/w (Punishable with fine which Fine of Rs.10/ Sec.
112 Moto may extend to one hundred in default to Vehicles Act rupees) undergo S.I. for five days.
Sec.89(b) r/w (Same as for Section 89(a)) Same sentence Sec.
112 Motor as above.
Vehicles Act Perturbed and shocked by the callous manner in which the Magistrate had dealt with the case, the State preferred an appeal under Section 377 Cr.
P.C. to the High Court of Karna taka for enhancement of sentence.
The High Court, we regret to note has declined to interfere with the sentence on the grounds which have no basis or relevance.
The High Court was alive to the trivial nature of the sentences awarded by the Magistrate and has observed: "The sentence imposed appears to be a lenient one." Nevertheless, the High Court has declined to exercise its powers under Section 377 Cr.
P.C. and the strange reasons given by it are as follows: "The judgment of conviction and sentence has been delivered on January 30, 1981.
We are today at the fag end of January, 1983.
The award has been hanging over the head of the accused for a very long time.
Which should have made him undergo a lot of mental agony and torture.
It is no doubt true that one death has taken place and injuries have been caused to one person.
The sentence imposed appears to be a lenient one.
Therefore, con sidering the fact the appeal is pending for a long time and it must have caused the accused a lot of mental anxiety, we think that the appeal should be dismissed with an observation that in such serious cases the court is expected to take a serious view of the matter and not to be lenient in such matters.
With this observation the appeal is dismissed.
" The utter disregard shown by the Magistrate to the nature of the offences, particularly the one under Section 304 A I.P.C., and the sentences provided for them under the Indian Penal Code and Motor Vehicles Act, by imposing what may be termed as 'flea bite ' sentences on the respondent, should have spurred the High Court to not only pass appro priate strictures against the Magistrate but also to set right matters by enhancing the sentence at least for the conviction under Section 304 A I.P.C. to a conscionable level in exercise of its powers under Section 377 I.P.C. 1107 The High Court has failed to comprehend that the re spondent has been let off with a total fine of Rs.345 for his convictions under all the five charges relating to the death of one person and the sustainment of injuries by another due to his rash and negligent driving besides his failure to secure medical assistance to the victims as well as his failure to make a report to the authorities about the accident.
The reasons given by the High Court are really non existent as well as irrelevant ones.
It is not as if the respondent had been charged or convicted for a grave offence punishable with death or imprisonment for life and his fate had remained in suspense for a long time and as a conse quence thereof, he had undergone mental agony and torment for a long period of time.
Here was a case where the re spondent had not only driven his bus in a reckless manner and caused the death of one person and injuries to another but he had also attempted to escape prosecution by failing to report the accident to the police authorities.
Considera tions of undue sympathy in such cases will not only lead to miscarriage of justice but will also undermine the confi dence of the public in the efficacy of the criminal judicial system.
It need be hardly pointed out that the imposition of a sentence of fine of Rs.250 on the driver of a Motor Vehi cle for an offence under Section 304 A I.P.C. and that too without any extenuating or mitigating circumstance is bound to shock the conscience of any one and will unmistakably leave the impression that the trial was a mockery of jus tice.
We are, therefore, constrained to do what the High Court should have done but failed to do viz. enhance the sentence in the interests of justice.
We, however, feel that the ends of justice would be met by enhancing the sentence for the most serious of the charges for which the respondent has been convicted viz. the charge under Section 304 A I.P.C.
Accordingly we enhance the sentence for the conviction under Section 304 A I.P.C. to six months R.I. and fine of Rs. 1,000 in default to undergo R.I. for two months.
We leave undisturbed the other convictions and sentences.
To the extent indicated above the appeal will stand allowed.
The respondent shall forthwith be taken into custo dy to serve out the sentence.
A.P.J. Appeal allowed.
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The respondent was charged under sections 279, 337, 304 A IPC and Sections 89(a) and 89(b) of the Motor Vehicles Act for having driven an Express Bus in a rash and negligent manner hitting a bullock cart as a result of which one of the persons traveling in the cart sustained fatal injuries and the other person sustained simple injuries.
After the accident the respondent failed to secure medical assistance to the injured person and also failed to report the accident to the police authorities.
The respondent pleaded guilty to all the charges and was convicted and sentenced to pay a total fine of Rs. 345 under all the five charges.
In the appeal preferred by the State for enhancement of sentence, the High Court declined to interfere with the sentence.
Allowing the appeal of the State, HELD: (1) The Magistrate in utter disregard to the nature of offences, particularly the one under Section 304 A IPC and the sentences provided for them under the ' IPC and the Motor Vehicles Act, imposed 'flea bite ' sentences on the respondent.
This should have spurred the High Court to not only pass appropriate strictures against the Magistrate but also to set right the matter by enhancing the sentence at least for the conviction under Section 304 A IPC in exercise of its powers under Section 377 Cr.
P.C. [1106G H] 1104 (2) The High Court has failed to comprehend that the respondent has been let off with a total fine of Rs. 345 for his convictions under all the five charges.
The reasons given by the High Court are really nonexistent as well as irrelevant ones.
Here was a case where the respondent had not only driven his bus in a reckless manner and caused the death of one person and injuries to another but he had also attempted to escape prosecution by failing to report the accident to the police authorities.
[1107A B] (3) Consideration of undue sympathy will not only lead to miscarriage of justice but will also undermine the effi cacy of the criminal judicial system.
The imposition of a sentence of fine of Rs. 250 on the driver in such a case and that too without any extenuating or mitigating circumstances is bound to shock the conscience of any one and will unmis takably leave the impression that the trial was a mockery of justice.
[1107C E] (4) The ends of justice would be met by enhancing the sentence for the most serious of the charges namely under Section 304 A IPC to six months R.I. and fine of Rs.1000 in default to undergo R.I. for two months.
[1107.E F]
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5214.txt
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Civil Appeal No. 11 IS(NT) of 1975.
WITH Civil Appeal Nos, 1226 & 1227(NT) of 1975.
From the Judgment and Order dated 18.9.1974 and 11.10.74 of the Andhra Pradesh and Calcutta High Court.
In case referred No. 15 of 1973 and matter No. 7 10 of 1970 respec tively B.B. Ahuja, Ms. A. Subhashini, K.C. Dua for the Appel lant in C.A. No. 1118 of 1975.
159 Harish N. Salve, Vivek Gambhir and Preveen Kumar for the Appellant in C.A. No. 1226 27 of 1975.
A. Subba Rao for the Respondent in C.A. No. 1118 of 1975.
B.B. Ahuja, K.C. Dua and Miss. A. Subhashini for the Re spondent in C.A. Nos.
1226 27 of 1975.
1226 & 1227/NT/1975, on a certificate, under Sec.
29(1) of the , (Act) by the assessee raise a question as to the proper construction of the proviso to Sec.
4(1)(a) of the Act, which provides for exemption respecting transferred assets which would other wise be includible in the wealth of the assessee under sec.
4(1)(a) of the Act.
The condition for the grant of the exemption under the proviso is that the transfer of the asset is either charge able to gift tax or is not chargeable under sec.
5 of the .
The particular point for consideration is whether, on the language of the proviso, the exemption is attracted only to such gifts as were chargeable to tax for any assessment year commencing "after the 31st day of March, 1964," as understood by the Revenue or whether the gifts even made earlier would attract the benefit of the exemption as claimed by the assessees.
There appears a divergence of judicial opinion on the point in the High Courts.
In C.W.T. vs Smt.
Sarala Debi Birla, ; T. Saraswathi Achi vs C.I.T., ; C.W.T. vs Seth Nand Lal Ganeriwala, ; M.G. Kollankulam vs C.I.T., Malti Harseey vs C.W.T., and C.W.T. vs Rasesh N. Mafatlal, several High Courts have construed the provision in the manner suggested by the Revenue.
C.W.T. vs Hashmatunnisa Begum, has taken the opposite view extending a wider benefit of the exemption.
The opinion of the Calcutta High Court in 1011TR 488, which is representative of the view in favour of Revenue, is under appeal in CA 1226 and 1227 of 1985 and the opinion of the Andhra Pradesh High Court in which is favour able to the assessee is under appeal 160 No. CA 1118 of 1975 preferred by the Revenue.
In CA 1118 of 1975 the assessee Smt.
Hashmatunnisa Begam, the legal representative of the late Nawab Zabeer Yar Jung Bahadur, claimed in respect of the assessment year 1967 68, that the value of the immovable properties gifted by the late Nawab to his wives before 1.4.
1964 should not be included in the net wealth of the Nawab as on the valua tion dated 31.9.1966.
The Nawab under three deeds of gift one dated 25.5.1962, in favour of Smt.
Hashmatunnisa Begum, his first wife, and two other deeds dated 17.8.1962 and 26.4.1962, in favour of Smt.
Fareed Jehan Begum his second wife, gifted in their favour certain lands and buildings of a total value of Rs. 1,96,950.
The gifts were chargeable to gift tax and were accordingly assessed to gift tax in the assessment year 1963 64.
On behalf of the estate of the Nawab who later dies on 16.12.1968 it was claimed in the proceedings for assessment to wealth for the Assessment Year 1967 68.
That though the gifts were otherwise includible as belonging to the Nawab under sec.
4(I)(a)(i), as the trans fers made to the spouses otherwise than for adequate consid eration, however, as the gifts were chargeable to gifttax, the proviso to sec.
4(I)(a) was attracted and that the assets so transferred were not includible in the net wealth of the Nawab "for any assessment year commencing after the 3 1st day of March 1964".
The Wealth tax Officer rejected this claim.
The Appellate Asst.
Commissioner, in the assessee 's appeal, confirmed the assessment.
In the assessee 's further appeal before the Appellate Tribunal, the Tribunal, on a particular construction of the proviso, allowed the appeal and held that the assets transferred, which had attracted gift tax, were not includible in the net wealth of the Nawab for the assessment year 1964 65 onwards.
At the instance of the Revenue, the following question of law was referred to the High Court for its opinion: "Whether, on the facts and in the circum stances of the case, the assessee was entitled to exclude, under the proviso to section 4(1)(a) of , the value of the assets gifted to his wives in the Wealth tax assessment for the assessment year 1967 68?" The High Court agreed with the construction placed on the proviso by the Tribunal and answered the question in the affirmative and against the revenue.
The revenue has come up in appeal by special leave.
In CA 1226 and 1227 of 1975 the assessment years concerned are 1964 65 and 1965 66 corresponding to the valuation dates 161 31.3.
1964 and 31.3.1965.
On 7.10.1959 Smt.
Sarladevi Birla, the assessee, made a gift of Rs.l,O0,011, to her minor daughter Smt.
Manju Rani Birla.
The assets so transferred were included in the assessee 's wealth for the two assess ment years 1964 65 and 1965 66 under sec.
4(I)(a)(ii) of the .
The claim of the assessee that the proviso to sec.
4(I)(a) operated to exclude the asset from the net wealth of the assessee as the transfer was chargeable to gift tax was not accepted by the Wealth tax Officer, who completed the assessment including the transferred asset in the assessee 's net wealth.
The assessee 's appeal before the Appellate Asst.
Commissioner was unsuccessful.
However, the Appellate Tribunal accepted the contention of the assessee and by its appellate order dated 11.5.1970 allowed the assessee 's appeal holding that on a true con struction of the proviso, so long as the gift was chargeable to or exempt under sec.
5 from gift tax to that extent sec.
4(I)(a) ceased to have operation and the statutory fiction embodied in it was not attracted and that as at the relevant time the gift was chargeable to gift tax.
The exemption was to operate from the assessment year commencing after 31.3.1964.
At the instance of the revenue, the Appellate Tribunal referred the following question of law for the opinion of the High court: "Whether on the facts and in the circumstances of the case and on a proper interpretation of section 4(1)(a) of the as amended by the Wealth tax (Amendment) Act, (Act 46) of 1964, the sum of Rs. 1,00,011 gifted by the assessee to her minor daughter could be included in computing her net wealth"? The High Court of Calcutta in reversal of the view taken by the Tribunal answered the question in the affirmative and against the assessee.
The assessee has come up in appeal by certificate.
We have heard Shri B.B. Ahuja, learned counsel for the revenue and Shri Harish Salve and Shri Subba Rao, for the assessees.
The controversy generated on the point leading to the divergence of the judicial opinion on the point is at tributable to the somewhat inelegant and inappropriate phraseology of the provision.
To appreciate the relevant contentions it is necessary to notice the words of the proviso: 162 "Provided that where the transfer of such assets or any part thereof is either charge able to gift tax under the (18 of 1958), or is not chargeable under Section 5 of that Act, for any assessment year commencing after the 3 1st day of March, 1964, (but before the 1st day of April, 1972), the value of such assets or part thereof, as the case may be, shall not be included in comput ing the net wealth of the individual;" The words "but before the 1st day April 1972" was later introduced by the Financee (No. with effect from 1.4.
This was introduced by the amending Act of 1964, but given effect to from 1.4.1965 by the notification.
Under the various clauses of Sec.
4(1)(a) certain transfers of assets made by an individual in favour or for the benefit of the spouse or a minor child, not being a married daughter, of such individual, are required to be ignored and the trans ferred assets included in the wealth of the assessee, as belonging to him.
Section 4(1)(a) aims at foiling an indi vidual 's attempt to avoid or reducing the incidence to wealth tax by transferring the assets to or for the benefit of the spouse or the minor child of the individual by re quiring the inclusion of such transferred assets in comput ing the net wealth of the individual.
However, the proviso makes the provision inoperative where and in so far as the transferred asset is either chargeable to gift tax under or is exempt under sec.
5 of the .
The controversy surrounds the question whether the expression "for any assessment year commencing after 31st day of March 1964", occurring in the proviso should be read with the first part and as referring to the eligibility of the gifts for exemption with reference to the point of time at which the gifts were made or whether that expression does not condition the identity of the eligible gifts but only signifies the starting point for the exemp tion from wealth tax.
Assessees contend that the date of the gift is immaterial and as long as the transfer is chargeable to gifttax or is exempt under sec.
5, whatever may be the year in which the gift was made, the exemption from gift tax must commences "for any assessment year commencing after the 31st day of March 1964".
If the expression "for any assessment year commencing after the 31st day of March, 1964" is intended to qualify and determine the gifts, the subject matters of which are eligible for exemption, then the literal construction, would be that the gifts made earlier to that period, 163 though chargeable to gift tax would not attract the benefit of exemption.
But the assessees say that the clause must be read as part of the second part of the proviso which contem plates the exemption.
So read, the clause would qualify the commencement of the benefit of the exemption and not the point of time when the Gift is required to be made to be eligible for the exemption from wealth tax.
The learned Judges of the High Court of Andhra Pradesh in the course of the Judgment under appeal in CA 1118 of 1975 observed: " . .
The words 'for any assess ment year commencing after the 31st day of March, 1964 ' are referrable to the assessment to be made under the .
They render the provisions of section 4(1)(a) inoperative irrespective of the fact whether the transferred asset was chargeable to gift tax or not chargeable to gift tax.
The proviso specifies the period of exemption upto 31st March, 1964.
Irrespective of the year of the gifts when the assets were gifted, they will not be included in the computation of the net wealth of the individual till the assessment year 1964 65.
We are, therefore, of the view that the intention of Parliament was to exempt transfers made under clauses (i) to (iv) of section 4(1)(a) from being computed in the net wealth of the individual upto the wealth tax assessment year commencing after 3 1st day of March, 1964 . . " 7.
Sri Ahuja submitted that the words "for any assess ment year commencing after the 31st day of 1964" could, in the context, only refer to the gift and gift tax assess ments.
The proviso, he said, which was introduced by way of an amendment, was brought into force with effect from 1.4.1965 by a notification which specified the commencement of the operation of the proviso and that, quite obviously, it would be redundant to read the clause under consideration as again referring to the commencement of the operation of the proviso.
While the clause under consideration related to and qualified the Gift tax assessments, the commencement of the exemption of the subjectmatter of the Gifts for purposes of wealth tax was controlled and determined by the commence ment of the operation of the proviso, which, by notification was specified as 1.4.1965.
Sri Ahuja submitted that the proviso was intended to effectuate the legislative policy that in respect of certain gifts made in favour of a spouse or a minor child, during a specified period, the assets transferred under the Gifts would have the benefit of exemption from the 164 operation of Section 4(1)(a).
This was because the legisla ture took into consideration that from 1.4.1964 onwards there was a sharp ascent in the rates of gift tax and that the assets which constituted the subject matter of such gifts attracting such high rates of gift tax should not also be included in the net wealth of the donor for wealth tax purposes which would otherwise be the consequence under Section 4(1)(a) of the Act.
As the proviso originally stood, gifts chargeable to gift tax for any assessment year com mencing after 3 1st March, 1964, attracted the benefit of exemption.
The outer limit for the period of such eligible gifts was later fixed by the amendment made by Finance (No. , w.e.f. 1.4.1972 which introduced the words 'but before the 1st day of April, 1972 '.
Accordingly, Sri Ahuja contends that only that class of gifts that were chargeable to gift tax for any assessment year 1964 65 or thereafter (but subject to the limit fixed by the 1971 amendment) which would otherwise fall under Section 4(1)(a) were eligible for the benefit of the exemption.
According to Sri Ahuja the plain words of the proviso leave no room for doubt and where the enactment is clear and admits of only one meaning and does not admit of two or more meanings, it would be the plain meaning that should be given effect to.
When the meaning is plain, says counsel, no resort could be had to any rules of construction which would denude the provision of its plain and ordinary meaning.
Sri Harish Salve presenting the case of the assessees sought to point out the intrinsic anomaly of the cases between a gift made, say, on 3 1st of March 1963 and one made the very next day i.e. 1st of April, 1963 on the other, to show that while in the first case even for the assessment year 1965 66 the transferred asset is includible in the wealth of the assessee, in the latter case it is exempt for all time to come thereafter.
Learned counsel pointed out that the criterion of higher rates of Gift tax as a justifi cation supporting the classification also fails in view of the fact that under the proviso it is not only the gifts chargeable to tax but also those exempt under sec.
5 that attract the exemption with the result that between two gifts which are both exempt under sec.
5 of the , one is for ever exempt from wealth tax in the hands of the donor while the other is includible in his wealth for purposes of wealth tax depending solely on the criterion of the date of gift whether the gift was made prior to 31st March 1963 or thereafter.
Here the criterion of classification of gifts on the basis of the exigibility for higher rates of tax, says Sri Salve, collapses and the cut off date determining the difference in consequences in the two different class of cases become wholly arbitrary.
Shri Salve submitted that a construction which promotes its constitutionality has to be pre 165 ferred to the one which, if accepted, would expose the provision to the vice of discrimination and unconstitution ality.
The essential basis of Sri Salve 's suggested construc tion rests on the requirement that the words "for any as sessment year commencing after the 31st day of March 1964" should not be read as part of the first part of the proviso relating to gift tax assessments but as part of the second part denoting the commencement of the operation of exemption from wealth tax.
This, we are afraid, will imboggle itself in the quagmire of irreconcilable constructional contradictions.
The amendment introducing the proviso was brought about by an amending Act of 1964; but the date of the commencement of its operation was left to be fixed by a Notification.
The effect of the Notification issued bringing the proviso into effect from 1.4.1965 would be wholly ignored by the con struction suggested by Sri Salve.
Secondly, the introduction of the words "but before the 1st day of April, 1972" would, if the construction suggested by Sri Salve is accepted, operate to take away the benefit of the exemption after 1.4.1972 and the exemption confined only to the assessment years between 1964 65 and 1972 73.
On a reading of the plain words of the proviso, the clause "for any assessment year commencing after 31st day of March, 1964" can only be read as relating to gift tax assessments and not to the wealth tax assessments.
But, Sri Salve contends that this literal construc tion would expose the provision to an attack on its consti tutionality on the ground that it brings about a discrimina tion between two classes of assessees on nothing more than an arbitrary cut off date.
The cases of gifts exempted under sec.
5, he says, illustrate the point as according to Sri Salve there could be no rational basis for discriminating between a gift exempted under sec.
5 made on 31.3.1963 on the one hand and 1.4.1963 on the other.
One of the pillars of statutory interpretation viz., the literalrule, demands that if the meaning of the Statuto ry Interpretation is plain and the Courts must apply regard less of the result.
The very concept of interpretation connotes the introduction of elements which are necessarily extrinsic to the words in the statue.
Though the words "interpretation" and "construction" are used interchangeably, the idea is somewhat different.
Dr. Patrick Devlin says: 166 " . .
A better word, I think, would be construction, because construction, although one often used it alternatively with interpre tation, suggests that something more is being got out in the elucidation of the subject matter than can be got by strict interpreta tion of the words used.
In the very full sense of the word 'construction ' the judges have set themselves in this branch of the law to try to frame the law as they would like to have it . . ".
[See: Samples of Law Making Oxford University Press p.70 71] "A statute" says Max Radin "is neither a literary text nor a divine revelation.
Its effect is, therefore, neither an expression laid on immutable emotional over tones nor a permanent creation of infallible wisdom.
It is a statement of situation or rather a group of possible events within a situation and as such it is essentially ambiguous.
" [See "Statutory Interpretation" 43 Har.
L.R. 863 (868)].
The observations of Lord Russel of Killowen in Attorney General vs Carlton Bank, though an early pronouncement, is refreshing from its broad common sense: "I see no reason why special canons of construction should be applied to any Act of Parliament, and I know of no authority for saying that a Taxing Act is to be construed differently from any other Act.
The duty of the Court is, in my opinion, in all cases the same, whether the Act to be construed relates to taxation or to any other subject, namely to give effect to the intention of the Legisla ture, as that intention is to be gathered from the language employed, having regard to the context in connection with which it is em ployed . .
Courts have to give effect to what the Legislature has said.
" The rule of construction that if the statutory provision is susceptible or admits of two reasonably possible views then the one which would promote its constitutionality should be preferred on the ground that the legislature is presumed not to have intended an excess of its own jurisdic tion, is subject to the further rule that it applies only where two views are reasonably possible on the statutory language.
If the words of the statute, on a proper construc tion, can be read only in a particular way, then it cannot be read in another way by a court of construction anxious to avoid its unconstitutionality.
In a case, as here, 167 a reference arises under 'Act ', the question of the consti tutionality of the 'Act ' cannot be examined and pronounced upon.
In State of Punjab vs Prem Sukhdas, ; this Court made the point clear: " . .
This amounts to nothing short of legislation.
We think that the view is an impossible one.
The principle that, where a provision is capable of one of two interpretations, the interpretation which validates rather than one which may invalidate a provision applies only where two views are possible.
It cannot be pushed so far as to alter the meanings of the clear words used in an enactment and to, in effect, repeal statu tory provisions by making them useless without holding them to be void." [p. 410] (Emphasis Supplied) Even in regard to constitutionality of the classifica tion, it is not possible to rule out arguments as to the validity of classification as wholly unstateable.
In a taxing measure the legislature enjoys a wider latitude and its dispensations are based on an interaction of diverse economic, social, and policy considerations.
Further, if the proviso is bad for discrimination, it would follow that the converse situation brought about by the later amendment, a discrimination as between gifts made as between the 31st of March 1972 and on 1st April, 1972 might also become bad.
It is true that we are required to notice the provision as it stood at the relevant time.
We, however, should not be understood to have pronounced on the question of constitutionality.
That is the task of the Court in judicial review but the rule of preference of a particular construction amongst the alternatives, in order to avoid unconstitutionality is unavailable here.
Accordingly, while Civil Appeal No. 1226 and 1227 of 1975 preferred by the assessee are dismissed, CA No. 1118 of 1975 of the revenue is allowed and in reversal of the order dated 18.9.1974 of the Andhra Pradesh High Court the ques tion referred is answered in the negative and in favour of the revenue.
In the circumstances, the parties are left to bear and pay their own costs in these appeals.
N.P.V. C.A. Nos.
1226 & 1227/75 are dismissed C.A. No. 1118/75 is allowed.
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In Civil Appeal No. 1118 of 1975 the respondent asses see 's husband gifted certain lands and buildings to his two spouses by three gift deeds dated 26.4.1962, 26.5.1962 and 17.8.1962.
The gifts were chargeable to gift tax and were accordingly assessed to gift tax In the assessment year 1963 64.
In the proceedings for assessment to wealth for the assessment year 1967 68, it was claimed on behalf of the estate of the assessee 's husband, who had later died on 16.12.1968 that as the gifts were chargeable to gift tax, the proviso to section 4(1)(a) was attracted and the assets so transferred were not includible in the net wealth of the deceased for any assessment year commencing after the 31st day of March, 1964.
The Wealth Tax Officer rejected this claim.
On appeal, the Appellate Assistant Commissioner confirmed the assessment.
Allowing the assessee 's further appeal, the Appellate Tribunal, on a particular construction of the proviso, held that the assets transferred, which had attracted gift tax, were not includible in the net wealth of the deceased for the assessment year 1964 65 onwards.
On a reference made at the Instant of the Revenue, the High Court agreed with the construction placed on the provi so by the Tribunal.
The Revenue filed an appeal, by Special leave In this Court.
156 The appellant assessee in Civil Appeal Nos.
1226 and 1227 of 1975, made a gift of certain amount to her minor daughter on 7.10.1959.
The assets so transferred were in cluded in the assessee 's wealth for the two assessment years 1964 65 and 1965 66 under section 4(1)(a)(ii) of the Wealth tax Act.
The claim of the assessee that the proviso to section 4(I)(a) operated to exclude the asset from the net wealth of the assessee as the transfer was chargeable to gift tax was not accepted by the Wealth tax Officer.
The Appellate As sistant Commissioner rejected the assessee 's appeal.
However, the Appellate Tribunal, accepting the conten tion of the assessee, allowed the assessee 's appeal and held that, on a true construction of the proviso, so long as the gift was chargeable to or exempt under section 5 from gift tax, to that extent section 4(1)(a) ceased to have operation and the statutory fiction embodied in it was not attracted and that since, the gift was chargeable to gift tax, at the relevant time, the exemption was to operate from the assessment year commencing after 31 3 1964.
The High Court, on a reference made at the instance of the Revenue reversed the Tribunal 's view.
Hence, the asses see filed the appeal, by certificate, in this Court.
In the appeals before this Court, it was submitted on behalf of the Revenue that the words "for any assessment year commencing after the 31st day of March, 1964" could, in the context only refer to the gift and gift tax assessments, that only that class of gifts which were chargeable to gift tax for any assessment year 1964 65 or thereafter (hut subject to the time limit fixed by the 1971 amendment) which would otherwise fail under section 4(1)(a) were eligible for the benefit of exemption, and that where the enactment was clear and admitted of only one meaning, and did not admit of two or more meanings, it would be the plain meaning that should be given effect to and no resort could be had to any rules of construction which would denude the provision of its plain and ordinary meaning.
On behalf of the assessees, it was contended that the date of the ' gift was immaterial and as long as the transfer was chargeable to gift tax or was exempted under section 5 what ever may be the year in which the gift was made, the exemp tion from a gift tax must commence for any assessment year commencing after the 31st day of March 1964", that these words should not be read as part of the first part of the proviso relating to gift tax assessments but as part of the second part denoting the commencement of the operation from Wealth tax, and that a construction which promoted its constitutionality has to be preferred to the 157 one which, if accepted, would expose the proviso to the vice of discrimination and unconstitutionality.
Allowing the appeal of the Revenue and dismissing the appeal of the assessee.
HELD: 1.
On a reading of the plain words of the proviso to section 4(1)(a) of the , the clause "for any assessment year commencing after 31st day of March, 1964" can only be read as relating to gift tax assesssments and not to the wealth tax assessments.
[165E] The amendment introducing the proviso was brought about by an amending Act of 1964, but the date of the commencement of its operation was left to be fixed by a Notification.
If the construction that the clause should be read as part of the second part, denoting the commencement of the operation of exemption from Wealth tax is accepted, effect of the Notification issued bringing the proviso into effect from 1.4.1965 would be wholly ignored, and the introduction of the words "but before the 1st day of April, 1972", by a later amendment would operate to take away the benefit of the exemption after 1.4.1972 and the exemption confined only to the assessment years between 1964 65 and 1972 73.
[165C D] Therefore, the gifts in question though chargeable to gift tax would not attract the benefit of exemption and would be liable to be included in the net wealth of the assessees.
[163A] T. Saraswathi Achi vs C.I.T., ; C.W.T. vs Seth Nand Lal Ganeriwala, ; M.G. Kol lankulam vs C.I.T., ITR 160 (Kerala), Malti Harseey vs C.W.T., and C.W.T. vs Rasesh N. Mafatlal, approved.
2.1 One of the pillars of statutory interpretation viz., the literalrule, demands that if the meaning of the Statuto ry Interpretation is plain, the Courts must apply regardless of the result.
[165G] 2.2 The very concept of interpretation connotes the introduction of elements which are necessarily extrinsic to the words in the statute.
Though the words "Interpretation" and "construction" are used interchangeably, the idea is somewhat different.
[165H] 2.3 The rule of construction that if the statutory provision is susceptible or admits of two reasonably possi ble views, then the one 158 which would promote its constitutionality should be pre ferred on the ground that the legislature is presumed not to have intended an excess of its own jurisdiction, is subject to the further rule that it applies only where two views are reasonably possible on the statutory language.
If the words of the statute, on a proper construction, can be read only in a particular way, then it cannot be read in another way by a court of construction anxious to avoid its unconstitu tionality.
[166G H] 2.4 In a case, as here, where a reference arises under 'Act ', the question of the constitutionality of the Act cannot be examined and pronounced upon by this Court.
That is the task of the Court in judicial review.
However, the rule of preference of a particular construction amongst the alternatives, in order to avoid unconstitutionality, is unavailable in the instant case.
[166H; 167A, F] 3.
In a taxing measure, the legislature enjoys a wider latitude and its dispensations are based on an interaction of diverse economic, social and policy considerations.
Further, if the proviso is bad for discrimination, it would follow that the converse situation brought about by the later amendment, a discrimination as between gifts made as between the 31st of March, 1972 and on 1st April, 1972 might also become bad.
This Court is required to notice the provi sion as it stood at the relevant time.
[167D E] State of Punjab vs Prem Sukhdas, ; and Attorney General vs Carlton Bank, , re ferred to.
Dr. Patrick Devlin: Samples of Law Making Oxford Uni versity Press, p. 70 71 and Max Radin "Statutory Interpreta tion" 43 Hat.
L.R. 863 (868), referred to.
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5924.txt
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ivil Appeal No. 2413 of 1989.
From the Judgment and Order dated 3.10.1988/12.10.1988 of the Central Administrative Tribunal, Hyderabad in O.A. No. 307 of 1987.
Anil Dev Singh, B. Parthasarthy, Hemant Sharma and C.V. Subba Rao for the Appellants.
Mrs. Kitty Kumaramangalam, Ms. Vijayalaxmi, Kailash Vasdev, P. Parmeshwaran and A.T.M. Sampath for the Respond ent.
The Judgment of the Court was delivered by AHMADI, J.
The Central Administrative Tribunal, Hydera bad by its order dated 3rd October, 1988 held that the Divisional Railway Manager (BG) SC Railway, Secunderabad was not competent to pass the impugned order dated 25th April, 1986 retiring the railway servant Shaik Ali from service under Rule 2046(h)(ii) of Indian Railway Establishment Code, Volume II Pension Rules (hereinafter called 'the Code ').
The Union of India feeling aggrieved by the said order has come in appeal to this Court by special leave.
The respondent Shaik Ali joined the erstwhile Nizam State Railway Service as Pointsman in 1953 or thereabouts and secured promotions from time to time in the course of his service, the last promotion being as Yard Master in the revised scale of Rs.550 750 on 31st January, 1986.
The facts show that he was on duty between 14.00 and 22.00 hours on 23rd February, 1986 at Sanatnagar Station.
As his reliever did not turn up at 23.00 hours, he was compelled to perform 459 duty from 22.00 hours to 08.00 hours of 24th February, 1986.
At about 23.15 hours, he permitted the staff working under him to have their meals and report for duty as soon as possible.
As the staff members did not return to duty within a reasonable time he went towards the cabin where they usually took their meals.
At that time the Divisional Safety Officer, A. Bharat Bhushan, came down from the cabin and inquired of the respondent 's identity.
The respondent coun tered by inquiring about the identity of the said officer.
It is the respondent 's say that as he did not know the said officer he asked for his identity before disclosing his identity.
The officer was annoyed at the behaviour of the respondent and threatened him with dire consequences.
It is the respondent 's case that immediately thereafter he was placed under suspension.
When he went to meet the officer at the suggestion of the Station Superintendent, the said officer behaved rudely and refused to listen to his explana tion.
By a subsequent order dated 19th March, 1986, the respondent was kept under further suspension w.e.f. 4th March, 1986.
He was not charge sheeted nor was any inquiry held against him but he was visited with the order of prema ture retirement dated 25th April, 1986, the relevant part whereof reads as under: "Whereas the Divisional Railway Manager (BG), Secunderabad is of the opinion that it is in the public interest to do so.
Now therefore, in exercise of the powers conferred by Clause (h)(ii) of Rule 2046 of Indian Railway Establishment Code, Volume II Pension Rules, the Divisional Railway Manager (BG), Secunderabad hereby retires Shri Shaik Ali, Assistant Ward Master, Sanatnagar with immediate effect that he having already completed 30 years of qualify ing service.
It was further directed that the respondent should be paid a sum equivalent to the amount of his pay plus allowances for a period of three months in lieu of three months notice calculated at the rate at which he was drawing salary imme diately before his retirement.
The respondent challenged this order of premature retirement by preferring an applica tion under Section 19 of the .
The Central Administrative Tribunal after reading the relevant Rule 2046(h)(ii) with Para 620(ii) of the Railway Pension Manual came to the conclusion that the Divisional Railway Manager who passed the impugned order of premature retirement was not competent to make such an order.
In taking this view the Tribunal relied on an earlier 460 decision of the Full Bench in AISLJ wherein it held that the highest authority among_ the appointing authorities alone was competent to impose any of the punish ments specified in Article 311 of the Constitution.
In this view that the Tribunal took, the Tribunal set aside the impugned order of premature retirement dated 25th April, 1986.
It is against the said order that the Union of India has preferred this appeal.
Under Rule 2046(a) of the Code ordinarily every railway servant would retire on the day he attains the age of 58 years.
However, notwithstanding the said provision, Rule 2046(h) entitles the appointing authority to retire him before he reaches the age of superannuation.
Rule 2046(h), insofar as it is relevant for our purposes, reads as under: "2046(h).
Notwithstanding anything contained in this rule, the appointing authority shall, if it is of the opinion that it is in the public interest to do so, have the absolute right to retire any railway servant giving him notice of not less than three months in writ ing or three months ' pay and allowances in lieu of such notice (i) if he is in Class I or Class II service or post and had entered Government service before attaining the age of thirty five years, after he has attained the age of fifty years.
(ii) in any other case after he has attained the age of fiftyfive years.
" Since the respondent was indisputably in Class III service at the time the impugned order came to be made his case was governed by the second clause of Rule 2046(h).
The impugned order recites that the respondent had already completed thirty years of qualifying service but it does not state that he had attained the age of fifty five years.
The re spondent 's contention was that he could not be prematurely retired under clause (ii) of Rule 2046(h) since he had not attained the age of fifty five years on the date of the impugned order.
According to him he was running 54th year on that date.
That obviously took his case out of the purview of the said rule.
Realising this difficulty an attempt was made by the department to fall back on paragraph 620(ii) of the Railway Pension Manual which reads as under: 461 "620(ii).
The authority competent to remove the railway servant from service may also require him to retire any time after he has completed thirty years ' qualifying service provided that the authority shall give in this behalf, a notice in writing to the railway servant, at least three months before the date on which he is required to retire or three month 's pay and allowances in lieu of such notice.
" Reliance was also placed on the decision of this Court in Union of India vs R. Narasimhan, ; in support of the contention that a railway servant governed by the Railway Pension Manual may be prematurely retired by 'the authority competent to remove him from service ' on his completing thirty years of qualifying service.
Under this rule, power is conferred on the authority competent to remove him from service to retire a railway servant who has completed thirty years of quarrying service regardless of his age.
The Tribunal took the view that although Rule 2046(h)(ii) would not be attracted in the absence of evi dence that the incumbent had attained the age of fifty five years, the department would be entitled to rely on para 620(ii) to support the order if it can show that the officer who passed the order was competent to do s0 under the said paragraph.
The Tribunal was however, of the opinion that since the power under paragraph 620(ii) could be exercised only by the authority competent to remove the railway serv ant from service, the Divisional Railway Manager not being such authority was not competent to pass the impugned order and hence the order was clearly void and inoperative in law.
In taking this view, the Tribunal relied on an earlier Full Bench decision referred to above.
We were told that as the said Full Bench decision of the Tribunal was under scrutiny by this Court, this Civil Appeal should be tagged on with similar matters pending in this Court.
However, the learned counsel for the respondent employee submitted that it was not necessary to tag on this matter with other matters arising out of the Tribunal 's Full Bench decision since in the instant case she proposed to support the Tribunal 's order on the twin grounds (i) that paragraph 620(ii) was ultra vires Article 14 of the Constitution and (ii) that the impugned order was punitive in nature and could not have been passed without a proper enquiry.
Insofar as the first contention is concerned she placed reliance on this Court 's decision in Senior Superintendent of Post Office & Ors.
vs Izhar Hussain; , wherein a similar Rule 2(2) of the Liberalised Pension Rules, 1950 was struck down as offending Article 14 of the Constitution.
So far as the second limb of her submission is concerned she stated that the respondent had been promoted to the post of Yard Master on 31st 462 January, 1986 and hence there was no occasion to prematurely terminate his service by the impugned order.
In Izhar Hus sain 's case the Court was concerned with F.R. 56(j) and Rule 2(2) of the Pension Rules.
F.R. 56(j) is substantially the same as Rule 2046(h)(ii) of the Code and Rule 2(2) is sub stantially the same as paragraph 620 with which we are concerned.
Since Rule 2(2) has been struck down as violative of Article 14 of the Constitution, paragraph 620(ii) would meet the same fate.
The learned counsel for the Railway Administration, realising this difficulty tried to support the impugned order on the ground that it was in public interest to retire the respondent.
Counsel for the respond ent contended that the railway administration has been shifting its stand, it first passed the impugned order under Rule 2046(h)(ii) of the Code and then relied on Rule 2(2) of the Pension Rules and when that was found to be of no as sistance switched over to paragraph 620(ii) of the Railway Pension Manual and is now trying to support the order on an extraneous ground which does not find a mention in the impugned order.
We think the criticism is well founded.
We are, therefore, of the view that apart from the competence of the Divisional Railway Manager to pass the order, the impugned order cannot be supported under paragraph 620(ii) for the aforesaid reason.
We next find that the learned counsel for the responden temployee is on terra firma so far as the second limb of her contention is concerned.
The facts clearly reveal that after the respondent joined the Nizam.
State Railway service in 1953 he secured promotions in due course and was appointed an Assistant Yard Master by an order dated 22nd August, 1984.
Thereafter, he was promoted to the next higher post of Yard Master by the order of 31st January, 1986.
While he was discharging duties as Yard Master On 24th February, 1986, the incident in question occurred which is said to be form ing the basis for the impunged order of 25th April, 1986.
We find from the facts that the Divisional Safety Officer was annoyed by the fact that the respondent had demanded that he disclose his identity before he (the respondent) did so.
The respondent was immediately placed under suspension and the said officer refused to listen to his explanation.
The suspension order was further extended by the order of 19th March, 1966.
This was followed by the impugned order of retirement dated 25th April, 1986.
The order was passed under Rule 2046(h)(ii) of the Code without verifying whether or not the incumbent had attained the age of fiftyfive years.
Even if the order was intended to be under Rule 2(2) of the Pension Rules, this requirement had to be satisfied.
The immediate and proximate reason for passing the impugned order was undoubtedly the unfortunate incident of 23/24th February, 1986.
But for that 463 incident there was no occasion for the Review Committee to examine the case of the respondent.
If the service record of the respondent was so bad as is now sought to be made out, he would not have been promoted to the post of Assistant Yard Master on 22nd August, 1984 and later to the post of Yard Master on 31st January, 1986.
We are, therefore, satis fied that the impugned order of premature retirement is punitive in nature and having been passed in flagrant viola tion of the principles of natural justice cannot be allowed to stand.
For the above reasons (different from the one on which the Tribunal rounded its decision), we are of the opinion that the ultimate order passed by the Tribunal does not require interference.
We, therefore, dismiss this appeal with costs.
Cost quantified at Rs.3,000.
Before we part we may observe that the concerned author ities will do well to amend Rule 2(2) of the Pension Rules and Paragraph 620(ii) referred to above so as to incorporate therein the requirement of public interest, that is to say, the premature retirement on completion of qualifying service of thirty years can be ordered in public interest only.
G.N. Appeal dismissed.
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The respondent, employed as Yard Master in the South Central Railway, was on duty between 14.00 and 22.00 hours on 23rd February '86.
In the absence of a reliever, he was to continue his duty till 8.00 hours on 24th February '86.
He allowed his staff to take meals and since they did not return within a reasonable time, he went towards the cabin where the staff usually took their meals.
The Divisional Safety Officer who was coming down from the cabin, enquired of the respondent 's identity.
The respondent in turn asked for the identity of the said officer.
The officer was an noyed at this and threatened the respondent with dire conse quences.
Immediately thereafter the respondent was placed under suspension.
Further suspension followed and the re spondent was visited with the order of premature retirement under Rule 2046 of Indian Railway Establishment Code.
Respondent challenged the said order before the Central Administrative Tribunal and the Tribunal, relying on its decision in Shri Gafoor Mia & Ors.
vs Director, DMRL, AISLJ held that the Divisional Railway Manager who passed the impugned order of premature retirement was not competent to make such an order, and set aside the order.
This appeal, by special leave, is against the Tribunal 's order.
Though under sub clause (ii) of rule 2046(h), a class III employee cannot be retired prematurely after he has attained the age of 55 years, (unlike officers of class I & II) this clause was invoked in the case of respondent who was admittedly in class III service and did not attain the age of 55 years.
Appellant relied on para 620(ii) of the Railway Pension 457 Manual which gives the authority power to remove from serv ice a railway servant after he completed 30 years service.
On behalf of Respondent, it was contended that the appellant had been shifting its stand and trying to support the order on an extraneous ground which did not find a place in the order viz. unsatisfactory service record of the respondent; and there is no basis for it in view of the promotionS secured by the respondent, the last of which was just before the premature retirement.
Dismissing the appeal, this Court, HELD: 1.1 The order was passed under Rule 2046(h)(ii) of the Indian Railway Establishment Code without verifying whether or not the incumbent had attained the age of fifty five years.
Since the respondent was indisputably in class III service at the time the order came to be made, his case was governed by the second clause of Rule 2046(h).
The impugned order recites that the respondent had already completed thirty years of qualifying service but it does not state that he had attained the age of fifty five years.
According to the respondent he was running 54th year on that date.
That obviously took his case out of the purview of the said rule.
Even if the order was intended to he under Rule 2(2) of the Liberalised Pension Rules, 1950, this require ment had to be satisfied.
The immediate and proximate reason for passing the impugned order was undoubtedly the unfortu nate incident of 23/24th February, 1986.
BUt for that inci dent there was no occasion for the Review Committee to examine the case of the respondent.
If the service record of the respondent was so bad as is now sought to be made out, he would not have been promoted to the post of Asstt.
Yard Master an 22nd August, 1984 and later to the post of Yard Master on 31st January, 1986.
The order of premature retire ment is punitive in nature and having been passed in fla grant violation of the principles of natural justice, cannot be allowed to stand.
[426G H; 460F G; 463A B] 1.2 F.R. 56(j) of the Fundamental Rules is substantially the same as Rule 2046(h)(ii) of the Railway Establishment Code and Rule 2(2) of the Liberalised Pension Rules, 1950 is substantially the same as paragraph 620 of Railway Pension Manual.
Since Rule 2(2) has been struck down as violative of Article 14 of the Constitution, paragraph 620(ii) would meet the same fate.
Apart from the competence of the Divisional Railway Manager to pass the order, the order cannot also he supported under paragraph 620(ii).
[462B D] 458 Senior Superintendent of Post Office & Ors., vs Izhar Hussain, ; , relied on.
Union of India vs R. Narasimhan, ; , referred to.
The authorities concerned will do well to amend Rule 2(2) of the Liberalised Pension Rules, 1950, and paragraph 620(ii) of the Railway Pension Manual, so as to incorporate therein the requirement of public interest, making it clear that premature retirement on completion of qualifying serv ice of thirty years can be ordered in public interest only.
[463C D]
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6215.txt
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N: Civil Appeal No. 2114 (N) of 1972.
From the Judgment and decree dated 16.7.1971 of the Kerala High Court in Appeal Suit Nos. 183, 195 and 249 of 1966.
G. Viswanatha Iyer, P.K. Pillai and N. Sudhakaran for the Appellant.
T.S. Krishnamoorthy Iyer, T.S. Padmanabhan, T.T. Kunhi kannan, section Balakrishnan, Irfan Ahmed and Ms. Lily Thomas for the Respondents.
The Judgment of the Court was delivered by JAGANNATHA SHETTY, J.
This appeal by Special Leave is against the judgment and decree dated July 16, 1971 passed by the High Court of Kerala in Appeal Suit Nos. 183, 195 and 249 of 1966.
618 The Appellant is the plaintiff and respondents are defendants 1 to 34 in Original Suit No. 35 of 1961 of the Sub Court, Alleppey, Kerala State.
It is a suit for parti tion in which the plaintiff claims 1/33 share in the plaint properties.
The plaintiff and defendants 1 to 33 are members of an undivided Malayala Brahmin illom.
They are the de scendants of one Vishnu Embran.
(referred to hereinafter as Vishnu (Senior)).
The relationship of the parties with Vishnu (Senior) is set out in geneological table annexed to the common judgment of the High Court.
Suffice it to state here that Vishnu (Senior) had three sons: Kesavan, Krishnan and Narayanan.
The plaintiff is the grandson of Kesavan.
One of the sons of Kesavan was given the name of his grand father.
To avoid confusion, we may call him as Vishnu (Junior).
Vishnu (Senior) did not remain with the members of his illom.
When he was 17, he took some properties of his illom for maintenance and moved out of his native village.
He settled at a place called Chambakulam.
There he was earning by performing Iswara Sevas like Santhi ceremonies and Pari karmam works in temples.
In the course of time he acquired some properties.
Vishnu (Senior) who went out to eke his livelihood at 17, reached 71.
He then thought of peacefully retiring.
He wanted that his children after his death should not quarrel over the properties.
With their full consent, he executed exhibit P. 1, a partition deed dated October 3, 1074 M.E. corre sponding May 15, 1889 A.D. Thereunder the properties ac quired by him were divided into four shares described in the deed as Schedules A, B, C & D.
He gave schedule A to Kesa van, Schedule B to Krishnan, Schedule C to Narayanan and Schedule D to his grandson Vishnu (Junior).
These schedules should not be confused with the plaint Schedule properties.
Plaint A Schedule consists of property given to Vishnu (Senior) from his original illom for the purpose of his maintenance.
Plaint B Schedule consists of properties under A and D Schedules in exhibit P. 1.
The other schedules in the plaint are not much relevant for this case.
So they are not referred to.
The case of the plaintiff, to put it shortly is that plaint B schedule properties have been acquired out of the income from Plaint A Schedule and hence they are also the illom properties in which he is entitled to a share on Per Capita basis.
Defendants 1 to 10, 24 to 26 and 29 to 33, supported the plaintiff.
Defendants 11, 13, 16 to 21, 22 and 27 contested the suit.
The case of the contesting defendant is that Vishnu (Senior) had no surplus in 619 come from plaint A Schedule properties and the acquisitions made by him which were the subject matter of division under exhibit P. 1 were his separate properties.
The trial court accepted the case of the plaintiff.
It held that parties are governed by Marumakkathayam Law.
Plaint A Schedule properties are illom properties.
Vishnu (SeniOr) could get surplus income therefrom.
That available surplus was utilised for purchasing properties dealt with under exhibit P. 1.
The said properties are, therefore, the illom properties which are available for partition.
The Court also said that in any event, the parties by their subsequent conduct appear to have treated the properties as illom properties.
Accordingly, it passed a preliminary decree for partition on Per Capita basis.
Against the said decree there were appeals and Cross Objection before the High Court.
The main question urged before the High Court related to the nature of the Plaint B Schedule properties.
The High Court on appraisal of the oral and documentary evidence held as follows: There is no acceptable evidence to show what were the properties allotted to Vishnu (Senior) for his maintenance when he left his illom, or the income therefrom.
There is no material to prove that the Plaint A Schedule properties were given to Vishnu (Senior) for his maintenance.
Nor there is evidence to establish that the Plaint B Schedule properties were acquired with the aid of surplus income from Plaint A Schedule properties.
With regard to properties allotted to Vishnu (Junior) under exhibit P. 1 and his subsequent conduct to treat the properties as joint family properties, the High Court ob served: "The point is, whether there was any intention on the part of Vishnu (Junior) to treat the properties as illom properties.
It is no doubt, a principle of Hindu Law that where a co parcener throws his self acquisitions into the common hotchpotch with the volition that the self acquisition should become joint family properties they will assume the charac ter of joint family properties.
It is doubtful whether this principle of Hindu Law can be applied to the parties here.
As already stat ed, there is no evidence that Vishnu (Junior) had the volition to throw D Schedule proper ties into the common hotchpotch." 620 In other words, it was observed firstly, there was no intention on the part of Vishnu (Junior) to treat his properties as illom properties; Secondly, even if he had such an intention it would be doubtful whether the principle of Hindu Law could be applied to the parties.
With these conclusions, the High Court reversed the decree of the trial court but it passed a preliminary decree in regard to plaint A Schedule and some other properties as under: "As plaint A Schedule was allotted only for the maintenance of Vishnu (Senior) the posses sory interest in the properties comprised therein and attributable to the share of Kesavan would devolve on the sons of Kesavan.
As regards B Schedule properties excluding the properties comprised in the D Schedule in exhibit P. 1 they being the self acquisitions of Vishnu (Senior) will be divided equally among the sons of Kesavan.
The D Schedule properties in Ext.
P. 1 comprised in the Plaint B Sched ule being the absolute properties of Vishnu (Junior), namely defendants 11 to 21.
The income from plaint A Schedule which is at tributable to the share of Kesavan and the Plaint B Schedule properties except the income from D Schedule in Ext.
P. 1 will be distrib uted among the sons of Kesavan equally.
The income from the D Schedule properties in Ext.
P. 1 and included in the Plaint B Schedule will be given to the legal representatives of Vishnu (Junior).
" Before we consider the contentions urged before us, it will be better to clear the mental cobweb as to the law applicable to Malayala Brahmins.
The trial Court said that they are governed by Marumakkathayam Law.
The High Court did not say anything specific.
It appears to have doubted the applicability of the principles of Hindu Law to them.
A question of this nature should not have been kept in doubt.
As a matter of fact no point that comes for consideration should be kept in doubt by Courts.
The litigants come to Courts for decisions and not for obtaining doubtful opin ions.
The Court, therefore, should not be a prisoner of indecision.
The clarity and promptness in decision making are the need of the hour.
That would go a long way to reduce the docket explosion.
Fortunately, for us the problem presents little diffi culty, in view of the stand taken by Counsel on both sides.
Our attention has been drawn to the decision of the Kerala High Court in Kunji Amma 621 Narayani Amma vs Dhathri Antherjanan, There it was observed at page 158: "On behalf of the plaintiff respondent, the learned Advocate General argued that the principles of Hindu Law are not applicable and that the case should be guided by rules of Maramakkathayam Law.
In Travancore it has been held from very early times that the Malabar Brahmins are governed by principles of Hindu Law as modified by local custom (6 T.L.R. 143, 19 T.L.R. 241, 34 T.L.R. 262, 19 T.L.J. 441) in Parmeswaran Narayanan vs Nangeli Antharaja nam a decision of the Royal Court of Appeal of Travancore, and Narayanan Narayan roo vs Kunjikutty Kutty and Others, 20 T.L.R. 65 F.B. it was held that unless Malayala Brahmins can be shown to have deviated in any respect from the interpretation put upon old texts by modern Hindu Sages and adopted dif ferent practices, they should be held bound by Hindu Law as now understood and acted upon elsewhere.
The main object of the Malayala Brahmin Act III of 1106 was to make provision for better management of tarwards, to define and limit the power of Karnavan, to improve the rights of the junior members and to lay down the rules of intestate succession in respect of their self acquired properties.
Appropriate provisions were made in the Act to achieve these objects.
We do not feel justi fied in holding that the plaintiff and 1st defendant are governed by principles of Maru makkathayam law, merely because such safe guards as are found in Marumakkathayam law have been incorporated in the Malayala Brahmin Act.
" No argument has been addressed before us that the view taken in the above case is incorrect.
It can, therefore, be stated and indeed not disputed that Malayala Brahmins are governed by Hindu Law, unless they can be shown to have deviated in any respect and adopted different practices, like local customs, if any.
Some of their rights have now been regulated by the Kerala Nambudiri Act, 1958 (Act 27 of 1958).
The Act provides for the family management and parti tion of illom properties among Nambudiri Brahmin Community.
Section 13 of the Act confers right on a member of illom to claim partition on Per Capita basis.
The law being thus clarified, we may now turn to the conten tions 622 urged by Shri Vishwanatha, learned counsel for the appel lant.
He urged that the High Court proceeded on the wrong assumption that there is no proof that the plaint A Schedule properties are illom properties that were given to Vishnu (Senior) for his maintenance.
We think the Counsel is right.
That also seems obvious and causes no difficulty.
In fact, it was admitted by all the defendants (see para 19 of the trial court judgment) that the Plaint A Schedule is common illom properties which were in possession of Vishnu (Senior) under a maintenance arrangement.
There can, therefore, be no doubt or dispute on this aspect of the matter.
The question next to be considered is whether plaint B Schedule or the properties dealt with under Ext.
P. 1 are also illom properties.
They are undisputedly the acquisi tions made by Vishnu (Senior) from time to time.
They could be regarded as illom properties provided it is established that they have been acquired with the aid of illom proper ties.
That of course is the case put forward by the plain tiff.
But the relevant evidence on record is scanty.
The High Court was, therefore, justified in stating that there is no acceptable evidence produced in the case to support the plea of the plaintiff.
The matter also becomes plain if we turn to the terms of Ext.
P. 1 on which Shri Krishna Murthy Iyer for the contest ing respondents mainly depended.
It is an ancient deed, executed at an undisputed point of time.
The deed at the beginning states that all the properties divided thereunder were acquired in the name of the father "with the assets obtained by the personal efforts and improvements of mine and my children.
" It means out of the personal exertions of the father and sons.
The plaintiff himself has stated that Vishnu (Senior) was doing Iswara Sevas in temples like Santhi Ceremony and Parikarmam works.
It is said to be the hereditary profession of Malayala Brahmins and the illom to which the parties belong.
But the income earned by any member of a illom from such practice would not become the joint family property.
It would be separate property of the individual.
So too the properties purchased out of such income.
It cannot become joint family property.
The posi tion, however, may be different if a member earns from such practices which exclusively belong to the joint family.
Another significant recital in Ext.
P. 1 may now be noticed.
It provides that the properties were divided into four shares after taking into consideration the efforts made by each party to acquire the movable and immovable proper ties.
It means the division was as per 623 contributions made by each party.
If the properties were illom properties, this recital has no place in the deed.
The deed does not refer to undisputed illom properties, that is the plaint A Schedule.
It is a deed of partition.
If the properties acquired by Vishnu (Senior) were also regard ed as illore properties, there was no good reason for him to remain silent in respect of the possessory right of the plaint A Schedule.
He ought to have, in the context, re ferred to it as to who should be in possession and what he should do about the income therefrom.
Above all the deed finally provides that the parties shall enjoy with absolute rights the properties allotted in the respective shares.
These indications clearly go to show that the properties dealt with under exhibit P. 1 were the self acquisitions of Vishnu (Senior).
We thus agree with the conclusions of the High Court though not for all the reasons stated.
In the result, the appeal fails and is dismissed with costs.
N.P.V. Appeal dis missed.
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The plaintiffs great grandfather executed a partition deed exhibit P. 1 under which the properties acquired by him were divided into four shares as described in Schedules A, B, C & D and distributed to his sons and grandsons.
The plaintiff claimed in a suit for partition that plaint B schedule properties consisting of properties in Schedules A plaint A schedule and hence they were also the illom proper ties in which he was entitled to share on per capita basis.
Defendants 1 to 10, 24 to 26 and 29 to 33 supported his case.
Defendants 11, 13, 16 to 21, 22 and 27 contended that the plaintif 's great grandfather had no surplus income from plaint A schedule properties and the acquisitions made by him which were the subject matter of division under exhibit P. 1 were the separate properties.
The trial Court decreed the suit and held that parties were governed by marumakkathayam Law and Plaint A schedule properties were illom properties, that the plaintiff 's great grandfather could get surplus income therefrom which was utilised for purchasing properties dealt with under exhibit P. 1 and, therefore, the illom properties were available for partition, and that, in any event, the parties by their subsequent conduct appeared to have treated the properties as illom properties and passed a preliminary decree for partition on per capita basis.
The matter was taken in appeal to the High Court.
Cross Objection was also filed.
The High Court held that there was no acceptable evidence to show as to what were the proper ties allotted to the original testator for his maintenance when he left his illom or the income there 616 from and that there was no material to prove that the plaint A schedule properties were given to him for maintenance; nor was there evidence to establish that the plaint B schedule properties were acquired with the aid of surplus income from plaint A schedule properties.
With regard to properties allotted to the testator 's grandson under exhibit P. 1 and his subsequent conduct to treat the properties as joint family properties, it held that firstly, there was no intention on the part of the testator 's grandson to treat his properties as illom properties, and secondly, even if he had such an intention it would be doubtful whether the principle of Hindu Law could be applied to the properties.
In appeal before this Court, it was urged that the High Court proceeded on the wrong assumption that there was no proof that the plaint A schedule properties were illom properties that were given to the plaintiffs great grandfa ther for his maintenance.
Dismissing the appeal by special leave, this Court, HELD: 1.
Malayala Brahmins are governed by Hindu Law unless they can be shown to have deviated in any respect and adopted different practices, like local customs, if any.
Some of their rights have now been regulated by the Kerala Nambudiri Act, 1958 (Act 27 of 1958) which provides for the family management and partition of illom properties among Nambudiri Brahmin Community and Section 13 confers right on a members of illom to claim partition on per capita basis.
[621F G] 2.
Iswara Sevas in temples like Santhi Ceremony and Parikarmam works are said to be the hereditary profession of Malayala Brahmins and the illom to which the parties belong.
But the income earned by any member of an illom from such practice would not become the joint family property.
It would be separate property of the individual.
It cannot become joint family property.
The position, however, may be different if a member earns from such practices which exclu sively belong to the joint family.
[622F G] 3.1 In the instant case, there is no doubt that the plaint A schedule properties are common illom properties which were in possession of the testator under a maintenance arrangement.
The plaint B Schedule properties or properties dealt with under exhibit P. 1 are illom properties and they are acquisitions made by the testator from time to time.
They could be regarded as illom properties provided it is estab lished that they have been acquired with the aid of illom properties.
But 617 the relevant evidence on record is scanty.
The High Court was, therefore, justified in stating that there was no acceptable evidence produced in the case to support the plea of the plaintiff.
[622B, C D] 3.2 exhibit P. 1 is an ancient deed executed at an undisput ed point of time.
The terms of the deed indicate that all the properties divided thereunder were acquired in the name of the father out of the personal exertions of the father and his sons, that the properties were divided into four shares taking into consideration the efforts made by each party to acquire the movable and immovable properties, and that the parties shall enjoy with absolute rights the properties allotted in the respective shares, which clearly go to show that the properties dealt with under exhibit P. 1 were the self acquisitions of the testator.
[622E, H, 623C] 4.
Litigants come to Courts for decisions and not for obtaining doubtful opinions.
The Court, therefore, should not be a prisoner of indecision.
Clarity and promptness in decision making are the need of the hour.
That would go a long way to reduce the docket explosion.
[620G] Kunji Amma Narayani Amma vs Dhathri Antherjanan, , referred to.
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5406.txt
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Appeals Nos.
1968 1970 of 1966.
Appeals by special leave from the judgment and order dated July 16, 1962 of the Madras High Court in Tax Cases Nos. 117,118 and 119 of 1959.
section B. Banerjee and section N. Mukerjee, for the appellant (in all the appeals).
K. M. Mudaliyar, Advocate General for the State of Madras and A. V. Rangam, for the respondent (in all the appeals).
M.C. Setalvad, B. Sen, G. section Chatterjee and P. K. Bose, for the Intervener (in C. A. No. 1968 of 1966).
The Judgment of the Court was delivered by Hegde, J.
These appeals by special leave arise from the common order made by the Madras High Court in T. C. Nos.
117 to 119 (revisions Nos. 71 to 73) on its file.
The Indian Steel and Wire Products Ltd. a joint stock public limited company is the appellant in all these appeals.
At the instance of the steel controller the appellant supplied certain steel products to various persons in the Madras State during the financial years 1953 54, 1954 55) and part of 1955 56 (from April 1, 1955 to September 6, 1955).
The State of Madras assessed the turnovers of the appellant relating to those transactions to sales tax under the Madras Gen. Sales Tax Act, 1939 (Madras Act 9 of 1939) (to be hereinafter referred to as the Act), the law in force at that time.
The appellant has been assessed to tax on the basis of best judgment.
The authorities under the Act have determined appellant 's turnover during the year 1953 54 at Rs. 3129520/ and levied a tax of Rs. 16298/4 annas.
During the financial year 1954 55, its turnover was determined at Rs. 3759216/ .
and the assessment levied is Rs. 58737 12 0.
For the broken period in the financial year 1955 56, the appellant 's turnover was determined at Rs. 1453292/ and the same was assessed to tax at Rs. 22707 12 0.
Even according to the appellant, its turnovers during 1953 54 was Rs. 2912533 14 0, in 1954 55, Rs. 3971493/7/ and in 1955 56, Rs. 1725400/5/ .
Therefore, there is little room for controversy about its turnover in the relevant years.
The appellant is contesting the right of the State of Madras to levy tax on the turnovers in question.
According to the appellant, the turnovers in question could not have been considered as sales and consequently they could not have been brought to tax under the Act.
The appellant asserts that deliveries in question were made under compulsion of law and there was no agreement between the parties.
They were 481 made in pursuance of the orders of the Controller exercising powers under the Iron & Steel (Control of Production and Distribution) Order, 1941 (which will hereinafter be referred to as the order), which was issued under the Defence of India Act 1939.
It was argued on behalf of the appellant that it was the controller who determined the persons to whom the goods were to be supplied, the price at which they were to be supplied, the manner in which they were.
to be transported, and the mode in which the payment of the price was to be made.
In short, it was said that every facet of those transactions were prescribed by the controller and therefore those transactions cannot be considered as sales.
On the basis of those assertions support was sought from the decision of the House of Lords in Kirkness vs John Hudson & Co., Ltd.(1) the decision of this Court in M Is.
New India Sugar Mills Ltd. vs Commis sioner of Sales Tax.
Bihar(1), the decision of the Calcutta High Court in Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income Tax, West Bengal(1) the decision of the Orissa High Court in Messrs. Cement Ltd. vs The State of Orissa(1), and a few other decisions.
It was further argued that even if those transactions are considered as sales the State before exercising its taxing power should have had in its possession material to show that the goods delivered by the appellant were delivered in that State for consumption which circumstance alone can make those transactions sales within that State; as no material was placed on record to show that the goods in question were delivered in that State for consumption it could not have brought the turnovers in respect of those transactions to tax under the Act.
These contentions of the appellant have been rejected by the authorities under the Act as well as by the High Court.
Other contentions advanced on behalf of the appellant deserve to be summarily rejected for the reasons to be mentioned hereinafter.
The principal question that falls for decision in these appeals.
is whether the transactions with which we are concerned herein are sales.
2(h) of the Act defines 'sale ' thus: " 'Sale ' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes also transfer of property in goods involved in the execution of works contract and in the, supply or distribution of goods by a co operative society. club, firm or any association to its members for cash or for deferred payment or other valuable consideration but does not include a mortgage.
hypothecation, charge or pledge" (the explanations to that definition are not relevant for our present purpo se).
(1) (2) [1963] Suppl.
2 S.C.R. 459.
(3) (4) 12 S.T.C. 205.
482 This wide definition undoubtedly covers those transactions.
But then the power of a State to tax sales is derived from Entry 54 of List II of the VII Schedule in the Constitution.
That entry as it stood at the relevant time empowered the State to tax on the sale or purchase of goods.
The scope of the expression 'sale or purchase of goods ' found in entry 48 in List II of Schedule VII of the Government of India Act 1935 which is in pari materia with the aforementioned entry 54 came up for interpretation before this Court in State of Madras vs Gannon Dunkerley(1).
In that case, the question that fell for decision was whether the words 'sale of goods ' should be given their popular meaning or whether they should have the meaning attached to them under the Sale of Goods Act.
This Court held that the expression 'sale of goods ' was, at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic and must be interpreted as having the same meaning as in the sale of Goods Act 1930: In the course of the judgment, Venkatarama Aiyar, J,who ,spoke for the Court after examining the various decisions cited at the Bar, observed, as follows: "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course pre supposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction property must actually pass in the goods.
Unless all these elements are present, there can be no sale.
Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale.
So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not sale.
And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale.
" As laid down by this decision, to constitute a valid sale, there must be concurrence of the following elements viz. (1) parties competent to contract (2) mutual assent (3) a thing the absolute or general property in which is transferred from the seller to the buyer and (4) a price in money paid or promised.
Therefore we have to see whether all these elements are found in the transactions before us.
Before doing so it is necessary to refer to the 'order ' and the manner in which those transactions were effected.
During the World War IT iron and steel goods became scarce.
Therefore it became necessary for the Government to control the production and distribution of those goods.
In order to do so, the (1) ; 483 government issued the 'order ' on July 26, 1941, and the same came into force on August 1, 1941.
The provisions in that order which are material for our present purpose are set out hereinbelow: "2. Definitions In this Order, unless there is anything repugnant in the subject context: (a) 'Controller ' means the person appointed as Iron and Steel Controller by the Central Government, and includes any person exercising, upon authorisation by the Central Government, all or any of the powers of the Iron and Steel Controller; (b) 'Producer ' means a person carrying on the business of manufacturing iron or steel.
(c) 'Registered Producer ' means a producer who is registered as such by the Controller.
(d) 'Stockholder ' means a person holding stocks of Iron or Steel for sale who is registered as stockholder by the Controller.
(e) 'Controlled Stockholder ' means a stockholder appointed by the Controller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time.
(f) 'Pressure Pipes ' include all Pipes and Tubes 1/8" nominal bore and above which will withstand or may be used for a working pressure of 25 lbs.
per square inch and above.
Application of Order (I) The provisions of this Order shall apply to all iron or steel of the categories specified in the Second Schedule to this Order.
(2) A certificate signed by the Comptroller or by any officer authorised by him in this behalf, in respect of any category of iron or steel, shall be conclusive proof that it is an article to which this Order is applicable.
Acquisition No person shall acquire or agree to acquire any iron or steel from a Producer or a Stockholder except under the authority of and in accordance with the conditions contained or incorporate d in a general or special written order of the controller.
Disposal No Producer or Stockholder shall dispose of or agree to dispose of or export or agree to export from British India any iron or steel, except in accordance with the conditions contained or incorporated in a general or special written order of the Controller.
10B. Power to direct sale The Controller may ' by a written Order require any person holding stock or iron 484 and steel, acquired by him otherwise than in accordance with the provisions of Clause 4 to sell the whole or any part of the stock to such person or class of persons and on such terms and conditions as may.
be specified in the Order.
10C. Power to prohibit removal The Controller may order any producer (including a registered producer), any stockholder (including a controlled stockholder) or any other person not to remove or permit the removal of any iron or steel, whether sold or unsold, from his stockyard or from any other part of his premises to any place outside the precincts of such stockyard or premises, except with the written permission of the Controller.
11 AA (3).
No producer, stockholder, or other person holding stocks of iron and steel shall without sufficient cause, refused to sell any iron or steel which he is autho rised to sell under this Order.
Explanation The possibility or expectation of obtaining a higher price at a later date shall not be deemed to be a sufficient cause for the purpose of this clause.
11B. Power to fix prices (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by Stockholder including a Controlled Stockholder and (c) by any other person or class of persons.
Such price or prices may differ for iron and steel obtainable from different sources and may include allowances for contribution to and payment from equalising freight, the concession rates payable to each pro ducer or class of producer under agreements entered into by the Controller with the producers from time to time.
and any other disadvantages.
(2) For the purpose of applying the prices notified under sub clause (1) the Controller may himself classify any iron and steel and may, if no appropriate price has been so notified, fix such price as he considers appropriate.
(3)No producer or stockholder or other person shall sell, or offer to sell.
(and no person shall acquire) any iron or steel at a price exceeding the maximum prices fixed under sub clause (1) or (2).
Any Court trying a contravention of this Order may, without prejudice to any other sentence which it may pass, direct that any Iron and Steel in respect of which the Court is satisfied that this order has been contravened shall be forfeited to His Majesty.
" The appellant has set out in para 4 of the statement of the case the procedure adopted for acquiring iron and/ 485 or steel products under the order.
This is what is stated therein: "That Order was at all material times administered principally by the Iron and Steel Controller having his office in the city of Calcutta in the State of West Bengal who controlled the entire production and distribution of the iron and/or steel products.
Any party desiring to acquire any product has to apply to the Controller.
Upon processing such application or requisition entirely at his option and discretion, the Controller would pass such a requisition an to the Appellant for manufacture and/or despatch.
The appellant has, upon receipt of the said requisition from the Controller to prepare a Works Order for the manufacture of the products concerned and to advise the Controller; and later on completion of the manufacture the appellant has to make the product conform to the requisition processed by the Controller and then deliver the requisite quantity in the requisite shape to the Indian State Railways siding maintained at the appellant 's own factory site, in Indranagar.
in the suburbs of Jamshedpur, in the State of Bihar, and to advise the requisitionist as well as the Controller accordingly. " The correspondence relating to the delivery of steel goods in pursuance of an order placed by one K. Thiruvengadam Chetty & Co. has been produced by the appellant evidently to show the manner in which the transactions were effected.
On December 20, 1952.
Thiruvengadam Chetty and Co., wrote follows to the Controller: 'From Name K. Thiruvengadam Chetty and Company.
Address Iron Merchants and Tata Scob Dealers 93, Rasappa Chetty Street.
Madras 3.
Date 20th December 1952.
To The Iron and Steel Controller, 33, Netaji Subas Road, Calcutta.
Through the Director of Controlled Commodities, Mount Road, Madras.
Dear Sir, Please place on our behalf and at our risk and account our order on Registered Producers for material as per specification given below for delivery in such period ,as you can arrange.
We confirm that this indent is placed 486 subject to the provisions of the Steel Price Schedule regarding prices, etc., and the terms and conditions of business (including payment) of the registered producers on whom the order is placed by you and that delivery or part/delivery from any such registered producer will be accepted by us.
Please direct the registered producers concerned to send us a copy of the works order in confirmation of having booked our Indent.
Ship to Madras Saltcotaurs.
Send R. R. to Messrs. K. Thiruvengadam Chetty and Company, Iron Merchants, 93, Rasappa Chetty Street, Madras 3, through your Madras Office.
Send original and duplicate invoice to Messrs. K. Thiruvengadam Chetty and Company, 93, Rasappa Chetty Street, Madras 3 through your Madras Office.
Date of shipment desired: Ex stock as early as possible.
Quantity Pieoes Section Lengths Complete description un tested of material indented (1) (2) (3) (4) CWT.
10. . 468 M.S. rounnd 1/4" 18 ' 13 B Category 5. . .493 " 3/16" 18 ' do 5. . .453 " 5/16" 18 ' do 20 (Twenty tons only) All P.T. free on rail Saltcotaurs and bundling charge account.
Yours faithfully, (signed). . . by Partner, For K. Thiruvengadam Chetty and Company.
" The Controller forwarded that letter to the appellant with the following remarks: "The above indent is forwarded to Indian Steel and Wire Products Limited, Tatanagar, for delivery in period 1/53 or subsequently in accordance with any general or special directions of the Iron and Steel Controller.
" It may be noted that the Controller merely asked the appellant to deliver to K. Thiruvengadam Chetty and company the goods ordered "in accordance with any general or special directions of the Iron and Steel Controller.
" Our attention was not invited to any general or special order issued by the controller excepting that 487 fixing the base price.
It is clear that it was left to the appellant to supply the goods ordered at his convenience.
On the basis of the, above communication a works order was issued by the appellant to the mill superintendent, a copy of which was sent to Thiruvengadam Chetty and Company.
That order reads: "Works Order: RS/MAD/RM/15/53 of 23rd February 1953.
Delivery: P.D.1/53.
Ship to: Saltcotaurs Book to self.
Freight: To pay.
To The Mill Superintendent.
Please supply the following to the Shipping Department, M.S. Rounds our usual commercial quality in bundles in stock lengths of 12/18 feet.
TONS 1/4" diameter 10 at Rs. 486 per ton free on rail 3/16" 5 at Rs.493 Saltootaurs, plus bundling.
5/16" 5 at Rs. 453 Charge of Rs. 5 per ton.
cc: South India Iron and Hardware Merchants Association, Armenian Street, Madras.
Notice to consignees.
Delivery must be taken within three days of the arrival of the train at destination, a certificate obtained for any wrongful delivery and a claim preferred against the Railway Company forthwith under advise to us.
In the case of non arrival of any consignment advise should be given us as soon as a reasonable time for the journey has elapsed. 'All orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods. ' 'All prices mentioned in the Works Orders are subject to revision, i.e., prices ruling at the time of despatch will be charged. '".
The works order in question specifically says that 'all orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods '.
In fact as seen from the letter of Thiruvengadam Chetty and Co., dated August 31, 1953, the buyers were willing to change by mutual agreement the specifications of the goods to be supplied.
This is what that letter says: 488 agreement the specifications of the goods to be supplied.
This is what that letter says: "If 1/4" size is not ready, please despatch 3/8" size 20 tons as requested in our previous letter.
Please treat this as very urgent.
" From the material on record it is not possible to accept the contention of Mr. S.R. Bannerjee, learned counsel for the appellant that the dealings in question were controlled at every stage, leaving no room of concensus.
From the records before us all that could be gathered is that the controller fixed the base price of the 'steel products and determined the buyers.
In other respects, the parties were free to decide their own terms by consent.
As seen from the correspondence referred to earlier, the controller allowed the appellant to supply the goods ordered either in the first quarter of the year 1953 or subsequently.
In other words, the appellant could supply the goods in question at its convenience.
It was open to the appellant to agree with its customers as to the date on which the goods were to be supplied.
From the works order dated February 23, 1953, a copy of which was sent to one of the appellant 's customers, it is clear that all orders booked were subject to appellant 's terms of business and general understanding in force at the time of 'booking the orders and despatch of goods.
It was also open to the appellant to fix the time and mode of payment of the price of the goods supplied.
Therefore it would not be correct to contend that the transactions were completely regulated and controlled by the controller leaving no room for mutual assent.
In his revision petition dealing with the question of transport of the goods supplied the appellant stated that "the transport of goods was if at all by virtue of an independent arrangement between the petitioner and the persons to whom the goods were supplied. .
This admission clearly shows that the supplies in question were made partly on the basis of mutual assent.
It was Mr. Bannerjee 's contention that for finding out the nature of the transaction we have only to look to the order and not to the documents produced in the case.
According to him, the documents produced in this case do not fully disclose the nature of the transactions; the transactions in question had to be effected under the terms of the order; the order left no room for negotiation between the supplier and its customers and therefore we should conclude that the transactions in question are not sales.
According to Mr. Bannerjee all supplies of iron and steel products could be made only in accordance with the directions given by the controller under cl.
10B of the order.
That being so, he asserted there was no room for mutual assent.
We do not think that this contention of Mr. Bannerjee is well founded.
We are unable to agree with him that the iron and steel products could not have been supplied to any person except in pursuance of an order made by the controller under cl.
10B. We think that supplies by producers can be made in pursuance of an order of the controller under cl.5.
We are not pursuaded 489 by Mr. Bannerjee 's contention that clauses 4 and 5 merely prohibit the prospective buyer and the intending seller from buying or selling without the sanction of the controller and that those provisions do not confer power on the controller to authorise a person to acquire and to permit a producer to sell.
Those provisions, in our judgment, by implication confer power on the controller to issue the necessary authority to the buyer and the seller.
This conclusion of ours is strengthened from the circumstance that cl.10B was not a part of the order till 1946.
That provision was inserted in the order by notification No. 1(1) 1(530) A dated May 26, 1946, It is nobody 's case that the provisions of the order were incapable of being implemented till that date.
The contention of Mr. Bannerjee that the controller derives his power to authorise the buyer to buy and the seller to sell exclusively under cl.
10B, suffers from another infirmity.
Under cl.
10B, the controller gets power to require any person holding stock of iron and steel acquired by him otherwise than in accordance with the provisions of cl. 4 to sell the whole or part of the stock to such person or class of persons and on such terms and conditions as may be specified in the order.
This clause does not empower the controller to issue the authority required under cl. 4.
Our attention has not been invited to any provision in the order if we exclude from consideration cl. 4, under which the controller could have the power to authorise the buyer to buy iron and steel products.
Therefore, it is obvious that he gets that power from cl. 4, itself.
The language employed in clauses 4 and 5 is simi lar.
If the controller gets power to authorise a buyer to buy iron and steel products under cl. 4, there is no reason why he should be held to have no power under cl. 5 to authorise a producer or stock holder to dispose of his stock of iron and steel products.
Further, under cl.
10B, the controller can only require any person holding stock 'of iron and steel to sell the whole or part of his stock to such person or class of persons and on such terms and conditions as may be specified in the order.
That clause does not empower him to direct any manufacturer to manufacture any steel or iron product and to dispose of the same to any person.
In other words, a direction under cl.
10B can only be given to a person holding stock of iron and steel But under cl.5 he can authorise a producer or a stockholder to dispose of any iron or steel whether the same is in stock or not in accordance with the conditions contained or incorporated in a special or general written order issued by him.
the instant case, as can be gathered from the correspondence already referred to, the order issued by the controller could be complied with only after manufacturing the required material.
Hence, the order issued by the controller could not have been issued under cl.
10B. In this view of the matter it is not necessary for us to find out the true scope of cl.
10B. So far as cl.5 is concerned.
admittedly, it does not require the controller to regulate or control every facet of a transaction between a producer and the person to whom he supplies iron and steel products.
490 It is true that in view of the order, the area within which there can be bargaining between a prospective buyer and an intending seller of steel products, is greatly reduced.
Both of them have to conform to the requirements of the order and to comply with the terms and conditions contained in the order of the controller.
Therefore they could negotiate only in respect of matters not controlled by the order or prescribed by the controller.
It is true, in these circumstances, the doctrine of laisser faire can have only a limited ap.
plication.
That is naturally so.
In certain quarters the validity of that doctrine is, seriously challenged.
Under the existing economic compulsions all essential goods being in short supply in a welfare State like ours, social control of many of our economic activities is inevitable.
That does not mean that there is no freedom to contract.
The concept of freedom of contract has undergone a great deal of change even in those countries where it was considered as one of the basic economic requirements of a democratic life.
Full freedom to contract was never there at any time.
Law invariably imposed some restrictions on freedom to contract.
But due to change in political outlook and as a result of economic compulsions, the freedom to contract is now being confined gradually to narrower and narrower limits.
This aspect is vividly brought out in the 'Law of Contract ' by Cheshire and Fifoot (6th ed.) at p. 22.
Dealing with the question of freedom to contract, the learned author observes.
"As the nineteenth century waned it became ever clearer that private enterprise predicated some degree of economic equality if it was to operate without injustice.
The very freedom to contract with its corollary, the freedom to compete, was merging into the freedom to combine; and in the last resort competition and combination were incompatible.
Individualism was yielding to monopoly, where strange things might well be done in the name of liberty.
The twentieth century has seen its progressive erosion on the one hand by opposed theory and on the other by conflicting practice.
The background of the law, social, political and economic, has changed.
Laisser faire as an ideal has been supplanted by 'social security '; and social security suggest status rather than contract.
The State may thus compel persons to make contracts, as where, by a series of Road Traffic Acts from 1930 to 1960, a motorist must insure against third party risks , it may, as by the Rent Restriction Acts, prevent one party to a con tract from enforcing his rights under it; or it may empower a Tribunal either to reduce or to increase the rent payable under a l ease.
In many instances a statute prescribes the contents of the contract.
The Moneylenders Act, 1927, dictates the terms of any loan caught by its provisions; the Carriage of Goods by Sea Act, 1924, contains six pages of rules to be incorporated in every contract for 'the carriage of goods by sea from any port in Great Britain or Northern 491 Ireland to any other port; the Hire Purchase Act 1938 inserts into hire purchase contracts a number of terms which the parties are forbidden to exclude; successive Landlord and Tenants Act from 1927 to 1954 contain provisions expressed to apply 'notwithstanding any agreement to the contrary.".
It would be incorrect to contend that because law imposes some restrictions on freedom to contract, there is no contract at all.
So long as mutual assent is not completely excluded in any dealing, in law it is a contract.
On the facts of this case for the reasons already mentioned, it is not possible to accept the contention of the ,learned counsel for the appellant that nothing was left to be decid ed by mutual assent.
On the other hand, we agree with the learned Advocate General of Madras and Mr. Setalvad who appeared for.
the State of West Bengal, the intervener, that the controller 's directions were confined to narrow limits and there were several matters, which the parties could decide by mutual assent.
We shall now proceed to examine the principal decisions relied ' upon by the learned counsel for the appellant.
In Kirkness vs John, Eudson & Co. Ltd.(1), the material facts were these: On January 1, 1948, railway wagons owned by John Hudson & Co., the tax payers '.
then under requisition by the Minister of Transport. were acquired, by the British Transport Commission under section 29 of the Transport Act, 1947.
Under section 30 of that Act, compensation became payable by the Commission to the tax payers.
The amount paid as compen sation was substantially higher than the written down value of the wagons for income tax purposes and as the tax payers had received allowances under r. 6 of the rules applicable to Cases I and 11 of Sch.
D to the Income Tax Act 1918, they were assessed under section 17 of the Income Tax Act 1945 to give effect to a balancing charge in respect of the excess of the original cost of the wagons over the written down value.
The Court of Appeal held that the transfer of ' wagons under section 29 of the Transport Act 1947 was not a sale at common law, since it did not involve a mutual assent and a price;, it was an acquisition authorised by a statute and not a compulsory purchase.
Therefore, the wagons were not machinery or plant which had been 'sold ' within the meaning of section 17(1) (a) of the Act of 1945 and no, balancing charge could be made under the sub section.
This, decision was affirmed by the House of Lords by a majority.
Speak in,, for the majority, Viscount Simonds observed: "My Lords, in my opinion the company 's wagons, were not sold, and it would be a grave misuse of language, to say that they were sold.
To say of a man who has had his property taken from him against his will and been awarded compensation in the settlement of which be has had no voice, to say of such a man that he has sold his ' property appears to me to be as far from the truth as to, (1) 492 say of a man who has been deprived of his property without compensation that he has given ' it away.
Alike in the ordinary use of language and in its legal concept a sale connotes the mutual assent of two parties.
So far as the ordinary use of language is concerned it is difficult to avoid being dogmatic, but for my part I can only echo what Singleton L.J. said in his admirably clear judgment: 'What would anyone accustomed to the use of the words ,sale ' or 'sold ' answer? It seems to me that everyone must say 'Hudsons did not sell '.
I am content to march in step with everyone and say 'Hudsons did not sell '.
Nor is a different result reached by an attempt to analyse the legal concept.
When Benjamin said in the passage quoted by Singleton and Birkett L. JJ.
from his well known book on Sale, 2nd ed., p. 1, that 'by the common law a sale of personal property was usually termed a 'bargain and sale of goods ', he was by the use of the word 'bargain ' perhaps unconsciously emphasizing that the consensual relation which the word 'bargain ' imports is a necessary element in the concept ', ".
From the facts set out above it is clear that the House of Lords was dealing with a compulsory acquisition and not sale.
Therefore that decision is of no assistance to the appellant.
In Messrs. New India Sugar Mills Ltd. vs Commissioner of Sales Tax, Bihar(1), this Court was called upon to consider whether ,certain transactions effected under the Sugar Control Order 1946 were sales.
By a majority this Court held that they were not sales.
The facts as found by the High Court and accepted by this Court ,are found at pp.
463 and 464 of the report.
They are as follows: "The admitted course of dealing between the parties was that the Government of various consuming States used to intimate to the Sugar Controller of India from time to time their requirement of sugar, and similarly the factory owners used to send to the Sugar Controller of India statements of stock of sugar held by them ' On a consideration of the requisitions received from the various State Governments and also the statements of stock received from the various factories, the Sugar Controller used to make allotments.
The allotment order was addressed by 'the Sugar Controller to the factory owner, direc ting him to supply sugar to the State Government in question in accordance with the despatch instructions received from the competent officer of the State Government.
A copy of the :allotment order was simultaneously sent to the State Government concerned, on receipt of which the competent authority of the State Government sent to the factory concerned detailed instructions about the destination to (1) (1963) Supp.
2 S.C.R. 459. 493 which the sugar was to be despatched as also the quantities of sugar to be despatched to each place.
In the case of the Madras Government it is admitted that it also laid down the procedure of payment, and the direction was that the draft should be sent to the State Bank and it should be drawn on Parry and Company or any other party which had been appointed as stockist importer on behalf of the Madras Government.
" On the basis of those facts, the Court came to the conclusion that there was no room for mutual assent in those transactions.
The facts of the present case are materially different from the facts of that case.
Hence the ratio of that decision does not apply to the facts of the present case.
Whether in a given case there was mutual assent or not is a matter to be decided on the facts of that case.
In Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income Tax, West Bengal(1).
the facts were: The assessees were an electric supply company.
During the war the government requisitioned an electricity generating plant of the assessees under r. 83(1) of the Defence of India Rules.
The Government wanted to acquire that plant.
As the assessees were not willing to sell the plant, they required the government to re examine the position and to rescind the order depriving them of the plant, but the government refused to re consider that decision.
The amount which the assessees received as price or compensation for the plant exceeded the written down value of the plant by Rs. 3,27,840/ .
The taxing authorities treated the excess as assessees ' profits under section 10(2) (vii) of the Indian, Income Tax Act 1922 and assessed that amount to tax.
On a reference under section 66(1) of that Act, as to whether the amount in question can be considered as assessees ' profit, Harries, C. J. and Banerjee, J. held that the transaction by which the government acquired the plant could not be regarded as a sale within the meaning of section 10(2) (vii) and therefore the sum of Rs. 3,27,840/ was not taxable as profit under that provision.
The Court further observed that the ordinary meaning of the word 'sale ' is a transaction entered into voluntarily between two persons known as buyer and seller by which the buyer acquires the property of the seller for an agreed consideration known as 'price '.
The rule laid down in that decision is the same as that laid down by the House of Lords in Kirkness vs John Hudson & Co. Ltd.(2).
In this case also the Court was dealing with a compulsory acquisition and not sale.
In M/s. Cement Limited vs The State of Orissa(3), the Court was dealing with transactions effected under the Cement Control Order 1956.
Therein the assessee company.
a manufacturer of cement, was required to sell cement to the State Trading Corporation On payment of stipulated price.
3 of the Cement Control Order provided "Every producer shall sell (1)(a) the entire quantity of cement held in stock by him on the date of the commencement (1) , (2) (3) 12 S.T.C. 205.
494 of the order, and (b) the entire quantity of cement which may be produced by him during a period of two years from the date of commencement of this order to the Corporation and deliver the same to such person or persons as may be specified by the Corporation in this behalf from time to time, (2) notwithstanding any contract to the contrary, every producer shall dispose of cement lying in stock with him or produced by him, in accordance with the provisions of sub cl.
(1) and shall not dispose of any cement in contravention thereof".
6(1) was to the effect that the price at which a producer may sell cement shall be specified in the schedule.
The sales in this case were effected under the aforementioned clauses 3 and 6.
It is under those circumstances that the Court came to the conclusion that the transactions in question were not sales but were in the nature of compulsory transfer of title.
This case again is of no assistance to the appellant.
The appellant 's learned counsel also read to us the decisions in North Adjai Coal Company (P) Ltd. vs Commercial Tax Officer and others(1) and section K. Roy vs Additional Member, Board of Revenue, West Bengal(2).
On the facts of those cases, the Court came to the conclusion that the transactions in question were not sales.
For the reasons already stated, we are unable to accept the contention that the transactions with which we are concerned in these cases are not sales.
Out of the four elements mentioned earlier, three were admittedly established, namely, the parties were competent to contract, the property in the goods was transferred from the seller to the buyer, and price in money was paid.
The only controversy was whether there was mutual assent.
Our finding is that there was mutual assent in several respects.
Hence, we agree with the High Court that the transactions before us are sales.
That takes us to the next contention by the appellant i.e., that there was no material to conclude that the goods were delivered in the State of Madras for consumption.
There is no dispute that the goods in question were delivered in the State of Madras.
The dispute centres round the question whether it is proved that they were delivered for consumption in that State.
The learned counsel for the appellant conceded that actual consumption within the State need not be proved.
All that is required to be shown is that they were delivered for consumption in the State.
The only question is whether there was any material to support the conclusion of the Sales Tax Appellate Tribunal, the final fact finding authority, that the goods were delivered in the Madras State for consumption in that State.
The High Court rightly proceeded on the basis that "the burden is certainly upon the State to establish facts upon which a subject can be taxed under a financial enactment.
" But it accepted the finding of the Sales Tax Appellate Tribunal that from the facts and circumstances established it is a reasonable inference to draw (1) 17 S.T.C. 514.
(2) 18 S.T.C. 379.
495 that the goods were delivered for consumption in the Madras State.
This aspect was dealt with by the Tribunal in para 1 1 of its order dated April 17, 1959.
On that question this is what the Tribunal says: "It will be an onerous task to pursue the subsequent history of every inter State sale transactions to find out whether after successive change of hands the ' goods left the state; but it will be permissible in such cases to consider the broad pattern of the transaction, the surrounding circumstances and any other relevant date to draw a reasonable conclusion therefrom.
In the cases before us, it is admitted that the sales were in pursuance of a scheme of internal distribution under the control order applicable to the whole of India.
That there was necessity to draw up such a scheme, indicates that the goods were essential goods, that the supply was inadequate to meet the demand, and that unless there was control and restriction in distribution it was likely that the goods would pass into the black market, and would be sold at exorbitant rates.
It is permissible inference that controlled stockists, registered stockists and registered dealers, who are the principal buyers from the appellants and who could be expected to have been given quotas in the scheme of controlled distribution, would be people expected to meet the local demand for the consumption of the controlled goods.
It is also well known to people familiar with the operation of a controlled scheme and distribution of goods that quotas are given against proved demands, and that it is not part of the scheme of distribution to provide for goods sold in one State being exported to other states inside the Union territory because each State has got its own quota of goods and list of controlled stockists, registered stockists and so on.
Therefore we infer from the analysis given of the transactions by the appellants, that the sales to various groups of purchasers, registered stockists and controlled ' stockists and so on are all intended to meet the local demands for steel products and not for re export.
An analysis of the amount concerned in each of these transactions show that the quantity of steel involved would not be large in each individual case, a circumstance again point to the inference that the sales were intended to meet the requirements of the consumers in Madras State.
In the case of sales to local Government departments, it is obvious that sales were intended for internal consumption and not reexports".
Strangely enough, the High Court at the first instance thought that this finding was unsupported by evidence.
Consequently it remanded the case back to the Tribunal for a fresh finding on that aspect 496 after giving both the parties opportunity to adduce further evidence oral and documentary.
No fresh material was placed before the tribunal after the case was sent back to it.
But on the basis of the material already on record, the tribunal again came to the very conclusion that it had come earlier.
When the cases again came back to the High Court.
that finding was accepted as correct.
In our opinion, the High Court was not right in rejecting that finding at the first instance.
The finding of the tribunal is a reasonable finding .
The inferences drawn by it are reasonable inferences from the facts proved or admitted.
It is reasonable to assume that the supplies of iron and steel products were being made to stockists in a State for consumption in that State.
It may be, as found in this case, that a small portion of the supplies had gone out of the State.
But that is not a relevant circumstance.
What we have to see is whether the Supplies in question were made for consumption in the Madras State.
On that question the finding of the Tribunal is conclusive.
The contentions of the appellant that the findings of the tribunal about the quantum of the turnover were not based on any evidence, or that those findings were arrived at in violation of the principles of natural justice or that the decision of the High Court is perverse, are wholly untenable contentions.
At the time of the hearing no reasons were advanced in support of those contentions.
Hence those contentions do not merit any detailed examination.
In the result, these appeals fail and they are dismissed with costs hearing fee, one set.
Appeals dismissed.
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At the instance of the steel controller exercising powers under the Iron and Steel (Control of Production and Distribution) Order, 1941, the appellant supplied certain steel products to various persons in Madras State during the financial years 1953 54, 1954 55 and part of the financial year 1955 56.
The State of Madras assessed the turnover of the appellant relating to those transactions to sales tax under the Madras General Sales Tax Act, the law in force at that time.
The appellant contended before the authorities under the Sales Tax Act as well as the High Court that the transactions were not sales and therefore could not be taxed.
The further contention was that there was no material to show that the deliveries were for consumption within the State of Madras so as to become taxable within the State.
From the adverse decision of the High Court the appellant, by special leave, came to this Court.
In support of the contention that the transactions were not sales it was urged that they were effected under the directions of the Iron and Steel Controller given under cl.
10B of the Order and that being so there was no mutual assent between the parties to the transactions.
HELD:The authority of the controller to pass the orders in question came from cl. 5 of the order and not cl.
10B. The orders were in respect of goods not yet manufactured whereas under cl.
10B directions could be given only in respect of goods already in stock.
So far as cl. 5 is concerned admittedly it does not require the controller to regulate or control every facet of a transaction between a producer and the person to whom he supplies iron and steel products.
[488H: 489C H] In modern times the doctrine of laisser faire can have only a limited application.
That does not mean that there is no freedom of contract.
So long as mutual assent is not excluded in any dealing, in law it is a contract.
On the facts of the present case it was not possible to accept the contention that nothing was left to be decided ' by mutual assent.
On the other hand the controller 's directions were confined to narrow limits and there were several matters which the parties could decide by mutual consent.
[49OB; 491B C] Kirkness vs John Hudson & Co. Ltd. ; M/s. New India Sugar Mills Ltd. vs Commissioner of Sales tax, Bihar, [1963] Supp. 2 S.C.R. 459; Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income tax.
West Bengal.
; M/s. Cement Ltd. vs State of Orissa, 12 S.T.C. 205; State of Madras vs Gannon Dunkerley, ; ; North Adjai Coal Company (P) Ltd. vs, Commercial Tax Officer & Ors.
17 S.T.C. 514 and section K. Roy vs Additional Member, Board of Revenue, West Bengal, 18 S.T.C. 379, refer red to.
(ii)From the facts and circumstances the Tribunal rightly found ' that the supplies were made to stockists in the State of Madras for 480 consumption in that State.
It may be that a small portion of the supplies had gone out of the State.
But that was not a relevant circumstance.
What had to be seen Was whether the supplies in question were made for consumption in the Madras State.
On that question the finding of the Tribunal was conclusive.
[496B C]
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2274.txt
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Civil Appeal Nos.
960 to 962 (NT) of 1975.
From the Judgment and order dated 2.3.1973 of the Allahabad High Court in Income Tax Reference No. 721 of 1970.
S.L. Aneja, Pawan Aneja and K.L. Tarieja for the Appellants.
C.M. Lodha, Ms. A. Subhashini and K.C. Dua for the Respondents.
The Judgment of the Court was delivered by VENKATACHALIAH, J.
These assessee 's appeals, by certificate, arise out of the Judgment and order dated 2.3.1973 of the Allahabad High Court in I.T.R. No. 721 of 1970 answering certain questions of law referred for the opinion of the High Court against the assessee.
The assessee is a Hindu Undivided Family.
The assessment years are 1954 55, 1960 61 and 1961 62.
The principal controversy in these appeals pertains to the allowance of and deduction for 'repairs ' in respect of a house property at Delhi leased out to the Chinese Embassy under a deed of lease dated 30.5.1952.
Originally assessments were completed including therein the annual letting value of this property at Rs.36,000 and allowing a deduction of Rs.6,000 for repairs under Section 24(1)(i)(a) of the Income tax Act, 1961 (Act) or the corresponding provisions of the Act of 1922.
Subsequently, the assessments were reopened on the ground that the assessee had got excess of relief.
In the re assessments the Income tax officer held that as the lessee had undertaken 'to keep 90 the premises in good and habitable condition, execute all repairs ', the deduction of Rs.6,000 was impermissible.
The Income tax officer accordingly determined the annual letting value of the property at Rs.40,000 and allowed a deduction at Rs.4,000 towards 'repairs ' under Section 24(1)(i)(b) of the Act.
In respect of the assessment year 1954 55, the assessee claimed unsuccessfully that he had undertaken ' considerable repairs and that a sum of Rs.5,645 should be allowed.
This claim was negatived by the Income tax officer who confined the allowance for repairs to the limit permissible under Section 24(1)(i)(b) of the Act on the premise that this was a case where the tenant had undertaken to bear the cost of repairs.
This view was affirmed by the Appellate Asst.
Commissioner of Income Tax and the Income tax Appellate Tribunal ( 'Tribunal ').
It is, perhaps, relevant to mention that some of the assessment years are governed by the provisions of the 1922 Act.
But, having regard to the similarity of the provisions, this does not assume any significance or affect the substance of the matter.
At the instance of the assessee, the Tribunal stated a case and referred the following three questions of law for the opinion of the High Court: (1) "Whether on the facts and in the circumstances of the case, the assessments for the years 1954 55, 1960 61 and 1961 62 were validly reopened under Section 147(a) of the Income Tax Act, 1961?" (2) "Whether on the facts and in the circumstances of the case, the provisions of Section 24(1)(i)(b) of the Income tax Act, 1961, were applicable?" (3) "Whether on the facts and in the circumstances of the case, the expenditure which was not allowed while completing the original assessments could be considered for allowance in course of assessments re opened under Section 147(a)?" As stated earlier, the High Court answered the questions against the assessee, but granted a certificate under Section 261 of the Act as in its opinion two important questions arose out of the judgment.
The questions the High Court had in mind are questions No. 2 and 3, supra.
It must, at the outset, be observed that the question as to the validity of the re opening of the assessments which was raised before the High Court was not, in our opinion rightly, re agitated here Learned counsel for the appellants urged that the High Court was in error in its opinion on questions 2 and 3.
The third question referred was whether where once an assessment is re opened by a valid notice, the whole proceedings of assessment were at large and all the claims and allowances which had been disallowed in the original assessment could be re agitated by the assessee.
The High Court has answered this proposition against the assessee.
We may take up and dispose of this contention first.
It is seen from the order of the Tribunal that though certain reliefs were claimed by the assessee before the authorities, the matter before the Tribunal was, however, confined to the question of allowance for repairs.
The relief on the claim for repairs, if otherwise tenable, can be granted even without going into this larger question.
It is, therefore, unnecessary to consider this contention in this case.
We may now turn to question No. 2 as formulated in the reference.
Learned counsel urged that the covenant for repairs embodied in the lease deed did not cast the burden to carry out the repairs exclusively on the lessee and that since the lessor had also undertaken to carry out some of the repairs, Section 24(1)(i)(b) was not attracted and that in the circumstances the benefit of Section 24(1)(i)(a) was available to the assessee.
Counsel relied upon Commissioner of Income tax vs Parbutty Churn Law, 6.
Section 24(1)(i)(b) of the Act provides that where a property is in the occupation of a tenant "who has undertaken to bear the cost of repairs", the deduction towards repairs which the assessee owner is entitled to is either the excess of the annual value over the amount of rent payable for a year by the tenant; or a sum equal to one sixth of the annual value whichever is lesser.
There is no dispute that if Section 24(1)(i)(b) is applicable the computation would be correct.
The only question, therefore, is whether, having regard to the terms of the covenant, it could be said that the tenant had undertaken to bear the cost of repairs within the meaning and for purposes of Section 24(1)(i)(b) of the Act.
The covenant in this behalf in the lease deed dated 9.9.1952 is in terms following: "To maintain and keep the demised premises in good and 92 habitable condition, tenantable, repair execute all repairs including annual white washing, repairs of electric and sanitary fittings etc., at the lessee 's expenses.
Major repairs such as repairs against collapse of the house etc., shall be undertaken by the lessors at their own cost.
" The view of the High Court, in substance, is that this covenant satisfies the requirements of and attracts Section 24(1)(i)(b) .
The correctness of this view turns upon what in the law of landlord and tenant is, the content of a covenant for 'repairs ' and whether by the terms of the present agreement, the tenant is said to have undertaken the burden of such 'repairs '.
Referring to what is implicit in and carried with the covenant for "repairs", Halsbury states: "Under a covenant to repair, a tenant is liable to repair but not to renew. 'Repair ' in this sense means the restoration by renewal or replacement of subsidiary parts of the whole, whereas 'renewal ' as distinguished from repair, means the re construction of the whole or of substantially the whole.
Where the demised building is erected on in herently defective foundations, the tenant is not liable to substitute new foundations . " (See Halsbury 's Laws of England 14th Edn.
paragraph 285) In regard to the Standard of Repairs, Halsbury, at paragraph 286, states: "If he has expressly covenanted to put a house into tenantable repair and to keep it in such repair, and it is not in tenantable repair at the commencement of the tenancy, the tenant must do the necessary repairs, not with standing that the building is thereby put in a better condition than when the landlord let it.
The effect is the same if, without expressly covenanting to put it into repair, the tenant only covenants to keep the house in tenantable repair.
Such a covenant presupposes putting the house in such repair, and keeping it in repair during the term.
The construction of the covenant is the same whether the covenant specifies 'tenantable ' or 'habitable ' or 'good ' repair.
A general covenant to repair without any such words is satisfied if the premises are kept in a substantial state of repair.
(emphasis supplied) 93 7.
The oft quoted observations in Lurcott vs Wakely and Wheeler, as to what is meant by 'repairs ' are generally considered apposite.
This has been referred to and relied upon by the High Court.
The observations in Lurcott 's case was referred to with approval by the Privy Council in Rodesia Railway Ltd. vs Income tax Collector, [1933] Appeal cases 368.
The idea of 'repair ' may include replacement or even a renewal.
But the converse may not be true.
All replacements or renewals need not necessarily be 'repairs '.
In the case of a building, restoration of stability or safety of a subordinate or subsidiary part of it or any portion of it can be considered as repair while the re construction of the entirety of the subject matter may not be so regarded.
The somewhat comprehensive import of the word 'repair ' in this context is evident from the reliance by Forbes J. in Ravenseft Properties Ltd. vs Davstone (Holdings) Ltd., [1980] Q.B. 12 on the following observations of Sir Herbert Cozens Herdy MR in Lurcott 's case (supra): "It seems to me that we should be narrowing in a most dangerous way the limit and extent of these covenants if we did not hold that the defendants were liable under covenants framed as these are to make good the cost of repairing this wall in the only sense in which it can be repaired, namely, by re building it according to the requirements of the county council." Having regard to somewhat comprehensive nature of the obligations that go with and are attached to and recognised under the tenant 's covenants for 'repairs ', it must be held that the covenant in the present case is one under which the tenant has undertaken 'substantial repairs ' and it must, accordingly, be held to fall within Section 24(1)(i)(b) of the Act and that the allowance for repairs must be one under, and limited to, that provision.
The case of the assessee that it should fall under Section 24(1)(i)(a), we are afraid, is very nearly unarguable.
There is no substance in the contention.
This is clearly not a case where the burden of carrying out repairs as understood in the context of Section 24(1)(i)(b) is shared between the lessor and the lessee.
The obligation is on the lessee alone.
The obligation under the latter part of the covenant does not relate to such repairs.
The appellant 's reliance on Commissioner of Income tax vs Parbutty Churn Law, supra is in the facts of the present case misplaced.
In the result, for the foregoing reasons these appeals fail and are dismissed, but in the circumstances, without an order as to costs.
N.P.V. Appeals dismissed.
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% The appellants, a Hindu undivided family, leased out a house owned by them.
The covenant in the lease deed stated that the tenant will maintain and keep the demised premises in good and habitable condition, tenantable, repair, execute all repairs including annual white washing, repairs of electric and sanitary fittings etc.
at the lessee 's expenses, and that the lessors shall undertake at their own cost major repairs such as repairs against collapse of the house.
Originally in the assessments for the years 1954 55, 1960 61 and 1961 62, the annual letting value of the property was arrived at RS.36,000 and a deduction of Rs.6,000 was allowed for repairs under section 24(1)(i)(a) of the Income Tax, Act, 1961.
Subsequently, the assessments were re opened on the ground that the assessee had got excess relief.
In the re assessments, the Income Tax officer held that as the lessee had undertaken to keep the premises in good and habitable condition, execute all repairs, the deduction of Rs.6,000 was impermissible.
He accordingly determined the annual letting value of the property at Rs.40,000 and allowed a deduction of Rs.4,000 towards repairs under s.24(1)(i)(a) of the Act.
In the reopened assessment for the year 1954 55, the assessee 's claim for deduction of Rs.5,645 being the cost of the repairs undertaken by them was disallowed on the ground that this was a case where the tenant had undertaken to bear the cost of the repairs and, therefore, the allowance for repairs was limited to the limit permissible under section 24(1)(i)(b).
The Appellate Assistant Commissioner and the Income Tax Appellate Tribunal affirmed the above view.
88 At the instance of the assessee, the Tribunal stated a case and referred it to the High Court which though answered against the assessee, granted a certificate under section 261 of the Act, regarding the applicability of section 24(1)(i)(b) and reconsideration of deduction of the expenditure which was not allowed in the original assessment in the course of reopened assessments.
In the appeal by special leave, it was urged that the covenant for repairs embodied in lease deed did not cast the burden to carry out the repairs exclusively on the lessee and that since the lessor had also undertaken to carry out some of the repairs, section 24(1)(i)(b) was not attracted and the benefit of section 24(1)(i)(a) was therefore available.
On the question whether, having regard to the terms of the covenant, it could be said that the tenant had undertaken to bear the cost of repairs within the meaning, and for purposes, of section 24(1)(i)(b) of the Act.
Dismissing the appeals, ^ HELD: 1.1 This is clearly not a case where the burden of carrying out repairs as understood in the context of section 24(1)(i)(b) of the Income Tax Act, 1961 is shared between the lessor and the lessee.
The obligation is on the lessee alone.
The obligation under the latter part of the covenant does not relate to such repairs.
[93G H] 1.2 The idea of 'repair ' may include replacement or even a renewal.
But the converse may not be true.
All replacements or renewals need not necessarily be 'repairs '.
In the case of a building, restoration of stability of safety of a subordinate or subsidiary part of it or any portion of it can be considered as repair while the reconstruction of the entirety of the subject matter may not be so regarded.
[93B C] A general covenant to repair without any such words as tenantable or habitable or good repair is satisfied if the premises are kept in a substantial state of repair.
[92H] Having regard to somewhat comprehensive nature of the obligations that go with and are attachment to and recognised under the tenant 's covenants for 'repairs ', it must be held that the covenant in the present case is one under which the tenant has undertaken 'substantial repairs ' and it must, accordingly, be held to fall within clause 89 (b) of section 24(1)(i) of the Act and not under clause (a) of the section and that the allowance for repairs must be one under, and limited to that provision.
[93F] Commissioner of Income tax vs Parbutty Churn Law, ; Lurcoff vs Wakely and Wheeler, [1911] I K.B. 905; Rodesia Railway Ltd. vs Income tax Collector, [1933] Appeal Cases 368; Ravenseft Properties Ltd. vs Davstone (Holdings) Ltd., [1980] Q.B. 12 and Halsbury 's Laws of England, 4th Edn., paragraph 286, referred to
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5558.txt
|
Civil Appeal No. 914 of 1968.
(From the judgment and decree dated the 9th April, 1962, of the Allahabad High Court in first Appeal No. 283 of 1950).
Naunit Lal, K. G. Bhargava and Miss Lalita Kohli for the appellant.
G. section Pathak, D. P. Singh and M. G. Goswami for respondents nos.
1(a) to 1(f).
The Judgment of the Court was delivered by GOSWAMI, J.
This appeal by certificate from the judgment and decree of the Allahabad High Court raises an important question with regard to the construction of a will.
The respondent Gokul (whose heirs have been impleaded after his death) was the original plaintiff in a suit for declaration that he was the absolute owner under a will of the property in suit and for possession of certain of them.
He also claimed certain movable properties with which we are not concerned in this appeal.
The property in suit was originally in exclusive ownership and possession of Bhola Chaubey, the testator.
Bhola Chaubey, was governed by the Mitakshra School of Hindu Law.
He belonged to the class of priests and was an old man of 67 years at the time when he executed the will on September 21, 1916.
He had then a legally wedded wife, Smt, Jarian, approaching nearly her forty fifth year and they had no issue in wedlock.
The only person whom the testator appeared to have almost treated like a son was the respondent Gokul, doubly related to the testator, being his sister 's son and also his wife 's brother 's son.
Gokul had been with him since childhood and the testator got him married.
Gokul in return had been serving the testator to his satisfaction and was in enjoyment of his full confidence and affection till the testator 's death in 1918.
Gokul was then aged about 23 years.
It was directed in the will that Smt.
Jarian would get the obsequies and other religious rites of the testator performed by Gokul.
After the death of the testator Smt.
Jarian and Gokul continued to live in cordiality for nearly 18 years.
Feelings, however, got 927 estranged some time after that and there was even litigation, criminal and civil, between Smt.
Jarian and Gokul.
It appears Smt.
Jarian, who died in March, 1948, had executed a gift deed and a will in respect of certain properties in suit in favour of the appellant, Navneet Lal.
All this led to the institution of the present suit out of which this appeal has arisen.
The case of the appellant was that Bhola Chaubey had given an absolute estate under the will to his wife, Smt.
Jarian, and she was, therefore, entitled to deal with the property as she liked and hence the deed of gift and the will in favour of the appellant were perfectly valid.
According to the appellant the respondent had no right to file the suit basing upon the will executed by Bhola Chaubey.
According to the respondent the will conferred on Smt.
Jarian only a life estate during her life and after her death an absolute estate of the testator 's entire property on the respondent.
The Civil Judge, Mathura, decreed the respondent 's suit except with reference to the movable property mentioned in Schedule O to the plaint as well as in respect of certain muafi zamindari property in Schedule A to the plaint.
The appellant appealed to the High Court at Allahabad and when the matter came up for disposal by a Division Bench of that court, there was a difference of opinion between the Judges.
Srivastava, J. held that the testator had no intention of conferring a limited life estate only on his wife and that she acquired an absolute estate by virtue of the will.
On the other hand, B. Dayal, J. took a contrary view holding that Bhola Chaubey intended to give merely a life estate to Smt.
Jarian and to make Gokul full owner of the property after her death.
The appeal was then set down for hearing before a third Judge, (Dhawan, J.) who agreed with B. Dayal, J. resulting in dismissal of the appeal.
We are concerned in this appeal only with the construction of the will executed in the year 1916.
From the earlier decisions of this Court the following principles, inter alia, are well established: (1) In construing a document whether in English or in vernacular the fundamental rule is to ascertain the intention from the words used; the surrounding circumstances are to be considered; but that is only for the purpose of finding out the intended meaning of the words which have actually been employed.
[Ram Gopal vs Nand Lal and others(1)].
(2) In construing the language of the will the court is entitled to put itself into the testator 's armchair [Venkata Narasimha vs Parthasarathy(2)] and is bound to bear in mind also other matters than merely the words used.
It must consider the surrounding circumstances, the position of the testator, his family 928 relationship, the probability that he would use words in a particular sense. but all this is solely as an aid to arriving at a right construction of the will, and to ascertain the meaning of its language when used by that particular testator in that document.
[Venkata Narasimha 's case supra and Gnanambal Ammal vs T. Raju Ayyar and Others(1)].
(3) The true intention of the testator has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory [Raj Bajrang Bahadur Singh vs Thakurain Bakhtraj Kuer(2)].
(4) The court must accept, if possible, such construction as would give to every expression some effect rather than that which would render any of the expression inoperative.
The court will look at the circumstances under which the testator makes his will, such as the state of his property, of his family and the like.
Where apparently conflicting dispositions can be reconciled by giving full effect to every word used in a document, such a construction should be accepted instead of a construction which would have the effect of cutting down the clear meaning of the words used by the testator.
Further, where one of the two reasonable constructions would lead to intestacy, that should be discarded in favour of a construction which does not create any such hiatus.
[Paerey Lal vs Rameshwar Das(3)].
(5) It is one of the cardinal principles of construction of wills that to the extent that it is legally possible effect should be given to every disposition contained in the will unless the law prevents effect being given to it, Of course, if there are two repugnant provisions conferring successive interests, if the first interest created is valid the subsequent interest cannot take effect but a Court of construction will proceed to the farthest extent to avoid repugnancy, so that effect could be given as far as possible to every testamentary intention contained in the will.
[Ramachandra Shenoy and Another vs Mrs. Hilda Brite and Other(4)] Bearing in mind the above principles we may now look at the will in question as a whole.
This will is written in the urdu language.
An official translation is placed on the record.
From the contents of the will we find the background and the exact position of relationship of the parties set out earlier.
Gokul was residing with Bhola Chaubey 929 and Smt.
Jarian.
It may bear repetition that Gokul was held in great love and affection by the testator who was keenly anxious for the welfare both of his wife and of Gokul.
There is yet another feature which is prominent in the will.
The testator was apprehensive of his only brother, Ram Raj and his nephew, Kishnu, who "might trouble his wife and Gokul after his death." From such of the aforesaid prefatory recitals as appear in the will, two objects stand out, namely, that he was deeply interested in the enjoyment of his property movable and immovable after his death by his wife and after her death by Gokul.
The second object was that he intended that his property should not fall into the hands of his brother and nephew who had been separate from him since long after some arbitration and even bore ill will against him and his wife.
After the above revelation of his mental attitude in the will there follows the following recitals: "So long as I, the executant, am alive, I myself shall remain the owner in possession (malik wa qabiz) of my entire movable and immovable property and of the income from Birt Jijmani.
After my death Mst.
Jarian, the wedded wife of me, the executant, shall be the owner (malik) of my entire estate, movable and immovable, and of the income from Birt Jijmani and shall have all the proprietary powers (aur usko jamiya akhtiyarat malikana hasil honge).
After the death of Mst.
Jarian, Gokul aforesaid shall be the owner of the entire estate left by me (malik kamil jaidad matruka meri ka hoga), and he shall have all the proprietary powers and the power of making transfer of all sorts (aur usko jamiya akhtiyarat malikana wa inteqalat har qism hasil honge).
If per chance, Mst.
Jarian dies in my life time, then Gokul aforesaid will be the absolute owner (malik kamil) of the estate left by me (matrura meri) and he shall have power of making all sort of transfers (aur usko har quism ke akhtiyarat inteqalat hasil honge).
Gokul aforesaid should go to Jijmana and should continue to give to Mst.
Jarian during her life time the charitable gifts (daan dakshina) which he brings from there.
After her death he might continue to be benefited thereby.
Jarian should get my obsequies, Barsi (annual death ceremony), Chhamchhi etc.
performed through Gokul aforesaid according to the custom prevalent in the brotherhood.
It will be the duty of Gokul aforesaid to obey and serve my wife Mst.
Jarian.
It will be necessary for Mst.
Jarian to keep my heir (waris) Gokul aforesaid and to act in consultation with him.
At present I have the following immovable properties and the Birt Jijmani.
If in addition to these I purchase or get any property the aforesaid persons shall be the owners of that also according to.
the aforesaid conditions".
Mr. Naunit Lal, on behalf of the appellant, submits that since the testator stated in the will that after his death Smt.
Jarian "shall be the 930 owner (malik) of my entire estate. and shall have all the proprietary powers (aur usko jamiya akhtiyarat malikana hasil honge)", it is absolutely clear that he intended to confer upon his wife an absolute estate to his entire property.
Mr. G. section Pathak, on behalf of the respondents, contests the proposition.
In support of his contention, Mr. Naunit Lal draws our attention to several decisions wherein the word `malik ' has been noticed and explained.
The term `malik ' when used in a will or other document as descriptive of the position which a devisee or donee is intended to hold, has been held apt to describe an owner possessed of full proprietary rights, including a full right of alienation, unless there is something in the context or in the surrounding circumstances to indicate that such full proprietary rights were not intended to be conferred, but the meaning of every word in an Indian will must always depend upon the setting in which it is placed, the subject to which it is related, and the locality of the testator from which it may receive its true shade of meaning.
[Sasiman Chowdhurain and others vs Shib Narayan Chowdhury and others (1) ].
We find observations to the same effect in Musammat surajmani and others vs Rabi Nath ojha and another(2).
It is, approved therein that in order to cut down the full proprietary rights that the word malik imports something must be found in the context to qualify it.
Similarly counsel has referred to the expression `malik mustakil ' which was noticed in a decision of this Court in Krishna Biharilal vs Gulabchand and Ors.(3), and this Court observed at page 31 as follows: "The meaning of the expression `malik mustakil ' an urdu word, has come for consideration before this Court in some cases.
In Dhyan Singh and anr.
vs Jugal Kishore & Anr.(4), this Court ruled that the words `malik mustakil ' were strong, clear and unambiguous and if those words are not qualified by other words and circumstances appearing in the same document, the courts must hold that the estate given is an absolute one We are, however, not required to consider the words `malik mustakil ' in this case.
But it is clear that even those words can be qualified by other words and circumstances appearing in the same document.
It is, therefore, abundantly clear that the intention of the testator will have to be gathered from all the relevant and material contents in the entire will made in the situation in which the testator was placed in life in the back ground of his property, his inclinations, wishes, desires and attitudes as can be clearly and unambiguously found either from the recitals from the instrument or from absolutely undoubted contemporaneous legally admissible evidence.
931 Reading the present will as a whole and if every disposition has to be rationally harmonised, we find that the testator intended a life estate for his wife so long as she lived.
This is consistent with his description of Gokul as "my heir (waris)" after his death.
It is further consistent with the recital that "if per chance, Mst.
Jarian dies in my life time, then Gokul aforesaid will be the absolute owner (malik kamil) of the estate left by me (matruka meri) and he shall have power of making all sorts of transfers (aur usko har quism ke akhtiyarat inteqalat hasil honge)".
In obvious contrast even though Smt.
Jarian was made the malik of his entire estate after his death "having all the proprietary rights" nothing is stated about her "power of making all sorts of transfers" which power is expressly mentioned as belonging to him and also exclusively conferred upon Gokul after Smt.
Jarian 's death.
While describing his own "proprietary powers" the testator made reference to his "power of making transfers of all sorts".
This power of making transfer which was prominent in the mind of the testator at the time of execution of the will is conspicuous by total omission in relation to Smt.
Jarian 's enjoyment of the property.
We have to give due importance to the lexicon in the will and we find that the testator has made a definite distinction between mere ownership of property and ownership of the same coupled with powers of transfer "in every way".
Ordinarily, however, without such clear evidence from the recitals in the will itself it may not be possible to hold that ownership of property, which is devised, without any thing more, would not connote absolute ownership of the same with the power of alienation.
There is another significant feature in the recitals, when reference is made in the will to acquisition of future property.
Says the testator "if in addition to these I purchase or get any property the aforesaid persons shall be the owners of that also according to the aforesaid conditions".
The testator thus unerringly conceives of any future property being owned by both, by the widow during her life time and by Gokul after her death in the same manner as the property that had already been bequeathed.
The expression "according to the aforesaid conditions" is, therefore, very significant in the context.
We also find that during her life time Gokul would be collecting "daan dakshina" of the jijmani to Smt.
Jarian and after her death Gokul would enjoy the same.
There is no contemplation of any possibility to deprive Gokul of the enjoyment of the property in any event.
All the above features run counter to the theory of an absolute estate in favour of Smt.
Jarian.
There is still another clinching factor.
It is clear from the will that the testator had misunderstanding and quarrels with his brother regarding ancestral property and the matter had to be settled by arbitration leading to partition and separate enjoyment of property as far back as 1889.
It also appears from the recitals in the will that he had grave apprehension that after his death his only reversioners, his brother and nephew, "might trouble and harass my wife Mst.
Jarian and my sister 's son Gokul.
" One thing was, therefore, clear that the testator never intended that his property should pass to his brother and nephew.
This intention of the testator would 932 best be achieved by holding that there was a devise of a life estate to his wife and an absolute estate thereafter to Gokul indicating a different line of inheritance in the will.
On the other hand, if any absolute estate would have been conferred on the widow, then on her death the property would have passed on by inheritance to her husband 's heirs who were none else than the brother and the nephew of the testator.
There was no other heir of Mst.
Jarian to inherit the property after her death.
A Plenitude of absolute estate in favour of the wife will make the absolute bequest to Gokul void in law.
No such repugnant interpretation detrimental to the interest of Gokul can be made in the light of the entire tenor of the instrument.
Having regard to the context and the circumstances apparent from the will, we are clearly of opinion that the testator intended to bequeath in favour of his widow only a life estate and after her death an absolute estate to Gokul.
That being the position the will by Smt.
Jarian in favour of the appellant fails and her gift in favour of the appellant also similarly fails on her death.
The respondent 's suit is rightly decreed by the courts below.
The appeal fails and is dismissed.
We will, however, make no order as to costs.
S.B. Appeal dismissed.
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One 'BC ', governed by the Mitakshra School of Hindu Law, being issueless and apprehending the claim to his property after his death as reversioners by his only brother 'RR ' and his nephew 'K ' who were inimical to him since the partition of their ancestral property in 1899, and possible harassment of his wife and 'G ', the respondent, executed a Will on September 21, 1916, in the Urdu script.
The respondent 'G ' being the son of the testator 's sister married to testator 's wife 's brother was doubly related.
As per the Will, 'G ' was to perform the obsequies and other annual death ceremonies etc.
, being his 'waris ' and the "Malik Kamil ' absolute owner" having all the proprietary powers and the power of making transfers of all sorts", while his wife was to be in possession and enjoyment of the property during her life time.
From the date of death of the testator in 1918 for about 18 years the widow and 'G ' lived in cordiality but got estranged later due to estrangement of feelings resulting in several civil and criminal litigation between them.
The widow died in 1948 executing a gift deed and a Will in respect of certain properties in favour of the appellant 'NL '. 'G ' filed a civil suit claiming his rights under the Will dated 21 September, 1916, and the appellant defendant contested it on pleas that the widow of 'BC ' having an absolute right over the property under the said Will validly made the gift deed and the Will of 1948 in his favour and that the respondent plaintiff had no locus standi to file the suit.
The suit was decreed.
On appeal to the Allahabad High Court, as there was a difference of opinion between the Judges of the Division Bench on the nature of the widow 's estate, one opining as the Will conferring a "limited estate" and the other opining as conferring an "absolute estate" the appeal was set down to a third Judge who agreed with the view that the Will conferred only a "limited estate" upon the widow and dismissed the appeal.
Confirming the decree of the courts below and dismissing the appeal by certificate, the Court, ^ HELD : (1) The following are the established principles for construing the language of the Will.
(a) In construing a document whether in English or in vernacular the fundamental rule is to ascertain the intention from the words used; the surrounding circumstances being considered to find out the intended meaning of such words employed therein.
[927F G] (b) In construing the language of the Will the court is entitled to put itself into the testator 's armchair and is bound to bear in mind also other matters than merely the words used like the surrounding circumstances, the position of the testator, his family relationship, the probability that he would use words in a particular sense all as an aid to arriving at a right construction of the Will, and to ascertain the meaning of its language when used by that particular testator in that document.
[927G H, 928A] (c) The true intention of the testator has to be gathered not by attaching importance to isolated expressions but by reading the Will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
[928B] (d) The court must accept, if possible, such construction as would give to every expression some effect rather than that which would render any of 925 the expression inoperative.
The court will look at the circumstances under which the testator makes his Will, such as the state of his property, of his family and the like.
Where apparently conflicting dispositions can be reconciled by giving full effect to every word used in a document, such a construction should be accepted instead of a construction which would have the effect of cutting down the clear meaning of the words used by the testator.
Further, where one of the two reasonable constructions would lead to intestacy, that should be discarded in favour of a construction which does not create and such hiatus.
[928C E] (e) It is one of the cardinal principles of construction of Wills that to the extent that it is legally possible effect should be given to every disposition contained in the Will unless the law prevents effect being given to it.
Of course, if there are two repugnant provisions conferring successive interests, if the first interest created is valid the subsequent interest cannot take effect but a court of construction will proceed to the farthest extent to avoid repugnancy, so that effect could be given as far as possible to every testamentary intention contained in the Will.
[928E G] Ram Gopal vs Nand Lal and others ; Venkata Narasimha vs Parthasarathy, 42 Indian Appeals 51/72; Gnanambal Ammal vs T. Raju Ayyar and others, ; Raj Bajrang Bahadur Singh vs Thakurain Bakhtraj Kuer, ; Pearey Lal vs Rameshwar Das [1963] Supp.
SCR 834/839/842 and Ramachandra Shenoy and Anr.
vs Mrs. Hilda Brite and others. , applied.
(ii) The term "malik" when used in a Will or other document as descriptive of the position which a devisee or donee is intended to hold, has been held apt to describe an owner possessed of full proprietary rights, including a full right of alienation, unless there is something in the context or in the surrounding circumstances to indicate that such full proprietary rights were not intended to be conferred, but the meaning of every word in an Indian Will must always depend upon the setting in which it is placed, the subject to which it is related and the locality of the testator from which it may receive its true shade of meaning.
The intention of the testator will have to be gathered from all the relevant and material contents in the entire Will made in situation in which the testator was placed in life in the background of his property, his inclinations, wishes, desires and attitudes as can be clearly and unambiguously found either from the recitals from the instrument or from absolutely undoubted contemporaneous legally admissible evidence.
Hence, even the words "malik muakkil" can be qualified by other words and circumstances appearing in the document.
[930 B C & G H] Sasiman Chowdhurain and others vs Shib Narayan Chowdhury and others, 49 Indian Appeals 25/35; Musammat Surajmani and others vs Rabi Nath Ojha and another, 35 Indian Appeals 17; Krishna Biharilal vs Gulabchand and others, (1971) Supp.
SCR 27 and Dhyan Singh and anr.
vs Jugal Kishore and anr.
, [1952] SCR 478, discussed.
(iii) In the instant case, the testator intended a life estate for his wife so long as she lived as is clear from the reading of the present Will as a whole.
This is consistent with his description of Gokul as "my heir (waris)" after his death.
It is further consistent with the recital that "if per chance, Mrs. Jarian dies in my life time, then Gokul, aforesaid will be the absolute owner (malik kamil) of the estate left by me (matruka meri) and he shall have power of making all sorts of transfers (aurusko har qism ke aktiyarat inteqalat hasil honge)".
In obvious contrast even though Smt.
Jarian was made the malik of his entire estate after his death "having all the proprietary rights" nothing is stated about her "power of making all sorts of transfers" which power is expressly mentioned as belonging to him and also exclusively conferred upon Gokul after Smt.
Jarian 's death.
While describing his own "proprietary powers" the testator made reference to his "power of making transfers of all sorts".
This power of making transfers which was prominent in the mind of the testator at the time of execution of the Will is conspicuous by total omission in relation to Smt.
Jarian 's enjoyment of the property.
The testator has made the distinction between mere ownership of property and ownership of the same coupled with a transfer in every way.
[931 A D] 926 Further, from the recitals in the Will about his only reversioners viz., his brother and nephew "might trouble and harass my wife Mst.
Jarian and my sister 's son Gokul", it is clear that the testator never intended that his property should pass to his brother and nephew.
This intention would be achieved by holding that there was a devise of a life estate to his wife and an absolute estate thereafter to Gokul indicating a different line of inheritance in the Will on the other hand, if any absolute estate would have been conferred on the widow, then on her death the property would have passed on by inheritance to her husband 's heirs who were none else than the brother and the nephew of the testator.
There was no other heir of Mst.
Jarian to inherit the property after her death.
[931 G H, 932 A B] A plenitude of absolute estate in favour of the wife will make the absolute bequest to Gokul void in law.
No such repugnant interpretation detrimental to the interest of Gokul can be made in the light of the entire tenor of the instrument.
The testator intended to bequeath in favour of his widow only a life estate and after her death an absolute estate to Gokul.
[932B C]
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3386.txt
|
ition Nos.
829/79, 1104, 200 2655 of 1980.
(Under article 32 of the Constitution of India).
G. N. Dikshit, section Markendeya, P. Sinha, M. M. Temai, J. K Nayyar and section K Bisaria with him for the Petitioners.
section R Gambhir for the Respondent.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
The petitioners are nomad graziers of Gujarat and Rajasthan, who wander from place to place with their sheep, goats and cattle in search of pasture and foliage.
Boundaries of States present no barriers to them.
After all, to them and to their livestock, it is a question of survival.
In their wanderings they often pass through the State of Madhya Pradesh en route some times to Uttar Pradesh and some times to Maharashtra.
This happens particularly in times of drought in Gujarat and Rajasthan The powers that be in the State of Madhya Pradesh became apprehensive that uninhibited passage of large herds of these animals through Madhya Pradesh may lead to large scale devastation of their forest wealth.
So they hit upon a plan to prevent foreign cattle ' from browsing in Madhya Pradesh forests.
For the moment, it was forgotten that India is one country and no Indian is a foreigner in any of the constituent States of India.
The plan was this: The enabled the State Government to make rules to regulate the cutting of grass and pasturing of cattle in protected forests (Sec.
32(i) and, generally, to carry out the provisions of the Act (Sec. 76).
We may note here 'cattle ' as defined by section 2(i) includes buffaloes, sheep, goats and many other specie of browsing animals.
We may also note that we are concerned in this case with protected forests only and not reserved forests.
Rules had been made earlier by the Madhya Pradesh Government in 1974 called the Madhya 126 Pradesh Grazing Rates Rules, 1974 by which provision was made A for grazing licences, transit grazing licences, grazing rates and other subjects.
Rule 4 prohibited grazing in closed coupes, plantation area and such other areas as were declared as closed for grazing by the Divisional Forest officer.
Rule 3 provided for the issuance of licences for grazing in particular grazing units, each forest range being treated as a grazing unit till the constitution of such grazing units.
Rule S provided for the issuance of transit licences for transit of cattle through Government forests in the State of Madhya Pradesh, so that cattle in transit may not graze continuously for more than a month in a particular grazing unit.
Rule 6 prescribed grazing rates, commercial and transit.
For buffaloes it was Rs. 6 per head per year while for goats and sheep, it was Re. 1 per head per year whether it was for commercial or transit purposes.
Rule 7 prescribed grazing rates for 'foreign cattle of adjoining States '.
Whether the cattle grazed in the forest or passed through the forest, Grazing was permitted at the rate of Rs. 10 per head per year in the case of buffaloes and Rs. 2 per head per year in the case of goats and sheep.
In 1979, the rules made in 1974 were superseded and fresh rules were made.
They are the rules now in force.
Rule 2(5) bans grazing in reserved forests.
Rule 3 provides for the issue of grazing licences in grazing units so constituted.
Until grazing units are constituted, each forest range is to be treated as a separate grazing unit.
Rule 3(2) provides for the levy of grazing charges at rates to be notified from time to time.
Rule 4 prohibits grazing in closed coupes, plantation areas and other areas which are declared as closed for grazing by the Divisional Forest officer.
Rule 5 provides for transit grazing licences, on payment of grazing charges, for the transit of cattle through Government forests where the owners of the cattle are residents of Madhya Pradesh.
Cattle in transit, however, are not allowed to graze continuously in the same grazing unit for more than 30 days.
Rule 6 enables the Government to notify from time to time the rates of grazing charges and transit grazing charges payable by residents of Madhya Pradesh.
Rule 7 provides for the levy of grazing rates for 'foreign cattle of adjoining States '.
The rule enables the State Government to prohibit, restrict, or in their discretion to grant owners of cattle residing outside the State of Madhya Pradesh grazing or transit grazing facilities for their cattle on payment of charges to be notified from time to time.
Rule 7(2) further empowers the Government to specify the specific grazing areas, the points of entry and exit of the route to be followed by the cattle, 127 the period during which grazing or transit grazing should be completed, etc.
On June 28, 1979, two notifications one, under rule 6 and the other, under rule 7 were issued notifying the rates of charges for the issue of grazing and transit grazing licences.
In respect of cattle belonging to residents of Madhya Pradesh, the grazing rate is Re. 1 per year for each animal in the case of goats and sheep.
Nothing is to be charged in the case of buffaloes.
The notification issued under rule 7 prescribes the routes to be followed by the cattle of Rajasthan and Gujarat while in transit through the State of Madhya Pradesh.
It also stipulates that the owners of cattle must take the cattle through the State of Madhya Pradesh within a period of 45 days after the issue of licences.
The prescribed grazing rates are Rs. 10 per animal in the case of buffaloes and Rs. 5 per animal in the case of sheep and goats.
Apparently the Government of Madhya Pradesh wants to inhibit the influx of cattle of other States (described in the rules as 'foreign cattle ') by the method of charging higher grazing rates in their case than in the case of cattle belonging to the residents of Madhya Pradesh, This levy of higher rates, the prescription of the route to be followed by foreign cattle while in transit through Madhya Pradesh and the stipulation that the cattle must leave Madhya Pradesh in 45 days are questioned in these writ petitions.
It is contended that the petitioner 's Fundamental Rights under article 14 and article 19 (e) (f ) and (g) and the right under article 301 are contravened.
On the other hand, it is contended on behalf of State of Madhya Pradesh that the rules prescribing grazing rates for 'foreign cattle; the route to be followed by 'foreign cattle ' while in transit through Madhya Pradesh and the period for which 'foreign cattle ' may remain within the boundaries of the State of Madhya Pradesh are made to regulate the influx and passage of 'foreign cattle ' into and through Madhya Pradesh with a view to prevent devastation and to protect the forest wealth of State.
We are unable to see any rational basis for the distinction made between owners of cattle belonging to Madhya Pradesh and owners of cattle belonging to other States (described as owners of 'foreign cattle ') and the levy of prohibited grazing rates on owners of the so called 'foreign cattle '.
Forests of Madhya Pradesh are not grazing grounds reserved for cattle belonging to residents of Madhya Pradesh only even as the towns and villages of Madhya Pradesh cannot be reserved for the residents of the original residents 128 of Madhya Pradesh only.
Accidents of birth and geography cannot A furnish the credentials for such discrimination and authorise prejudicial treatment in matters of this nature.
We do not say that geographical classification is never permissible.
For example, a preference given by a State to its residents ill the matter of admission to educational institutions maintained by the State from its revenues may be well justified.
But we are unable to see any such justification for the levy of virtually penal grazing charges in the case of owners of cattle belonging to other States.
The only attempt at justification is that the influx of 'foreign cattle ' is resulting in the destruction of the forest wealth of the State.
It is difficult to understand this justification.
If cattle belonging to residents of Madhya Pradesh are allowed to graze, will it not lead to the same damage as by the cattle belonging to persons of other States ? Surely, it cannot be that the Madhya Pradesh cattle are less destructive than the cattle belonging to persons of other States.
Further if the object was to prevent all cattle from grazing in protected forests, such grazing could have been banned as in the case of reserved forests.
Even in the case of the so called foreign cattle, cattle belonging to owners who are rich, may yet have their cattle graze in the Madhya Pradesh forests but not cattle belonging to poorer graziers.
Further, subject to reasonable restrictions which may be imposed in the interests of the general public, a citizen has the right under our Constitution to move freely throughout the territory of India, to reside and settle in any part of the territory of India and to practise any profession, or to carry on any occupation trade or business.
Graziers, be they of Madhya Pradesh, Gujarat or Rajashthan, therefore, have the right to pass and repass through the State of Madhya Pradesh with their cattle in the pursuit of their occupation.
The right is, of course, subject to reasonable restrictions in the interests of the general public.
We are enable to discover any reasonable basis for classifying graziers into those belonging to Madhya Pradesh and those belonging to other States; nor are we able to discover any acceptable reason behind the restriction imposed on graziers of other States by the heavier charge made on them.
We are convinced that their is no justification whatsoever for charging higher grazing rates for cattle belonging to persons of other States.
In regard to the prescription of the route along which the cattle have to be taken while in transit, however we find nothing wrong with it, since the object is obviously to prevent cattle straying and causing indiscriminate damage to forests.
We are, however, unable to justify the ceiling of 45 days in which cattle must pass through the State of Madhya Pradesh.
In the case of 129 cattle belonging to residents of Madhya Pradesh, the grazing rate is levied for a period of one year.
There is no reason why the charge A should be levied for 45 days in the case of persons belonging to other States.
The apprehension that cattle, if allowed to graze in the same place for a long time, may destroy the pasture and foliage altogether is taken care of by the other rules which prescribe that the cattle may not graze in the same grazing unit for more than a month.
In the circumstances, we quash the levy of higher grazing rates in the case of cattle belonging to persons of States other than Madhya Pradesh and direct the respondents to levy the same rates as they do in the case of cattle belonging to residents of Madhya Pradesh.
The limit of stay of 45 days is also declared unconstitutional.
The writ petitions are allowed accordingly.
The petitioners will get their costs.
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With the purported object of inhibiting the influx of cattle belonging to owners of neighbouring States passing through the State of Madhya Pradesh, the State Government issued a notification under rule 7 of the M.P. Grazing Rates Rules, 1979 prescribing the route to be followed by such cattle (described as 'foreign cattle ') while in transit.
The notification also stipulated that 'foreign cattle should leave the State within a period of 45 days after the issue of the licence, that the owner should pay grazing charges of Rs. 10 per buffalo and Rs. 5 per goat or sheep for the period of transit.
A notification issued under rule 6, however, prescribed grazing charge of Re. 1 per year for each goat or sheep belonging to residents of the State of Madhya Pradesh.
No charge was prescribed in respect of buffaloes.
The petitioners, nomad graziers of Gujarat and Rajasthan who pass through the State of Madhya Pradesh with their cattle en routes to other neighbouring States, in their petitions under Article 32 of the Constitution contended that tile notification issued under rule 7 contravened their fundamental rights under Articles 14, 19 (1) (e), ( f ) and (g) and also their right under Article 301 of the Constitution and that therefore it was invalid.
Allowing the petitions, ^ HELD: There was no rational basis for the distinction made between owners of cattle belonging to Madhya Pradesh and owners of cattle belonging to other States and the levy of prohibited grazing rates on owners of 'foreign cattle '.
There was equally no justification in prescribing the ceiling of 45 days during which the cattle must pass through the State.
While in the case of cattle belonging to the residents of the State of Madhya Pradesh the levy was for one year there was no reason why the charge should be for 45 days in the case of cattle belonging to graziers of other States.
[127 G H, 128 A B] Under our Constitution a citizen has the right to move freely throughout the territory of India subject to reasonable restrictions.
To whichever State a grazier may belong, he has the right to pass and repass through the State of 125 Madhya Pradesh with his cattle in pursuit of his occupation.
Forests of the State are not the grazing grounds reserved for cattle belonging to residents of A that State only.
[128 D F] There was, however, nothing wrong in prescribing the route along which the cattle had to pass while in transit because its object was to prevent cattle straying and causing indiscriminate damage to forests.
[128 H]
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iminal Appeal No. 5 of 1963.
Appeal by special leave from the judgment and order dated June 21, 1962 of the Gujarat High Court in Criminal Appeal No. 383 of 1961.
D. R. Prem and B. R. G. K. Achar, for the appellant.
M. V. Goswami, for the respondent.
April 7, 1962.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
On June 21, 1960 at 5 50 A.M. the Hi Inspector of Factories, Bhavnagar, visited Saurashtra Metal and Mechanical Works, Wadhwan City, which is a factory within the meaning of section 2(m)(1) of the .
He found even workmen working on a machine and on examining the notice of period of work for adult workers and the register of workers he found that three of the workmen belonged to a group which was expected to begin work from 7 A.M. He commenced proceedings under section 63 of the against the respondent Mr. Kansara Manilal Bhikhalal as the occupier/manager of the factory, after issuing notice to him to show cause.
He asked for enhanced penalty under section 94 of the because the said Mr. Manilal Bhikhalal was convicted on a previous occasion in three cases.
As three workmen were concerned three separate complaints were filed in the Court of the Judicial Magistrate, First Class, Wadhwan City.
The defence of the respondent was that he was not the occupier and manager of the factory.
It may be pointed out that one Mr. Dangi and the respondent are partners.
They have another factory at Dharangadhra and the defence was that Mr. Bhikhalal was manager at the Dharangadhra factory 658 and Mr. Dangi was manager at Wadhwan.
Another defence.
was that a machine had gone out of order the previous day and after it was repaired work was started a little earlier the: next day, because production had suffered and goods were required.
The Inspector, it was stated, was informed by a letter (Ext.11) written on the 20th about the change of timing though the letter, unfortunately, did not reach the Inspector till the 22nd.
It was admitted that this change in the hours of work was not notified and displayed as required by section 61(1).
It was urged that section 61(10) permitted a change to be made in the system of work in a factory and as this provision was fully complied with, there was no offence.
The Judicial Magistrate did not accept these defences.
According to him, Mr. Dangi 's letter (Ext. 15) showed that the respondent was the occupier and the manager of the factory at Wadhwan.
On the second defence the Magistrate was of the opinion that the hours of work could not be changed without the permission of the Inspector of Factories under sub section
(10) of section 61.
The contention on behalf of the respondent that this being the first change it was not necessary to wait for one week before making another change, was not accepted because it was held that the factory manager must always wait for one week before introducing a change.
The respondent was, therefore, convicted under section 63 of the in respect of three offences and under section 94, enhanced punishment was imposed upon him by ordering him to pay a fine of Rs. 100 in respect of each offence.
On appeal the Sessions Judge of Surendranagar ordered the acquittal of the respondent.
The learned Sessions Judge held that the second part of section 61(10) applied to a case of second or subsequent change and this being the first change it did not fall within the second part.
According to the Sessions Judge, it fell in the first part of the sub section and the change could not be said to have been effected in breach of that part since the Inspector of Factories was informed about the change.
The learned Sessions Judge was also of the opinion that section 117 of the protected the action because it was bonafide.
The conviction and sentence were accordingly set aside.
The State of Gujarat appealed against the acquittal but was unsuccessful.
A Division Bench of the High Court which heard the appeal agreed with the Sessions Judge in his interpretation of section 61 (10) and did not express any opinion on section 117 of the Act.
In this appeal filed by special leave of this Court these two points have again arisen for our consideration.
The scheme of the bearing upon the present matter may now be examined.
It is convenient to do so 659 in the reverse order.
Section 92 is a section providing generally for penalties and section 94 provides for enhanced penalty after previous conviction.
These sections prescribe penalties for contravention of any of the provisions of the Act or of any rule made or of any order in writing given thereunder.
The breach here is stated to be of section 63 of the Act which lays down that the hours of work must correspond with notice required to be displayed under section 61 and the register directed to be maintained under section 62.
It provides: "section 63.
Hours of work to correspond with notice under section 61 and register under section 62 No adult worker shall be required or allowed to work in any factory otherwise than in accordance with the notice of periods of work for adults displayed in the factory and the entries made beforehand against his name in the register of adult workers of the factory.
" Section 61 deals with the notice of periods of work for adults.
It is divided into 10 sub sections of which sub sections
(1), (2) and (10) alone are relevant here.
They are as fol lows: "61.
Notice of periods of work for adults. (1) There shall be displayed and correctly maintained in every factory in accordance with the provisions of sub section (2) of section 108, a notice of periods of work for adults showing clearly for every day the periods during which adult workers may be required to work.
(2) The periods shown in the notice required by subsection (1) shall be fixed beforehand in accordance with the following provisions of this section, and shall be such that workers working for those periods would not be working in contravention of any of the provisions of sections 51, 52, 54, 55, 56 and 58.
(10) Any proposed change in the system of work in any factory which will necessitate a change in the notice referred to in sub section (1) shall be notified to the Inspector in duplicate before the change is made, and except with the previous sanction of the Inspector, no such change shall be made until one week has elapsed since the last change." 660 Section 62 next provides that a register of adult workers shall be maintained in which will be shown (a) name of each adult workers in the factory; (b) the nature of his work; (c) the group, if any, in which he is included; (d) where his group works on shifts, the relay to which he is allotted and (e) such be prescribed.
Section 51 to which second sub section of section 61, already hours week; section 52 refers to weekly fixes a maximum of 9 hours a day interval for rest and prescribes that exceed 5 hours at one stretch; section 56 fixes generally that the period of work and rest should be spread over 10 1/2 hours and section 58 prohibits the overlapping of shifts.
The Sessions Judge and the High Court concurred in holding that the provisions of sub section
(10) were complied with and there was thus no offence under section 63.
They treated this as a change in the system of work in the factory necessitating a change in the notice referred to in sub G. (1) and held that as the change was notified to the Inspector before it was made there was nothing illegal in employing the three workers before their shift commenced.
They also held that as this was the first change there was no need to wait for a week or to obtain the previous sanction of the Inspector as required by the latter part of the tenth sub section.
With due respect to the High Court, we do not agree that this sort of case is contemplated by the tenth :sub section.
That sub section speaks of "change in the system of work in any factory which will necessitate a change in the notice" and these words refer not to a departure from the notice but to a change in the system, a change which would require the notice to be recast.
The notice shows "the periods during which adult workers may be required to work" and these words are descriptive of the scheme of the employment of labour in the factory but are not apt to contemplate the time of employment for each individual worker.
That can only be found by referring to the register which goes with the notice.
Sub section
(1) makes no mention of the change in the register but of the change in the notice and thereby indicates that the change which is contemplated is an overall change affecting a whole group and not an individual worker.
The latter part of the sub section also points in the same direction because it implies that such changes should not be frequent and if the change is for the second time it should not be made until one week has elapsed since the last change.
This cannot possibly refer to a casual change in the hours of work of an individual worker.
661 The learned counsel sought to justify the action by referring to section 59 which provides that extra wages for over time shall be paid.
No such claim was made earlier in this case and justification was sought only from the provisions of sub section
(10) of section 61 and section 117 of the Act.
Section 59 cannot be considered in isolation: It has to be read with section 64, where the State Government has been given the power to make exempting rules '.
Under those rules a departure from the provisions of sections 51, 52, 55 and 56 can be made but only in accordance with the rules so framed; as for example, overtime work may be taken from workers engaged on urgent repairs in spite of the provisions of sections 51, 54, 55 and 56, but must be in accordance with rule 91 and the urgency which is referred to in this section and the rule is 'an urgency relating to the factory and not an urgency felt by the constituents of the factory '.
A departure from the hours of work as laid down in section 61(2) can only be made in those cases in which the exempting provisions of the rules cover the case and not otherwise.
It would, therefore, appear that the offence which was committed in the case was the employment of workers contrary to the notice displayed under section 61(1) without any justi fication by reason of any exempting provision.
The respon dent was not saved from the operation of section 63, which is peremptory, by reason of anything contained in sub section
(10) and the sending of the letter to the Inspector of Factories was therefore mis conceived.
It was contended before us that the respondent was not the occupier/manager of the factory and, in any event, section 117 of the Act protected him because he was not present there and his action was bonafide.
A: , to the first part of this argument it is sufficient to say that the Magistrate found that he was the occupier and manager.
The letter of Mr. Dangi (Ext. 15) quite clearly establishes this.
The argument under, section 117 of the Act requires a more detailed consideration.
That section reads as follows: "17.
Protection to persons acting under this Act.
No suit, prosecution or other legal proceeding.
shall lie against any person for anything which is in good faith done or intended to be done under this Act.
" It is argued by Mr. M. V. Goswami on the authority of cases about to be mentioned that this section gives protection against prosecution in respect of anything which is done in good faith under the Act.
He referred us to two decisions of 662 Thomas, C. J. in Ranjit Singh vs Emperor(1) and Ranjit Singh vs Emperor,(2) in which the learned Chief Justice observes that the language of section 117 is not limited to the inspecting staff but is wide enough to include occupiers, managers, foremen, workers etc.
Mr. Goswami also refers to two decisions of the Andhra Pradesh High Court in Public Prosecutor vs Mangaldas Thakker(3) and In re.
P. Lakshmaiah Naidu(1) in which the same view has been expressed.
Mr. D. R. Prem on behalf of the State of Gujarat relies on The Public Prosecutor vs Vattem Venkatramayya(5) and Provincial Government, C.P. and Berar vs Seth Chapsi Dhanji Oswal Bhate and Anr(6).
Reference was also made to Superinte dent and Remembrancer of Legal Affairs, Bengal vs H. E. Watson(7).
It is not necessary to refer to the lines of reasoning adopted in these cases.
The language of this protecting clause is not limited to officers but is made wide to include "any person".
It thus gives protection not only to an officer doing or intending to do something in pursuance or execution of this Act but also to "any person".
But the critical words are "any thing * * * done or intended to be done" under the Act.
The protection conferred can only be claimed by a person who can plead that he was required to do or omit to do something under the Act or that he intended to comply with any of its provisions.
It cannot confer immunity in respect of actions which are not done under the Act but are done contrary to it.
Even assuming that an act includes an omission as stated in the General Clauses Act, the omission also must be one which is enjoined by the Act.
It is not sufficient to ,say that the act was honest.
That would bring it only within the words "good faith".
It is necessary further to establish that what is complained of is something which the Act requires should be done or should be omitted to be done.
There must be a compliance or an intended compliance with a provision of the Act, before the protection can be claimed.
The section cannot cover a case of a breach or an intended breach of the Act however honest the conduct otherwise.
In this connection it is necessary to point out, as was done in the Nagpur case above referred to, that the occupier and manager are exempted from liability in certain cases men tioned in section 101.
Where an occupier or a manager is charged (1) A.I.R. (1943) Oudh 308.
(2) A.I.R. (1943) Oudh 311.
(3) A.I.R. (1958) Andh.
Pra. 79.
(4) I.L.R. (5) A.I.R. (1963) Andh.
Pra. 106).
(6) I.L.R. (1938) Nag. 408.
(7) 663 with an offence he is entitled to make a complaint in his own turn against any person who was the actual offender and on proof of the commission of the offence by such person the occupier or the manager is absolved from liability.
This shows that compliance with the peremptory provisions of the Act is essential and unless the occupier or the manager brings the real offender to book he must bear the responsibility.
Such a provision largely excludes the operation of section 117 in respect of persons guilty of a breach of the provisions of the Act.
It is not necessary that means rea must always be established as has been said in some of the cases above referred to.
The responsibility exists without a guilty mind.
An adequate safeguard, however, exists in section 101 analysed above and the occupier and manager can save themselves if they prove that they are not the real offenders but who, in fact, No such defence was offered here.
For these reasons we are of the opinion that the respondent is not saved by section 117.
We, accordingly, set aside his, acquittal and convict him under section 63 read with section 94 of the .
He is ,sentenced to pay a fine of Rs. 501/ in respect of each of the offences, or in default to undergo 15 days ' simple imprisonment.
|
On inspection three of the workmen were found working in a factory before their shift commenced.
It was stated that the Inspector of Factories was informed by a letter written a day prior to this inspection about the change of the timing though the letter did not reach the Inspector till the day after the inspection.
This change in the hours of work was not notified and displayed as required by section 61(1) of the .
The respondent as the occupied/manager of the factory was convicted under section 63 of the Act.
On appeal, the Sessions Judge acquitted the respondent holding that the second part of section 61(10) of the Act applied to a case of second or subsequent change in the system of work in a factory and this being the first change there was no need to wait for a week or to obtain the previous sanction of the Inspector as required by the later part of section 61(101), and further section 117 of the Act protected the action because it was bonafide.
The State appealed to the High Court which agreed with the Sessions Judge in his interpretation of section 61(10) but expressed no opinion on section 117 of the Act and it dismissed the appeal.
On appeal by special leave: Held: (i) The respondent was not saved from the opera tion of section 63 which is peremptory, by reason of anything contained in section 61(10) and the sending of the letter to the Inspector of Factories was therefore misconceived.
The words "change in the system of work in any factory which will necessitate a change in the notice" in section 61(10) refer not to departure from the notice but to a change in the system, a change which would require the notice to be recast.
The notice shows "the period during which adult workers may be required to work" and these words are descriptive of the scheme of employment of labour in the factory but are not apt to contemplate the time of employment for each individual worker.
That can only be found by referring to the register which goes with the notice.
Sub section (1) makes no mention of the change in the register but of the change in the notice and thereby indicates that the change which is contemplated is an over all change affective to a whole group and not an individual worker.
The latter part of the sub section also points in the same direction because it implies that such changes should not be frequent and if the change is for the second time it should not be made until one week has.
elapsed since the last change.
(ii) The language of section 117 of the Act is not limited to officers but is made wide to include "any person".
The protection conferred can only be claimed by a person who can plead that he was required to do or omit to do something under the Act or that he intended to comply with any of its provisions.
It cannot confer immunity in respect of actions which are not done under the Act but are done contrary to it.
657 (iii) The occupier and manager, are exempted from liabi lity in certain cases mentioned in section 101.
Where an occupier or a manager is charged with an offence he is entitled to make a complaint in his own turn against any person who was the actual offender and on such proof the occupier or the manager is a solved from liability.
This shows that compliance with the peremptory provisions of the Act is essential and unless the occupier or the manager brings the real offender to book he must bear the responsibility.
It is not necessary that means rea must always be established.
The responsibility exists without a guilty mind.
Ranjit Singh vs Emperor, A.I.R. (1943) Oudh 308, Ranjit Singh vs Emperor, A.I.R. (1943) Oudh 311, Public Prosecutor vs Mangaldas Thakkar, A.I.R. , In re P. Lakshmaiah Naidu, I.L.R. , Public Prosecutor vs Vattem Venkatramayya, A.I.R. 1963.
Pra. 106, Provincial Government C.P. and Berar vs Seth Chapsi Dhanji Oswal Bhate and Anr.
I.L.R. and Superintendent and Remembrancer of Legal Affairs, Bengal vs H. E. Watson, , referred to.
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TION: Criminal Appeal No. 672 of 1989.
From the Judgment and Order dated 16.2.1988 of the Madras High Court in Crl.
Petition No. 12389 of 1987.
R. Mohan and R.A. Perumal for the Appellant.
R.K. Jain, Mrs. Aruna Mathur and A. Mariarputham for the Respondents.
The Judgment of the Court was delivered by M. FATHIMA BEEVI, J.
Special Leave granted.
The appellant married the first respondent on 29.4.
They lived together until 1982 and have two children.
They separated and the legal battle commenced in 1983.
The first respondent moved the City Civil Court for divorce.
The appellant instituted criminal complaint in the court of the Metropolitan Magistrate.
The complaint was taken cognizance of for offences under Sections 494, 496, 498 A, 112, 114, 120, 120 B and 34 IPC against the respondents.
It was al leged that the first respondent married the second respond ent while the proceedings for decree of divorce were still pending, the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
On the application of the first respondent the High Court by the impugned order quashed the proceedings before the Metropolitan Magistrate.
Hence the appeal.
Section 482 of the Code of Criminal Procedure empowers the High Court to exercise its inherent powers to prevent abuse of the process of Court.
In proceedings instituted on complaint exercise of the inherent power to quash the pro ceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482.
It is not, however, necessary that there should be a meticu lous analysis of the case, before the trial to find 167 out whether the case would end in conviction or not.
The complaint has to be read as a whole.
If it appears on a consideration of the allegations, in the light of the state ment on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexa tious.
in that event there would be no justification for interference by the High Court.
The High Court without proper application of the princi ples that have been laid down by this Court in Sharda Prasad Sinha vs State of Bihar, ; ; Trilok Singh and Others vs Satya Deo Tripathi, [1980] 86 CRL.
LJ 882 AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala and Others, ; proceeded to analyse the case of the complainant in the light of all the probabilities in order to determine whether a conviction would be sustainable and on such premises arrived at a conclusion that the proceedings are to be quashed against all the respondents.
The High Court was clearly in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
We find there are spe cific allegations in the complaint disclosing the ingredi ents of the offence taken cognizance of.
It is for the complainant to substantiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the complaint is frivolous when the complaint does disclose the commission of an offence there is no justification for the High Court to interfere.
We, therefore, allow the appeal, set aside the impugned order and direct that the proceedings before the Magistrate shall be restored and disposed of in accordance with the law.
P.S.S. Appeal allowed.
|
The criminal complaint instituted by the appellant was taken cognizance of by the Magistrate for offences under sections 494, 496,498 A, 112, 114, 120, 120 B and 34 IPC.
It was alleged that the first respondent had married the second respondent while the proceedings for decree of divorce were still pending, and that the marriage was performed secretly in the presence of respondent Nos. 3 to 6.
The High Court, however, on the application of the first respondent quashed the proceedings before the Magistrate.
Allowing the appeal by special leave, HELD: The High Court was in error in assessing the material before it and concluding that the complaint cannot be proceeded with.
[167C D] In proceedings instituted on complaint exercise of the inherent power under section 482 of the Code of Criminal Proce dure by the High Court to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive.
It is not necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not.
The complaint has to be read as a whole.
[166G; 167A] In the instant case, there were specific allegations in the complaint disclosing the ingredients of the offence taken cognizance of.
It was for the complainant to substan tiate the allegations by evidence at a later stage.
In the absence of circumstances to hold prima facie that the com plaint was frivolous there was no jurisdiction for the High Court to interfere.
[167D E] Sharda Prasad Sinha vs State of Bihar, ; ; Trilok 166 Singh & Ors.
vs Satya Deo Tripathi, AIR 1979 SC 850 and Municipal Corporation of Delhi vs Purshotam Dass Jhunjunwala
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Appeal No. 408 of 1957.
Appeal by Special Leave from the Judgment and Order dated the 28th September, 1955, of the former Bombay High Court in Income tax Reference No. 5 of 1955.
Sanat P. Mehta, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant.
A. N. Kripal, R. H. Dhebar and D. Gupta, for the respondent.
October 18.
The Judgment of the Court was delivered by SHAH J.
To the appellant who was a non resident for the purposes of the Indian Income Tax Act, 1922, had accrued in the assessment years 1943 44, 194445, 1946 47 and 1947 48 certain dividend income within the taxable territory of British India, but the appellant did not submit returns of his income for those assessment years.
In exercise of his powers under section 34 of the Indian Income Tax Act, 1922, the Income Tax Officer, Bombay City, served upon the appellant notices under section 34 read with s, 22(2) of the Act for assessment of tax in respect of those years.
The notice for the year 1943 44 was served on the appellant on March 27, 1952, for the year 1944 45 on February 16, 1953, for the year 1946 47 on April 4, 1951 and for the year 1947 48 on April 2, 1952.
The Income Tax Officer completed the assessments in respect of the years 1943 44, 1944 45 and 1947 48 on May 6, 1953 and for the year 1946 47 on March 19, 1952.
The orders of assessment were confirmed by the Appellate Assistant Commissioner and by the Income Tax Appellate Tribunal.
At the instance of 37 the appellant, the Income Tax Appellate Tribunal drew up a statement of the case under section 66(1) of the Income Tax Act and submitted to the High Court of Judicature at Bombay the following two questions: (I).
Whether the notices issued under section 22(2) of the Act read with section 34 of the Act for the assessment years 1943 44, 1944 45, 1946 47 and 1947 48 were served after the period of limitation prescribed by section 34 of the Act? (2) If the answer to Question No. 1 is in the affirmative, whether the assessments for the years in question were invalid in law? The High Court answered the first question in the negative and observed that on that answer, the second question " did not arise ".
With special leave under article 136 of the Constitution, this appeal is preferred by the appellant against the order of the High Court.
The only question which falls to be determined in this appeal is whether the proceedings for assessment were commenced within the period of limitation prescribed for serving notice of assessment under section 34(1)(a) of the Act.
At the material time, by section 34 (1)(a), the Income Tax Officer was invested with power amongst others to serve at any time within eight years from the end of any year of assessment notice of assessment if he had reason to believe that income, profits or gains had escaped assessment by reason of omission or failure on the part of the assessee to make a return of his income under section 22 for that year, or to disclose fully and truly all material facts necessary for his assessment of that year.
In those cases where the Income Tax Officer had in consequence of information in his possession reason to believe that income, profits or gains had escaped assessment even though there was no omission or failure as mentioned in el.
(a), he could under cl.
(b) within four years from the end of the year of assessment serve a notice of assessment.
Admittedly, the notices issued by the Income Tax Officer for the years in question were issued within eight years from the end of the years of assessment and if el.
(1)(a) of section 34 applied, the assessment was not barred by the law of limitation.
38 But the appellant contended that the notices for assessment were, even though he had not made a return of his income for the years in question, governed not by cl.
(1)(a) of section 34, but by cl.
(1)(b) of section 34.
He contended that being a resident outside the taxable territory in the years of , assessment, a general notice under section 22(1) did not give rise to a liability to submit a return, and his inaction did not amount to omission or failure to submit a return, inviting the applicability of section 34(1)(a).
He submitted that omission or failure to make a return can only arise qua a non resident, if no return is filed after service of an individual notice under section 22(2).
In other words, the plea is that a notice under section 22(1) imposes an obligation upon persons resident within the taxable territory and not upon non residents, and support for this argument is sought to be obtained from section 1 sub section
(2) which extended the Income Tax Act at the material time to British India.
The expression " every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income tax " in section 22(1) includes all persons who are liable to pay tax and there is nothing in the section or in its context which exempts non residents from liability to submit a return pursuant to a notice thereunder.
The fact that a non resident assessee may not come to know of the general notice issued under section 22(1) is not a ground for not giving effect to the plain words used in the section.
In terms, the clause read with r. 18 requires every person who has taxable income to submit his return, and if he fails to do so, under section 34 of the Act the Income Tax Officer may commence proceedings for assessment within the period prescribed by cl.
(1)(a).
Section 34(1)(b) applies only to those cases where there is no omission or failure to make a return of the income or to make a full and true disclosure of facts material to the assessment.
To the appellant though non resident income bad admittedly accrued in the taxable territory and that income exceeded the maximum amount not chargeable to income tax.
, The appellant not having submitted a return in pursuance of the notice issued under section 221 the Income Tax 39 Officer was competent under section 34(1)(a) to issue notice at any time within eight years of the end of the year of assessment for assessing him to tax.
Once a notice is given by publication in the press and in the prescribed manner under section 22(1), every person whose Th.
income exceeds the maximum amount exempt from tax is obliged to submit a return and if he does not do so, it will be deemed that there was omission on his part to a make a return within the meaning of section 34(1)(a).
There is no warrant for the submission that section 22(1) applies to residents only and that an obligation to make a return on the part of a nonresident can only arise if a notice under sub section
(2) is served.
Under sub section
(2) it is open to the Income Tax Officer to serve a special notice upon any person requiring him to furnish a return in the prescribed form, but that provision does not derogate from the liability arising under sub section
(1) to submit a return.
The Income Tax Act extends by section 1(2) to the taxable territory and not beyond; but within that territory, the Income Tax Officer has power to tax income which accrues, arises or is received, and that is not disputed by the appellant.
If power to tax be granted, it is difficult to appreciate the ground on which the plea that the general provision imposing liability upon persons receiving taxable income is subject to an unexpressed limitation that it is to apply only to residents and not to non residents.
The submission that a person liable to pay tax but resident outside the taxable territory must be served with a special notice under section 22(2) before his inaction in the matter of making a return may be deemed omission within the meaning of section 34(1) is without force.
There is no such express provision made by the statute and none can be implied from the context.
The High Court was therefore right in holding that the proceedings for assessment were properly commenced within the period of limitation prescribed by section 34(1)(a) from the close of the year of assessment.
The appeal fails and is dismissed with costs.
Appeal dismissed.
|
The appellant, a non resident for the purposes of the Indian Income tax Act, did not submit returns of certain dividend income accruing to him within the taxable territory.
The Income tax Officer served upon him notices under section 34 read with section 22(2) of the Act for assessment of tax in respect of those years.
The notices in question were issued within eight years from the end of the years of assessment and were within the period prescribed by section 34(i)(a).
The appellant contended that notices for assessment were governed by cl.
(i)(b) of section 34 and not by cl.
(i)(a), even though the appellant had not made a return of his income for the years in question as a general notice under section 22(1) did not give rise to a liability to submit a return and his inaction did not amount to omission or failure to submit a return as he was a non resident, and the assessment proceedings were barred by limitation.
Held, that the expression "every person " in section 22 (1) of the Indian Income tax Act, 1922, includes all persons who are liable to pay tax and non residents are not exempted from liability to submit a return pursuant to the general notice thereunder.
Once a notice is given by publication in the prescribed manner under section 22(i), every person whether resident or non resident whose income exceeds the maximum amount exempt from tax is obliged to submit a return and if he does not do so, 36 it will be deemed that there was omission on his part to make a return within the meaning of section 34(i)(a) of the Indian Income tax Act.
Section 34(1)(b) applied only to those cases where there was no omission or failure to make a return of the income or to make a full and true disclosure of facts material to the assessment.
In the instant case the proceedings for assessment were pro perly commenced within the period of limitation prescribed by section 34(1)(a).
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975.txt
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Appeal No. 874 of 1962.
Appeal from the judgment and order dated January 15, 1962, of the Madras High Court in Writ Appeal No. 82 of 1959.
A. V. Viswanatha Sastri, G. B. Pai and B. N. Ghosh, for the appellant.
267 B. R. Dolia, M. Rajagopalan and K. R. Chaudhuri, for the respondents.
August 2, 1963.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
The principal question which arises in this appeal relates to the true scope and effect of the provisions contained in section 73 of the (hereinafter called the Act).
The appellant, the Buckingham & Carnatic Co. Ltd., is a company registered under the Indian Companies Act and its registered office is at Madras.
It has a Textile Mill in Madras City which employs 14,000 workmen.
On January 10, 1957, the respondent Venkatiah whose case is sponsored by the respondent Union, the Madras Labour Union, had gone on leave for six days.
Taking into account the intervening holidays, the said leave expired on January18, 1957.
He, however did not join duty on the 19th January as he should have, but remained absent without leave without sending to the appellant any communication for extending his leave.
On the 11th March 1957 he sent a letter to the appellant stating that sometime after reaching his village near Kanigiri he suffered from fever and dysentery and was treated by the Civil Assistant Surgeon, Kanigiri.
This letter was accompanied by a certificate issued by the said Civil Assistant Surgeon.
In this certificate it was stated that Venkatiah suffered from chronic malaria and dysentery from January 15 to, March 7, 1957.
When he appeared before the Manager of the Company, he was asked to go to the Senior Medical Officer of the appellant for examination.
The said Officer examined him and was unable to confirm that he had been ailing for a period of nearly two months.
Acting on that opinion ' the appellant refused to take back Venkatiah and when Venkatiah pressed to be taken back, the appellant informed him on March 23, 1957 that he could not be reinstated as his explanation for his absence was un satisfactory.
The case of Venkatiah was treated by the appellant under Standing Order No. 8(ii) of the Standing Orders of the appellant.
Meanwhile, Venkatiah had applied to the Employees State Insurance Corporation and on or about the 15th June 1957 he obtained cash sickness benefit for the period covered by the medical certificate issued.
by the Civil Assis 268 tant Surgeon, Kanigiri.
The Regional Director to whom Venkatiah had applied for the said assistance accepted the said certificate as alternative evidence and directed that payment may be made to him to the extent permissible under the Act.
Accordingly, Rs. 82 14 00 were paid to him.
When the appellant refused to take back Venkatiah in its employment, the respondent Union took up his case and it was referred for adjudication to the Labour Court at Madras as an industrial dispute (S.P.O. No. A 5411 of 1958).
Before the Labour Court the appellant urged that the reference made was invalid and it also contended that the termination of Venkatiah 's services was 'Justified.
The Labour Court rejected the appellants preliminary object ion about the invalidity of the reference.
It held that if the matter had to be considered solely by reference to the Standing Orders, the appellant was entitled to succeed, because it was justified in acting upon the opinion given by its Medical Officer in regard to the alleged illness of Venkatiah.
When the said opinion was attacked before the Labour Court, it observed that it was easy to make, such an attack and it held that "he was not inclined to accept the correctness of the criticism in the a absence of any strong evidence to show that the Medical Officer was prejudiced against the worker and was motivated with the idea of victimisation".
The respondent, however, succeeded before the Labour Court primarily on the ground that the decision of the appellant not to take back Venkatiah was inconsistent with the provisions of section 73 of the Act.
That is why the Labour Court directed the management of the appellant to reinstate Venkatiah within two weeks after its award came into force without liability to pay back wages, but with continuity of service.
After this award was pronounced by, the Labour Court, the appellant moved the Madras High Court by 2 writ petition and prayed that the said award be quashed (W.P. No. 716 of 1958).
This writ petition was allowed by Mr. Justice Balkrishna Ayyar.
The learned Judge held that section 73 of the Act was inapplicable to the present case and found that, in substance, the labour court had made its award on grounds of sympathy for Venkatiah rather than on the merits of the case.
In the result, the said 269 award was set aside by the learned judge.
The respondent challenged the correctness of this decision by a Letters Patent Appeal before a Division Bench of the Madras High Court (No. LPA 82 of 1959).
The respondent 's appeal was allowed by the Division Bench and in consequence, the award passed by the Labour Court has been restored.
The Division Bench has held that section 73 applied to the present case and that made the refusal of the appellant to take back Venkatiah in its employment illegal.
It has also observed that in refusing to take back Venkatiah the appellant had not properly discharged its obligation of examining Venkatiah 's explanation reasonably and that introduced an infirmity in its decision not to take him back.
In ,other words, according to the Division Bench, the action of the management amounted to contravention of the provisions of section 73 of the Act and was otherwise not fair.
It is against this decision that the appellant has come to this Court with a certificate issued by the Madras High Court under article 133(1)(c) of the Constitution.
Mr. Sastri for the appellant contends that the case of Venkatiah falls squarely within the provisions of Standing Order 8(ii) and the High Court was in error in holding that the decision of the appellant in refusing to condone the absence of Venkatiah was either unfair or improper, or that it contravened the provisions of section 73 of the Act.
Let us first examine Standing Order No. 8(ii) before proceeding any further.
The said Standing Order reads thus: "Absent without Leave: Any employee who absents himself for eight consecutive working days without Leave shall be deemed to have left the Company 's service without notice thereby terminating his contract of service.
If he gives an explanation to the satisfaction of the management, the absence shall be converted into leave without pay or dearness allowance.
Any employee leaving the Company 's service in this manner shall have no claim for re employment in the Mills.
But if the absence is proved to the satisfaction of the Management to be one due to sickness, then such absence shall be converted into medical leave for such period as the employee is eligible with the permissible allowances.
" 270 This Standing Order is a part of the certified Standing Orders which had been revised by an arbitration award between the parties in 1957.
The relevant clause clearly means that if an employee falls within the mischief of its first part, it follows that the defaulting employee has ter minated his contract of service.
The first provision in clause (ii) proceeds on the basis that absence for eight consecutive days without leave will lead to the inference that the absentee workman intended to terminate his contract of service.
The certified Standing Orders represent the relevant terms and conditions of service in a statutory form and they are binding on the parties at least as much, if not more, as private contracts embodying similar terms and conditions of service.
It is true that under common law an inference that an employee has abandoned or relinquished service is not easily drawn unless from the length of absence and from other surrounding circumstances an inference to that effect can be legitimately drawn and it can be assumed that the employee intended to abandon service.
Abandonment or relinquishment of service is always a question of intention, and normally, such an intention cannot be attributed to an employee without adequate evidence in that behalf.
But where parties agree upon the terms & conditions of service and they are included in certified Standing Orders, the doctrines of common law or considerations of equity would not be relevant.
It is then a matter of construing the relevant term itself.
Therefore, the, first part of Standing Order 8(ii) inevitably leads to the conclusion that if an employee is absent for eight consecutive days without leave, he is deemed to have terminated his contract of service and thus relinquished or abandoned his employment.
The latter part of this clause, however, provides that the employee can offer an explanation as to his absence and if Ms explanation is found to be satisfactory by the management, his absence will be converted into leave without pay or dearness allowance.
Now this clause is in substance a proviso to its first part.
Before effect is given to the inference of relinquishment of service which arises from the first part of the clause, an opportunity is given to the employee to offer an explanation and if the said explanation is treated as satisfactory by the management, 271 the inference of termination of contract of service is rebutted and the leave in question is treated as leave without pay or dearness allowance.
This latter clause obviously postulates that if the explanation offered by the employee is not found to be satisfactory by the management, the inference arising from the first part prevails and the employee shall be deemed to have terminated his contract of service with the result that the relationship of master and servant between the parties would be held to have come to an end.
With the remaining part of the said Standing Order we are not concerned in this appeal.
It is true that absence without leave for eight consecutive days is also treated as misconduct under cl.
13(f) of the Standing Orders.
The said clause refers to the said absence and habitual absence without leave.
In other words, the position under the Standing Orders appears to be that absence without leave for more than eight consecutive days can give rise to the termination of the contract of service either under Standing Order 8(ii) or may lead to the penalties awardable for misconduct after due enquiry is held as required by the relevant Standing Order.
The fact that the same conduct is dealt with in two different Standing Orders cannot affect the applicability of S.O. 8(ii) to the present case.
It is not as if the appellant is bound to treat Venkatiah 's absence as constituting misconduct under S.O. 13(f) and proceed to hold an enquiry against him before terminating his services.
Dismissal for misconduct as defined under S.O. 13 may perhaps have different and more serious consequences from the termination of service resulting from S.O. 8(ii).
However that may be, if S.O. 8(ii) is applicable, it would be no answer to the appellant 's case under S.O. 8(ii) to say that S.O. 13(f) is attracted.
This position is not seriously in dispute.
The High Court appears to have taken the view that the appellant did not act fairly in rejecting Venkatiah 's case that he was ill and in refusing to act upon the certificate produced by him in support of his case.
It is necessary, in the first instance, to examine the correctness of this con clusion.
As we have already indicated, the Civil Assistant Surgeon no doubt certified on March 7, 1957 that Venkatiah had suffered from chronic dysentery from janu 272 ary 15 to March 7, 1957, and he added that he was then completely free from the ailments and was in a fit state of health to join duty on the 9th March 1957.
Incidentally, the certificate has been granted at the end of the treatment and specifically avers that he was fit enough to join on March 9, 1957.
When Venkatiah was examined by the Medical Officer of the appellant on the 22nd March 1957, thr Medical Officer was unable to confirm that he was ill for a period of nearly two months.
The High Court has criticised this certificate as being vague.
In our opinion, by this certificate the Medical Officer politely suggests that having regard to the opinion which he formed on examining Venkatiah on March 22, he was unable to confirm the certificate issued by the Civil Assistant Surgeon.
What struck the High Court as vague in the certificate is obviously the result of the desire of the appellant 's Medi cal Officer to observe professional courtesy in dealing with the certificate on which Venkatiah relied.
Apart from I this aspect, however, we do not see how it was open to the High Court to consider the propriety of the conclusion reached by the Labour Court on this point.
We have already noticed that the Labour Court has specifically repelled the criticism made by the respondent against the conduct of the appellant 's Medical Officer and has held that if the matter had fallen to be considered only in the light of Standing Order 8(ii), the appellant would have succeeded.
That being so, it is not easy to see how the respondent 's grievance against the said finding of the Labour Court could have been properly upheld by the High Court in exercising its writ jurisdiction under article 226 of the Constitution.
Whether or not the appellant should have accepted the certificate of the Civil Assistant Surgeon was primarily for the appellant to consider.
It is significant that there is no allegation about mala fides in this case, and so, we do not think that the High Court was justified in making a finding against the appellant on the ground that the appellant had not discharged its obligation under the Standing Orders of properly considering the explanation of Venkatiah in regard to his absence.
The High Court was apparently aware of this position and so, it has stated in the course of its judgment that it would rest its decision on what it regarded to be the effect of 273 section 73 "even assuming that the discharge of the worker in the instant case was automatic by virtue of the operation of Standing Order 8(ii), and so, it is to this part of the case that we must now turn.
Before doing so, however, we may refer to the argument urged before us by Mr. Dolia for the respondent that it would be anomalous if it is open to the appellant to reject Venkatiah 's case that he was ill during the relevant period when the said case had been accepted by the Corporation when it gave him relief under section 73 and the regulations framed under the Act.
Mr. Dolia relies on the fact that Venkatiah satisfied the relevant authorities administering the provisions of the Act that he was ill during the relevant period, and had, in fact, been given assistance on that basis, so that for the purposes of the Act he is held to be ill during that period, and yet the appellant for the purpose of Standing Order 8(ii) holds that Venkatiah was not ill.
during the same period.
It could not be the intention of the legislature to allow such a glaring anomaly to prevail, says Mr. Dolia, and so, he suggested that the appellant was bound to hold that Venkatiah was ill during the relevant period, having regard to the fact that his illness had been accepted by the relevant authorities under the Act.
This argument is no doubt, prima facie, attractive, but before accepting it, it would be necessary to find out whether there is any specific provision in the Act which compels the appellant to accept the view taken by the relevant authority under the Act when it decided to give assistance to Venkatiah.
Section 73 of the Act reads asunder : "Employer not to dismiss or punish employee during period of sickness, etc. (1)No employer shall dismiss, discharge, or reduce or otherwise punish an employee during the period the employee is in receipt of sickness benefit or maternity benefit, nor shall he, except as provided under the regulations, dismiss, discharge or reduce or otherwise punish an employee during the period he is in receipt of disablement benefit for temporary disablement or is under medical treatment for sickness or is absent from work as a result of illness duly certified in accordance with the regulations to arise out 274 of the pregnancy or confinement rendering the employee unfit for work.
(2)No notice of dismissal or discharge or reduction given to an employee during the period specified in sub section (1) shall be valid or operative." Mr. Dolia contends that since this Act has been passed for conferring certain benefits on employees in case of sickness, maternity and employment injury, it is necessary that the operative provisions of the Act should receive a liberal and beneficent construction from the court.
It is a piece of social legislation intended to confer specified benefits on workmen to whom it applies, and so, it would be inappropriate to attempt to construe the relevant provisions in a technical or a narrow sense.
This position cannot be disputed.
But in dealing with the plea raised by Mr. Dolia that the section should be liberally construed, we cannot overlook the fact that the liberal construction must ultimately flow from the words used in the section.
If the words used in the section are capable of two constructions one of which is shown patently to assist the achievement of the object of the Act, courts would be justified in preferring that construction to the other which may not be able to further the object of the Act.
But, on the other hand, if the words used in the section are reasonably capable of only one construction and are clearly intractable in regard to the construction for which Mr. Dolia contends, the doctrine of liberal construction can be of no assistance.
Mr. Dolia 's suggestion is that the general policy of section 73 is to prevent dismissal, discharge, reduction or other punishment being imposed or,.
an employee who is ill if it is shown that he has received sickness benefit.
There are other cases mentioned in this section to which it is not necessary to refer for the purpose of dealing with Mr. Dolia 's argument.
According to Mr. Dolia, the operation of section 73 is confined to cases of illness for instance, and it prohibits the imposition of any penalty wherever it is shown that in respect of the illness in question, the employee has received sickness benefit.
In the present case, the employee has received sickness benefit, and so, for the said sickness, no penalty can be imposed on him.
That, in brief, is the contention which Mr. Dolia has pressed 275 before us.
On the other hand, Mr. Sastri argues that the words used in the section are capable of only one construction.
The section merely prohibits any punitive action being taken against the employee during the period of his illness, and he urges that the prohibition is not confined to punitive action in respect of illness alone but extends to punitive action in respect of all kinds of misconduct whatever.
What the section says is, during the period that the employee is ill, no action can be taken against him whatever may be the cause for the said action.
Mr. Sastri also contended that the clause "during the period the employee is in receipt of sickness benefit" can cover the period during which the sickness benefit is actually received by him, and so, he suggests that since during the period of Venkatiah 's illness itself no sickness benefit had been received by him, section 73(i) is wholly inapplicable.
We are not impressed by this argument.
In our opinion, the clause "during the period the employee is in receipt of sickness benefit" refers to the period of his actual illness and requires that for the said period of illness, sickness benefit should have been received by him.
It is quite clear that in a large majority of cases, sickness benefit would be applied for and received by the employee after his sickness is over, and so, to hold that the period there referred to is the period during which the employee must be ill and must also receive sickness benefit, would make the section wholly unworkable.
That is why we do not think that the limitation which Mr. Sastri seeks to introduce by suggesting that sickness benefit must be paid during the course of illness itself, can be read into the section.
Even so, what is the effect of section 73(1) ? In considering this question, it would be useful to take into account the provisions of sub section
This sub section provides that no notice given to an employee during the period specified in sub section
(i) shall be valid or operative.
Thus, it is clear that the giving of the notice during the specified period makes it invalid, and it is remarkable that the notice is not in regard to dismissal, discharge or reduction in respect of sickness alone, but it includes all such notices issued, whatever may be the misconduct justifying them.
Thus, 276 there can be no doubt that the punitive action which is prohibited by section 73(1) is not confirmed to punitive action proceeding on the basis of absence owing to sickness; it is punitive action proceeding on the basis of all kinds of misconduct which justifies the imposition of the penalty in question.
What section 73(1) prohibits is such punitive action and it limits the extent of the said prohibition to the period during which the employee is ill.
We are free to confess that the clause is not very happily worded, but it seems to us that the plain object of the clause is to put a sort of a moratorium against 211 punitive actions during the pendency of the employee 's illness.
If the employee is ill and if it appears that he has received sickness benefit for such illness, during that period of illness no punitive action can be taken against him.
That appears to us to be the effect of that part of section 73(1) with which we arc concerned in the present appeal.
If that be so, it is difficult to invoke section 73 against the appellant, because the termination of Venkatiah 's services has not taken place during the period of his illness for which he received sickness benefit.
There is another aspect of this question to which it is necessary to refer.
Section 73(1) prohibits the employer from dismissing, discharging, reducing or otherwise puni shing an employee.
This seems to suggest that what is prohibited is some positive act on the part of the employer, such as an order passed by him either dismissing, discharg ing or reducing or punishing the employee.
Where ter mination of the employee 's services follows automatically either from a contract or from a Standing Order by virtue of the employee 's absence without leave for the specified period, such termination is not the result of any positive act or order on the part of the employer, and so to such a termination the prohibition contained in section 73(1) would be inapplicable.
Mr. Dolia no doubt contended that the word 'discharge ' occurring in section 73(1) should be liberally construed and he argued that termination of service even under Standing Order 8(ii) should be held to be a discharge under section 73(1).
We are not prepared to accept this argument.
In considering the question about the true denotation of the word "discharge" in section 73(1), it is relevant to bear in mind the provisions of section 85(d) of the Act.
277 Section 85(d) provides that if any person in contravention of section 73 or any regulation, dismisses, discharges, reduces or otherwise punishes an employee, he shall be punishable with imprisonment which may extend to three months or with fine which may extend to five hundred rupees, or with both.
In other words, the contravention of section 73(1) is made penal bys.
85(d), and so, it Would not be reasonable to put the widest possible denotation on the word "discharge" ins.
73(1).
The word "discharge" in section 73(1) must,therefore, in the context, be taken to be a discharge which is the result of a decision of the employer embodied in an order passed by him.
It may conceivably also include the case of a discharge where discharge is provided for by a Standing.
Order.
In such a case, it may be said that the discharge flowing from the Standing Order is, in substance, discharge brought about by the employer with the assistance of the Standing Order.
Even so, it cannot cover the case of abandonment of service by the employee which is inferred under Standing, Order 8(ii).
Therefore, we do not think the High Court was justified in taking the view that the termination of Venkatiah 's services under S.O. 8(ii) to which the appellant has given effect by refusing to take him back, contravenes the provisions of section 73(1).
Mr. Dolia argued that on the appellant 's construction 73(1) would afford very unsatisfactory and poor protection to the employees.
If all that section 73(1) does is to prevent any punitive action being taken against the employee during the period that he is ill, there is not much of protection given to him at all, says Mr. Dolia.
There is no doubt some force in this argument: but as we have already observed, the words used in section 73(1) read with subs.
(2) cannot reasonably lead to the construction for which, Mr. Dolia contends.
It would, we think, be unreasonable, if not illegitimate, to construe the relevant section merely on the hypothesis that the legislature intended to provide a larger protection to the employees when the said hypothesis cannot be worked out in the light of the words used by the statute.
By virtue of the power conferred on the State Government by section 96 to make rules, certain regulations had been framed under the Act in 1950.
Chapter III of these 278 Regulations deals with the benefit claims.
Regulations 53 to 86 in this Chapter are concerned with the certification and claims for sickness and temporary disablement.
Regu lation 54 provides for the persons competent to issue medi cal certificate and Regulation 55 required that the Medical Certificate should be filled in the prescribed form.
Regu lation 57 deals with the Medical Certificate on first exa mination and Regulation 58 refers to the final Medical Certificate.
Regulation 63 prescribes the form of claim for sickness or temporary disablement.
An insured person intending to claim sickness benefit has to submit the said form to the appropriate Local Office by post or otherwise.
Regulation 64 lays down that if such a claimant fails to submit to the appropriate Local Office by post or otherwise the first medical certificate or any subsequent medical certificate within the period therein prescribed, he shall not be eligible for that benefit in respect of the period indicated thereunder.
It is in the light of these regulations that Regulation 53 has to be considered.
This regulation provides that every insured person claiming sickness benefit shall furnish evidence of sickness in respect of the days of his sickness by means of a medical certificate given by an Insurance Medical Officer in accordance with the Regulations in the appropriate form.
There is, however, a proviso to Regulation 53 which says that the Corporation may accept any other evidence of sickness or temporary disablement if in its opinion the circumstances of any particular case so justify.
In the present case, the Regional Director has accepted the Civil Assistant Surge 'on 's certificate under the proviso to regulation 53 when he directed that cash benefit may be paid to Venkatiah under section 73(1).
Having regard to these Regulations, it is difficult to see how the view taken by the Regional Directors about the effect of the certificate issued by the Civil Assistant Surgeon can be said to be binding on the appellant.
There is no provision in the Act or the Regulations, to which section 73(1) refers by which it could be contended that once the illness of an insured employee is accepted by the appropriate authority under the Act, it must automatically be accepted by the employer in dealing with the said employee 's case under the Standing Orders.
Therefore, the argument that inconsistent results may follow if two views 279 are allowed to be taken about the illness of a given em ployee, does not help the appellant.
Besides, as we have already indicated, this argument has hardly any relevance in view of the construction which we are inclined to put on section 73(1) of the Act.
In view of our construction of the said section, Mr. Dolia 's argument that there is inconsistency between the said section and Standing Order 8(ii) also has no validity.
Before parting with this case, we ought to add that at the very outset, Mr. Sastri for the appellant made it clear to us that the appellant was fighting this appeal not so much to resist the order of reinstatement passed in favour of Venkatiah as to get a decision from this Court about the true scope and effect of section 73(1) of the Act.
In other words, he argued that this case was fought as a test case on the question of the construction of the said section.
Therefore, when we suggested to Mr. Sastri that the appel lant who is a very big prosperous employer should not resist the reinstatement of a single employee whose case has been brought to this Court, he assured us that he would recommend to the employer to take Venkatiah back on the terms prescribed by the Labour Court in the first instance in this case.
In the result, the appeal is allowed, the order passed by the Division Bench of the Madras, High Court is set aside and that of the Single Judge restored.
There would be no order as to costs.
Appeal allowed.
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The respondent Venkatiah went on leave for six days and did not join duty on the expiry of the leave period but remained absent without sending to the appellant any communication for extending his leave.
Later, he sent 2 letter to the appellant accompanied by a medical certificate issued by a Civil Assistant Surgeon in respect of his illness for a period of nearly two months.
The Medical Officer of the appellant was unable to confirm that he was ailing for a period of two months.
Finding the explanation for his absence unsatisfactory the appellant refused to take him back in its employment.
Meanwhile he had applied to the Regional Director of the Employees ' State Insurance Corporation and obtained cash sickness benefit for the period covered by the Medical Certificate issued by the Civil Assistant Surgeon.
On the appellant 's refusal to take him back in its employment, the respondent union, referred his case for adjudication 18 2 section C. India/64 266 to the Labour Court and the management of the appellant was directed to reinstate him.
The appellant then moved a writ petition in the High Court and it was allowed by the learned single Judge.
The respondent then preferred a Letters Patent Appeal before a Division Bench of the High ' Court.
The appeal was allowed by the Division Bench and the award passed by the Labour Court was restored.
In his appeal against the said decision the appellant 's main contention in this Court was that the case of Venkatiah fell squarely within the provisions of Standing Order 8(ii) and the High Court was wrong in holding that the decision of the appellant in refusing to condone the absence of Venkatiah was either unfair or improper, or that it contravened the provisions of section 73 of the .
The respondent mainly contended that in the present case the employee received sickness benefit, and so, for the said sickness, no penalty could be imposed on him.
Held : (i) Standing Order 8(ii) was applicable to the present case and the fact that the same conduct was dealt with in two different standing orders, could not affect the applicability of Standing Order 8(ii) to the present case.
(ii) Whether or not the appellant should have accepted the certificate of the Civil Assistant Surgeon was primarily for the appellant to consider; as there was no allegation about mala fides in this case, it was not open to the High Court, in exercise of its writ jurisdiction, to consider the propriety of the conclusion reached by the Labour Court on this point.
(iii) On a proper construction of section 73(1) read with sub section
(2), it was impossible to invoke section 73 against the appellant, because the termination of Venkatiah 's services had not taken place during the period of his illness for which he received sickness benefit; the High Court was not justified in taking the view that the termination of Venkatiah 's services under S.O. 8(ii) contravened the pro visions of section 73(1).
(iv) The view taken by the Regional Director about the effect of the Civil Assistant Surgeon 's certificate under the proviso to regulation 53 could not be said to be binding on the appellant and in view of the construction put on section 73(1), there was no inconsistency between the said section and Standing Order 8(ii).
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1646.txt
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minal Appeal No. 191 of 1967.
Appeal by special leave from the judgment and order dated March 14, 1967 of the Rajasthan High Court in Criminal Appeal No. 720 of 1965.
B. D. Sharma, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Sikri, J.
Hari Ram, respondent, filed a complaint against Lala Ram, appellant, alleging that Lala Ram had attacked him 899 with a Kassi on June 10, 1964, at about 6 p.m.
Poonaram, who was standing there prevented the blow from falling on Hari Ram by receiving it on his hand.
The respondent, however, made a second attack and inflicted an injury on the left shoulder of Hari Ram.
Hari Ram and Poonaram got themselves examined by the Civil Assistant Surgeon of the city and the injury report was submitted alongwith the complaint.
The learned Magistrate acquitted the accused.
Hari Ram filed an application under section 417(3) of the Criminal Procedure Code for leave to appeal against the order of the Magistrate.
Leave was granted by the High Court, and thereupon Hari Ram filed the appeal.
The High Court accepted the appeal and convicted the appellant, Lala Ram, under section 324, I.P.C., and sentenced him to four months ' rigorous imprisonment.
The attention of the High Court was not drawn to the Proba tion of Offenders Act, 1958, during the hearing of the a peal but subsequent to the delivery of the judgment an application was filed under section 561 A, Cr.
P.C., read with sections 3, 4 and 6 of the Probation of Offenders Act.
It was alleged in the application that the appellant was 20 years old and the High Court should have given him the benefit of the Probation of the Offenders Act.
The High Court did not accede to this application.
The appellant having obtained special leave from this Court, the appeal is now before us.
The main contention of law which arises before us is whether the appeal to the High Court was filed within limitation.
The application for leave to appeal to the High Court under section 417 (3) against the order of acquittal of the Magistrate, dated August 31, 1965, was filed on November 1, 1965.
It was claimed by the applicant that two days were necessary for obtaining the certified copy of the order of the Magistrate and the applicant was entitled to deduct these two days taken for obtaining the certified copy of the order of the Magistrate.
There is no doubt that the application would be in time, if these two days are deducted.
But the learned counsel for the appellant contends that section 12(2) of the Indian Limitation Act is not attracted to applications under section 417(3), Cr.
P.C. Section 417(3) and (4) read as follows "417.
(1) Subject to the provisions of sub section (5), the, State Government may, in any ease, direct the Public Prosecutor to present an appeal to the High Court from an original or appellate order of acquittal passed by any Court other than a, High Court.
(3) If such an order of acquittal is passed in any case instituted upon complaint and the High Court, on L5SupCI/70 12 900 an application made to it by the complainant in this behalf, grants special leave to appeal from the order of acquittal, the complainant may present such an appeal to the High Court.
(4) No application under sub section (3) for the grant of special leave to appeal from an order of acquittal shall be entertained by the High Court after the expiry of sixty days from the date of that order of acquittal.
It is contended that the period of 60 days mentioned in s.417(4) is not a period of limitation within the meaning of s.12(2) of the Limitation Act.
Section 12(2) of the Limitation Act reads as follows : "12(2) In computing the period of limitation for an ,appeal or an application for leave to appeal or for revision or for review of a judgment, the day on which the judgment complained of was pronounced and the, time requisite for obtaining a copy of the decree, sentence or order appealed from or sought to be revised or reviewed shall be excluded.
" The learned counsel says that what s.417(4) provides is a prohibition and it bars the jurisdiction of the High Court to deal with the application if a period of 60 days has expired from the date of the order of acquittal.
In our opinion there is no force in these contentions.
In Kaushalya Rani vs Gopal Singh(1) this Court, while dealing with the question whether s.5 of the Limitation Act applies to applications under s.417(3) described this period of 60 days ment ioned in s.417(3) as follows: "In that sense, this rule of 60 days bar is a special law, that is to say, a rule of limitation which is specially provided for in the Code itself, which does not ordinarily provide for a period of limitation for appeals or applications.
" This Court further observed "Once it is held that the special rule of limitation laid down in sub section
(4) of section 417 of the Co de is a especial law ' of limitation, governing appeals by private prosecutors, there is no difficulty in coming to the con clusion that s.5 of the Limitation Act is wholly out of the way, in view of s.29 (2) (b) of the Limitation Act." (1) ; 987.
901 This Court approved the judgment of the Full Bench of the Bombay High Court in Anjanabai vs Yashwantrao Dauletrao Dudhe(l).
The Full Bench of the Bombay High Court had observed in Anjanabai 's case "Sub section (4) prescribes a period of limitation for such an application.
It states that no such application shall be entertained by the High Court after the expiry of sixty days from the date of the order of acquittal.
This period of limitation is prescribed not for all appeals under the Criminal Procedure Code, or even for all appeals from the orders of acquittal.
It is prescribed only for applications for special leave to appeal from orders of acquittal.
It is therefore a special provision for a special subject and is consequently a special law within the meaning of s.29(2) of the Limitation Act.
" It is quite clear that the Full Bench of the Bombay High Court and this Court proceeded on the assumption that s.417(4) of the Criminal Procedure Code prescribes a period of limitation.
The learned counsel, however, contends that there was no discussion of this aspect.
Be that as it may, it seems to us that s.417 (4) itself prescribes a period of limitation for an application to be made under s.417(3).
It was not necessary for the legislature to have amended the Limitation Act and to have inserted an article dealing with applications under s.417(3), Cr.
P.C.; it was open to it to prescribe a period of limitation in the Code itself.
The learned counsel also suggests that the word "entertain" which occurs in s.417 (4) means "to deal with or hear" and in this connection he relies on the judgment of this Court in Lakshmi Rattan Engineering Works vs Asstt.
Commissioner Sales Tax (2).
It seems to us that in this context "entertain" means "file or received by the Court" and it has no reference to the actual hearing of the application for leave to appeal; otherwise the result would be that in many cases applications for leave to appeal would be barred because the applications have not been put up for hearing before the High Court within 60 days of the order of acquittal.
In the result we hold that the application under s.417(3) to the High Court was within time.
The learned counsel then contends that the High Court should not have interfered with the order of acquittal passed by the Magistrate.
He has taken us through the evidence of Poonaram who was injured and the statement of P.W. 3, Ananda, who was present and who seems to be an independent witness.
We agree (1) I.L.R. [1961]Bom.135, '137.
(2) ; 902 with the High Court that the Magistrate was not entitled to reject the evidence of the eye witnessess.
No reason has been shown to us why we should interfere with the finding of fact arrived at by the High Court.
The learned counsel further contends that no offence was committed because the accused had a right of private defence of property.
Assuming that he had a right of private defence of property he had ample opportunity of having recourse to the authorities and there was no need for the appellant to have taken the law into his own hands.
The only question that remains now is the question whether the benefit of s.6 of the Probation of Offenders Act should be extended to the appellant.
In spite of opportunity being given no good proof has been furnished to establish that the appellant was at the relevant time under the age of 21 years.
For the aforesaid reasons the appeal fails and is dismissed.
R.K.P.S. Appeal dismissed.
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An application for leave to appeal to the High Court under section 417(3) Code of Criminal Procedure against an order of acquittal by a Magistrate dated August 31, 1965 was filed on November 1, 1965.
It was claimed that two days were necessary for obtaining the certified copy of the order of the Magistrate.
The application would be in time if these two days were deducted.
The High Court accepted the appeal and convicted the appellant.
In appeal to this Court against his conviction the appellant contended that the period of 60 days mentioned in section 417(4) was not a period of limitation within the meaning of section 12 of the Limitation Act and that the sub section barred the jurisdiction of the High Court to deal with the application if a period of 60 days had expired from the date of the order of acquittal.
HELD : The application under section 417(3) to the High Court was within time.
Section 417(4) itself prescribes a period of limitation; it was open to the legislature to prescribe a period of limitation in the code itself.
In the context of section 417(4) the word "entertain" means "file or receive by the court" and it has no reference to the actual hearing of the application for leave to appeal; otherwise the result would be that in many cases applications for leave to appeal would be barred because the applications have not been put up for hearing before the High Court within sixty days of the order of acquittal.
[901 D F] Kaushalya Rani vs Gopal Singh, , 987, Anjanabai vs Yeshwantrao Daplatrao Dudhe, I.L.R. (1961) Bom.
135, 137 and Lakshmi Rattan Engineering Works vs Asstt.
Commissioner Sales Tax; , , referred to.
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2765.txt
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iminal Appeal No.112 of 1965.
Appeal by special leave from the jurisdiction and order dated April 29, 1965 of the Allahabad High Court in Criminal Misc. 'Contempt Case No. 43 of 1965.
A. section R. Chari, M. K. Ramamurthi, Vineet Kumar and Shyamala Pappu, for the appellants.
O. P. Rana, for respondent No. 1.
J. P. Goyal, V. C. Prasar and section P. Singh for respondent No. 2.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment of the Allahabad High Court adjudging the five appellants guilty of contempt of court and sentencing each of them to pay a fine of Rs. 1,000/ and further ordering that in case of default they shall undergo simple imprisonment for two weeks.
The High Court held that the five appellants had disobeyed an order of stay passed by it staying proceedings pending before the Nyaya Panchayat, Jokha Khas, District Deoria.
The relevant facts are these.
On September 2, 1963, Yashoda, son of Raj Kumar, filed a complaint before the Nyaya Panchayat, Jokha Khas, against Jagdeo, Mahabir and Laxmi alleging that he had been abused and be laboured and his property worth Rs. 40/ damaged.
On September 10, 1963, the Nyaya Panchayat assembled and evidence was led before it.
The case was adjourned to December 25, 1963.
On October 11, 1963, Mahabir, accused, made an application under section 85 of the U.P. Panchayat Raj Act, 1947, to S.D.M., Deoria, to transfer the proceedings on the ground that the complainant Yashoda was father of Bunna Prasad, Sarpanch of Nyaya Panchayat, Jokha Khas.
On November 28, 1963, the S.D.M. rejected this application.
On December 13, 1963, a notice was issued to the five members of the Panchayat to assemble on December 25, 1963, and hear the case.
On December 20, 1963, Mahabir moved an application under article 227 of the Constitution challenging the order of the S.D.M., dated November 28, 1963, and on the same day the High Court admitted the application and stayed further proceedings before the Nyaya Panchayat.
An urgent copy of the order was applied for and obtained on that very day and the counsel sent a telegram in the following words "Allahabad He 20 Baldeopd cashier Trust Sdr GR Mahabir application admitted stay granted Banwarilal.
" 117 It is alleged on the side of the applicant, Mahabir, that immediately after the receipt of the telegram an application accompanied by an affidavit and the telegram of his counsel in the High Court was presented before the Nyaya Panchayat with the prayer to stay further proceedings but the Sarpanch refused to take it.
This fact was denied and the High Court seems not to have relied on this fact in its judgment.
It seems to us that it is not proved on the evidence here that any such application was made before the Nyaya Panchayat.
No application dated December 21, 1963, which was not accepted by the Nyaya Panchayat, has been produced.
On December 23, 1963, Mahabir submitted an application in the Court of Shri R. Singh, S.D.M., Deoria, alleging that "writ petition has been admitted and a stay order has been issued.
But notwithstanding my informing the Panchayat Adalat of that, I am not getting any hearing there, and when an application is made there, it is not entertained." He prayed that the Panchayat Adalat be directed to postpone proceedings pending the receipt of the stay order.
He produced the telegram received from the Advocate before the S.D.M.
In the affidavit accompanying the application, however, no mention was made about Mahabir having informed the Panchayat Adalat of the stay order or the fact that the order and the application was not being entertained by the Adalat.
It happened that the S.D.M. was absent on December 23, 1963, and papers were put up before Shri section K. Srivas tava, Additional Sub Divisional Magistrate, who issued the order "Put up with records".
Apparently he did not take any further action till December 26, 1963.
But as the notice against Shri Srivastava has been discharged by the High Court, we need not give any further details about his various orders, On December 25, 1963, the Nyaya Panchayat met and proceeded to hear the case.
The order sheet reads thus : "Put up today the 25th December, 1963.
The complainant and the accused are present.
The statements of the complainant and his witnesses, Bhabhuti and Damri, are recorded.
The accused refused to make statements and put down their signatures.
Today, the 25th December, 1963, Mahabir has made an applica tion to the Court and signed it before it.
Hence judgment shall be given on 25 12 63.
" This order was signed by three Panchas, Phagu Parsad, Jagat Dubey and Badri Yadav.
On the same day a final order was made holding the accused guilty and imposing a fine of Rs. 3/ each on accused Nos. 1 and 3, and Rs. 9/ on accused No. 2.
The application of Mahabir, referred to in the order, reads thus: 118 .lm15
Sir, It is submitted that I have filed a writ petition in the above case, in the High Court.
It has been admitted by the High Court which has stayed proceedings also in this case.
It is, therefore, prayed that the proceedings in this case may be stayed." A document purporting to be an affidavit was also attached, in which it was stated "I make oath and say that in the above case I have filed a writ petition in the High Court, that it has been admitted, and that proceedings in the case have been stayed by the High Court.
" We looked at this so called affidavit and found.
that it has not been sworn to before any person authorised to administer oaths.
On May 21, 1964, Mahabir filed an application under sections 4 and 5 of the , against the five appellants and section K. Srivastava, A.S.D.M.
The main allegation, apart from reciting the facts which we have already detailed above, was that "in spite of the knowledge of the interim stay dated 20 12 63 passed by the Hon 'ble High Court the Sarpanch, the Opposite Party No. 1 and the members of the Bench, Opposite Parties Nos. 2 to 5 disobeyed the order of the Hon 'ble High Court and disposed of the case on 25 12 63 and thus they committed contempt of the Hon 'ble High Court.
" Affidavits were filed in the High Court by Baldeo Prasad, pairokar of Mahabir, Burma Prasad, the Sarpanch, and Mahabir, and statements of Phagu Prasad and Bunna Prasad were recorded on oath.
Bunna Prasad, in his affidavit, stated that as the Nyaya Panchayat was not satisfied for want of evidence by way of proper affidavit etc.
, the Nyaya Panchayats proceeded with the case.
Phagu Prasad.
in his statement, stated "As the paper of Mahabir 's application and affidavit was not good, we had asked him to get them written on a proper paper obtained from the Tehsil.
We had also told him to get the affidavit verified before some Tehsil authority.
We had told Mahabir as above before we had read the application and affidavit presented before the Nyaya Panchayat.
Mahabir told us that he is not prepared to go to Tehsil, but is presenting before the Panchayat whatever he has got in his possession." Phagu Prasad further stated that "no other affidavit had ever been filed before us, but we knew that in the law courts the 119 affidavits,which are filed, are verified by some authority."He further added that "the reason why we did not believe theaffidavit of Mahabir was that it did not contain any date of theHigh Court 's stay order." Bunna Prasad, in his statement, stated that he had told Mahabir to bring the affidavit on a good quality paper of full size, and Mahabir thereupon told him that he would present whatever he had.
According to him, the Panchas did not tell Mahabir that his affidavit was not proper; they, however, told him to get it verified in Tehsil and that it should be duly sealed.
The High Court, on examination of the evidence, came to the conclusion that it was the Sarpanch who bad initially declared that the affidavit of the applicant was not proper and that the matter should file a proper affidavit in support of his allegations, though the Sarpanch had admitted in his deposition that he had to authority to tell Mahabir that his affidavit was not proper.
It appeared to the High Court that "the Sarpanch first wanted to avoid the petitioner 's affidavit being brought on the record by declaring that it was not proper because it did not fully evidence the fact that the High Court had passed an order staying proceedings before the Nyaya Panchayat." The High Court further held that "the Nyaya Panchas faithfully accepted the objections raised by the Sarpanch and dittoed him about the impropriety of the petitioner 's affidavit and inadequacy of the evidence contained therein regarding the stay order alleged to have been.
passed by the High Court.
" The High Court disbelieved the explanation of the Panchas given before it because no mention of these was made in the order sheet dated December 25, 1963.
The High Court held : "There was no reasonable ground for the Panchas to have doubted the averments made in the application and affidavit of Mahabir that the High Court had stayed further proceedings before the Panchayat, nor is there any thing in the order sheet to show that the Panchas did not believe the contents of the application, and affidavit of Mahabir.
However, if they wanted to ascertain the matter, they should have at best stayed the proceedings for a short while and should have asked the applicant to produce a certified copy of the stay order.
In the alternative, they should have verified from the Sub Divi sional Magistrate whether Mahabir had really filed an application and affidavit before him along with the original telegram received from his counsel at Allahabad saying that the High Court had already stayed the proceedings before the Nyaya Panchayat.
But the Panchas did nothing of the kind.
The action of the Nyaya Panchas in not doing so was obviously not bona fide and 120 amounts to wilful disobedience of the High Court 's order.
The learned counsel for the appellants, Mr. Chari, says that no contempt of court has been established because a Court is entitled not to act on an application which is not accompanied by an affidavit properly sworn to or a certified copy of the order He urges that the Nyaya Panchayats exercised judicial powers and, even if the Panchas erred in not staying proceedings, before finding them guilty of contempt of court it should be definitely proved that the order was passed deliberately to by pass the order of the High Court.
This Court quoted with approval the following passage from Oswald 's Contempt of Court, in Hoshiar Singh vs Gurbachan.
Singh(1): "The judgment or order should be served on the party personally, except in the following cases : (1) prohibitive orders, the drawing up of which is not completed;. .
In order to justify committal for breach of a prohibitive order it is not necessary that the order should have been served upon the party against whom it has been granted, if it be proved that he had notice of the order aliunde, as by telegram, or newspaper report, or otherwise, and knew that it was intended to be enforced, or if he consented to the order, or if he was present in Court when the order Was pronounced, or *hen the motion was made, although he left before the order was pronounced.
" We need not consider whether it makes any differnce in law if the order has been drawn up.
We will for the purpose of this case assume that it does not make any difference.
It is also clear that in such matters those who assert that a person had knowledge of the order must prove this fact beyond all reasonable doubt.
If there is any doubt, the benefit ought to be given to the person charged with contempt of court.
If a person bona fide comes to the conclusion on the material placed before him that the source of information is not authentic he cannot be held guilty of contempt of court for disobeying the order.
The question then arises whether the Sarpanch and the Pan chas had knowledge of the existence of the order of the High Court dated December 20, 1963.
The only material before them was the application dated December 25, 1963, which was not supported by any affidavit sworn to before a person authorised to (1) [1962] Supp. 3 S.C.R. 127,138.
121 administer oaths.
Further, the application did not contain the .date of the order; even a copy of the telegram was not attached to the application; and the application seems to have been made after the proceedings on that date had commenced and evidence taken.
We are unable to appreciate how on this material the bona fides of the Panchas can be doubted if they refused to accept the mere statement of the party that the High Court had stayed proceedings before them.
It seems to us that the High Court did not appreciate that the so called affidavit which was filed before the Panchas was in fact not an affidavit at all.
it had not been sworn to before any person authorised to administer oaths.
It was no part of the duty of the Panchas to enquire from the S.D.M. about the filing of the application before him.
At any rate, he has apparently no jurisdiction to stay proceedings before the Nyaya Panchayats when no Proceeding is pending before him.
It is true that in certain cases proceedings can be adjourned to enable the parties to file better proof, but a judicial officer is not bound to do so and, if he bona fide does not in his discretion adjourn proceedings, it cannot be said that he has committed contempt of court.
It must also be borne in mind that Panchas are not well versed in law and procedure and the records maintained by them should not be judged in the same manner as that of ordinary courts.
With respect, the High Court should not have drawn an adverse inference from the fact that the reasons for not accepting the prayer for stay were not recorded.
Contempt of court is a serious matter and a High Court should be chary of finding a judicial officer guilty of contempt of court for disobeying its orders unless there is unimpeachable evidence that the judicial officer had knowledge of the order of the High Court.
In our opinion, there is no such evidence in this case.
The learned counsel for the State contends that we should not reappreciate the facts, but, with respects, it seems to us that the High Court, while dealing with the evidence, has not kept in mind the principles which we have mentioned above.
In the result we allow the appeal and set aside the judgment and order of the High Court.
R.K.P.S. Appeal allowed.
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M, an accused person in certain proceedings pending before the Nyaya Panchayat filed a petition under article 227 in the High Court and obtained a stay of the proceedings on December 20, 1963 .
Thereafter when the Panchayat met to proceed with the matter, he made an application supported by a document purporting to be an affidavit stating that the High Court had admitted his writ petition and had stayed further proceedings before the Panchayat; and that therefore nothing further should be done in the matter.
However, the, Panchayat did not allow his application and proceeded (to hold M and others guilty and imposing fines on them.
M, thereafter filed an application under sections 4 and 5 of the , alleging contempt of the High Court by the Panchayat.
An affidavit filed before the High Court by the Sarpanch stated that the document filed by M, by way of an affidavit in support of his application had not been verified by any proper authority and for this and other reasons the Panchayat did not believe that the High Court had stayed the proceedings.
The High Court held the members of the Panchayat guilty of contempt and observed that if they wanted to ascertain the matter, they should have at best stayed the proceedings for a short while and asked the applicant to produce a certified copy of the stay order; in not doing so, the Panchas had obviously not acted bona fide and their action amounted to, wilful disobedience of the High Court 's order.
On appeal to this Court, HELD : The appeal must be allowed and the judgment and order of the High Court set aside.
The only material before the Panchayat was the application dated December 25.
1963, which was not supported by 'any affidavit sworn to before a person authorised to administer oaths.
Further, the application did not contain the date of the order; even a copy of the telegram stated to have been sent by M 's advocate in the High Court was not attached to the application.
On this material the bona fides of the Panchas could not be doubted if they refused to accept the mere statement of the party that the High Court had stayed the proceedings before them.
In such matters those who assert that a person had knowledge of the order must prove this fact beyond all reasonable doubt.
If there is any doubt.
the benefit, ought to be given to the person charged with contempt of court.[120 F H; 121 A B] It is true that in certain cases proceedings can be adjourned to enable the parties to file better proof, but a judicial officer is not bound (to do so and, if the bona fide does not in his discretion adjourn proceedings, it cannot be said that he has committed contempt of court.
[121 C D]
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2392.txt
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Civil Appeal No. 806 of 1982.
From the Judgment and order dated 27 7 1981 of the Industrial Tribunal (III) U.P. in Adjudication Case No. 15 of 1977.
114 M. K. Ramamurthy, Jitendra Sharma and P. Gaur for the Appellants G.B. Pai, H. K. Puri and J. K. Mehra for the Respondent.
The Judgment of the Court was delivered by DESAI, J.
In exercise of the power conferred by Sec. 4 (K) of the U.P (`Act ' for short) the Government of Uttar Pradesh by its order dated May 23, 1975 referred the following dispute to the Industrial Tribunal for adjudication.
The reference is in Hindi.
Agreed translation of the industrial dispute referred for adjudication reads as under: "Whether the variable dearness allowance payable by the employers to their workmen should be revised and it should be linked with the consumer price index for industrial workers at Kanpur computed by Labour Bureau Simla ? If yes, then from what rate (sic) and with what other details.
" There are two rival unions of the workmen employed by the Indian Oxygen Ltd. (`Company ' for short) in its Industrial under taking at Kanpur.
They are the Indian Oxygen Karamchari Union (Karamchari Union ' for short) and the Indian Oxygen Sharamik Sangh (`Sharamik Sangh ' for short).
There is a federation of trade unions formed at various centres where the Company has its industrial undertaking.
Sharamik Sangh is affiliated to the federation.
Karamachari Union claims to represent the workmen employed by the Company at Kanpur.
The demand and the consequent industrial dispute which led to the reference was espoused by Karamchari Union.
The Karamchari Union in its statement of claim stated that the Company is a unit of the multi national British Oxygen Company.
The Indian Unit of the multi national corporation operates under the name and style of M/s Indian Oxygen Ltd. The industrial activities of the Company comprises manufacture and sale of industrial and medical gases etc.
It was stated that while the wage structure is uniform in respect of workmen employed by the Company all over the country the dearness allowance formula varies from centre to centre.
Briefly it was stated that the workmen of the Company employed at Bombay, Madras, Hyderabad, Bangalore and 115 Delhi are in receipt of higher dearness allowance compared to the workmen employed in Kanpur Unit.
The immediate provocation for raising the demand was an award by the Industrial Tribunal Delhi by which the dearness allowance of the workmen employed in Delhi unit was linked to consumer price index for Delhi prepared by the Labour Bureau Simla which resulted in a substantial increase in the dearness allowance available to the workmen posted at Delhi.
Soon after the award was published, the Karamahcari Union submitted a demand on January 7, 1975 for revising the rate of dearness allowance for workmen employed in Kanpur unit and as there was no adequate response from the employer, the matter was taken into conciliation.
The Company in its attempt to thwart the demand being pursued entered into a settlement with the Sharamik Sangh in respect of the dearness allowance and then approached the Labour Commissioner Kanpur for registering the settlement.
Failing to obtain the registration, the Company unilaterally enforced the new scheme of dearness allowance linked to the all India average consumer price index prepared by Labour Bureau Simla.
The Karamchari Union did not accept the revised formula, and pressed its demand that the dearness allowance should be linked to all India consumer price index number prepared by Labour Bureau, Simla for Kanpur centre, after adopting the linking factor as has been done in the award by the Industrial Tribunal at Delhi.
The conversion ratio was suggested at 4.83 linked to January 1970 index number.
The Company consistent with the employer culture put forth number of preliminary objections so as to delay the adjudication of the demand.
All the preliminary objections failed as per the decision of this Court in Indian Oxygen Ltd. vs The Workmen as represented by Indian Oxygen Karamachari Union.(1) After the matter went back for adjudication on merits it was contended on behalf of the Company that the settlement arrived at between the Sharamik Sangh and the Company would be binding on the members of the Karamachari Union and the Tribunal should not adjudicate the dispute on merits.
This settlement has been stigmatized by this Court to be a collusive one.
(See page 920).
It was further contended that the Company is desirous of linking dearness allowance to all India average consumer price index for working class with base 1960=100 and that the Tribunal should avoid accepting a demand of a few workmen where a majority of the workmen have accepted and are satisfied with the revised formula introduced by the Company.
116 The Company employs 5,400 workmen in all its establishments all over the country.
Out of total strength of 5,400 workmen, 3030 are employed in gas manufacturing unit.
The employment strength in Kanpur unit is roughly about 200.
It is not in dispute that the basic wages of all workmen employed all over the country by this Company are occupation wise uniform but the dearness allowance paid to workmen differs or varies from place to place.
This ought to be so as will be presently pointed out.
Prior to 1975 dearness allowance to the workmen employed in the units of the Company in North Eastern Zone i.e. in the States of West Bengal, Bihar, Orissa, U.P., Delhi and Punjab was linked to the consumer price index number (middle class) prepared by the Bengal Chamber of Commerce for Calcutta.
It may be mentioned that the Bengal index has been discontinued since 1975.
It is important to note that by the two awards of the Industrial Tribunal, the office staff and the workmen employed the Company at Delhi are being paid dearness allowance linked to consumer price index compiled by Labour Bureau Simla for Delhi.
Subsequently by a decision of this Court in Govardhan Prasad and others vs The Management of M/s Indian Oxygen Ltd.(1) 10 workmen employed by the Company stationed at Ghaziabad were required to be paid dearness allowance to the same extent and in the same manner as was being paid under the awards of the Industrial Tribunal to the workmen of the Company at Delhi.
Before we delve into the narrow contentions raised in this behalf we would remove the gloss over the submission that the attempt of the company, having all India operation, is to introduce uniformity in the matter of dearness allowance payable to its workmen all over the country.
Uniformity, to an uninformed mind, appears to be very attractive.
But let it not be forgotten that sometimes this uniformity amongst dissimilar persons becomes counter productive.
Uniformity and equality have to be amongst equals measured by a common denominator.
One can appreciate the implementation of the constitutional aspiration of `equal pay for equal work. ' In the matter of basic wages it is a consummation devotedly to be wished.
But when it comes to dearness allowance any attempt at uniformity between workmen in such metropolitan areas like Delhi, Bombay, Madras, Calcutta and in smaller centres 117 would be destructive of the concept of dearness allowance.
Dearness allowance is directly related to the erosion of real wages by constant upward spiraling of the prices of basic necessities and as a sequel to the inflationary input, the fall in purchasing power of the rupee.
It is a notorious phenomenon hitherto unquestioned that price rise varies from centre to centre.
Dearness allowance is inextricably intertwined with price rise, it being an attempt to compensate loss in real wages on account of price rise considered as a passing phenomenon by compensation.
That is why it is called variable dearness allowance.
Any uniformity in the matter of dearness allowance may confer a boon on persons employed in smaller centres and those in big metropolitan areas would be hard hit.
Dearness allowance by its very form and name has an intimate relation to the prevailing price structure of basic necessities at the centre in which the workman is employed.
Therefore, the claim in the written statement on behalf of the company that imbued with the equitable principle of introducing uniformity in the matter of dearness allowance, the Company with the easy availability of consent of its protege union Sharamik Sangh introduced a new scheme of dearness allowance linked to the all India average consumer price index prepared by Labour Bureau, Simla is misleading.
The Tribunal rightly observed that it is by now well settled that dearness allowance to workmen at a particular place should depend upon the place where the workman is working irrespective of the fact that the industrial undertaking in which the workman is employed is a unit of an industrial enterprise having an all India or inter State operations.
In Dunlop Rubber Co. (India) Ltd vs Workmen & Ors.,(1) a contention on behalf of the employer that in the case of an all India concern, it would be advisable to have uniform conditions of service throughout India was repelled observing that `however desirable uniformity may be in the case of all India concerns, the tribunal cannot abstain from seeing that fair conditions of service prevail in the industry with which it is concerned. ' This view to some extent was affirmed in the Remington Rand of India Ltd vs The Workmen(2).
Leaving aside basic wages in the matter of dearness allowance specially the Court should lean in favour of adjudication of dispute on the principle of industry cum region because dearness allowance is linked to cost of living index of a particular centre which has a local flavour.
If the concept of uniformity on an all India basis is introduced in the matter of dearness allowance, it would work havoc, because the price structure 118 in a market economy at places like Bombay, Madras, Calcutta, Delhi, Ahmedabad has little or no relation to smaller centres like Kanpur, Varanasi etc.
If workmen working in such disparate centres are put on par in the matter of dearness allowance in the name of proclaimed all India uniformity, not only unequals will be treated as equals but the former would suffer irreparable harm.
Such an approach would deal a fatal blow to the well recognised principle of industrial adjudication based on region cum industry developed by courts by a catena of decisions.
Realising this situation courts have learned in favour of determination of dearness allowance linked to cost of living index, if available for the centre where the workman employed and in the matter of neutralisation on the industry cum region principle.
The Tribunal having rejected this approach committed an error apparent on the record.
At this stage, it is necessary to have some idea of what is consumer price index number, how it is being complied and what is its relevance in the matter of dearness allowance ? Pursuant to the recommendations of the Planning Commission for the Second Five Year Plan the Labour Bureau, Simla and the Industrial Statistical Organisation of the Government of India took steps to conduct fresh family living surveys among working class and middle class population respectively with a view to constructing the new series of consumer price index numbers.
The working class surveys were conducted at 50 selected centres and the middle class surveys at 45 centres, 18 centres being common to both.
The work of this survey was commenced in the second half of 1958 and was concluded by September, 1959.
One of the centres selected for survey was Kanpur (See Ahmedabad Mill Owners ' Association etc.
vs The Textile Labour Association(1) What materials and statistical information enter into the compilation of consumer price index number may be briefly noticed.
The consumer price index number for industrial workers (base 1960=100) are being compiled and published by the Labour Bureau, Simla every month in respect of 50 industrial centres scattered all over the country.
Amongst them is Kanpur.
The material collected is through the family surveys of working class families.
There are six main groups for which indices for each centre are being compiled besides the general index.
They are: 119 (i) Food (ii) Pan, Supari, Tobacco and intoxicants (iii) Fuel and light (iv) Housing (v) Clothing, bedding and footwear, and (vi) Miscellaneous Consumer price index numbers are intended to measure relative temporal (overtime) changes in the price of a fixed basket of goods and services consumed by the index population in a current period in relation to the base period.
The index numbers are compiled by using Laspeyers ' Formula.
The Broadly stated this formula takes note of base and current prices for a particular item, quantity consumed of that item during the base period.
It would appear that for the compilation of an index, there are three essential requirements namely: (1) weighting diagram which is the relative percentage share of the total consumption expenditure as revealed by the basic family budget enquiry in respect of different items, (2) Base prices of the different items which go into the index basket and (3) current prices in respect of each one of the items featuring in the index basket.
The weighting diagram for a centre is derived on the basis of the data collected through family budget enquiries which were conducted in the 1958 59 at each one of the 50 centres.
The survey was conducted by taking all samples of working class families in each of the 50 centres and the data was collected by interviewing these families.
Based on the results of the family budget enquiries, the average expenditure of a family per month on different items of consumption was arrived at.
All India average consumer price index number is a weighted average of the 50 centres ' indices.
This is compiled and published alongwith the index number for each centre (Source: Consumer Price Index: An anatomy published by Labour Bureau, Simla).
It would appear at a glance that there would be a noticeable difference between the consumer price index number for a centre and its weighted average for 50 centres which would be the all India average consumer price index number, the latter would generally be lower than the former in some cases.
120 Reverting to the demand in this case, the Karamchari Union raised a demand that the variable dearness allowance payable to the workmen should not only be revised but it should be linked with the consumer price index for industrial workers at Kanpur.
The Tribunal by its award directed the employer to pay dearness allowance linked to the all India consumer price index (1960= 100) for the Kanpur Centre compiled by Labour Bureau, Simla.
On the question of neuturalisation, the Tribunal directed that the calculation in the rate of dearness allowance will remain the same as presently operative and no change is required therein.
In reaching this conclusion, the Tribunal committed two manifest errors apparent on the record.
The company introduced as stated in its written statement, a new scheme of dearness allowance linked to the all India consumer price index prepared by Labour Bureau, Simla.
That was a very recent innovation introduced by way of a counter blast to the demand raised by the Karamchari Union.
Prior thereto, it is an admitted position that the workmen at Kanpur were being paid dearness allowance linked to Bengal Chamber of Commerce Index Number.
That was unilaterally given up by the Company.
There appeared to be at least two valid reasons for scrapping that scheme: one is that since 1975 Bengal Chamber of Commerce Index which was compiled for middle class families and was being artificially applied to industrial workers has been scrapped.
In other words, the index is no more being compiled.
Secondly, the constituent members of the Bengal Chamber of Commerce had started their business in India long before the present century and most of them were incorporated in England or other Western countries while the Company in the present case has been started a few decades back and therefore, re induction of the Bengal Chamber Index Number would not be relevant.
On behalf of the Karamchari Union, it was contended that in devising a dearness allowance formula, the region cum industry principle should ordinarily be accepted.
As pointed out earlier, dearness allowance generally has a local flavour.
A man is exposed to the vagaries of the market where he resides and works, even though he may be an employee of a national, multinational or trans national industrial empire.
The workman is concerned with the vagaries of price fluctuation in the area in which he resides and works for gain and to which he is exposed.
Therefore, the region 121 cum industry principle must inform industrial adjudication in the matter of dearness allowance.
In Woolcombers of India Ltd. vs Woolcombers Workers Union & Anr.
(1) this Court following its earlier decision in Greaves Cotton & Co. and Ors vs Their Workmen (2) held that in devising basic wages and dearness allowance structure, industrial adjudication sometimes leans on the industry part of the industry cum region formula and at other times, on the region part of the formula as the situation demands.
This well recognised principle of industrial adjudication cannot be given a go by on the specious plea that the workmen are employed by an industrial undertaking which has an all India operation.
In this case, the Tribunal has overlooked this important principle of industrial adjudication.
Before we examine the second manifest error committed by the Tribunal in narrowly construing the terms of reference, it would be advantageous to briefly recapitulate what relevant considerations have to be kept in view in devising dearness allowance formula.
This aspect is no more res integra.
In Bengal Chemical and Pharmaceutical Works Ltd. vs Its workmen (3), after reviewing all the earlier decisions, the court restated the principles on which a fair and just dearness allowance formula must be devised.
They are: "1.
Full neutralisation is not normally given, except to the very lowest class of employees.
The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on the rise in the cost of living and a decrease on a fall in the cost of living.
The basis of fixation of wages and dearness allowance is industry cum region.
Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workmen.
122 5.
The additional financial burden which a revision of the wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account.
" We need not examine whether the dearness allowance formula as at present existing is valid according to the principles herein extracted because we are not devising a dearness formula for the workmen working in the industrial undertaking of the company at Kanpur for the first time.
The demand is for upward revision of the dearness allowance formula and its linkage.
The terms of reference extracted hereinbefore unmistakable show that the workmen sought upward revision of the variable dearness allowance by linking it to the consumer price index number for industrial workers at Kanpur computed by Labour Bureau, Simla.
If the demand is to be granted, the Tribunal was requested to specify the rate and other details.
Interpreting this reference the Tribunal observed that the new dearness allowance formula which was in vogue at the time of the reference as being related to all India average consumer price index number for industrial workers in accordance with the settlement with the Shramik Sangh which settlement was found to be collusive by this Court yet the Tribunal must proceed on the basis that dearness allowance was being paid to the workmen at Kanpur as per the settlement and that cannot be wished away.
This approach overlooks a vital fact that the introduction of the new formula under a collusive settlement led to the demand for revision.
The Tribunal rejected the submission that it must examine and devise a new formula in relation to the Bengal Chamber of Commerce Index Scheme which was in vogue before the formula as per the collusive settlement was introduced.
If the settlement between the company which is found to be collusive by this Court is to be the starting point of revision of the dearness allowance formula as has been done by the Tribunal, the conclusion is inescapable that the Tribunal started from a wrong premise and landed itself into an utterly unsustainable conclusion.
This is the second apparent error in the face of the record which would impoll us to interfere.
Mere so because the genesis of the demand for a revision of the dearness allowance was the collusive settlement.
The Tribunal committed a grave error in accepting the settlement as the starting point of the revision.
123 The demand of the Karamchari Union was that the Tribunal should first take into account, relevant to a certain date, the all India consumer price index number for Kanpur centre (1960=100) and then the index figure should be multiplied by the conversion factor of 4.83 and then dearness allowance should be linked to the figure so worked out.
The Tribunal rejected this demand on the ground that in the statement of claim, the Karamchari Union demanded payment of dearness allowance according to Simla Index Number for Kanpur.
The Tribunal took note of the fact of the linking factor but observed that as the same has been discontinued by the Labour Commissioner, U.P., the demand has been essentially for dearness allowance according to the Simla Index for Kanpur.
This reasoning manifests an error in approaching, appreciating and evaluating the demand for revision of dearness allowance.
Before we examine the error, let it be made clear that where for a certain industrial centre, a dearness allowance formula is in vogue and it is linked to some consumer price index number, whenever the base year for consumer price index number is changed, a fresh linkage requires a conversion ratio.
In the absence of a conversion ratio, the whole scheme falls out of gear and becomes unworkable.
To illustrate, in the textile industry, the consumer price index number was compiled on the basis of base year 1939=100.
The year 1939 was chosen as the year in which the second world was engulfed the world which completely overhauled the consumer pattern and the prices of essential articles.
Over years the price spiral relentlessly moved upward and that too so rapidly that in most of the industries where even though 100% neutralisation was not given by devising a dearness allowance yet the dearness allowance for a given month was occasionally double or triable of the basis wage.
This was unjust, unfair and from an economist 's point of view, imprudent.
Therefore, as pointed out earlier, a fresh survey was undertaken in 1958 with the base year 1960=100.
A fresh index was compiled and continues to be compiled with 1960=100 as base year.
In fact the 1960=100 base year is being replaced.
We will however, confine ourselves in this appeal to the base year of 1960=100.
Now if those industrial undertakings in which dearness allowance formula was linked to the base year 1939=100 are to be delinked and relinked to the index number compiled on the base year 1960=100, before the fresh number is adopted, a linking or a conversion ratio between 1939 100 and 1960=100 will have to be computed.
Only then a fresh linkage 124 can be devised.
This very obvious fact has been wholly overlooked by the Tribunal when it merely awarded that the workmen of the company at Kanpur should be paid dearness allowance linked to the all India consumer price index number (1960=100) for Kanpur Centre compiled by Labour Bureau, Simla.
This approach overlooks the linking factor.
The rejection of the linking or conversion factor makes the scheme devised by the award unworkable, ineffective and in fact unjust.
In this connection, we may refer to the Ahmedabad Mill Owner 's Association case in which this Court after noting the fact that the base year having changed, pointed out that the question of linking factor loomed large and assumed importance.
The court had before it the admitted position that there was only one index existing in Ahmedabad which was based on the new series (1960=100) and the old series (1939=100) has rightly gone out of existence since it had become antiquated.
Two alternatives were submitted to the court for its consideration.
It was submitted that an entirely new scheme of basic wages based not on the pre war level of 1939, but based on the cost of living of 1960 as the base year be devised and then award dearness allowance in relation thereto.
In the alternative, it was submitted that an arithmetical method of linking the old and the new series be devised.
The Tribunal had accepted the conversion ratio at 3.17.
This was attacked on diverse grounds.
After examining the whole gamut of arguments, this Court held that the linking factor of 3.17 was valid and correct Approaching the matter from the same angle, and avoiding the arguments which have been rejected by this Court in the aforementioned judgment, we are of the opinion that the conversion ratio of 4.83 is valid and correct and the Tribunal ought to have accepted the same.
It is usual in the matter of dearness allowance to examine the paying capacity of the employer.
Rightly Mr. Pai did not at all contend that this employer can not bear the additional burden.
We therefore, need not stray into this aspect at all.
On behalf of the Karamchari Union, it was seriously contended that the award of the Industrial Tribunal at Delhi between this very Company and its Workmen at Delhi be accepted.
We need not examine the same as the comparison between Delhi and Kanpur is ill conceived and untenable.
Delhi is the capital of the sub continent and it is fast growing.
Kanpur is at best a district town though 125 undoubtedly an important industrial centre in U.P.
But the comparison would be invidious.
Accordingly, this appeal partly succeeds and is allowed.
The award of the Industrial Tribunal that the workmen of the Kanpur unit of the Indian Oxygen Ltd. should be paid dearness allowance linked to all India consumer price index (1960=100) for Kanpur centre compiled by the Labour Bureau, Simla is modified to read that 'the dearness allowance should be paid according to all India consumer price index number for Kanpur (1960=100) compiled by Labour Bureau, Simla after applying conversion factor also called linking factor of 4.83. ' In all other respects i.e. the date of enforceability etc.
the award remains unaltered except for the modification herein granted.
The appeal is allowed to this extent with costs quantified at Rs. 3,000.
A.P.J. Appeal partly allowed.
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In the respondent Company there were two rival Unions of workmen, namely, Karamchari Union and Sharmik Sangh.
The Karamchari Union espoused the demand of the workmen employed by the Company in its Kanpur unit for upward revision of dearness allowance following an award of the Industrial Tribunal Delhi by which the dearness allowance of the workmen employed in the Delhi unit was linked to the consumer price index for Delhi prepared by Labour Bureau, Simla, which substantially increased the dearness allowance of workmen posted at Delhi.
The Company in its attempt to thwart the demand being pursued by the Karamchari Union, entered into a settlement with the Shramik Sangh in respect of dearness allowance and then approached the Labour Commissioner for registering the settlement Failing to obtain the registration, the Company utilaterally enforced the new scheme of dearness allowance linked to all India average consumer price index prepared by Labour Bureau, Simla.
The Karamchari Union did not accept the revised formula and pressed its demand.
The dispute was referred for adjudication.
Before the Tribunal the Company contended: (1) that the settlement would be binding on the members of the Karamchari Union and the dispute does not require adjudication on merits, and (2) that the Company is desirous of linking dearness allowance to all India average consumer price index for 112 working class with base 1960 100 and the Tribunal should avoid accepting the demand of a few workmen.
The tribunal directed that the workmen of the Kanpur unit of the Company should be paid dearness allowance linked to the all India consumer price index (1960 100) for Kanpur Centre compiled by the Labour Bureau, Simla.
On the question of neutralisation, no change was allowed.
Partly allowing the appeal of the workmen, ^ HELD: 1.
The workmen of the Kanpur unit of the Company should be paid the dearness allowance according to all India consumer price index number for Kanpur (1960 100) compiled by Labour Bureau Simla after applying conversion factor also called the linking factor of 4.83.
Their dearness allowance cannot be linked to all India average consumer price index.
[125 B C] 2.
The Tribunal Committed a grave error in accepting collusive settlement as the starting point of the revision.
[122 H] 3, Uniformity, to an uninformed mind, appears to be attractive.
But, sometimes uniformity amongst dissimilar persons becomes counter productive.
Uniformity and equality have to be amongst equals measured by a common denominator.
The implementation of the Constitutional aspiration of `equal pay for equal work ' can be appreciated.
In the matter of basic wages it is a consummation devotedly to be wished.
But when it comes to dearness allowance any attempt at uniformity between workmen in metropolitan areas and in smaller centres would be destructive of the concept of dearness allowance.
[116 G H] Dearness allowance is directly related to the erosion of real wages by constant upward spiraling of the prices of basic necessities and as a sequal to the inflationary input, the fall in the purchasing power of the rupee.
It is a notorious phenomenon hitherto unquestioned that price rise variee from centre to centre, [117 A] Dearness allowance is inextricably intertwined with price rise, it being an attempt to compensate loss in real wages on account of price rise considered as a passing phenomenon by compensation.
That is why it is called variable dearness allowance.
Any uniformity in the matter of dearness allowance may confer a boon on persons employed in smaller centres and those in bigger metropolitan areas would be hard hit.
Dearness allowance by its very form and name has an intimate relation to the prevailing price structure of basic necessities at the centre in which the workman is employed.
[117 B C] Dearness allowance to workmen at a particular place should therefore depend upon the place where the workman is working irrespective of the fact that the industrial undertaking in which the workman is employed is a unit of an industrial enterprises having an all India or inter State operations.
[117 E] 113 4.
In the matter of dearness allowance the Court should lean in favour of adjudication of dispute on the principle of industry cum region because dearness allowance is linked to cost of living index of a particular centre which has a local flavour.
A workman is exposed to the vagaries of the market where he resides and works, even though he may be an employee of a national, multi national or transnational industrial empire.
Therefore.
the region cum industry principle must inform industrial adjudication in the matter of dearness allowance.
In the instant case the Tribunal has overlooked this important principle of industrial adjudication.
[117 G; 120 H; 121 A; 121 C] Dunlop Rubber Co. (India) Ltd. vs Workmen & Ors., ; , referred to.
Remington Rand of India Ltd. vs The Workmen , woolcombers of India Ltd. vs Woolcombers Workers Union & Anr. ; and Greaves Cotton & Co. and Ors.
vs Their Workmen ; and Bengal Chemical and Pharmaceutical Works Ltd. vs Its Workmen ; , followed.
Any attempt of a company introducing uniformity in the matter of dearness allowance linked to the all India average consumer price index prepared by Labour Bureau, Simla would be destructive of the concept of dearness allowance.
Not only unequals will be treated as equals but the former would suffer irreparable harm.
Such an approach would deal a fatal blow to the well recognised principle of industrial adjudication based on region cum industry because there cannot be any uniformity in the dearness allowance of the workmen working in metropolitan areas and the workmen working in smaller areas.
[118 A C] 6.
Where for a certain industrial centre a dearness allowance formula is in vogue and it is linked to some consumer price index number, whenever the base year for consumer price index number is changed, a fresh linkage requires a conversion ratio.
In the absence of a conversion ratio, the whole scheme falls out of gear and becomes unworkable, ineffective and in fact unjust.
In the instant case the conversion ratio of 4.83 in valid and correct and the Tribunal ought to have accepted the same.
[123 D; 124 F] Ahmedabad Mill Owners ' Association etc.
vs The Textile Labour Association, [1966) 1 S.C.R. 382, followed.
In the matter of dearness allowance usually the paying capacity of the employer is examined.
In the instant case, it has not at all been contended that the respondent company cannot bear the additional burden.
[124 G]
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5016.txt
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Appeal No. 167 of 1964.
Appeal by special leave from the judgment and decree dated April 11, 1962 of the Orissa High Court in First Appeal No. 61 of 1959.
A. V. Viswanatha Sastri and T. V. R. Tatachari, for the, appellant.
A. N. Sinha and B. P. Jha, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Raghubar Dayal, J.
This appeal, by special leave, is against the decree of the High Court of Orissa reversing the decree of 346 the Court of the Subordinate Judge, Berhampur and dismissing the plaintiff 's suit for recovery of Rs. 8,216 due on a promissory note executed by Kontaru Naiko, defendant No. 1 for Rs. 6,000.
The plaintiff money lender obtained a registration certificate under section 5(4) and r. 5, of the Orissa Money Lenders Act, 1939 (Act III of 1939), hereinafter called the Act, and the rules thereunder, on March 31, 1952.
He obtained another registration certificate in 1955 which said that the maximum capital for which the certificate is granted is Rs. 8,000.
The plaintiff advanced the loan to defendant No. 1 on May 19, 1954 and sued for the recovery of the amount due on this loan.
It was contended for the defendant that the suit was not maintainable as the maximum capital for which the plaintiff had required the registration certificate in 1952 was Rs. 2,000 and under the provisions of the Act.
and the rules framed thereunder, he could not have advanced loan in excess of that amount and that his doing so made the registration of the appellant as a money lender void and therefore the suit for recovery of Rs. 2,000 even was not maintainable.
These contentions were not accepted by the trial Court which decreed the suit against the defendants with 'the direction that defendants Nos. 2 and 3 sons of defendant No. 1, were not personally liable and were liable to the extent of the assets of their father in their hands.
The High Court, however, took a different view, accepted the aforesaid contentions of the defendants and dismissed the suit.
The sole contention for the appellant is that the High Court was in error in holding that the registration of the appellant as a registered money lender in March 1952 became void when he advanced a loan in suit in excess of Rs. 2,000 in 1954 and that the High Court was also in error in holding that he could not have advanced the loan in excess of the maximum capital for which the registration certificate was wanted.
The relevant provisions of the Act may now be set out. 'Capital ', is defined in section 2(c), to mean that which a moneylender invests in the business of money lending whether in money or in kind. 'Registered money lender ', according to section 2(m), means a person to whom a registration certificate has been granted under section section Section 5 provides for the registration of moneylenders and a registration fee.
Sub section
(1) thereof requires the applicant for registration to mention in the application particulars mentioned in ' that sub section and 'such other particulars as may be Sub section
(3) empowers the Provincial Government 3 47 to prescribe by rules for different classes of money lenders and for different areas a registration fee not exceeding Rs. 25 to be paid by an applicant for registration.
Sub section
(4) empowers the Sub Registrar to grant a registration in the prescribed form to the applicant except where the certificate previously granted to him has beencancelled under section 18 and the order of cancellation is in force.
Section 6 enacts that the registration certificate granted willbe in force for 5 years from the date on which it is granted.
Section 7 provides for the registered money lender to maintain accounts and to give receipts.
Section 8 which provides for suits for recovery of loans by registered money lenders reads : "Suit for recovery of loan maintainable by registered money lenders only: A money lender shall not be entitled to institute a suit for the recovery of a loan advanced by him after the date on which this section comes into force unless he was registered under this Act at the time when such loan was advanced : Provided that a money lender shall be entitled to institute a suit to recover a loan advanced by him at any time in the course of two years after the date on which the section comes into force, if he is granted a certificate of registration under section 5 at any time before the expiration of the said years.
" Section 9 provides for the maximum rates at which interest may be decreed.
Various other sections deal with other matters which the legislature thought fit to provide for in order to achieve the object of the Act which, according to the preamble, is to regulate money lending transactions and to grant relief to debtors in the State of Orissa.
Rule 1, clause (c), of the Orissa Money Lenders Rules, 1939, defines 'maximum capital ' to mean the highest total amount of the capital sums which may remain invested in a money lending business on any day during the period of the registration certificate.
Rule 3, cl.
(iii), requires every application for the registration of a money lender to mention the maximum capital for which the certificate is wanted.
Rule, 4 lays down the registration fees payable and fixes the fees according to the maximum capital in respect of which an application for such certificate is made.
Rule 5 provides that registration certificate would be in Form in and that during the currency of a registration certificate application may be made for a registration certificate of a higher 348 denomination and the provisions of rr.
3 to 5 shall, as far as may be, apply to it, credit being given to the registration fee already paid by the applicant.
The question for decision in this case is practically the same as came up for decision before this Court in Sant Saranlal vs Parsuram Sahu(1) judgment.
in which has been delivered today.
The relevant provisions of the Bihar Money Lenders Act, 1938 and the Bihar Money Lenders (Regulation of Transactions) Act, Act mentioned above.
What we have said in that case appropriately covers the contentions of the panics in this case.
We do not therefore consider it necessary to repeat the discussion of the various contentions in this case.
We hold that in the absence of any specific provision in the Act in this case providing for the fixing of the maximum capital which a money lender can invest in money lending business, it was not open to the State Government to frame a rule in that regard and that the rules framed by it about mentioning, in the application, the maximum capital for which the registration certificate was wanted and the mention in the certificate of the amount of the maximum capital for which the certificate is granted, do not lead to the conclusion that the registration of the money lender will become void if he exceeds the limit of the maximum capital laid down in the registration certificate.
We do not consider it necessary now to decide the other point raised with respect to the retrospective operation of the registration certificates of higher denomination obtained during the currency of a registration certificate.
We accordingly allow the appeal, set aside the decree of the Court below and restore the decree of the trial Court.
We direct the respondents to pay the costs of the appellant in the High Court and this Court.
Appeal allowed.
(1) [1966] S.C.R.335.
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The appellant filed a suit against the respondents for the recovery of Rs. 8216 due on a promissory note executed by respondent No. 1 for a sum of Rs. 6000.
The plea taken in defence was that the suit was not.
maintainable because the registration of the appellant under section 5(4) and r. 5 of the Orissa Money Lenders Act 1939 had become void on account of the money lent being in excess of the maximum amount of Rs. 2,000 which the appellant was authorised to invest in the business by his registration certificate.
The contention was not accepted by the trial court but the High Court.
accepting it, dismissed the suit.
In appeal, before this Court, by special leave, it was urged on behalf of the appellant that the main Act did not provide for any restriction on the amount of capital that could be invested and that the rules went beyond the Act in making such a provision.
HELD : In the absence of any specific provision in the Act providing for the fixing of the maximum capital which a money lender can invest in money lending business, it was not open to the State Government to frame a rule in that regard and the rules framed by it about mentioning, in the application, the maximum capital for which the registration certificate was wanted and the mention in the certificate of the amount of the maximum capital for which the certificate is granted, do not lead to the conclusion that the registration of the money lender will become void if be exceeds the limit of the maximum capital laid down in the registration certificate.
[348 D] Sant Saranlal vs Parsuram Sahu , relied on.
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establishment of the Judge of Small Causes Court, Delhi, the name of Respondent No. 1 appears at Serial No. 9 whereas that of the appellant appears at Serial No. 19.
Both of hem satisfy the test of integrity.
The only claim the appellant can have 135 is on the principle of rotation as he is a graduate.
As that principle does apply to an appointment by promotion to the post in question, the claim of the appellant cannot be upheld.
[140F G] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 592 of 1982.
From the Judgment and Order dated 7.8.198 1 of the Delhi High Court in Civil Writ Petition No. 1003 of 1974.
Prithvi Raj and T.C. Sharma for the Appellant.
Dr. Arun Kumar and V.B. Saharya for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
On the retirement of one Jagan Nath Kohli, who was holding the post of Clerk of Court (Upper Division Clerk) in the grade of Rs. 130 300 (old Scale Rs.75 5 125), one post of Upper Division Clerk (U.D.C.)/English Clerk fell vacant in the office of the Judge, Small Causes Court, Delhi.
Five officials of that court, namely, the appellant and respondents nos.
1, 5, 6 & 7 asserted their claim to the said post.
The appellant, Chander Bhan, made his claim on the footing that he was a graduate and on the basis of the rule of rotation as embodied in Rule VI in Chapter XVIII A of the High Court Rules and Orders, Volume I referred to more particularly hereinafter.
Respondent No. 1, Hotilal Gupta, claimed the said post on the basis of his seniority.
We are not concerned with the claims of the other claimants because the contest before us is between the claims of the appellant and respondent No. 1.
The Judge, Small Causes Court in his order dated August 10, 1971, took the view that the appellant who is a graduate and has got 2 1/2 years office experience as Lower Division Clerk (L.D.C.), was an honest and efficient worker and was entitled to promotion in preference to respondent No. 1 because of the rule of rota tion.
The aggrieved parties filed an Administrative Appeal before the District & Sessions Judge, Delhi who passed his order dated July 17, 1973 and held that the rule of rotation did not apply to the establishment of the Judge, Small Causes Court.
He held that respondent No. 1 being the senior most official as Lower Division Clerk was entitled to the post of Upper Division Clerk and accordingly appointed respondent No. 1 as Upper Division Clerk against the said vacancy.
Being aggrieved, the appellant filed a departmental appeal against the said order to the High Court of Delhi which was heard by a learned 136 Judge on the Administrative Side of that Court who, by his order dated August 7. 1974.
accepted the appeal of the appellant and set aside the appointment of respondent No. 1.
He took the view that promotion in the office of the Judge, Small Causes Court, Delhi could only be made by the District and Sessions Judge, Delhi and that the vacancy should be filled in accordance with rule VI of the Rules framed by the erstwhile Punjab High Court, under section 35(3) of the punjab Courts Act, 1918, for subordinate services attached to Civil Courts other than the High Court (hereinafter referred to as 'the said rules ').
Respondent No. 1, Hotilal Gupta challenged the correct ness of the view taken by the learned Judge on the Adminis trative side by filing a writ petition being C.W. No. 1003 of 1974 in the Delhi High Court.
By an order dated 7th August, 198 1, the Division Bench of the Delhi High Court allowed the said writ petition, quashed the order dated 7th August, 1974, passed by the learned Single Judge and upheld the order of the District and Sessions Judge, Delhi appoint ing respondent No. 1 to the said post.
The Division Bench took the view that not only the initial appointments but also the appointments by promotion to the post of Upper Division Clerk in the office of the Judge, Small Causes Court were to be made by the Judge, Small Causes Court and not by the District and Sessions Judge, and held that the rule of rotation on the basis of which the appellant had been appointed to the said post by the order of the Single Judge on the Administrative Side was not applicable to the said appointment.
It is submitted by learned counsel for the appellant that the Division Bench of the High Court was in error in coming to the said conclusion.
It was submitted by him that although the first appointment to the post of Upper Division Clerk in the office of the Judge, Small Causes Court, Delhi is to be made by a Judge of Small Causes Court, promotion to that post could only be made by the District & Sessions Judge and the rule of rotation contained in the first proviso to Rule VI of the said Rules was applicable to the appointment by promotion.
order to consider the merit of the submission of learned counsel for the appellant, it is necessary to bear in mind the relevant provisions of law.
The relevant portion of section 35 of the Punjab Courts Act.
191S reads as follows: "(1) The ministerial officers of the District Courts and 137 Courts of Small Causes shall be appointed and may be sus pended or removed by the Judges of those Courts respective ly.
(2) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (3) Every appointment under this section shall be subject to such rules as the High Court may prescribed in this behalf, and in dealing with any matter under this section, a Judge of a Court of Small Causes shall act subject to the control of the District Court.
" The rules for subordinate services attached to Civil Courts other than the High Court were framed by the erst while Punjab High Court under section 35(4) of the Punjab Courts Act.
A perusal of Rule II of the said Rules dealing with classification, shows inter alia that Clerks of Court to Senior Subordinate Judges and Judges of Courts of Small Causes and English and Vernacular Clerks form a joint cadre.
Subrule (b) of Rule II of the said Rules inter alia provides that there shall be a separate cadre for each Revenue Dis trict and a separate cadre for each Court of Small Causes.
Rule III deals with qualifications and sub rule (2) of that Rule provides that no person shall be appointed to, or accepted as a candidate for, any clerical ministerial post, unless he has passed the Matriculation Examination of the Punjab University or an equivalent examination.
The material part of Rule 'IV runs as follows: "IV.
First appointments.
First appointment shall be made as follows: (1) By the District Judge: (a) Ministerial officers in his own court and in all courts controlled by the District Court other than Courts of Small Causes; .
(b) x x x (2) x x x (3) By the Judge of a Court of Small Causes: Ministerial Officers and menials in his own Court." . 138 Rule V deals with appointment and sub rule (1) of that Rule thereof runs as follows: "(1) Appointment to ministerial posts shall ordi narily be made either by open competition or by selection from a list of qualified candidates or apprentices accept ed by the District Judge.
Judge of a Small Causes Court,.
or Sub Judge to whom powers of appointment have been delegat ed, as the case may be.
Any departure from either of these methods should be reported to the High Court for confirma tion." Rule VI. which is of central importance in this appeal runs as follows: "VI.
Promotion (1) Appointments to the higher grades of the ministerial establishment should ordinarily be made by seniority from lower grades, provided that the official who would thus receive promotion possesses the prescribed educational qualifications and is otherwise fit to perform the duties to which he will be promoted, for which purpose tests may be imposed.
This rule does not apply to such posts as that of stenographer, for which special qualifications are needed; but preference should be given to officers with such qualifications who are already working in the lower grades: Provided that permanent vacancies in the 75 5 125 grade shall be filled by the District and Sessions Judges in the following rotation: (i) By selection on merit out of graduates who have at least two years ' experience in the work of the office, if there is no suitable graduate who fulfils this condition an 'outsider ' graduate may be appointed, but he must be one who normally resides within the jurisdiction of the District and Sessions Judge.
(ii) & (iii) By normal promotion in the office, i.e. the appointment of the next senior man whether graduate or non graduate subject to his fitness: Provided further that the rotation may be modified in 139 very exceptional cases when the direct appointment of a graduate would mean the ousting of a man who had been officiating quasi permanently in the post concerned for an appreciable period.
What is an appreciable period will depend on the circumstances of each case.
After such a modification.
the rotation should be restored as soon as possible.
(2) In making promotions preference may invariably be shown to officials who are known to be strictly honest.
No promotion should be given and no recommendation for promotion made in the case of an official who does not possess and maintain a reputation for strict integrity.
Effi ciency without honesty is not to be regarded as constitut ing a claim to promotion. ' A Notification dated October 28, 1953 was issued in exercise of the powers conferred by the proviso to Article 309 of the Constitution and in supersession of the Notifica tion issued earlier on February 17, 1941.
The said Notifica tion sets out that subject to such general rules as may be made by the Hon 'ble Judges of the Punjab High Court in that behalf appointments to the posts on the establishment of the Civil Courts at Delhi specified in Column (1) of the Sched ule thereto shall be made by the Authority specified in the corresponding entry in Column (2) of the said Schedule.
A perusal of the Schedule shows that appointments to the posts on establishments other than process serving and menial establishments in the Small Causes Court at Delhi are ' to be made by the Judge, Small Causes Court, Delhi.
It has been pointed out in the impugned judgment that the establishment of the District and Sessions Court and that of the Court of the Small Causes constitute separate cadres.
This is not disputed before us.
Hence, whenever a specific mention is made regarding a particular officer of an estab lishment in a rule, that particular rule would normally apply to that establishment alone and the powers conferred by that rule would be conferred on the officer mentioned in the rule.
Rule VI(1) speaks of appointments to the higher grades of the ministerial establishments and states that these appointments should ordinarily be made by seniority from lower grades provided that the official to be promoted possess the qualifications prescribed.
The first proviso to that rule goes on to say that the permanent vacancies in the original grade of Rs.75 5 125 shall be filled in by the District and Sessions Court by rotation as set out in the said sub rule (1) of Rule VI.
The first part of Rule VI deals with appointments by promotion to the higher grade of ministerial establishment.
Generally it must be 140 held applicable to the establishment of the District and Sessions Court as well as that of the Judge of the Small Causes Court.
This rule, however, does not deal specifically with the question as to who is the officer competent to promote.
In view of this, the proviso can only be construed as laying down that, where the power of appointment by promotion is vested in the District and Sessions Judge, in making appointments by promotion to fill in.the permanent vacancies in the said original grade of Rs.75 5 124, rule of rotation set out in the first proviso to clause (1) of Rule VI should ordinarily be followed.
It is not disputed that there is a separate Cadre for the Court of Small Causes.
Rule IV(3) shows that the first appointment of the ministe rial officers in the Court of Small Cause is to be made by the Judge of the Small Causes Court.
The notification dated October 28, 1953 referred to earlier provides that the appointments to the posts on establishment other than proc ess serving and menial in the Court of Small Causes are to be made by the Judge, SmaLl Causes Court, Delhi.
A reading of sub section (1) of the Punjab Courts Act and the rules and Notification discussed earlier makes it clear that appointments by promotion to the posts in the entire ministerial cadre other than in the process serving and menial establishments in the Court of Small Causes have to be made by the Judge, Court of Small Causes and the first proviso to Rule VI(1) prescribing the rule of rotation has no application to such appointments.
Moreover, it would be unreasonable to apply the principle of rotation to the Court of Small Causes where there is only one U.D.C.
The principle of rotation can be made applicable to the District & Ses sions Court because there are a number of posts of Upper Division Clerks.
It would be irrational to apply that prin ciple of rotation to the Court of Small Causes in which there is only one Upper Division Clerk/English Clerk.
In the seniority list of the establishment of the Judge of Small Causes Court, Delhi, the name of respondent No. 1 appears at Serial No. 9 whereas that of the appellant ap pears at Serial No. 19.
Both of them satisfy the test of integrity.
The only claim the appellant can have is on the principle of rotation as he is a graduate.
As that principle does not apply to an appointment by promotion to the post in question, the claim of the appellant cannot be upheld.
As we have already observed, none of the other respondents have pressed their claims in the High Court or here.
In the result, the appeal fails and is dismissed.
Looking to the facts and circumstances of the case there will be no order as to costs.
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One post of Upper Division Clerk/English Clerk fell vacant in the Small Causes Court.
Appellant made his claim to the post on the footing that he was a graduate and on the basis of Rule of Rotation embodied in Rule VI of the High Court Rules and Orders, Volume 1, Respondent No. 1 made his claim on the basis of seniority.
The Judge, Small Causes Court took the view that the appellant was entitled to promotion in preference to Respondent No. 1 because of the rule of rotation.
On an Administrative Appeal, the District applicable to the establishment of Judge, Small Causes Court, and appointed Respondent No. 1 as Upper Division Clerk.
The Appellant preferred a departmental appeal which was heard by a Single Judge on the Administrative side of the High Court.
He took the view that the promotion in question could be made by the District & Sessions Judge, and should be in accordance with the rule of rotation.
Respondent No. 1 challenged the said decision by way of a Writ Petition.
The High Court allowed the Writ Petition and held that not only initial appointments but also ap pointments by promotion were to be made by the Judge, Small Causes Court and not by the District & Sessions Judge, and that the rule of rotation was not applicable.
Against the High Court 's decision, the appellant has preferred this appeal contending that the promotion in question could only be made by the District & Sessions Judge and that the rule of rotation was applicable even to the appointment by promotion.
Dismissing the appeal, this Court, HELD: 1.
Whenever a specific mention is made regarding a 134 particular officer of an establishment in a rule, that particular rule would normally apply to that establishment alone and the powers conferred by that rule would be con ferred on the officer mentioned in the rule.
Rule VI(1) of the High Court Rules speaks of appointments to the higher grades of the ministerial establishments and states that these appointments should ordinarily be made by seniority from lower grades provided that the officer to be promoted possesses the qualifications prescribed.
The first proviso to that rule goes on to say that the permanent vacancies in the original grade of Rs.75 5 125 shall be filled in by the District & Sessions Court by rotation as set out in the said sub rule (1) of Rule VI.
The 1st part of Rule VI deals with appointments by promotion to the higher grade of ministerial establishment.
Generally it must be held applicable to the establishment of the District & Sessions Court as well as that of the Judge, Small Causes Court.
This part, however, does not deal specifically with the question as to who is the officer competent to promote.
In view of this, the proviso can only be construed as laying down that, where the power of appointment by promotion is vested in the District & Sessions Judge, in making appointments by promotion to fill in the permanent vacancies in the said original grade of Rs.75 5 125, rule of rotation set out in the first provi so to clause (I) of Rule VI should ordinarily be followed.
It is not disputed that there is a separate Cadre for the Court of Small Causes.
Rule IV(3) shows that the first appointment of the ministerial officers in the Court of Small Causes is to be made by the Judge of the Small Causes Court.
[139F H; 140A C] 2.
A reading of sub section (1) of the Punjab Courts Act, 1918 the High Court Rules, and Notification issued makes it clear that appointments by promotion to the posts in the entire ministerial cadre other than those in the process serving and mental establishments in the Court of Small Causes have to be made by the Judge, Court of Small Causes and the first proviso to Rule VI(1) prescribing the rule of rotation has no application to such appointments.
Moreover, it would be unreasonable to apply the principle of rotation to the Court of Small Causes where there is only one U.D.C.
The principle of rotation can be made applicable to the District & Sessions Court because there are a number of posts of Upper Division Clerks.
It would be irrational to apply that principle of rotation to the Court of Small Causes in which there is only one Upper Division Clerk/English Clerk.
[140D E]
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PPeal NO 4454 of 1985.
From the Judgment and Order dated 15.2.1984 of the Punjab and Haryana High Court in L.P.A. No. 224 of 1984.
V.M. Tarkunde, Miss Meenakshi Arora, R.N. Karanjawala and Mrs. Manik Karan jawala for the Appellant.
K.K Jain, A.D. Sanger, Ajay K. Jain, Pramod Dayal, B.R. Appeal, P.G. Gokhale, Janendra Lal and Miss Yashmin Tarapore for the Respondents.
PG NO 705 The Judgment of the Court was delivered by RAY, J.
The only question that arises for decision in this appeal is whether an employee promoted to a post reserved for Scheduled Castes and Scheduled Tribes is entitled to have his seniority determined from the date of his appointment to the post or his seniority inter se will be reckoned as it was in the class or grade from which he was promoted to a post in a higher rank.
The appellant, who is a Scheduled Caste joined service as a Clerk in the Electricity Branch of the Punjab Public Works Department on February 20, 1954.
The terms and conditions of his service were governed by the Punjab P.W.D. (Electricity Branch) Provincial Service Class 111 (Subordinate posts) Rules, 1952.
In February, in and Punjab State Electricity Board was constituted under Section 3 of the and the employees of the Electricity Branch were transferred to the Board.
The conditions of service of the employees were governed by their existing terms and conditions as well as existing service Rules.
In 1967 the Haryana State Electricity Board was constituted and the appellant was allocated to the Haryana State Electricity Board with existing terms and conditions of service.
The Board being a statutory corporation was requested by letter dated December 13, 1972 by the Government to provide for reservation of 22% of vacancies initial recruitment and promotion posts for being filled up by members of the Scheduled Castes and Scheduled Tribes as well as by members of backward classes.
The Haryana State Electricity Board adopted the above circular by its Resolution dated March 1976 providing for reservation of posts both for initial requirement as well as for promotion.
The appellant was promoted on September 1973 as Deputy Superintendent the respondent No.2, Rajinder Singh Marya was also promoted by the same order as Deputy Superintendent.
In the said order of appointment the following note was appended: The earlier promotion of the above officials as Deputy Superintendent will not confer upon them any right to claim seniority over those who may otherwise be senior to them due to any reason whatsoever.
On April 27, 1972 a circular was issued by the Chief Secretary Government of Haryana to all its departments regarding reservation for members of Scheduled Castes and Scheduled Tribes in service and fixation of seniority Paragraphs 2 and 4 of the said circular which are relevant are quoted hereinbelow: PG NO 706 "2.
It has to be pointed out that this was irregular and inter se seniority of all the candidates taken together (i.e. whether appointed against reserved vacancies or against open ones) must be fixed according to the combined merit list and not otherwise.
Vacancies assigned to Scheduled Castes/Backward Classes under block system are so assigned for the purposes of reservation only and are not intended for fixing inter se seniority of the candidates contrary to their order in the combined merit list prepared by the Public Service Commission/Subordinate Service Selection Board.
The above instructions, regarding determination of inter se seniority will however? apply only in those cases where the departmental service rules do not provide for seniority being determined from the date of joining or from the date of confirmation or by a method otherwise than the merit determined by the Public Service Commission/S.S.S. Board.
In other words, in all cases where the service rules have not yet been framed, or where the service rules provide for seniority being determined according to the merit laid down by the Commission/S.S.S. Board, the seniority of the officials shall be determined in the manner stated above.
In other cases, where the service rules specifically provide for seniority being determined from the date of joining or from the date of confirmation by the recruiting authority the seniority shall be determined by such different methods.
" As the seniority of the appellant was not determined from the date of his appointment to the post of Deputy Superintendent he made a representation to the Board requesting for determination of his seniority from the date of his appointment to the promoted post and also for considering his case for promotion to the post of Superintendent.
This representation of the appellant was rejected on the ground that: "The officials belonging to the scheduled castes/tribes and backward classes who are promoted against the posts reserved for them under the block system and for reasons other than inefficiency of their seniors will not be assigned seniority from the date of their joining in the PG NO 707 promoted rank.
They shall be assigned seniority in the promoted rank with reference to their inter se seniority of their previous posts.
Thereafter, on January 20, 1977 the appellant was finally informed that his seniority will not be computed from the date of his promotion to the post of Deputy Superintendent.
On January 12, 1977 the respondent Nos. 2 and 3 i.e. Rajinder Singh Marya and Jagdish Lal Lamba who were junior to the appellant as Deputy Superintendents, were promoted as Superintendents superseding the claim of the appellant.
Aggrieved by this, the appellant instituted an application under Article 226 of the Constitution of India in the High Court of Punjab and Haryana praying for a writ of mandamus directing the respondent No. 1 to consider his case for promotion to the post of Superintendent on the basis of his being seniormost Deputy Superintendent according to the continuous length of service on that post and to promote him to the post of Superintendent with effect from the date his juniors have been promoted and for other consequential reliefs.
An affidavit was filed on behalf of Respondent No. 1 verified by Shri R. Prakash, Secretary, Haryana State Electricity Board wherein in para 3 it has been submitted that: " . .the seniority of the petitioner has been determined in the post of Deputy Superintendent in accordance with the exception below Rule 9 of the 1952 Rules.
" In Para 5 it has been admitted that the appellant was promoted as Deputy Superintendent on 25th September, 1973 and since then he is continuing on the said post.
It has further been submitted that the promotion of the appellant was in an officiating capacity and he still continues to officiate as Deputy Superintendent.
The appellant was promoted to the post of Deputy Superintendent against a post which was reserved for the Scheduled Castes, though he was far junior in the cadre of Assistants.
In para 7 it has been stated that: ".
The petitioner cannot claim seniority above those two officials in the rank of Deputy Superintendent.
In view of the exception to Rule 9, if a member of service is promoted temporarily to a post earlier than his senior for PG NO 708 reasons other than the inefficiency of the senior person, they will take rank inter se according to their relative seniority in the class from which they were promoted and junior persons thus promoted shall not be confirmed from a date earlier than the date of confirmation of his senior except on the score of inefficiency of the latter.
In the present case, the petitioner was promoted temporarily to the post of Deputy Superintendent earlier to the other two officials on the ground that the petitioner belonged to the scheduled castes.
The other two officials were not superseded on the ground of inefficiency . " On February 4, 1984 the learned single Judge of the High Court dismissed the writ petition holding inter alia that the instructions governing the matter of promotion in favour of the Scheduled Caste candidates had nothing to do with the determination of the seniority of these candidates.
Moreover, in the letter promotion the petitioner it was specifically mentioned that the earlier promotion would not confer on him any right or claim to seniority over and above those who were otherwise senior to him in the cadre from which he had been promoted.
It was further held that m the light of exception to Rule 9, the petitioner being promoted temporarily, his seniority cannot be counted from the date of his appointment in the higher post and the respondent Nos. 2 and 3 would be treated senior to him in the rank of Deputy Superintendent as they were senior to the petitioner in the grade of Assistants.
It was therefore, found that respondent Nos. 2 and 3 were entitled to be promoted as Superintendents earlier to the petitioner .
Against this judgment and order Letters Patent Appeal being LPA No. 224 of 1984 was filed.
The said appeal was however.
dismissed summarily as being without any merit.
The appellant, thereafter, filed the instant appeal assailing the said judgment.
Before proceeding to consider the question whether the appellant 's seniority was properly determined under Rule 9 of the Punjab P.W.D. (Electricity Branch) Provincial Service Class 111 (Sub ordinate posts) Rules 1952 (in short to be referred herein as the said Rules) it is necessary to set out herein the relevant provision of Rule 9: "9. Seniority of the members of the Service The seniority of the members of the Service for the time being serving in each class of appointment shown in Appendix `A ' shall be determined as follows: PG NO 709 (i) Prior to confirmation (i.e. in the case of persons serving on probation or in an officiating capacity) in the order of the dates of their appointment or if such date be the same in respect of two or more persons, in the order of their ages, the older being placed above the younger.
(ii) After confirmation by their respective dates of confirmation, provided that where two or more members are confirmed w.e.f.
the same date they will retain the order to confirmation.
Exception: If a member of the service is promoted temporarily to a post earlier than his senior, for reasons other than the inefficiency of the senior person they will take rank inter se according to their relative seniority in the class from which they were promoted and the junior person thus promoted shall not be confirmed from a date earlier than the date of confirmation of his senior except on the score of inefficiency of the latter.
Provided further that if a member is appointed to a higher class later than a person who was junior to him in the lower class for reasons which the appointing authority may certify in writing to be connected with the Public interest the person so appointed shall be given the same seniority in the higher class vis a vis such junior as he held in the lower class.
Thus, on a plain reading of the Rule it appears that the seniority of the members of the Service serving in an officiating capacity shall be prior to confirmation `in the order of the dates of their appointment ' and after confirmation by their respective dates of confirmation.
There is an exception to this Rule to the effect that if a member of the Service is promoted temporarily to a post earlier than his senior for reasons other than inefficiency of the senior person they will take rank inter se according to their relative seniority in the class from which they were promoted and the junior person so promoted shall not be confirmed from a date earlier than the date of confirmation of the senior.
The provision contained in the exception to Rule 9 is applicable only in the case of temporary promotion of a member of the service to a post earlier than his senior for the purposes other than inefficiency of the senior persons.
PG NO 710 In the instant case admittedly the appellant has been promoted to the post of Deputy Superintendent which was reserved under the block system for members of the Scheduled Castes.
The appointment to the said reserved post on promotion is a regular one and this has been admitted in paragraph 5 of the counter affidavit referred to hereinbefore.
The appointment letter does not articulate that the promotion of the appellant to the post of Deputy Superintendent was purely temporary.
The promotion has been made on a regular basis to the post of Deputy Superintendent reserved on the basis of quota of vacancies for being filled up by promotion of members belonging to the Scheduled Castes.
The appointment of the appellant to the said promotional post of Deputy Superintendent, in our considered opinion cannot be designated to be purely a temporary promotion.
This being the position the exception to Rule 9(ii) of the said rules cannot be applied to determine the seniority of the appellant in the post of Deputy Superintendent and his seniority cannot be based in accordance with the inter se seniority of the respondent Nos. 2 and 3 in the cadre of Assistants from which the appellant and respondent Nos. 2 and 3 were promoted to the post of Deputy Superintendent.
Rule 9(i) of the said Rules is applicable in this case and the seniority of the appellant is to be reckoned from the date of his appointment In the post of Deputy Superintendent.
The appellant is thus senior to respondent Nos. 2 and 3 in the rank of Deputy Superintendent as he was promoted to the said post earlier than the respondents Nos. 2 and 3 and as such his claim for promotion to the post of Superintendent on the dates when the respondent Nos. 2 and 3 were promoted to such post is legal and valid.
It may be mentioned that during the pendency of the writ petition, the appellant had been promoted to the post of Superintendent on 29.5.1981 and as such he pleaded in para 6 of the special leave petition that his seniority in the cadre of Deputy Superintendent should not be affected on the basis of the judgments rendered by the High Court.
On a consideration of the facts and circumstances stated hereinbefore, the finding of the High Court that the appellant was promoted temporarily and so exception to Rule 9(ii) applies for determination of seniority of the appellant as Deputy Superintendent, in our considered opinion, cannot be sustained as we have already held that the promotion of the appellant in a reserved vacancy, is a regular one and it does not smack of purely temporary character.
The seniority of the appellant is to be reckoned from the date of his appointment to the said post according to the provisions of Rule 9(i) of the said Rules.
The judgments of the High Court in Letters Patent Appeal No. 224 of 1984 as well as in the writ petition No. 773 of 1977 are PG NO 711 set aside and the appeal is allowed.
The respondent No. 1 is directed to treat the appellant promoted to the post of Superintendent from the date the respondent Nos. 2 and 3 were promoted to the said post and to pay him the emoluments attached to the said post of Superintendent minus the emoluments paid as Deputy Superintendent from that date till the date of his actual appointment as Superintendent, i.e. May 29, 1981.
The appeal is thus allowed with costs.
N.V.K. Appeal allowed.
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The appellant, who belongs to the Scheduled Castes community, joined service as a clerk on February 20, 1954 in the Electricity Branch of the Punjab Public Works Department.
In February 1959, the Punjab State Electricity Board was constituted and the employees of the Electricity Branch were transferred to the said Board.
The conditions of service of the employees were governed by the existing terms and conditions.
as well as the existing service rules.
In 1967, the Haryana State Electricity Board was constituted and the appellant was allocated to the said Board.
The Electricity Board by its resolution dated March 16.
1976 adopted the circular letter dated December 18, 1972 providing for reservation of 22% of Vacancies both for initial recruitment as well as for promotion to the Scheduled Castes and Scheduled Tribes as well as to members of the backward classes.
The appellant was promoted on September 25, 1973 as Deputy Superintendent.
The respondent No. 2 was also promoted by the same order as Deputy Superintendent.
However, in the said order, it was made clear by a note appended thereto that the earlier promotion of the officials will not confer on them any right to claim seniority over others.
On April 27, 1972, a circular was issued by the Chief Secretary, Government of Haryana to all the Departments regarding the criteria for reservation for members of Scheduled Castes and Scheduled Tribes in the service and fixation of their seniority.
As the seniority of the appellant was not determined from the date of his appointment to the post of Deputy Superintendent, he made a representation to the Board requesting for its determination.
This representation was, however, rejected on the ground that seniority in the promoted rank would be accorded only with reference to the inter se seniority in the previous post, and on January 21, 1977, the appellant was finally informed that his seniority will not be computed PG NO 702 PG NO 703 from the date of his promotion to the post of Deputy Superintendent.
On January 12, 1977 respondents 2 and 3 who were junior to the appellant as Deputy Superintendent were promoted as Superintendent superseding the claim of the appellant.
Aggrieved by the aforesaid action of the first respondent in promoting respondents 2 and 3, the appellant filed a writ petition in the High Court for a mandamus directing respondent 1 to consider his case for promotion for the post of Superintendent on the basis of his being the senior most Deputy Superintendent.
The writ petition was contested on behalf of the respondent l who stated in its counter affidavit that the petitioner could not claim seniority above the respondents 2 and 3 in the rank of Deputy Superintendent on the ground that his seniority had already been fixed in accordance with the exception below rule 9 of the 1952 Service Rules.
A Single Judge of the High Court dismissed the writ petition on the ground that the instructions governing the matter of promotion in favour of Scheduled Castes candidate had nothing to do with the determination of the seniority of these candidates and that the letter promoting the petitioner had specifically mentioned that the earlier promotion would not confer on him any right of claim to seniority over and above those who are otherwise senior to him in the cadre from which he was promoted and that in the light of the exception to rule 9 of the 1952 Service Rules, the petitioner being promoted temporarily, his seniority cannot be counted from the date of his appointment in the higher post and that respondents 2 and 3, who could be treated senior to him in the rank of Deputy Superintendent as the were senior to the petitioner in the grade of assistants.
The Letters Patent Appeal filed by the appellant having been dismissed summarily, the appellant appealed to this Court by special leave.
Allowing the Appeal, HELD. 1.
On a plain reading of Rule 9 it appears that the seniority of the members of the service serving in an officiating capacity shall be determined prior to confirmation `in the order of the dates of their appointment ' and after confirmation by their respective dates of confirmation.
The exception to this Rule is that if a member of the is promoted temporarily to a post earlier than his senior for reasons other than inefficiency of the senior person they will take rank inter se according to PG NO 704 their relative seniority in the class from which they were promoted and the Junior person so promoted shall not be confirmed from a date earlier than the date of confirmation of the senior.
[709F G] In the Instant case, the appellant has been promoted to the post of Deputy Superintendent which was reserved under the block system for members of the Scheduled Castes.
The appointment to the said reserved post on promotion is a regular one.
The appointment letter does not that the promotion of the appellant to the post of Deputy Superintendent was purely temporary.
This being the position the exception to Rule 9(11) cannot be applied to determine the seniority of the appellant in the post of Deputy Superintendent, and his seniority cannot be based in accordance with the inter se seniority of respondent Nos. 2 and 3 wee promoted to he post of Deputy Superintendent.
[710A D] 2.
The appellant is thus senior to respondent Nos. 2 and 3 in the rank of Deputy Superintendent the was promoted to the said post earlier them the respondents Nos. 2 and 3 and as such his claim for promotion to the post of Superintendent on the dates when the respondent Nos. 2 and 3 were promoted to such post is legal and valid.
[710E] 3/ Respondent No. 1 is directed to treat the appellant promoted to the post of Superintendent from the date respondent Nos. 2 and 3 were promoted to the said post and to pay him the emoluments attached to the said post of Superintendent minus the emoluments paid us Deputy Superintendent from that date till May 29, 1981 date of actual appointment is Superintendent.
[711A B]
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5882.txt
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iminal Appeal No.159 of 1966.
Appeal by special leave from the judgment and order dated November 24, 1965 of the Bombay High Court in Criminal Misc. "Application No. 323 of 1965.
S.C. A garwala, for the appellant.
M.S.K. Sastri and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal from the judgment of the Bombay High Court passed in exercise of ordinary original civil jurisdiction by which the ,appellants were found guilty of having committed contempt of Mr. Justice Tarkunde in his judicial capacity and of the court.
Appellant No. 2 D.R. Goel, who is the Editor, Printer and Publisher of Perspective Publications (P) Ltd. appellant No. 1, was sentenced to simple imprisonment for one month together with fine amounting to Rs. 1,000/ , in default of payment of fine he was to undergo further simple imprisonment 781 for the same period.
The appellants were also directed to pay the costs incurred by the State.
On behalf of the first appellant it has been stated at the bar that the appeal is not being pressed.
The background in which the impugned article was published ' on April 24, 1965, in a weekly periodical called "Mainstream" which is a publication brought out by the first appellant may be set out.
In the year 1960 a suit was filed by one Krishnaraj Thackersey against the weekly newspaper "Blitz" and its Editor and others claiming Rs. 3 lacs as damages for libel.
The hearing in that suit commenced on the original side of the Bombay High Court on June 24, 1964.
The delivery of the judgment commenced on January 19, 1965 and continued till February 12, 1965.
After June 24, 1964, that suit was heard from day to day by Mr. Justice Tarkunde.
The suit was decreed in the sum of Rs. 3 lacs.
An appeal is pending before a division bench of the High Court against that judgment.
The impugned article is stated to have been contributed by a person under the name of "Scribbler" but appellant No. 2 has taken full responsibility for its publication.
Its heading was "STORY OF A LOAN and Blitz Thackersey Libel Case".
It is unnecessary to reproduce the whole article which appears verbatim in the judgment of the High Court.
The article has been ingeniously and cleverly worded.
The salient matters mentioned in the article are these: After paying a tribute to the Indian judiciary the writersays that according to the report in "Prajatantra" a Gujarati paper architects Khare Tarkunde Private Limited of Nagpur, hereinafter called "Khare Tarkunde" (which is described a Firm in the article) got a loan facility of Rs. 10 lacs from the Bank of India on December 7, 1964.
The partners of Khare Tarkunde included the father, two brothers and some other relations of Justice Tarkunde who awarded a decree for Rs. 3 lacs as damages against Blitz and in favour of Thackersey.
It is pointed out that the date on which Rs. 10 lacs loan facility was granted by the Bank of India was about five and a half months after the Thackersey Blitz libel suit had begun and just over six weeks before Justice Tarkunde began delivering his "marathon judgment" on January 19, 1965.
It is then said that for Rs. 10 lacs loan facility granted to Khare Tarkunde, the New India Assurance Co. stood guarantee and that the two Directors of the Bank of India who voted in favour of the credit of Rs. 10 lacs being granted to Khare Tarkunde were Thackersey and Jaisinh Vithaldas (believed to be a relative of Thackersey).
Next it is stated that one of the Directors of the New India Assurance that stood guarantee for the loan facility was N.K. Petigara, who was also a senior partner of M/s. Mulla & Mulla Craigie Blunt & Caroe, Solicitors of Thackersey in the Blitz Thackersey Libel Case before Justice Tarkunde 4 Sup.
CI/69 17 782 Emphasis is laid on the fact that Khare Tarktunde had a capital of Rs. 5 lacs only and the balance sheet of the firm of June 1964 revealed indebtedness to various financiers to the tune of Rs. 14 lacs.
Thus Khare Tarkunde is stated to be "lucky to get against all this a handsome loan of Rs. 10 lacs from the Bank of India".
The writer refers to the Code among college teachers and university professors of not examining papers when their own children and near relatives sit for examination and adds that Justice Tarkunde himself will recognize the rightness of such a Code.
Referring to the unimpeachable integrity and reputation of judges of the Bombay High Court, the writer proceeds to say "there must not be allowed to be raised even the faintest whisper of any misgiving on that score.
" Paragraph 24 deserves to be reproduced : "If Sri Krishna Thackersey did not lay it bare at the time of the suit that he was one of the sponsors of a contract of which the judge 's relations were the beneficiaries, it is up to the Chief Justice of the Supreme Court and the Bombay High Court including Justice Tarkunde as also the ever vigilant members of the Bar to consider all the implications of these disclosures which have distressed a common citizen like me, so that the finest traditions of our judiciary may be preserved intact.
" A petition was filed before the Bombay High Court by the State of Maharashtra pointing out that the aforesaid article contained scandalous allegations and was calculated to obstruct the administration of justice and constituted gross contempt of court.
The article purported to state certain facts relating to the transaction between Khare Tarkunde and the Bank which were false and there were several mis statements and suppression of facts some of which were: (a) The article wrongly stated that the father of Mr. Justice Tarkunde was a partner in Khare Tarkunde; and (b) The article falsely described the transaction as a 'loan ' by the Bank to Khare Tarkunde.
In fact the said transaction was only a guarantee given by the Bank which undertook to pay to the Govt.
any amount not exceeding Rs. 10 lacs in the event of Khare Tarkunde being unable to perform its obligations.
The Bank was secured by a further guarantee given by the New India Assurance Co. Ltd. undertaking to secure the Bank in the event of the Bank having to pay the said amount or any part thereof.
Appellant No. 2 who also happens to be a Director and Principal Officer of the first appellant, filed a reply raising some objec 783 tions of a legal and technical nature ,and took up the position that the impugned article was based on a report published in "Prajatantra" from which all the facts stated in the article were incorporated.
It was asserted that certain 'major facts ' had been verified by the appellant and found to be true.
It was admitted that upon reading the petition for taking contempt proceedings it was found by appellant No. 2 that there were certain incorrect statements in the article.
It was claimed that the article had been published in a bona fide belief that whatever was stated in the article in "Prajatantra" was true.
The intention was to convey to the public at large that it was incumbent on the plaintiff Thackersey and Pettigara, one of the partners of Mulla & Mulla etc.
, his attorneys to inform Justice Tarkunde that the plaintiff had voted for a resolution of the Board of Directors of the Bank of India which, without reasonable doubt, would help Khare Tarkunde in which Tarkunde happened to be a brother of the Judge.
The High Court analysed the implications of the facts stated in each paragraph of the impugned article in great detail and observed : " . . reading the article as a whole, taking care not to read into it anything more than its plain language implies and making every allowance for literary style and rhetorical flourish expressions which were often used in the arguments for the.
respondents it is impossible to avoid the conclusions that this article exceeds the bounds of fair and reasonable criticism.
In so far as it suggests that there is some sort of casual connection between the granting of the loan to M/s. Khare Tarkunde Pvt. Ltd., and the judgment of Mr. Justice Tarkunde in the Blitz Thackersey case, it clearly attempts to lower the learned judge in his judicial capacity not to mention the fact that it would also tend to shake the confidence of the lay public in the High Court and impair the due administration of justice in that Court.
In so far as there is a suggestion made be it ever so faint that Mr. Justice Tarkunde knew or must have known of the loan to his brother 's firm before he delivered the judgment in the case, the article is malicious and 'not in good faith." The High Court also examined the misstatements and inaccuracies in the impugned article and held that there was no foundation for the suggestion that Khare Tarkunde was an impecunious concern and therefore was "lucky" to get the handsome loan nor for the suggestion that either Thackersey and his co Directors in the Bank of India or Thackersey 's solicitor and his co Directors in the New India Assurance Co. went out of their way to grant accom 784 modation to Khare Tarkunde.
The High Court found no basis for the insinuation that there was any connection between the loan and the judgment in the Blitz Thackersey case or that Justice Tarkunde knew or might have Known about any loan having been granted to his brother 's firm.
No attempt was made to justify these suggestions in the return or in the argument before the High Court and all that was urged was that the words used by contestable did not give rise to the said imputations or innuendos and that the contemnor was only trying to communicate to the public at large what has been stated before.
It is needless to refer to the other points raised before and decided by the High Court because none of them has been argued before us.
In this appeal, counsel for appellant No. 2 has made some attempt to establish that no aspersion was cast on the integrity of Justice Tarkunde in the article nor was any imputation of dishonesty made.
His second contention is that proceedings for contempt for scandalising a Judge have become obsolete and the proper remedy in such a situation is for the Judge to institute action for libel.
Thirdly, it is said that there was no evidence before the High Court that Justice Tarkunde did not know about the transaction or the dealings between the firm in which his brother was a partner and the bank of which Thackersey was a director.
If, it is submitted, the allegations made in the article were truthful or had been made bona fide in the belief that they were truthful the High Court ought not to have found appellant No. 2 guilty of contempt.
At any rate, according to counsel, the statements contained in the article only made out a charge of bias against the Judge and if such a charge is made it cannot be regarded as contempt.
On the first point our attention has been invited to the paragraphs in the article containing expression of high opinion held by the writer of the judiciary in India.
It is suggested that his attempt was only to make a fair and legitimate criticism of the proceedings in the Thackersey suit against the "Blitz" weekly.
It has been emphasised in the article that the damages which were awarded to the tune of Rs. 3 lakhs were almost punitive and that it was a rare phenomenon that the plaintiff (Thackersey) did not step into the witness box and also a permanent injunction had been granted preventing Blitz from printing anything based on the subject matter of litigation.
The law involving freedom of press fully warranted such criticism of a judgment or of the proceedings in a suit in a court of law.
It is true that the writer of the article could exercise his right of fair and reasonable criticism and the matters which have been mentioned in some of the paragraphs may not justify any proceedings being taken for contempt but the article read as a whole leaves 785 no doubt that the conclusions of the High Court were unexceptionable.
It was a skillful attempt on the part of the writer to impute dishonesty and lack of integrity to Justice Tarkunde in the matter of Thackersey Blitz suit, the imputation being indirect and mostly by innuendo that it was on account of the transaction and the dealings mentioned in the article that the suit of Thackersey was decreed in the sum of Rs. 3 lakhs which was the full amount of damages claimed by Thackersey.
It may be that the article also suggests that Thackersey and his ,attorneys were to blame inasmuch as they did not inform the Judge about the transactions of Khare Tarkunde with the Bank of India with which Thackersey was associated in his capacity as a director but that cannot detract from the obvious implications and insinuations made in various paragraphs of the article which immediately create a strong prejudicial impact on the mind of the reader about the lack of honesty, integrity and impartiality on the part of Justice Tarkunde in deciding the Thackersey Blitz suit.
On the second point counsel for appellant No. 2 has relied a great deal on certain decisions of the Privy Council and the Australian and American courts.
In the matter of a Special Reference from the Bahama Islands(1) a letter was published in a colonial newspaper containing sarcastic allusions to a refusal by the Chief Justice to accept 'a gift of pineapples.
No judgment was given by the Privy Council but their lordships made a report to Her Majesty that the impugned letter though it might have been made subject of proceedings for libel was not, in the circumstances, calculated to obstruct or interfere with the course of justice or the due administration of ,law and, therefore, did ,not constitute contempt of court.
In that case there was no question of scandalising the court nor had any imputation been made against the Chief Justice in respect of any judicial proceedings pending before him or disposed of in his court.
It is the next decision of the Privy Council in McLeod vs St.
Aubyn(2) on which a great deal of argument has been built up before us that the courts, at least in England, have stopped committing anyone for contempt for publication of scandalising matter respecting the court after adjudication as well as pending a case before it.
That case came by way of an appeal from an order of the Acting Chief Justice St. Aubyn of the Supreme Court of St. Vincent committing one McLeod to prison for 14 days for alleged contempt of court.
It was said inter alia in the impugned publication that in Mr. Trifford the public had no confidence and his locus tenons, Mr. St. Aubya was reducing the judicial character to the level of a clown.
There were several other sarcastic and libelous remarks made about the Acting Chief Justice.
While recognizing publication of scandalous matter of the court itself ,as a head of contempt of court as (1) (2) 786 laid down by Lord Hardwicke in Re: Read and Huggonson(1), Lord Morris proceeded to make the oft quoted observation "committals for contempt of Court 'by itself have become obsolete in this country even though in small colonies consisting principally of coloured population committals might be necessary in proper cases".
Only a year later Lord Russel of Killowen C.J., in The Queen vs Gray(2) reaffirmed that any act done or writing published calculated to bring a court or a judge of the court in contempt, or to lower his authority, was a contempt of court.
The learned Chief Justice made it clear that judges and courts were alike open to criticism and if reasonable argument or expostulation was offered against any judicial act as contrary to law or the public good no court could or would treat that as contempt of court but it was to be remembered that the liberty of the press was not greater and no less than the liberty of every subject.
In that case it was held that there was personal scurrilous abuse of a judge and it constituted contempt.
All the three cases which have been discussed 'above were noticed by the Privy Council in Debi Prasad Sharma & Ors.
vs The King Emperor(3) where contempt proceedings had been taken in respect of editorial comments published in a newspaper based or a news item that the Chief Justice of Allahabad High Court in his administrative capacity had issued a circular to judicial officers enjoining on them to raise contributions to the war fund and it was suggested that he had done a thing which would lower the prestige of the court in the eyes of the public.
This is what was said at page 224 : "In In re a Special Reference from the Bahama Islands , the test applied by the very strong Board which heard the reference was whether the words complained of were in the circumstances calculated to obstruct or interfere with the course of justice and the due, administration of the law.
In Reg.
vs Gray [1900] 2Q.B. 36 it was shown that the offence of scandalising the court itself was not obsolete in this country.
A very scandalous attack had been made on a judge for his judicial utterances while sitting in a criminal case on circuit, and it was with the foregoing opinions on record that Lord Russel of Killowen C.J. adopting the expression of Wilmot C.J. in his opinion in Rex vs Almon (1765) Wilmot 's Notes of Opinions 243, which is the source of much of the present law on the subject, spoke of the article complained of as calculated to lower the authority of the judge.
" It is significant that their lordships made a distinction between a case where there had been criticism of the administrative act of (1) (2) (3) 70 I.A. 216.
787 a Chief Justice and an imputation on him for having done or omitted to have done something in the administration of justice.
It is further noteworthy that the law laid down in McLeod vs St. Aubyn(1) was not followed and it was emphasised that Reg.
vs Gray(2) showed that the offence of scandalising the court itself was not obsolete in England.
In Rex vs Editor of the New Statesman(3) an article had been published in the New Statesman regarding the verdict by Mr. Justice Savory given in a libel action brought by the Editor of the "Morning Post" against Dr. Marie Slopes (the well known advocate of birth control) in which it was said, inter alia, "the serious point in this case, however, is that an individual owning to such views as those of Dr. Marie Stores cannot 'apparently hope for a fair hearing in a Court presided over by Mr. Justice Avory and there are so many Avorys".
On behalf of the contemnor McLeod vs St. A ubyn(1) was sought to be pressed into service.
The Lord Chief Justice in delivering the judgment of the Court said that the principle applicable to such cases was the one stated in Reg.
vs Gray(2) and relied on the observations of Lord Russel at p. 40.
It was observed that the article imputed unfairness and lack of impartiality to a judge in the discharge of his judicial duties.
The gravamen of the offence was that by lowering his authority it interfered with the performance of his judicial functions.
Again in Ambard vs Attorney General for Trinidad and Tobago(4) the law enunciated in Reg.
vs Gray(2) by Lord Russel of Killowen was applied and it was said at page 335: "But whether the authority and position of an individual judge, or the due administration of justice, is concerned, no wrong is committed by any member of the public who exercises the ordinary right of criticising, in good faith, in private or public, the public act done in the seat of justice.
The path of criticism is a public way; the wrong headed are permitted to err therein; provided that members of the public abstain from imputing improper motives to those taking part in the administration of justice, and are genuinely exercising a right of criticism, and not acting in malice, or attempting to impair the administration of justice, they are immune.
Justice is not a cloistered virtue; she must be allowed to suffer the scrutiny and respectful, even though spoken, comments of ordinary men.
" It was, however, held that there was no evidence upon which the court could find that the alleged contemnor had exceeded fair and temperate criticism and that he had acted with untruth or malice (1) [1899] A .C. 549.
(2) (3) (4) 788 and with the direct object of bringing the administration of justice into disrepute.
Lord Denning M.R. in Reg vs Commissioner of Police of the Metropolis, Ex parte Blackburn (No. 2)(1) made some pertinent observations about the right of every man, in Parliament or out of it, in the Press or over the broadcast, to make fair and even outspoken comment on matters of public interest.
In the words of the Master of Rolls, "those who comment can deal faithfully with all that is done in a court of justice.
They can say that we are mistaken, and our decisions erroneous, whether they are subject to appeal or not.
All we would ask is that those who criticise us will remember that, from the nature of our office, we cannot reply to their criticism.
We cannot enter into public controversy.
Still less into political controversy.
We must rely on our conduct itself to be its own vindication.
" In that case Mr. Quintin Hogg had written an article in "Punch" in which he had been critical of the Court of Appeal and had even made some erroneous statements.
But reading of the article the salient passage of which is set out in the judgment of the Master of the Rolls makes it quite clear that there was no attempt to scandalise the Court and impute any dishonourable or dishonest motives or to suggest any lack of integrity in any particular Judge.
Oswald in his book on the Contempt of Court has expressed the view that it would be going a great deal too far to say that commitments for contempt of court by scandalising the Court itself have become obsolete, and that there does not seem to be any good reason for ignoring the principles which govern the numerous early cases on the subject.
The American and the Australian cases viz., John D. Pennekamp and The Miami Herald Publishing Co. vs State of Florida(2) and Bell vs Stewart(a) to which reference h.as been made on be half of appellant No. 2 can hardly be of much assistance because in this country principles have become crystallized by the decisions of the High Courts and of this Court in which the principles followed by English Courts have been mostly adopted.
We would now advert to the decisions of this Court.
It was held in Bathina Ramakrishna Reddy vs The State of Madras(4) that the fact that the defamation of a Judge of a subordinate court constitutes an offence under section 499 of the Indian Penal Code did not oust the jurisdiction of the High Court to take cognizance of the act as a contempt of court.
In that .case in an article in a Telugu weekly it was alleged that the Stationary Sub Magistrate of Kovvur was known to the people of the locality for harassing (1) [1968].2 W.L.R. 1206.
(2) ; (3 ) (4) ; 789 litigants in various ways etc.
Mukherjea, J., (as he then was) who delivered the judgment described the article as a scurrilous attack on the integrity and honesty of a judicial officer.
It was observed that if the allegations were false, they could not undermine the confidence of the public in the administration of justice and bring the judiciary into disrepute.
The .appellant there had taken the sole responsibility regarding the publication of the article and was not in a position to substantiate by evidence any of the allegations made therein.
It was held that he could not be said to have acted bona fide, "even if good faith can be held to be a defence at all in a proceeding for contempt".
The decision in Re: The Editor, Printer and Publisher of "The Times of India" and In re Aswini Kumar Ghose and Anr.
vs Arabinda Bose & Anr.(1) is very apposite and may be.next referred to.
In a leading article in "The Times of India" on the judgment of this Court in Aswini Kumar Ghose vs Arabinda Bose & Ant.(2) the burden was that if in a singularly oblique and infelicitous manner the Supreme Court had by a majority decision tolled the knell of the much maligned dual system prevailing in the Calcutta and Bombay High Courts by holding that the right to practise in any High Court conferred on advocates of the Supreme Court had made the rules in force in those High Courts requiring advocates appearing on the original side to be instructed by attorneys inapplicable to them.
This is what was said by Mahajan, J., (as he then was) speaking for the Court: "No objection could have been taken to the article had it merely preached to the courts of law the sermon of divine detachment.
But when it proceeded to attribute improper motives to the Judges, it not only transgressed the limits of fair and bona fide criticism but had a clear tendency 'to affect the dignity and prestige of this Court.
The article in question was thus a gross contempt of court.
It is obvious that if an impression is created in the minds of the public that the judges in the highest Court in the land act on extraneous considerations in deciding cases, the confidence of the whole community in the administration of justice is bound to be undermined and no greater mischief than that can possibly be imagined." The Editor, Printer and Publisher of the newspaper tendered an apology which was accepted; but this Court concurred in the expression of views in Ambard vs Attorney General of Trinidad(3), a passage from which has already been extracted.
The guiding principles to be followed by courts in contempt proceedings were enunciated in Brahma Prakash Sharma & Ors.
vs The State of (1) ; (2) ; (3) 790 Uttar Pradesh(1).
The judgment again was delivered by Mukherjea, J., (as he then was) and the English decisions including those of the Privy Council were discussed.
It is necessary to refer only to the principles laid down for cases of the present kind i.e. scandalising the court.
It has been observed that there are two primary considerations which should weigh with the court when it is called upon to exercise summary power in cases of contempt committed by "scandalising" the court itself.
In the first place, the reflection on the conduct or character of a Judge in reference to the discharge of his judicial duties would not be contempt, if such reflection is made in the exercise of the right of fair and reasonable criticism which every citizen possesses in respect of public acts done in the seat of justice.
Secondly, when .attacks or comments are made on a Judge or Judges disparaging in character and derogatory to their dignity, care should be taken to distinguish between what is a libel on a judge and what really amounts to contempt of court.
If, however, the publication of the disparaging statement is calculated to interfere with the due course of justice or proper administration of law by such court, it can be punished summarily as contempt.
"it will be 'an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice, or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
It is well established that it is not necessary to prove affirmatively that there has been an actual interference with the administration of justice by reason of such defamatory statement; it is enough if it is likely, or tends is ,any way, to interfere with the proper administration of law.
" In that case it was held that the contempt was of a technical nature.
This was based apparently on the reason that the Members of the Bar who had passed a resolution attributing incompetency, lack of courtesy etc.
and had referred to complaints against two officers, one a Judicial Magistrate and the other a Revenue Officer and had sent those complaints to the District Magistrate, Commissioner and the Chief Secretary in the State and secondly because very little publicity had been given to the statement.
In Re: Hira Lal Dixit & two Ors.(2) the above principles were ,applied and reaffirmed.
In that case words which had been used in a poster which was published had the necessary implication that the judges who decided in favour of the Government were rewarded by the Government with appointments to this Court.
Although this case was not one of scandalizing of the court but the question that was posed was whether the offending passage was of such character and import or made in such circum (1) (2) ; 791 stances as would tend to hinder or obstruct or interfere with the due course of administration of justice by this Court and it was answered in the affirmative and the contemnor was held guilty of Contempt of Court.
In State of Madhya Pradesh vs Revashankar(1) an application was made under section 528 of the Code of Criminal Procedure in certain criminal proceedings containing serious aspersions against a Magistrate, Mr. N.K. Acharya.
Reliance was once again placed on Brahm Prakash Sharma 's(2) case and the principles laid therein.
It was held that the aspersions which had been made amounted to something more than a mere intentional personal insult to the Magistrate; they scandalised the court itself and impaired the administration of justice and that proceedings under the contempt of court could 'be taken against the contemnor.
There can be no manner of doubt that in this country the principles which should govern cases of the present kind are now fully settled by the previous decisions of this Court.
we may re; state the result of the discussion of the above cases on this head of contempt which is by no means exhaustive.
(1 ) It will not be right to say that committals for contempt for scandalizing the court have become obsolete.
(2) The summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
(3) It is open to anyone to express fair, reasonable and legitimate criticism of any act or conduct of a judge in his judicial capacity or even to make a proper and fair comment on any decision given by him because "justice is not a cloistered virtue and she must be allowed to suffer the scrutiny and respectful, even though outspoken, comments of ordinary men".
(4) A distinction must be made between .a mere libel or defamation of a judge and what amounts to a contempt of the court.
The test in each case would be whether the impugned publication is a mere defamatory attack on the judge or whether it is calculated to interfere with the due course of justice or the proper administration of law by his court.
It is only in the latter case that it wilt be punishable as Contempt.
(1) (2) 792 (5 ) Alternatively the test will be whether the wrong is done to the judge personally or it is done to the public.
To borrow from the language of Mukherjea, J. (as he then was) (Brahma Prakash Sharma 's case)(1) the publication of a disparaging statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
As regards the third contention no attempt was made before the High Court to substantiate that the facts stated in the article were true or were rounded on correct data.
It may be that truthfulness or factual correctness is a good defence in an action for libel, but in the law of contempt there are hardly any English or Indian cases in which such defence has been recognized.
It is true that in the case of Bathina Ramakrishna Reddy(2) there was some discussion about the bona fides of the person responsible for the publication but that was apparently done to dispose of the contention which had been raised on the point.
It is quite clear that the submission made was considered on the assumption that good faith can be held to be a defence in a proceeding for contempt.
The words "even if good faith can be held to be a defence at all in a proceeding for contempt" show that this Court did not lay down affirmatively that good faith can be set up as a defence in contempt proceedings.
At any rate, this point is merely of academic interest because no attempt was made before the High Court to establish the truthfulness of the facts stated in the article.
On the other hand, it was established that some of the material allegations were altogether wrong and incorrect.
Lastly the submission that the statements contained in the article made out only a charge of bias against the judge and this cannot constitute contempt has to be stated to be rejected.
It is a new point and was never raised before the High Court.
Moreover the suggestion that the charge in the article was of legal bias which meant that Justice Tarkunde had some sort of pecuniary interest in Khare Tarkunde which had the transactions with the bank of which Thackersey was a Director is wholly baseless.
Counsel had to agree that Justice Tarkunde was neither a shareholder nor was there anything to show that he had any other interest m Khare Tarkunde.
The mere fact that his brother happens (1) (2) ; , 793 to have a holding in it cannot per se establish that Justice Tarkunde would also have some financial or pecuniary interest therein.
It is not possible to accept nor has such extreme position been taken by the counsel for appellant No. 2 that there is any bar to a brother or 'a near relation of a judge from carrying on any business, profession or avocation.
The entire argument on this point is wholly without substance.
The appellant No. 2 showed no contrition in the matter of publication of the impugned article.
lie never even tendered an unqualified apology.
The High Court, in these circumstances, was fully justified in punishing him for contempt of court and in awarding the sentence which was imposed.
In the impugned article there was a clear imputation of impropriety, lack of integrity and oblique motives to Justice Tarkunde in the matter of deciding the Thackersey Blitz suit which, on the principles already stated, undoubtedly constituted contempt of court.
The appeal fails and is hereby dismissed.
V.P.S. Appeal dismissed.
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One T filed a suit claiming Rs. 3 lacs damages for libel against a newspaper.
The suit was decreed by a Judge of the Bombay High Court.
Thereafter, an article was published in a publication brought out by the first appellant and of which the second appellant was the editor, printer and publisher.
The article contained insinuations that there was a connection between a loan of Rs. 10 lacs, granted to a firm in which the Judge 's brother was a partner, and the judgment m the defamation case; and that the Judge knew, about the loan having been granted to the firm.
The appellants were found guilty of contempt of court.
In appeal to this Court, it was contended that: (1) In the article no aspersion was cast on the integrity of the Judge nor was any imputation of dishonesty made; (2) Proceedings for contempt for scandallzing a Judge have become obsolete, the proper remedy being for the/judge to take action for libel; (3) The allegations were made in the bona fide belief that they were truthful and there was no evidence that the Judge did not know about the transaction; and (4) The statements, if at all, amounted to a charge of bias against the Judge and could not be regarded as contempt.
HELD: (1 ) The obvious implications and institutions made in the various paragraphs of the article, read as a whole, create a strong judicial impact on the mind of the reader about the Jack of honesty, integrity and impartiality on the part of the Judge in deciding the defamation suit.
[785 C D] It is open to anyone to express fair, reasonable and legitimate criticism of any act or conduct of a Judge in his judicial capacity or even to make a proper and fair comment on any decision given by him.
But, if an article attributes improper motives to the Judge, it not only transgresses the limits of fair and bona fide criticism but has a clear tendency to affect the dignity and prestige of the court and would amount to contempt of court.
[785 A, 791 F] (2) It will not be right to say that committals for contempt of court for scandalizing the court have become obsolete.
[791 D] (a) But such summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
[791 E] (b) There is a distinction between a mere libel or defamation of a judge and what amounts to contempt of court.
The tests are: (i) Is the impugned publication a mere defamatory attack.
on the Judge or is it calculated to interfere with the due course of Justice or the proper administration of law by his court? and (ii) Is the wrong done to the Judge personally or is it done to the public? The publication of a disparaging 780 statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the Judge or to deter actual and prospective litigants from placing complete reliance upon the courts administration of justice, or if it is likely to cause embarrassment in the mind of the Judge himself in the discharge of his judicial duties.
[791 G H; 792 A C] B.R. Reddy vs State of Madras, ; , Re: The Editor.
Printer and Publisher of the 'Times of India ' and in re: Aswini Kumar Ghose vs Arabinda Bose, ; , Brahm Prakash Sharma vs State of U.P., ; Re: Hira Lal Dixit & Ors. ; and State of M.P. vs Revashankar , followed.
Re: Read and Huggonson, 2 Atk. 471, In the matter of a Special Reference from the Bahama Islands , McLeod vs St. Aubyn, , Reg.
vs Gray, ; Rex vs Editor of the New Statesman ; Ambard vs Attorney General for Trinidad and Tobago, (.1936) A.C. 322, Debi Prasad Sarma .v.
The 'King Emperor.
70 I.A. 216 and Reg.
vs Commissioner of Police the Metropolis, Ex parte Blackburn, , referred to.
(3) Assuming good faith can be held to be a defence in a proceeding for contempt, in the present case, no attempt was made to substantiate 'that the facts stated in the article were true or were rounded on correct data.
On the other hand, it was established that some of the material allegations were altogether wrong and incorrect.
[792 E F] B.R. Reddy 's case; , , referred to.
(4) The mere fact that his brother happened to have a pecuniary interest in the firm could not per se establish that the Judge would also have a financial interest therein so as to constitute legal bias.
[792 H; 793 A]
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Appeals Nos. 195 and 196 of 1959.
Appeals by special leave from the Award dated April 15, 1957, of the Third Industrial Tribunal, West Bengal, in Case No. VIII 7 of 1956.
B. Sen, P. K. Chakravarty and B. N. Ghosh, for the appellants (in C. A. No. 195 of 59) and respondents (in C. A. No. 196 of 59).
N. C. Chatterjee, D. L. Sen Gupta and B. P. Maheshwari, for the respondents (in C. A. No. 195 of 59) and appellants (in C. A. No. 196 of 59).
March 30.
The Judgment of the Court was delivered by WANCHOO, J.
These are two appeals by special leave against the same award of the Third Industrial Tribunal, West Bengal and shall be disposed of by this judgment.
Appeal No. 195 is by Messrs. Burn and Co. Limited (hereinafter called the company) and Appeal No. 196 is by the workmen of Messrs. Burn and Co. Limited (hereinafter called the workmen).
There were disputes between the company and the workmen on various matters, which were referred to the tribunal for adjudication.
Of these disputes, only two now survive in the two appeals.
The company 's appeal is with respect to that part of the award which deals with incentive bonus to the clerical and subordinate staff while the workmen 's appeal is with respect to that part of the award which appeals with the cash benefit of Annas eight per head per working day for the period the canteen was not in operation.
We shall first take up the company 's appeal.
The company has introduced incentive bonus for manual workers including Sarkars and Checkers but there is no provision for incentive bonus to the clerical and subordinate staff.
The workmen therefore claimed that these two categories should also be given incentive bonus like the manual workers and pointed out 425 that in other concerns this was done.
The company resisted the claim on two grounds: (i) that the clerical staff got what is known as the Bengal Chamber of Commerce dearness allowance, which is higher than, the dearness allowance paid to the manual workers and (ii) that the clerical staff and the subordinate staff do not actually produce anything and if they are given incentive bonus it will mean that they would be paid on the 'production of others, namely, the manual workers.
The tribunal was of the view that the fact that the clerks got the Bengal Chamber of Commerce dearness allowance was no reason for their total exclusion from the benefit of the incentive bonus scheme.
It also pointed out that the subordinate staff did not get the Bengal Chamber of Commerce dearness allowance and there was no difference between their dearness allowance and the dearness allowance of the manual workers.
Further the tribunal was conscious of the fact that the clerical staff and the subordinate staff do not directly produce goods but that in its opinion was no justification for their total exclusion, particularly when other comparable concerns like the Indian Iron and Steel Co. Ltd. at Burnpur, Bridge and Roof Co. (India) Limited, Howrah, and Tatas were paying incentive bonus to the clerical and subordinate staff also.
It therefore ordered that the company should extend the scheme of incentive bonus to the clerical and subordinate staff also and lay down the rates and conditions for the same.
The main contention of the company before us is that as the clerical staff and the subordinate staff have no part in actual production they should not be given any incentive bonus, particularly as their work does not increase at all because of the increased production.
It is, however, difficult to accept that there will be no increase in the work of the clerical staff in particular and also of the subordinate staff because of higher production, though it may be accepted that the increase may not be in proportion to the increase of production.
It is also true that the clerical staff and the subordinate staff do not directly produce goods like manual workers and that may be a reason 426 for treating them somewhat differently in the matter of incentive bonus and that is what the tribunal seems to have done, for it has directed the company to extend the scheme of incentive bonus to the clerical and subordinate staff and to lay down the rates and conditions of the same and has not said that exactly the same rates and conditions should apply, to the clerical and subordinate staff as apply to the manual workers.
But there can be no doubt that economically speaking the clerical staff and the subordinate staff also take part in the production and there is no reason therefore for excluding them altogether from the scheme of incentive bonus.
Besides, as the tribunal has pointed out, in other comparable concerns incentive bonus is being paid to the clerical and subordinate staff.
The fact that dearness allowance was paid to the clerical staff at a higher scale is also, in our opinion, no reason for depriving them altogether of the benefits of the incentive bonus scheme.
It is also urged on behalf of the company that the introduction of incentive bonus is a management function and the tribunal should not impose it on the management and reference in this connection has been made to Messrs. Titaghur Paper Mills Co. Ltd. vs Their Workmen (1).
In the present case, however, the incentive bonus scheme has already been introduced by the company for the major part of its workmen and all that is now asked for is that the benefit of the scheme should be extended to the remainder of the workmen.
This prayer is, in our opinion, very different from asking a tribunal to impose an incentive bonus scheme for the first time in a concern.
We can see no reason why where an incentive bonus is in force in a concern for the majority of its workmen, the tribunal should not be able to extend the same to the remainder of the workmen.
We therefore see no reason to interfere with the order of the tribunal in this behalf Turning now to the appeal of the workmen with respect to eight annas tiffin allowance during the period the canteen was riot working, it is enough to say that this matter was examined at length by the (1) [1959] SUPP.
2 S.C.R. 1012.
427 tribunal.
It has dealt with the history relating to this tiffin allowance and exhaustively considered all the points raised on behalf of the workmen.
Nothing has been brought to our notice which would induce us to interfere with the considered order of the tribunal in this behalf.
All the points that Sri Chatterjee has raised on behalf of the workmen have been dealt with by the tribunal and the conclusion it has reached is that halving regard to the circumstances, the workmen were not eligible to the tiffin allowance of annas eight per head per working day.
All that we need say is that the correspondence between the workmen and the company shows that though the workmen were keen on the provision of a canteen before the tiffin allowance was granted by the award dated July 24, 1953, their keenness disappeared after the award.
The company seems to have taken steps even before the award to start a canteen and pursued the matter vigorously after the award; but the workmen started objecting to the arrangements made and some of the objections were fantastic.
It seems that having been given the tiffin allowance they preferred to have it rather than go to the canteen.
In the circumstances we are of opi nion that the conclusion of the tribunal is correct and there is no reason for interference.
The appeals are hereby dismissed, but in the circumstances we pass no order as to costs.
Appeals dismissed.
|
There can be no doubt from the point of view of Economics that the clerical and subordinate staff of an industry like its manual workers contribute to its production and there can, therefore, be no reason for excluding them wholly from the benefits of a scheme of incentive bonus.
The fact that the clerical staff are paid dearness allowance at a higher scale can be no reason for their exclusion.
(1)[1956] 424 Where, as in the instant case, the company had already Introduced a scheme of incentive bonus for the majority of its workmen, there could be no reason why the Industrial Tribunal should not be able to extend that scheme to the clerical and subordinate staff.
M/s. Titaghur Paper Mills Co. Ltd. vs Their Workmen, [1959] Supp. 2 S.C.R. 1012, considered.
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Appeal No. 78 of 1962.
Appeal from the judgment and order dated April 13,1960, of the Bombay High Court in Income tax Reference No 40 of 1959.
R.J. Kolah, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellants.
N.D. Karkhanis and R.N. Sachthey, for the respondent.
November 25, 1963.
The Judgment of the Court was delivered by SARKAR J.
This is an appeal against a judgment of the High Court at Bombay given on a case stated to it under the Income tax Act and answering in the affirmative the following question: "Whether the levy of Rs. 68,501/ as penalty for concealment in the original return for the assessment year 1951 52 is legal?" The question arose, in the assessment of the appellant, a firm, for the year 1951 52 in respect of which the accounting year was the calendar year 1950.
The assessee carried on business at Surat it had a branch at Bangkok to which it exported cloth from India.
The branch also made purchases locally and sold them.
During the last world war the business at Bangkok had been in abeyance but it was re started after the termination of the hostilities.
In its return for the assessment year 1949 50 the assessee did not include any profit of the Bangkok branch but stated that the books of account of the Bangkok branch were not available and that therefore its profit might now be assessed on an estimate basis subject to action under section 34 or 35 on production of statement of account.
: The assessment was there 563 upon made on the basis of profit at 5 % on the export to Bangkok branch appearing in the Surat books.
For the year 1950 51 again there was no reference to the Bangkok branch in the return and a similar estimate was made for this year also.
For the year, 1951 52 also the Bangkok business profits were not shown but on January 11, 1952, the Income tax Officer issued a notice to the assessee under section 22(4) of the Act to produce the profits and loss account and balance sheet with the relevant books.
The assessee excused itself by alleging on January 29, 1952 that the books were at Bangkok and the profit and loss account and the balance sheet could not be drawn up unless its partner, Hatimbhai A. Malbary, went there personally and there was no certainty as to when he would go there and promising that in the following year these accounts for the calendar year 1950 would be produced.
Thereupon the Income tax Officer made an estimate of the sales of the Bangkok branch at Rs. 7,50,000 and of the net profits at 5% thereon, amounting to Rs. 37, 5001 .
This assessment was made on January 31, 1952.
On the same day he issued a notice under section 28(3) of the Act requiring the assessee to show cause why a penalty under s.28(1)(c) for concealment of the particulars of the income of 1950 should not be levied.
The assessee was heard on this notice and on January 22, 1954, the Income tax Officer imposed a penalty of Rs.20,000 on it as its explanation was not acceptable.
In the meantime assessment proceedings for the year 1952 53 had commenced and this year also the assessee adopted a similar attitude as in the previous years.
The Income tax Officer was however insistent and, therefore, after various adjournments, the assessee had on August 17, 1953 to produce the accounts and books of the Bangkok branch.
It appeared from these books that in the calendar year 1950 the assessee had made a profit of Rs. 1,25,520/ .
The Income tax Officer thereupon commenced proceedings under section 34 of the Act against the assessee in respect of the assessment year 1951 52 and gave 564 notice to the assessee to submit a return.
The assessee then submitted a return stating therein correctly the profits for the calendar year 1950.
The Income tax Officer completed that assessment after directing the .issue of a further notice under section 28(3) on April 8, 1954 requiring the assessee to show cause why penalty should not be levied for deliberately concealing the particulars of his income of 1950.
Pursuant to this notice the Income tax Officer passed another order on February 28, 1957 imposing a penalty of Rs. 68,501.
So there were two orders of penalty.
The assessee appealed to the Appellate Assistant Commissioner against both the aforesaid orders of penalty but the appeals were rejected.
There is no dispute as to the assessment of the income.
The assessee then appealed to the Income tax Appellate Tribunal.
The Tribunal observed, "It is indeed difficult to understand the action ' of the Department in splitting up one offence into two proceedings.
So far as the levy on the basis of the 23(3) assessment is concerned, it appears to have no basis as till that stage the Department had not succeeded in establishing and bringing home any guilt.
It was still in the region of estimate. .
The levy of Rs. 20,000 has to be remitted in full.
The levy of Rs. 68,501 is entirely different.
With the definite knowledge that the Income tax Officer had obtained that the profit for the year was Rs. 1,25,520 he has clearly proved the guilt of concealment against the assessee. .
The penalty is not at all excessive and accordingly confirmed.
" The revenue authorities never questioned the cancellation of the first order of penalty.
Thereafter the asseseee obtained a reference to the High Court of the question which we have set out at the beginning of this judgement.
That question, it will be noticed, referred only to the penalty of Rs. 68,501 / imposed pursuant to the second notice under section 28(3) for concealing the particulars of the income of 1950.
It has to be observed that in the return that was filed in the proceedings started under 565 section 34, the assessee furnished correct particulars and it also produced the books.
So it had not committed any default in connection therewith.
The notice must therefore be taken to have been in respect of the original concealment of the income.
The assessee knew and this is what was found by the Tribunal% and that is a finding of fact which is binding on a Court in a reference that its profits were Rs. 1,25,520/and it had not disclosed that profit originally nor produced the relevant books but permitted the Incometax Officer to proceed on an estimate of that profit at Rs. 37,500/ .
It was contended in the High Court that in respect of the same concealment there were thus two penalties involved, namely, one of Rs. 20,000 and the other of Rs. 68,501/ .
The High Court agreed with the contention of the assessee that two penalties could not be levied in respect of identical facts but it held that the penalties in this case had not been levied on the same facts.
It observed that the original assessment was solely on the basis of an estimate and the second assessment was after knowledge of the full facts of the concealed income.
In this Court Mr. Kolah has urged that the second order for penalty was illegal because there was one concealment and in respect of that an order for penalty of Rs. 20,000/ had earlier been made.
He contended that there was no jurisdiction to make the second order of penalty while the first order stood and for that reason the second order must be treated as a nullity.
He further stated that the fact that the first order was subsequently cancelled by the Tribunal would not set the second order on its feet for it was from the beginning a nullity as having been made when the first order stood.
We are unable to accept this argument.
It may be that in respect of the same concealment two orders of penalty would not stand but it is not a question of jurisdiction.
The penalty under the section has to be correlated to the amount of the tax which would have been evaded if the assessee had got away with the concealment.
In this case having assessed 566 the income by an estimate, the Income tax Officer levied a penalty on the basis of that estimate.
Later when he ascertained the true facts and realised that a much higher penalty could have been imposed, he was entitled to recall the earlier order and pass another order imposing the higher penalty.
If he had omitted to recall the earlier order that would not make the second order invalid.
He had full jurisdiction to make the second order and he would not lose that jurisdiction because he had omitted to recall the earlier order, though it may be that the two orders could not be enforced simultaneously or stand together.
However, in the present case the earlier order having been cancelled and no objection to the cancellation having been taken, we have only one order and that for the reasons earlier stated is, in our view, a legal order.
It was also said that when the first order of penalty was passed the Income tax Officer was in possession of the full facts which would have justified the imposition of the higher penalty.
It was pointed out that the first order of penalty was passed on January 22 1954 while the books disclosing the real state of affairs had been produced before the Income tax Officer on August 17, 1963.
It was contended that in inspite of this he passed the order imposing a lower penalty, he had no right later to change that order In support of this contention reference was made to C. V. Govinderajulu Iyer vs Commissioner of Income tax, Madras" '.
There it was argued that the original proceeding under section 23(3) and a proceeding under section 34 in respect of the same period were different and in the latter proceeding a penalty could not be imposed for a concealment in respect of the original proceeding.
Rajamannar C.J. rejected this contention and held, "that so long as the proceedings under Section 34 relate to the assessment for the same period as the original assessment, the Income tax Officer will be competent to levy a penalty on any ground open to him under Section 28(1), even though it relates (1) [16] I.T.R. 391 567 to the prior proceeding".
He however proceeded to observe, "There may be one possible qualification of his power, and that is when the default or the act which is the basis of the imposition of the penalty was within the knowledge of the officer who passed the final order in the prior proceeding and if that, officer had failed to exercise his power under Section 28 during the course of the proceeding before him.
Possibly in that case he would have no power.
" Learned counsel for the appellant relied on this latter ob servation in support of his contention.
We do not think that Rajamannar C.J. wished to state this qualification on the power of the Income tax Officer as a proposition of law.
It was not certainly necessary for the purposes of the case before him.
We do not wish to be understood as subscribing to it as at present advised.
But assume that this statement of the law is correct.
It has no application to the present case.
What is said is that if the default which entails the penalty was within the knowledge of the authority when it passed the final order in the prior proceeding no penalty could be later imposed.
Now Rajamannar C.J. was not dealing with a case in which two penalties had been imposed.
The case before him was one in which no return had been filed pursuant to a general notice but subsequently section 34 proceedings had been stated and resulted in an assessment and an order imposing a penalty was thereupon passed.
The final order in the prior proceedings referred to by the learned Chief Justice must, therefore, be final assessment order in the prior proceedings.
Now in the present case the final order in the prior assessment proceedings was made on January 31, 1952 and on that date the Income tax Officer had no knowledge of the concealment of income of Rs. 1,25,520.
Therefore it seems to us that the observation of Rajamannar C.J. does not assist Mr. Kolah.
We may also observe that the first order of penalty passed on January 22, 1954, was pursuant to a notice issued on January 31, 1952 in respect of which the assessee had offered 568 his explanation on March 11, 1952.
That notice 'was not concerned with any concealment that came to light from the production of the books on August 17, 1953 and, therefore, on this concealment the assessee had never been heard.
In assessing a penalty If on this notice subsequently acquired knowledge would be irrelevant.
The result is that the appeal fails and it is dismissed with costs.
Appeal dismissed.
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The appellant, a firm of Surat, had a branch at Bangkok, to which it exported cloth, and the branch also made purchases locally and sold them.
During the war the business of the branch had been in abeyance, but was re started after the termination of the hostilities.
in its return for the assessment year 1949 50 the appellant did not include any profit of the branch, but stated that the books of account of branch were not available, and therefore its profits might now be assessed on an estimate basis subject to 561 action under s.34 or 35.The assessment was made on the basis of profit at 5 % on the export to the branch appearing in the Surat books.
A similar estimate was made for year 1950 51.
For the year 1951 52 also the business profits of the branch were not shown but the Income tax officerissued a notice to the assessee to produce the relevant accountsand books.
The appellant excused itself by promising that in thefollowing year these accounts for the year 1950 would be produced.
Thereupon the Income tax Officer made an estimate of the sales of the branch and of the net profits at 5 % thereon, amounting to Rs. 37,500/ , and the same day he issued a notice to show cause why a penalty for concealment of the particulars of the income of 1951 52 should not be levied.
Subsequently, the Income tax Officer imposed a penalty of Rs. 20,000/ on it as its explanation was not acceptable.
In the meantime assessment proceedings for the year 1952 53 had commenced and the appellant adopted a similar attitude.
The Income tax Officer was insistent and, therefore, appellants had to produce the accounts and books of the branch, from which it appeared that for the year 1951 52 the appellant had made a profit of Rs. 1,25,520/ .
The Income tax Officer issued a further notice to the appellant to show cause why penalty should not be levied for deliberately concealing income for the year 1951 52.
Pursuant to this notice the Income tax Officer passed another order imposing a penalty of Rs. 68,501/ .
The appellant 's appeal to the Appellate Assistant Commissioner against both the orders of penalty was rejected.
On appeal, the Tribunal cancelled the first order of penalty but confirmed the second one.
This hereafter, the appellant obtained a reference to the High Court on the question: "Whether the levy of Rs. 68,501/ as penalty for concealment in the original return for the assessment year 1951 52 is legal?" The High Court answered the question in the affirmative.
On the appeal by special leave it was urged that the second order for penalty was illegal because there was one concealment and in respect of that a penalty of Rs. 20,000/ had earlier been imposed, that there was no jurisdiction to make the second order of penalty while the first order stood and for that reason the second order must be treated as a nullity; and that the fact that the first order was subsequently cancelled by the Tribunal would not set the second order on its feet for it was from the beginning a nullity as having been made when the first order stood.
Held: (i) The contentions must be rejected.
The Income tax Officer had full jurisdiction to make the second order and he would not lose that jurisdiction because he had omitted to recall the earlier order, though it may be that the two orders in respect of the same concealment could not be enforced simultaneously or stand together.
When the Income tax Officer ascertained the true facts and realised that a much higher penalty could have been imposed, he was entitled to recall the earlier order and pass another order imposing the higher penalty.
If he had omitted to recall the earlier order that would not make the second order invalid, 1 SCI/64 36 562 (ii)In the present case the earlier order having been cancelled and no objection to the cancellation having been taken, there is only one order, which is a legal order.
C.V. Govindarajulu Iyer vs Commissioner of Income tax, Madras, , distinguished.
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1686.txt
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tition Nos.
16093/84 & 1 3243/83 G Under Article 32 of the Constitution of India.
Sobhag Mal Jain , S.K. Jain and D.K. Garg for the Petitioner.
A.K. Ganguli and R.N. Poddar for the Respondents.
The Judgment of the Court was delivered by 610 CHINNAPPA REDDY , J.
On November 20 , 1984 this writ petition was heard along with Writ Petition No. 13243 of 1983 (Shri J.P Chaturvedi vs Union of India).
Shri J.P. Chaturvedi 's petition was allowed , by consent of the learned Attorney General who appeared for the Union of India.
Shri M.L. Jain 's petition was allowed on the same lines under the impression that the facts involved were the same.
It has now been brought to our notice by the Registry that there is considerable difference in the prayers in the two cases.
We have , therefore , recalled our earlier order in Shri M.L. Jain 's case and examined his case afresh.
Shri M.L. Jain was a member of the Rajasthan Judiciary from September 31 , 1945 onwards till July 1 , 1975 during which period he was a District and Session Judge , from November 9 , 1970 to July 1 , 1975.
Thereafter he was elevated as a Judge of the High Court on July 1 , 1975.
He retired as a Judge of the High Court on July 21 , 1984.
Had he not been appointed a Judge of the High Court , he would have retired as District and Session Judge on July 31 , 1977.
His total period of service as a Judicial Officer , otherwise than as a Judge of the High Court was 29 years , 9 months and one day while his service as a Judge of the High Court was a period of 9 years and 21 days.
When he was appointed a Judge of the High Court he appears to have opted , for the purpose of his pension , for Part Ill of the 1st Schedule to the High Court Judges ' (Conditions of Service) Act , 1954.
Paragraph two of Part III of the Ist Schedule is as follows: "The pension payable to such Judge shall be (a) the pension to which he is entitled under the ordinary rules of his service if he had not been appointed a Judge , his service as a Judge being treated as service therein for the purpose of calculating that pension; and (b) a special additional pension of Rs. 700 per annum in respect of each completed year of service for pension but in no case such additional pension together with the additional or special pension , if any , to which he is entitled under the ordinary rules of his service , shall exceed Rs. 3,500 per annum.
" According to the calculation made by the respondent , Shri M.L. Jain was entitled to a pension of Rs. 15,320 per annum only.
611 This figure was arrived at on the basis that had he continued as a District and Sessions Judge he would have retired on July 31 , 1977 and his average monthly emoluments during the period , October 1 , 1976 to July 31 , 1977 , would be Rs. 2,500 per month as that was the pay he would have drawn as a District Judge had he continued as a District Judge and retired on July 31 , 1977.
On that basis his pension was calculated at Rs. 11,820 per annum under clause (a) of Para (2) of the First Schedule read with the Rajasthan Rules and to that figure was added the additional pension of Rs. 3,500 per year under Clause (b) of Para 2 of Schedule I.
His total pension was thus determined at Rs. 15,320 per annum.
The calculation made under clause (a) of Paragraph 2 of the First Schedule was apparently done pursuant to the letter dated September 19 , 1984 from the Ministry of Law , Justice and company Affairs addressed to all Accountants General.
Paragraph 2 of the letter is as follows: "The question as to what should be taken into account for calculation of pension in terms of part 2(a) mentioned above , has been examined.
After careful consideration of the matter , it has been decided that. . (i) The service as Judge of the High Court will count towards qualifying service for pension in his parent service or post.
(ii) pay of the purpose for calculating pension under para 2(a) shall be the pay which a Judge had drawn or would have drawn in the scale of pay of the post held by him in his parent Department , preceding the date on which he was elevated as a Judge of the High Court , including annual increments , if any , which he would have drawn upto the date of his superannuation as a Government servant.
Further the pay which he would have drawn in the selection grade , if any , for which he would have been automatically , eligible and not on the basis of any selection , will also be taken into account.
In case he was holding a post on deputation (as distinct from "foreign service") , the pay in such an ex cadre post will also be 612 taken into account on the same lines as mentioned above.
(iii) Special additional pension under para 2(b) will be calculated as provided in the High Court Judges , (Conditions of Service) Act , 1954.
" We are of the opinion that para 2(ii) of the letter dated September 19 , 1984 is a clear departure from para 2 clause (a) of Schedule I to the High Courts Judges (Conditions of Service) Act.
Under clause (a) of para 2 of the Schedule I to the High Courts Judges ' (Conditions of Service) Act the retiring Judges entire service as a Judge has to be reckoned for the purpose of calculating his pension and for that purpose the last pay drawn by him has to be the pay drawn by him as a Judge of the High Court and not the pay that would have been drawn by him as a District Judge , had he not been appointed a High Court Judge.
Under the Rajasthan Rules , his monthly pension was to be calculated in the following manner: Upto the first Rs. 1000 of emoluments , the monthly pension would be 50% of the emoluments; For the next Rs. 500 of the emoluments , the pension would be 45% of the emoluments , For the balance of the emoluments , the pension would be 40% of the emoluments. 'The amount of pension was to be arrived at on the basis of these slabs , related to the maximum qualifying service of 33 years.
There was however a ceiling on the pension and it was prescribed that the maximum amount of pension should not exceed Rs. 1500 per month.
As Shri M.L. Jain had put in a total service of more than 38 years and 9 months including his service as a High Court Judge and his last pay drawn was Rs. 3,500 per month , his pension would be Rs. 1,525 per month.
But since the Rajasthan Rules prescribed a ceiling of Rs. 1,500 per month , he was entitled to a pension of Rs. 1,500 per month only under clause (a) of Para 2 of Schedule III.
To this , the additional pension to be added under clause (b) was Rs. 700 x 9 = Rs. 6,300 , but here again the ceiling 613 has been prescribed as Rs. 3,500 per annum.
Thus the additional pension under clause (b) would be Rs. 3,500 per annum only bringing the total pension of Shri M.L. Jain to Rs. 21,500 per annum.
But for the ceiling prescribed under the Rajasthan Rules and clause (b) of para 2 of the Schedule I to the High Courts Judges ' (Conditions of Service) Act , Shri M.L. Jain would have been entitled to a pension of Rs. 24,600 per annum , which is meagre enough considering his long and distinguished service as a Judicial Officer and High Court Judge for a period of 38 years and 9 months.
But even this he is not entitled to be paid under the rules because of the respective ceilings and he is only entitled to a pension of Rs. 21,500 per annum.
We find that in the recent budget proposals , the ceiling on the pension of civil servants is to be lifted.
We hope the situation will be remedied in the case of judges also and the ceiling lifted as early as possible.
We may suggest that this may be done straight away by including suitable provisions in the Bill now announced to be pending before Parliament.
This will , of course , be quite apart from the other changes for the improvement of the Conditions of Service of Judges in the matter of salaries , allowances etc.
which changes also brook no further delay if justice is to be done to the judges.
The petition is allowed in terms of what we have stated.
Letter No. 6/4/84 Jus dated August 30 , 1984 from the Government of India , Ministry of Law , Justice and Company Affairs to the Chief Secretary , Delhi Administration , Delhi is qua shed and the pension of the petitioner is refixed at Rs. 21,500 per annum.
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Paragraph 2 of of the 1st Schedule to the , 1954 , provides that the pension payable to a Judge shall be (a) the pension to which he is entitled under the ordinary rules of his service if he had not been appointed a Judge , his service as a Judge being treated as service therein for the purpose of calculating that pension; and (b) a special additional pension of Rs. 700 per annum in respect of each completed year of service for pension but in no case such additional pension shall exceed Rs.3,500 per annum.
By a letter dated September 19 , 1984 , addressed to all Accountants General the Ministry of Law , Justice and Company Affairs indicated the method for calculation of a Judges pension.
It provided that: (i) the service as Judge of the High Court will count towards qualifying service for pension in his parent service or post , and (ii) pay for the purpose for calculating pension under para 2 (a) shall be the pay which a Judge had drawn or would have drawn in the scale of pay of the post held by him in his parent Department preceding the date on which he was elevated as a Judge of the High Court , including annual increments , if any , which he would have drawn upto the pate of his superannuation as a Government servant , and (iii) special additional pension under para 2 (b) as provided in the .
The petitioner was a member of the State Judicial Service.
His total period of service as a Judicial Officer , otherwise than as a Judge of the High Court was 29 years , 9 months and one day while his service as a Judge of the High Court was a period of 9 years and 21 days According to the calculation made by the respondent , the petitioner was entitled to a pension of Rs 15,320 per annum.
This figure was arrived at on the basis that had he continued as a District and Sessions Judge , he would have retired on July 31 , 1977 , and on 609 that basis his pension was calculated at Rs.11,820 per annum under clause (a) of para 2 of the First Schedule read with the Rajasthan Rules and to that figure was added the additional pension of Rs.3,500 per year under Clause (b) of Para 2 of Schedule I.
His total pension was determined at Rs.15,320 per annum.
A Allowing the Writ Petition.
^ HELD: 1.
Para 2(ii) of the letter dated September 19 , 1984 of the Ministry of Law , Justice & Company Affairs is a clear departure from para 2 clause (a) of Schedule I to the , 1954.
Under clause (a) of para 2 of the Schedule I to the Act , the retiring Judges ' entire service as a Judge has to be reckoned for the purpose Or calculating his pension and for that purpose the last pay drawn by him had to be the pay drawn by him as a Judge of the High Court and not the pay that would have been drawn by him as a District Judge , had he not been appointed a High Court Judge.
[612C D ] In the instant case the petitioner had put in a total service of more than 38 years and 9 months including his service as a High Court Judge and his last pay drawn was Rs.3,500 per month , his pension would be Rs.1,525 per month.
But since the Rajasthan Rules prescribed a ceiling of Rs. 1,500 per month , he was entitled to a pension of Rs.1,500 per month only under clause (a) of para 2 of Schedule I.
To this , the additional pension to b added under clause (b) was Rs.700 x 9 Rs.6,300 but here again the ceiling prescribed was Rs.3,500 per annum.
The total pension would therefore be Rs.21,500 per annum.
But 1) for the ceiling prescribed under the Rajasthan Rules and clause (b) of para 2 of Schedule I of the Act , he would have been entitled to Rs.24,600 per annum.
[612G 613B] 2.
The letter dated August 30 , 1984 from the Government of India to the Chief Secretary , Delhi Administration is quashed and the pension of the petitioner is refixed at Rs.21,500 per annum.
[613 E] 3.
In the recent budget proposals the ceiling on the pension of civil servants is to be lifted.
It is hoped the situation would be remedied in the case of judges also and the ceiling lifted as early as possible.
[613 C)
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4976.txt
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Petition No. 1 of 1987.
Election Petition under Section 16, 17, 18, 19 and 20 of Part III of the Petitioner in person (Mithilesh Kumar).
K. Parasaran, Attorney General T.S. Krishnamurthy Iyer, Krishnamurthy Swami and Miss A. Subhashini for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The above petition is filed by the petitioner, Shri Mithilesh Kumar under the provisions of the (Act No. 31 of 1952) (hereinafter referred to as 'the Act ') calling in question the validity of the election of Shri R. Venkataraman, the 1st respondent herein as the 528 President of India at the election held in July, 1987 for electing the President of India and praying for a declaration that he is the successful candidate at that election.
There were three candidates at the election, namely, Shri R. Venkataraman respondent No. 1, Shri V.R. Krishna Iyer respondent No. 2 and Shri Mithilcsh Kumar the petitioner.
The result of the election was declared on 16.7.1987 by the Returning officer for Presidential Election 1987 respondent No. 4, declaring Shri R. Venkataraman respondent No. 1 as the President of India.
The Act was passed in the year 1952 for the purpose of regulating certain matters relating to or connected with the elections to the offices of the President and the Vice President of India.
Part II of the Act contains the provisions relating to the conduct of Presidential and Vice Presidential elections and Part III of the Act sets out the provisions relating to the settlement of disputes regarding elections to the offices of the President and the Vice President of India.
Section 14 of the Act provides that no election should be called in question except by presenting an election petition to the authority specified in subsection (2) and the authority having jurisdiction to try an election petition under the Act is specified as the Supreme Court of India by sub section (2).
Sub section (3) of section 14 of the Act requires that an election petition should be presented to the Supreme Court of India in accordance with the provisions of Part III of the Act and of the rules made by the Supreme Court of India under Article 145 of the Constitution of India.
Order XXXIX of the Supreme Court Rules, 1966 (hereinafter referred to as 'the Rules ') made under Article 145 of the Constitution of India and all other powers enabling it in this behalf by the Supreme Court of India contains the provisions relating to the election petitions filed under Part III of the Act.
Section 14 A of the Act provides that an election petition calling in question an election may be presented on one or more of the grounds specified in Sub/section (1) of section 18 and section 19 to the Supreme Court by any f candidate at such election or in the case of Presidential election, by twenty or more electors joined together as petitioners and in the case of Vice Presidential election, by ten or more electors joined as petitioners.
Such petition may be presented at any time after the date of the publication of the declaration containing the name of the elected candidate at the election under section 12 of the Act but not later than thirty days from the date of such publication.
Section is of the Act provides that subject to the provisions of Part III of the Act rules made by the Supreme Court of India under Article 145 of the Constitution of India may regulate the form of election petitions, the manner in which 529 they are to be presented, the persons who are to be made parties thereto, the procedure to be adopted in connection therewith and the circumstances in which petitions are to abate and to be withdrawn and in which new petitioners may be substituted and may require security to be given for costs.
Rule 3 of order XXXIX of the Rules prescribes that a court fee stamp of the value of rupees two hundred and fifty shall be paid on the election petition and the election petition will be signed by the petitioner or petitioners, if they are more than one, or a duly authorised advocate on record on his or their behalf.
Rule 4 of order XXXIX of the Rules provides that the petition shall be divided into paragraphs, numbered consecutively, each paragraph being confined to a distinct portion of the subject, and shall be printed or typed legibly on one side of standard petition paper, demy foolscap size or of the size of 29.7 cm.
x 21 cm.
Or on paper of equally superior quality.
Rule 5 of order XXXIX of the Rules requires that the petition shall state the right of the petitioner under the Act to petition the Court and briefly set forth the facts and grounds relied on by him to sustain the reliefs claimed by him.
The allegations of fact contained in the petition shall be verified by an affidavit to be made personally by the petitioner or by one of the petitioners, if there are more than one as provided under rule 6 of order XXXIX of the Rules.
The grounds on which the election of the returned candidate at the Presidential or the Vice Presidential election can be declared void are set out in section 18 of the Act Section 18 of the Act reads thus: " 18(1).
If the Supreme Court is of opinion, (a) that the offence of bribery or undue influence at the election has been committed by the returned candidate or by any person with the consent of the returned candidate; or (b) that the result of the election has been materially affected (ii) by the improper reception or refusal of a vote; or (ii) by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act; or (iii) by reason of the fact that the nomination of any 530 candidate (other than the successful candidate), who has not withdrawn his candidature, has been wrongly accepted; or (c) that the nomination of any candidate has been wrongly rejected or the nomination of the successful candidate has been wrongly accepted; the Supreme Court shall declare the election of the returned candidate to be void.
(2) For the purposes of this section, the offences of bribery and undue influence at an election have the same meaning as in Chapter IXA of the Indian Penal Code.
" Section 19 of the Act sets out the grounds for which a candidate other than the returned candidate may be declared to have been elected.
Section 19 of the Act reads thus.
Grounds for which a candidate other than the re turned candidate may be declared to have been elected.
If any person who has lodged an election petition has, in addition to calling in question the election of the returned candidate, claimed a declaration that he himself or any other candidate has been duly elected and the Supreme Court is of opinion that in fact the petitioner or such other candidate received a majority of the valid votes, the Supreme Court shall, after declaring the election of the returned candidate to be void, declare the petitioner or such other candidate, as the case may be, to have been duly elected: Provided that the petitioner or such other candidate shall not be declared to be duly elected if it is proved that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
" Section 18 of the Act is exhaustive of the grounds on which the election of the President or the Vice President can be declared void.
Under section 18(1)(a) an election of the President or of the Vice President may be set aside if it is established that the offence of bribery or undue influence, as explained in Chapter IXA of the Indian Penal 531 Code had been committed by the returned candidate or by any person with the consent of the returned candidate.
In order to succeed on the grounds mentioned in section 18(1)(a) of the Act it has to be established that the offence of bribery or undue influence had been committed at the election by the returned candidate himself; or by any person with his consent.
Originally when the Act was enacted section 18(1)(a) of the Act read thus: " 18(1).
If the Supreme Court is of opinion (a) that the offence of bribery or undue influence at the election has been committed by the returned candidate or by any person with the connivance of the returned candidate: or . . . . . . . . ." The word 'connivance ' in section 18(1)(a) of the Act was substituted later on by Parliament when the former Part III of the Act was substituted by the present Part III of the Act by the Presidential and the Vice Presidential Elections (Amendment) Act, 1977 to bring it in line with the provisions of section 123(1) and (2) of the Representation of the People Act, 1951, which contain the grounds of bribery and undue influence which would vitiate the election to either House of Parliament or to the Houses or House of the State Legislatures as the case may be.
Clause (b) of section 18(1) of the Act contains three grounds the proof of any of which would result in the election being declared void provided it is established that the result of the election has been materially affected thereby, namely, (i) the improper reception or refusal of a vote; or (ii) any non compliance with the provisions of the Constitution or of the Act or of any rules or orders made under the Act; or (iii) wrongful acceptance of the nomination of any candidate (other than the successful candidate), who has not withdrawn his candidature.
Clause (c) of section 18(1) of the Act provides that if the nomination of any candidate has been wrongly rejected or the nomination of the successful candidate has been wrongly accepted, the election of the returned candidate is to be declared void.
These are the only grounds on which the election of the returned candidate can be declared void under the Act.
Section 19 of the Act as stated already contains grounds for declaring a candidate other than the returned candidate as duly elected.
It should he stated at the outset that the manner in which the 532 present petition has been drafted is not in accordance with the Rules.
Ordinarily the petition should state in a narrative form succinctly and clearly all the facts as may be necessary to enable the respondents and the Court to understand the case of the petitioner.
This is not the case here.
The first part of the petition contains 13 questions and the answers given by the petitioner to those questions.
A reading of all these 13 questions and answers given thereto by the petitioner shows that the only ground on which the petitioner wished to call in question the election of the 1st respondent is that the issue of a whip by the Congress (I) Party to its legislators on the eve of the election asking them to cast their votes in favour of the 1st respondent was in the nature of a threat amounting to undue influence which is one of the two grounds set out in section 18( I)(a) of the Act.
The allegations made in this part of the petition suggest that the specific case of the petitioner is that the said act of undue influence had been committed by the members of the Congress (I) Party.
There is no allegation that any act amounting to undue influence was committed either by respondent No. ] himself, or by any other person with his consent.
Even in the second part of the petition which is entitled 'Notable points ' and the third part of the petition containing grounds to declare the election of the returned candidate as void, there is no averment that either the returned candidate himself had committed any act of undue influence or any other person had committed any act of undue influence with his consent.
The fourth part of the petition contains grounds to declare the petitioner as duly elected.
It is alleged in this part that by reason of the issue of the whip by the Congress (I) Party and/or by other parties the votes which would have been cast in his favour had been grabbed by the other candidates.
The fifth part of the petition contains the reliefs sought by the petitioner and the last part contains the prayer for an interim order directing the staying of the oath ceremony of the returned candidate which had been fixed to take place on the 25th of July, 1987.
There is no reference to any other ground mentioned in section 18 of the Act on the basis of which the election can be set aside.
After the petition was presented to this Court notice was issued to the respondents and also to the Attorney General of India as pro 533 tion is liable to be rejected at this stage itself since it does not disclose any cause of action.
Rule 34 of order XXXIX of the Rules provides that subject to the provisions of order XXXIX of the Rules or any special order or directions of the Court, the procedure on an election petition shall follow, as nearly as may be, the procedure in proceedings before the Court in the exercise of its original jurisdiction.
Order XXIIl of the rules contains the rules of pleadings in cases filed under the original jurisdiction of this Court.
Rule 6 of order XXIII of the Rules states that the plaint shall be rejected where it does not disclose a cause of action or where the suit appears from the statement in the plaint to be barred by any law.
It is stated in the preliminary objections of the 1st respondent and the preliminary submissions of the Attorney General of lndia that since no where in the election petition the petitioner has stated that the offence of undue influence had been committed by the 1st respondent or by any other person with his consent and since no other ground specified in section 18 of the Act has been pleaded, the petition is liable to be rejected under rule 6 of order XXIII of the rules even assuming that all that the petitioner has stated in his petition is true.
After the preliminary objections of the 1st respondent and the preliminary submissions of the Attorney General of India were filed, the case was taken up for hearing on the said preliminary objections and preliminary submissions.
The petitioner Shri Mithilesh Kumar (in person), Shri T.S. Krishnamurthy Iyer, learned counsel for respondent No. 1 and Shri K. Parasaran, learned Attorney General of India were heard.
The issue which arises for consideration in this case is whether the election petition is liable to be rejected under rule 6 of order XXIII of the Rules on the ground that it does not disclose any cause of action.
The question of law involved in this case is no longer res integra.
In Charan Lal Sahu vs Neelam Sanjeeva Reddy, ; the petitioner in that petition had questioned the election of Shri Neelam Sanjeeva Reddy as the President of India.
In that decision this Court held that it was obligatory upon the Court to reject a petition outright and not to waste any more time upon a plaint or petition if the provisions of law bar or are shown to bar the proceedings.
The Court proceeded to hold that it was not even necessary to issue notice to any opposite party or parties in such a case.
The next decision in Charan Lal Sahu & others vs Giani Zail Singh & Another, [198412 S.C.R. 6 534 deals with facts which are very close to the facts of the present case.
In A the said case two issues arose for consideration: (i) can the election of a candidate to the of fice of the President of India be challenged on the ground that he is not a suitable person for holding that office; and (ii) whether the averments in that election petition, assuming them to be true and correct, disclose any cause of action for setting aside the election of the returned candidate on the ground stated in section 18(1)(a) of the Act.
This Court observed in that case that the rights arising out of elections, including the right to contest or challenge an election, were not common law rights, but they were creatures of the statutes which created, conferred or limited those rights.
Therefore, for deciding the question whether an election can be set aside on any alleged ground, the court has to consult the provisions of law governing the particular election.
The Court has to function within the framework of that law and cannot travel beyond it.
The Court proceeded to observe in the above decision thus at Pages 22 to 24: "Nor is it alleged that the offence of undue influence was committed by the returned candidate himself.
The allegation of the petitioners is that the offence of undue influence was committed by certain supporters and close associates of Respondent 1 with his connivance.
It is patent that this allegation, even if it is true, is not enough to fulfil the requirements of section 18(1)(a).
What that section, to the extent relevant, requires is that the offence of undue influence must be committed by some other person with the 'consent ' of the returned candidate.
There is no plea whatsoever in the petition that undue influence was exercised by those other persons with the consent of Respondent 1.
It is contended by Shri Shujatullah Khan who appears on behalf of the petitioners, that connivance and consent are one and the same thing and that, there is no legal distinction between the two concepts.
In support of this contention, learned counsel relies upon the meaning of the word 'connivance ' as given in Webster 's Dictionary (Third Edition, Volume 1, p 481); Random House (p. 311); Black 's Law Dictionary (p. 274); Words and Phrases (Permanent Edition, Volume 8A, p. 173); and Corpus Juris Secundum (Volume 15A, p. 567).
The reliance on these dictionaries and texts cannot carry the point at issue any further.
The relevant question for consideration for the 535 decision of the issue is whether there is any pleading in the petition to the effect that the offence of undue influence was committed with the consent of the returned candidate.
Admittedly, there is no pleading of consent.
It is then no answer to say that the petitioners have pleaded connivance and according to dictionaries, connivance means consent.
The plea of consent is one thing: the fact that connivance means consent (assuming that it does) is quite another.
It is not open to a petitioner in an Election Petition to plead in terms of synonyms.
In these petitions, pleadings have to be precise, specific and unambiguous so as to put the respondent on notice.
The rule of pleadings that facts constituting the cause of action must be specifically pleaded is as fundamental as it is elementary. 'Connivance ' may in certain situations amount to consent which explains why the dictionaries give 'consent ' as one of the meanings of the word 'connivance '.
But it is not true to say that 'connivance ' invariably and necessarily means or amounts to consent, that is to say, irrespective of the context of the given situation.
The two cannot, therefore, be equated.
Consent imply that parties ad idem.
Connivance does not necessarily imply that parties are of one mind.
They may or may not be, depending upon the facts of the situation.
That is why, in the absence of a pleading that the offence of undue influence as committed with the consent of the returned candidate, one of the main ingredients of section 18(1)(a) remains unsatisfied.
The importance of a specific pleading in these matters can be appreciated only if it is realised that the absence of a specific plea puts the respondent at a great disadvantage.
He must know what case he has to meet.
He cannot be kept guessing whether the petitioner means what he says, 'connivance ' here, or whether the petitioner has used expression as meaning 'consent '.
It is remarkable that, in their petition, the petitioners have furnished no particulars of the alleged consent, if what is meant by the use of the word connivance is consent.
They cannot be allowed to keep their options open until the trial and adduce such evidence of consent as seems convenient and comes handy.
That is the importance of precision in pleadings, particularly in election petitions.
Accordingly, it is impermissible to substitute the word 'consent ' for the word 'connivance which 536 occurs in the pleadings of the petitioners.
The legislative history of the statute lends support to our view that for the purposes of section 18(1)(a), connivance is not the same thing as consent.
Originally, when the Act was passed in 1952, section 18(1)(a) provided that the Supreme Court shall declare the election of the re turned candidate void if it is of opinion that the offence of bribery or undue influence has been committed by the re turned candidate or by any person 'with the connivance ' of the returned candidate.
This sub section was amended by section 7 of the Presidential and Vice Presidential Elec tions (Amendment) Act S of 1974, which came into force on March 23, 1974.
The word 'connivance ' was substituted by the word 'consent ' by the Amendment Act.
If connivance carried the same meaning as consent and if one was the same as the other Parliament would not have taken the deliberate step of deleting the word 'connivance ' and sub stituting it by the word 'consent '.
The amendment made by the Amendment Act of 1974 shows that connivance and consent connote distinct concepts for the purpose of section 18(1)(a) of the Act.
Since, admittedly, there is no pleading in the Election Petition that the offence of undue influence was committed with the consent of the returned candidate, the petition must be held to disclose no cause of action for setting aside the election of the returned candidate under section 18(1) (a) of the Act.
" We have given above a fairly long quotation from the above decision because it contains all the reasons necessary to decide this case too.
We do not propose to repeat them.
They are applicable to this case also.
In the petition before us there is not even an allegation that the act of undue influence had been committed by some persons with the connivance of the 1st respondent.
The petition is as bald as it could be.
At the hearing after getting the entire petition read out the Court asked the petitioner to point out whether there was any allegation that the 1st respondent had himself committed any undue influence or any other person with the consent of the 1st respondent had committed such an act or any allegation which required to be tried and the petitioner was not able to point out any part of the petition in which such an allegation had been made.
In view of this infirmity we 537 have not found it necessary to examine whether the issuing of the whip by any political party amounts to undue influence vitiating an election even when such an act is committed by the returned candidate or with his consent by some other persons.
In the circumstances, the Court has no choice except to reject the petition as required under rule 6 of order XXIII of the Rules as it does not disclose any cause of action.
Before concluding we should observe that the petitioner did not appear to be quite serious about his case.
At one stage he contended having himself filed the petition before the Court that this Court had no competence to hear the case and at another stage he wanted 51 Judges to hear his petition when the maximum permissible strength of this Court is about one half of that number and the existing strength of this Court is less than one third of that number.
Rule 20 of order XXXIX of the Rules requires that every petition calling in question an election to the offices of the President and the Vice President shall be posted before and be heard and disposed of by a Bench of this Court consisting of not less than five Judges.
While we expect every conscientious citizen eligible to file an election petition to question an election on the grounds prescribed by the Act, we do not wish that any petitioner should make use of this Court as a forum to file a petition without giving adequate thought to its contents and also to the provisions of law governing the case merely to seek some cheap publicity.
We regret to say that seeing one 's name in newspapers everyday has lately become the worst intoxicant and the number of people who have become victims of it is increasing day by day.
We, however, refrain from referring to some other irrelevant and unwarranted statements made by him before this Court orally and in writing.
Perhaps the petitioner who desired to become the President of India did not understand the effect of what he was saying.
We shall leave it at that.
The petition is, therefore, rejected.
H.L.C. Petition dismissed.
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% Part III of the sets out the provisions relating to the settlement of disputes regarding elections to the offices of the President and the Vice President of India.
Section 14(3) thereof requires that an ekction petition should be presented in accordance with the provisions of that Part and of the rules made by this Court under article 145 of the Constitution.
The rules so made are contained in O.XXXIX of the Supreme Court Rules, 1966.
Rule 34 thereof provides that subject to the provisions of that order or any Special order or directions of the Court, the procedure on an election petition shall follow, as nearly as may be, the procedure in proceedings before the Court in the exercise of its original jurisdiction, which procedure is set out in O.XXIII.
Rule 6 of o.
XXIII states inter alia that the plaint shall be rejected where it does not disclose a cause of action.
Respondent No. 1 was declared elected as the President of India at an election held in July, 1987.
The petitioner who had contested in the said election as a candidate filed this petition questioning the validity of the election of respondent No. 1 and praying for a declaration that he was the successful candidate at that election.
Rejecting the petition, ^ HELD: In the circumstances of this case the Court has no choice except to reject the petition as required under r. 6 of O.XXIII of 526 the Supreme Court Rules, 1966 as it does not disclose any cause of A action.
[537B] (i) Section 18 of the Presidential and Vice Presidential Elections Act, 1952 is exhaustive of the grounds on which the election of the President or the Vice President can be declared void.
An election may be set aside under cl.(a) of section 18(1) if it is established that the offence of bribery or undue influence, as explained in Chapter IXA of the Indian Penal Code had been committed by the returned candidate or by any person with the consent of the returned candidate.
In order to succeed on the grounds mentioned in section 18(1)(a) it has to be established that the offence of bribery or undue influence had been committed at the election by the returned candidate himself; or by any person with his consent.
[530G H: 531A R] (ii) The manner in which the present petition has been drafted is not in accordance with the Rules.
Ordinarily the petition should state in a narrative form succinctly and clearly all the facts as may be necessary to enable the respondents and the Court to understand the case of the petitioner.
This is not the case here.
The first part of the petition contains 13 questions and the answers given by the petitioner to those questions.
A reading of all these 13 questions and answers given there to be the petitioner shows that the only ground on which the petitioner wished to call in question the election of the 1st respondent is that the issue of a whip by the Congress (I) Party to its legislators on the eve of the ekction asking them to cast their votes in favour of the 1st respondent was in the nature of a threat amounting to undue influence which is one of the two grounds set out in section 18(1)(a).
The allegations made in this part of the petition suggest that the specific case of the petitioner is that the said act of the influence had been committed by the members of the Congress(I) Party.
There is no allegation that any act amounting to undue influence was committed either by respondent No. 1 himself or by any other person with his consent.
Even in the second part of the petition which is entitled 'Notable points ' and the third part of the petition containing grounds to declare the election of the returned candidate as void there is no averment that either the returned candidate himself had committed any act of undue influence or any other person had committed any act of undue influence with his consent.
[532A E] (iii) At the hearing after getting the entire petition read out the Court asked the petitioner to point out whether there was any allegation that the lst respondent had himself committed any undue influence or 527 any other person with the consent of the 1st respondent had committed such an act or any allegation which required to be tried and the petitioner was not able to point out any part of the petition in which such an allegation had been made.
In view of this infirmity we have not found it necessary to examine whether the issuing of the whip by any political party amounts to undue influence vitiating an election even when such an act is committed by the returned candidate or with his consent by some other person.
[536G H; 537A] (iv) The petitioner did not appear to be quite serious about his case.
At one stage he contended having himself filed the petition before the Court that this Court had no competence to hear the case and at another stage he wanted 51 Judges to hear his petition when the maximum permissible strength of this Court is about one half of tha number and the existing strength of this Court is less than one third of that number.
While we expect every conscientious citizen eligible to file an election petition to question an election on the grounds prescribed by the Act, we do not wish that any petitioner should make use of this Court as a forum to file a petition without giving adequate thought to its contents and also to the provisions of law governing the case merely to seek some cheap publicity.
[537C E] Charan Lal Sahu vs Neelam Sanjeeva Reddy, l1978] 3 S.C.R. 1 and Charan Lal SaJlu & O.R.S. vs Giani Zail Singh & Anr., ; relied on.
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5497.txt
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minal Appeal No. 139 of 1954.
1333 Appeal by Special Leave from the Judgment and Order dated the 29th April 1954 of the Allahabad High Court in Criminal Appeal No. 1101 of 1953 and Referred No. III of 1953 arising out of the Judgment and Order dated the 3rd September 1953 of the Court of the Sessions Judge at Fatehpur in Sessions Trial No. 50 of 1953.
Sadhan Chandra Gupta and Janardhan Sharma, for the appellant.
K. B. Asthana and C. P. Lal, for the respondent.
March 1.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal by special leave from the judginent of the High Court at Allababad.
The sole appellant before us has been convicted by the Sessions Court under sections 148, 307 and 302 of the Indian Penal Code, and sentenced to rigorous imprisonment for two and a half years under section 148, to transportation for life under section 307, and to death under section 302.
These convictions and sentences have been confirmed by the High Court.
At the trial there were 19 other accused along with this appellant.
All of them were convicted and sentenced by the trial court under various sections of the Indian Penal Code.
On appeal ten out of them were acquitted by the High Court.
In respect of the remaining nine besides this appellant, the convictions and sentences were partially modified.
But this appeal is not concerned with them.
The incident in the course of which these offences are said to have been committed took place in the evening of the 4th January, 1953, shortly before sun set in a village called Sonari in the district Fatehpur, Uttar Pradesh.
During that incident two persons, Bisheshwar and Surajdin, are alleged to have received gun shot wounds.
Bisheshwar survived but Surajdin died on the spot.
The back ground for this incident was as follows: In the village of Sonari there were two factions between whom there was prior history of enmity resulting in criminal prosecutions by each against the other.
It 1334 may be broadly stated that the accused persons in the present case belong to one party and the prosecution witnesses as well as the deceased person belong to the other party.
In the year 1946 there was rioting between them in which two of the present prosecution witnesses were assaulted.
This led to a criminal case against some of the present accused and others, in which they were convicted and sentenced, the members of the other party figuring there in as prosecution witnesses.
Again, just five months prior to the present incident, there was another rioting in the village between these two groups.
In that, one Rain Bharosey a member of the party of the present accused was killed.
As a result 15 persons of the opposite party (i. e. the party of the present prosecution witnesses) were prosecuted.
By the date of this incident that case had been committed to the sessions but the sessions trial had not started.
According to the prosecution case, the occasion for the incident, which concerns us, was that some of the present accused wanted to persuade or prevent a member of the opposite party by name, Bisheshwar P.W. 2 in this case from doing what is called pairavi on behalf of the accused in that case.
(Pairavi is said to be the active assistance in relation to Court proceedings which a friend or agent renders to a litigant).
While, Bisheshwar, P.W. 2, and two others Bhurey Lal, P.W. 1, and Ram Saran, P.W. 3, were sitting in front of the house of Ram Saran on the evening of the 4th January, 1953, the present appellant and the other accused are said to have turned up before them, ' lathies in hand.
The appellant is said to have asked Bisheshwar to give up doing pairavis in the then pending case on behalf of the accused therein.
Bisheshwar having declined to do so, the appellant is said to have pulled out a pistol from his inner pocket and fired at him, as a result of which he fell down on the ground.
P.Ws. 2 and 3 are said to have dragged him inside the house and chained the door from inside, run up the roof and raised an alarm, whereupon a number of persons of the other party are said to have come running up.
One of the persons who so came running up was 1335 Surajdin who was cutting fodder at the house of Bhurey Lal, P.W. 1.
The appellant is said to have fired at him with the pistol.
He fell down and died on the spot.
Another person named Gaya Prasad is said to have received some minor lathi injuries.
Accused party thereafter is said to have run away.
First information of the report was lodged by Bhurey Lal, P.W. 1, near about 12 that very night at the police station which was about nine miles from the scene of the occurrence.
The police came on the scene the next morning and the usual investigation followed.
The police filed on the 22nd February, 1953, a charge sheet for offences under sections 147, 148, 323/149 and 307/149.
The charge sheet in so far as it was under section 323/149 related presumably to some minor injuries said to have been received by Gaya Prasad, and in so far as it was under section 307/149 related presumably to the gun shot wounds received by Bisheshwar, P.W. 2.
It may be noticed that the charge sheet did not concern itself with any offence or offences alleged to have been committed, in bringing about the death of Surajdin by the firing of a pistol at him.
It is on this charge sheet that cognizance of the case was taken by the Magistrate and committal proceedings were started.
It appears, however, that the complainant party finding that the police challan did not relate to the offence under sec tion 302, Indian Penal Code filed, on the 2nd May, 1953, a private complaint, before the very Magistrate in whose court the committal proceedings were by then pending.
That complaint was filed by the same Bisheshwar, P.W. 1, who lodged the first information in this case on the 5th January, 1953.
It sets out substantially the same facts.
This complaint also was taken on the file of the Magistrate.
The enquiry thereon was merged into the enquiry relating to the police challan case.
The Magistrate eventually committed all the 20 accused to take their trial before the Sessions Judge by framing charges, under sections 147, 323/149, 307/149 and 302/149.
There was a specific charge under section 148, Indian Penal Code against Suraj Pal and 1336 Dharm Raj, the former for being armed with a pistol and the latter for being armed with a pharsa, at the time of the commission of the rioting.
It is in respect of charges so framed by the committing Magistrate without any amendment or alteration that the accused were tried in the Sessions Court.
It may be mentioned at this stage that the defence of the accused, apart from the general denial of their hav ing anything to do with the incident and denials as to their having been present at the occurrence, was to the effect that it was the complainant 's party including the deceased Surajdin who formed the unlawful assembly, with the common object of beating one Ram Pal of the village.
This Ram Pal had appeared as a prosecution witness at the committal stage in the criminal proceedings by then pending against the present prosecution witnesses as accused.
It was also their defence that it was one Ram Bhawan of that party who, in the course of the incident, fired pistol shots in the air and also shot, later, Surajdin and brought about his death.
The learned Sessions Judge found all the accused guilty of the various offences as charged and sentenced them.
On appeal the High Court considered the prosecution evidence with reference to three aspects.
(1) How far the manner in which the prosecution alleged the incident to have taken place can be accepted; (2) How far the prosecution case regarding the presence and participation of the various per sons can be accepted; and (3) What offence can be said to have been made out as against each of them.
On the first question the High Court accepted the view that the incident took place as alleged by the prosecution.
With reference to the second, the High Court set out elaborately various reasons why the prosecution evidence in so far as it implicates particular individuals, could not be accepted at its face value and required to be carefully scrutinized.
With reference to certain criteria which it was considered necessary and right to adopt for purposes of scrutiny, the High Court held that the convictions of ten out of the 20 persons before it should be set aside and that 1337 the other ten persons including the present appellant were participants in the rioting.
Accordingly, the Court confirmed the conviction as against these ten under section 147, Indian Penal Code.
As regards the charge under section 148, Indian Penal Code, Dharm Raj was acquitted but the conviction of Suraj Pal was maintained on the ground of his having a pistol in his hand at the time of the rioting.
There remained the three charges against the ten persons under sections 323/149 for injuries on Gaya Prasad, 307/149 in respect of the gun shot wounds received by Bisheshwar, and 302/149 in respect of the murder of Surajdin.
It was held that the assault on Gaya Prasad wasn 't proved beyond doubt and hence, all the accused were acquitted in respect of this charge.
As regards the other two charges, i.e., under sections 307/149 and 302/149, the High Court came to the conclusion that neither the attempt on the life of Bisheshwar by pistol fire nor the actual death of Surajdin by pistol fire can be said to have been in prosecution of the common object of the unlawful assembly nor to have been within the knowledge of the accused as being so likely.
It was, therefore, held that none of the accused could be found guilty under section 149, with reference to, the attempt on the life of Bisheshwar, or the death of Surajdin.
All the same, in view of the fact that the evidence showed that the person who inflicted the pistol fire as against both was the appellant Suraj Pal, it was held that he was guilty of the offences under sections 307 and 302, Indian Penal Code.
On this ground, therefore, the High Court, while it set aside the convictions and sentences of all the accused under sections 307/149 and 302/149, maintained the 'convictions of the appellant under these two sections and maintained the sentences of transportation for life under section 307 and of death under section 302, Indian Penal Code.
The High Court convicted the other nine persons under section 323/149 in respect of the injuries received by P.W. 2 and sentenced them therefor.
On the above statement of the course of these proceedings, one important fact which emerges is that 1338 there have been no direct and individual charges against the appellant for the specific offences under sections 307 and 302, Indian Penal Code.
The question that arises is whether ', without such direct charges the convictions and sentences for those offences can be maintained.
It appears to us quite clear that a charge against a person as a member of an unlawful assembly in respect of an offence committed by one or other of the members of that assembly in prosecu tion of its common object is a substantially different one from a charge against any individual for an offence directly committed by him while being a member of such assembly.
The liability of a person in respect of the latter is only for acts directly committed by him, while in respect of the former, the liability is for acts which may have been done by any one of the other members of the unlawful assembly, provided that it was in prosecution of the common object of the assembly or was such as the members knew to be likely to be so committed.
A charge under section 149, Indian Penal Code puts the person on notice only of two alleged facts, viz. (1) that the offence was committed by one or other of the members of the unlawful assembly of which he is one, and (2) that the offence was committed in prosecution of the common object or is such that was known to be likely to be so committed.
Whether or not section 149, Indian Penal Code creates a distinct offence (as regards which there has been conflict of views in the High Courts), there can be no doubt that it creates a distinct head of criminal liability which has come to be known as "constructive liability" a convenient phrase not used in the Indian Penal Code.
There can, therefore, be no doubt that the direct individual liability of a person can only be fixed upon him with reference to a specific charge in respect of the particular offence.
Such a case is not covered by sections 236 and 237 of the Code of Criminal Procedure.
The framing of a specific and distinct charge in respect of every distinct bead of criminal liability constituting an offence, is the foundation for a conviction and sentence therefore The absence, therefore, of specific 1339 charges against the appellant under sections 307 and 302, Indian Penal Code in respect of which he has been sentenced to transportation for life And to death respectively, is a very serious lacuna in the proceedings in so far as it concerns him.
The question then which arises for consideration is whether or not this lacuna has prejudiced him in his trial.
It is perfectly true that the initial accusation as disclosed by the first information lodged by the com plainant, P.W. 1, on the 5th January, 1953, specifically, was to the effect that it was this appellant who with a pistol fired both as against Bisheshwar, P.W. 2, as also against the deceased, Surajdin.
It is also true that this allegation was repeated in the private complaint filed by this same P.W. I in May, 1953, directly before the Magistrate.
It is also undeniable that the evidence in court, both in the committal proceedings as well as at the sessions trial, given by the prosecution witnesses was in support of that allegation.
But curiously enough, apart from the absence of any individual charges against the appellant for these specific offences, even the charges against him and others relating to the injuries inflicted on P.W. 2 and the deceased Surajdin are somewhat vague as to the authorship thereof The relevant charges run as follows (after specifying the members alleged to constitute the unlawful assembly): "Firstly: That you, on the 4th day of January 1953 at about half an hour before sunset in village Sonari, formed an unlawful assembly with the common object of committing the murders of Bisheshwar and Suraj Din and committed rioting.
And thereby committed an offence punishable under section 147 of the Indian Penal Code.
Secondly: That you on the same date, time and place, in prosecution of the common object of the said unlawful assembly of which you were members at that time committed the murder of Suraj Din who was shot dead by a pistol fire.
And thereby committed an offence punishable under section 302/149 of the Indian Penal Code, 1340 Thirdly: That you on the same date, time and place, in prosecution of the common object of the said unlawful assembly of which you were members at that time attempted to commit the murder of Bisheshwar Singh by means of a pistol fire.
And thereby committed an offence punishable under section 307/149 of the Indian Penal Code".
The portions underlined (for the purposes of this judgment) in the charge under heads 2 and 3 above are curiously vague.
They appear to indicate a definite non committal attitude on the part of the Public Prosecutor and the Court, which has the ultimate responsibility for the framing of the charge, (vide section 226, Code of Criminal Procedure) as to who is the active author of the pistol fire referred to under these two heads of charge.
When the charge was so pointedly vague, no accused was bound to direct his attention in his defence to the question as to whether he or somebody else was the person who fired the pistol which brought about the gun shot wounds.
It has been brought to our notice that the appellant has been specifically questioned in the Court of Sessions under section 342, Code of Criminal Procedure on the footing that he was the person who fired at P.W. 2 and the deceased, Surajdin, and that the accused denied it.
But this cannot be said to remove any prejudice that would arise by virtue of the vagueness in the charge at the sessions trial, as to who was the author of the pistol fire.
Normally in a sessions trial the accused has no right of cross examination after the questioning under section 342, Code of Criminal Procedure.
It has been suggested that since such a question was put also in the questioning by the committing Magistrate under section 342, Code of Criminal Procedure, the accused had ample notice of this specific case before the commencement of the sessions trial.
But it does not follow that there could be no prejudice.
On the other hand, the very fact that in spite of such questioning the charges framed in the Magistrate 's Court, with their vagueness, in so far as this feature therein is concerned, has been 1341 maintained, before the Sessions Court without any amendment, is likely to have been misleading.
The appellant might well have relied on the absence of any such amendment as being an indication that he was not called upon to defend himself on the footing of his being the author of the pistol fire.
In a case so serious as that which involves the sentences of transportation for life, and of death, and particularly in a case like the present one, where the death sentence has been awarded in the trial court by distinguishing this appellant from all the other accused in respect of his individual act by way of pistol fire, it is difficult to say that the accused has not been prejudiced by the absence of specific charges under sections 307 and 302, Indian Penal Code.
Further, the medical evidence indicates that P.W. 2 as well as the deceased Surajdin had gun shot wounds on their person.
The evidence of the Doctor is to the effect that these wounds may have been caused by a country pistol which, it is alleged, the appellant had in his hand.
It has been suggested on behalf of the defence that the Medical Officer was not competent to speak about it and that if the prosecution wanted to rely thereupon, they should have called an arms expert to speak to the same.
Whether or not this comment is legitimate, it is clear that if the appellant is to be found directly responsible for inflicting the wounds, noted as gun shot wounds by the Medical Officer, he might well have availed himself of the opportunity to elucidate, by cross examination or positive defence, the nature of the fire arm which would have caused the actual injuries found on the bodies of P. W. 2 and of deceased Surajdin.
In all the circumstances above noticed, we are satisfied that the absence of specific charges against the appellant under sections 307 and 302, Indian Penal Code has materially prejudiced him.
We must accordingly set aside the convictions and sentences of the appellant under sections 307 and 302 of the Indian Penal Code.
The further question that arises is whether or not we are to direct a retrial of the appellant in respect of these offences.
We have given our best considera 1342 tion to all the circumstances of this case and have for this purpose looked into the evidence and the material on the record.
The case discloses certain outstanding features.
At the very outset and simultaneously with the first information filed by P.W. 1 in this case, there was another report filed by one Ram Pal at the same police station, almost exactly at the same time, relating to the same incident.
This is exhibit P 16 on the record.
This report is said to have been lodged at the police station at 12 15 in the night, while the other report is said to have been lodged at 12 10 that night.
The report, exhibit P 16, alleged the present prosecution party to be the aggressors and put forward, as the occasion for the incident, an attempt on the part of the prosecution party to beat Ram Pal, the com plainant of that complaint, for having given evidence in support of the prosecution in the committal proceedings of the rioting case then pending against the present prosecution witnesses (as accused therein)obviously with a view to prevent him from giving evidence in the Sessions Court against them.
That complaint specifically refers to one Ram Bhawan who is P.W. 4 in the present case as the person who had a pistol in hand and fired with it.
That report makes no mention of any injuries having been by then received from pistol fire, in the course of that incident.
Of course, there is no proof, in this case, of any of the allegations in that report.
But it appears from the order of commitment in this case (which forms part of the present printed record) that with reference to that report there was pending, at the date of the committal, a cross case against some of the prosecution witnesses in the present case for the same incident.
The police constable mohair of the police station where the counter complaint, exhibit P 16 was lodged and who accepted both the complaints (1) from Bhurey Lal, and (2) from Ram Pal, has stated in his evidence that when the complaint, exhibit P 16, was filed by Ram Pal the present appellant Suraj Pal had also accompanied Ram Pal, the complainant therein.
This may well be claimed to be the conduct of an innocent person.
It is also not without some significance 1343 that admittedly and as a matter of fact, the police did not file any charge sheet in the present case against any one for the actual offence of murder under section 302, Indian Penal Code and that even in the charge sheet which they did file they confined the case to section 307, Indian Penal Code but did not commit themselves as to who out of the members of the unlawful assembly was the author of the pistol fire.
So far as it appears from the police charge sheet dated the 22nd February, 1953, as printed in the record before us, there is a statement therein to the effect "Suraj Pal Singh and Ram Manohar were armed with pistols".
Ram Manohar is also one of the accused who was put up for trial.
The statements of some of the prosecution witnesses furnish indication of more than one fire arm having been used at the incident.
Thus, for instance.
, Bisheshwar, P.W. 2, said "I heard 3 or 4 guns being fired outside and also heard a noise".
P.W. 4., Ram Bhawan, said "We four persons threw lumps of earth from the well at the accused persons, the accused retired and fired their gun twice. . . .
The accused had fired a gun from the door of Mabadeo when going away, then, bad fired two or three guns from his door".
P.W. 5, Gaya Prasad, said "Two or three guns afterwards had been fired from the door of Mahadeo Pandit.
Those guns had been fired from the lane.
The guns had been fired at the door of Ram Saran and had bit it".
All these witnesses no doubt assert that so far as the particular injuries with which this case is concerned the firing was by the appellant Suraj Pal.
But the above state ments by these witnesses in the cross examination may well indicate that there may have been other persons in the unlawful assembly at that time with arms in their hands, who made use of them by firing.
Apart from the use of pistols in the course of that incident, by one party or the other, there are clear indications that there was a mutual fight between both the parties.
Two of the persons on the side of the accused, viz. Lal Pratap and Chedi Lal have received some injuries and their injury certificates have 172 1344 been marked as Exs.
D 1 and D 2.
The prosecution witnesses themselves admit that there was mutual fighting to this extent, viz. that there was also throwing of brickbats by the complainant 's party against the rioters.
As already stated there is in fact a counter case against some of the present prosecution witnesses in respect of the same incident.
In such a situation any further trial is likely to result only in very doubtful and unreliable evidence being adduced after a considerable lapse of time.
Even as it is, the evidence recorded in the present case has been found by the High Court in its judgment as not acceptable at its face value.
The learned Judges have dealt with this aspect at length and they wound up their consideration of this part of the case as follows: "For the above reasons, I am of opinion that there is a good deal of substance in this part of the arguments of the appellants ' counsel.
The question that would arise is as to which of the particular accused is guilty and what should be the criterion for deciding this matter.
In view of the biassed and interested nature of the prosecution evidence, I am of opinion that the presence of only those accused should be held to have been proved who have been assigned any definite part by the prosecution witnesses or ,whose presence is corroborated by some other circumstantial evidence.
In view of the highly interested nature of the prosecution evidence, dealing with the first aspect of the case also, viz. the question as to how far the prosecution have succeeded in proving the manner in which the incident occurred, 1 have not accepted the prosecution case unless it found corroboration from some other factor of a circumstantial nature or from probabilities of the case".
It is by reference to these standards that they have rejected the evidence of the prosecution witnesses in so far as they implicated ten other accused whom the High Court acquitted.
But it appears to us, that judged by the very same standards there is no adequate reason for accepting the evidence as being reliable in respect of this appellant also.
In fact there is good reason to feel that on the same standards this appel 1345 lant also should have got the benefit of the doubt.
At this stage, it is not out of place to mention one fact.
It appears from the evidence of the Investigating Officer, P.W. 14, that in the course of the investigation the prosecuting authorities were of the opinion that the murder in this case was to be attributed to the prosecution witness, Ram Bhawan, P.W. 4, and not to the appellant, and that in their view even the evidence as against Ram Bhawan was not sufficient to put him on trial for the murder.
Doubtless such an opinion of the prosecuting authorities has no relevancy in the case and should not have been placed on the record in this case.
But when we have to consider the desirability or otherwise of retrial, we need not shut our eyes to these features of the case which have been brought on the record.
In the circumstances mentioned above we do not consider that the interests of justice require that any retrial should be ordered.
We accordingly direct that there shall be no retrial.
In the result, the convictions of the appellant under sections 307 and 302 of the Indian Penal Code and the sentences therefor are hereby set aside.
But his conviction under section 148 of the Indian Penal Code is maintained as also the sentence of two years and a half in respect thereof.
This appeal is accordingly allowed partially to the extent indicated above.
Appeal partially allowed.
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Where a person has been charged along with others under sections 302 and 307 of the Indian Penal Code each, only as read with section 149 of the Code, his convictions and sentences for the substantial offences under sections 302 and 307 of the Code are erroneous.
The absence of specific charges in this behalf is a serious lacunas in the proceedings, inasmuch as the framing of a specific and distinct charge in respect of every distinct head of criminal liability constituting an offence is the foundation for a conviction and sentence therefore The conviction in these circumstances under Bs.
302 and 307 of the Code and sentences of death and transportation for life cannot be maintained unless the Court is satisfied, on the facts of the case, that the accused has not been prejudiced in his trial.
Whether or not in such a situation the questioning of the accused during the course of his examination under section 342 of the Code of Criminal Procedure in relation to the offences under sections 302 and 307 of the Indian Penal Code can be relied upon as obviating the likelihood of prejudice has to be determined with reference to the facts and circumstances of each case.
All the circumstances of the case and the evidence and materials on the record should be looked into on the question arising in such a situation as to whether a retrial should be ordered or not.
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: Criminal Appeal No, 385 of 1976.
(From the Judgment and Order dated 22 12 1975 of the Gujarat High Court in Crl.
Appeal No. 180/74) N.N. Keswani & Ramesh N. Keswani for the appellant.
K.H. Kazi & M.N. Shroff for the Respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal, by special leave, is directed against an order passed by the High Court of Gujarat setting aside the acquittal of the appellant and directing that he, along with other accused, be retried not only for the of fence of consumption of liquor of which he was acquitted but also for the offence of possession of liquor punishable under section 66(1)(b) of the Bombay Prohibition Act, 1949.
The question arising for determination is a short one, but in order to appreciate it, it is necessary to state the. facts giving rise to the appeal.
The appellant, original accused No. 2, was at all mate rial times working as District Health Officer in District Amreli in the State of Gujarat.
He was, according to the prosecution, found of liquor and whenever he used to go out of Amreli in connection with his duties, he used to partici pate in drinking parties.
On 3rd August, 1972, he visited Kodinar, a town situate in the District of Amreli and late in the evening of that day, he attended a drinking party which was arranged by accused No. 1 in his agricultural farm situate at a place called Ghantwad about 50 Kms.
away from Kodinar.
Besides accused Nos. 1 and 2, six other persons who were arraigned as accused Nos.
3 to 8 were also present at the drinking party.
On receiving information about the drinking party, the District Magistrate and the District Superintendent of Police along with other police officers and panch witnesses raided the agricultural farm where the drinking party was in progress.
The raid was carried out at about 00.30 hrs.
after midnight and on seeing the police, the appellant and the other accused tried to run away but they were apprehended.
The raiding party, also found five glasses and two empty bottles, all smelling of liquor, twelve empty soda water bottles and one full ' bottle con taining liquor and these articles were seized by the raiding party in the presence of the panch witnesses and the panch nama was prepared.
The appellant and the other accused were thereafter taken to the Amreli hospital where their blood was taken by the Civil Surgeon for the purpose of carrying out 874 the necessary test for determining the presence of alcohol.
The analysis of the blood revealed that, in the case of the appellant, the concentration of alcohol in the blood was more than 0.05 per cent weight in volume while in the case of the other accused, it was less than 0.05 per cent.
On these facts, the appellant and the other accused were charge sheeted before the Judicial Magistrate, Kodinar.
The charge against accused No. 1 was that he possessed as well as consumed liquor in contravention of the provisions of the Act and was, therefore, guilty of offences punishable under section 66(1)(b), while the charge against the other ac cused, including the appellant, was that they were guilty of consuming liquor in contravention of the provisions of the Act and were hence liable to be punished for the offence under section 66(1) (b) of the Act.
The learned Judicial Magistrate accepted the evidence in regard to the concentra tion of alcohol in the blood of the accused, but taking the view that breaches of certain rules in the Bombay Prohibi tion (Medical Examination and Blood Test) Rules, 1959 were committed in taking the blood of the accused, the learned Judicial Magistrate acquitted the accused including the appellant of the offence of consuming liquor under section 66 (1 ) (b).
The learned Judicial Magistrate also acquitted accused No. 1 of the offence of possessing liquor under section 66(1)(b) on the ground that it was not proved by the prosecution beyond reasonable doubt that he was in posses sion of liquor.
The State preferred two appeals against the order of acquittal passed by the learned Judicial Magistrate.
Both the appeals were heard by a Single Judge of the High Court any they were disposed of by a common judgment.
The High Court did not examine whether the order passed by the learned Judicial Magistrate acquitting the appellant and the other accused of the offence of consuming liquor was right or wrong nor did it consider whether the acquittal of ac cused No. 1 for the offence of possessing liquor was correct or incorrect.
But, taking the view that there was no dis tinction between the case of accused No. 1 on the one hand and that of the appellant and accused Nos. 3 to 8 on the other so far as the charge of possession of liquor is con cerned, the High Court held that, on the material on record, the learned Judicial Magistrate should have flamed a charge against the appellant and accused Nos.
3 to 8 not only for the offence of consuming liquor but also for the offence of possession of liquor as in the case of accused No. 1.
The High Court observed: "Whenever "Drinking Parties" are detect ed by the police, it is the imperative duty of the prosecution to allege that all the partic ipants of the same are charged with the "possession" of liquor in contravention of the provisions of law contained in Sec.
66(1 )(b) of the B 'bay Prohibition Act, 1949.
It may be emphasised that in such cases, "possession" of liquor does not only necessarily mean actual, physical or conscious possession of the owner or the occupant of the premises".
In such cases of "Drinking Parties", it is always open to a participant to stretch his hand and to take the liquor in question for his own use and consumption.
But, in all such cases of 875 "Drinking Parties", the Court must be satis fied that the attendant circumstances should clearly indicate that the accused persons are the participants in a "Drinking Party".
In the case before me, why should the accused persons, during the night hours, having gath ered together go to a distant farm house ? Why should they be found with the aforesaid articles ? Why should they create a situa tion as a result of which a constable had to jump over a wall ? Why should they try to run away when they Were apprehended by the respon sible officers for Amreli ? In such circumstances, it is the duty of the prosecution to see that all the partic ipants are charged with the commission of the offence viz. of possessing liquor in contra vention of the provisions contained in Sec.
66(1)(b) of the B 'bay Prohibition Act, 1949.
" The High Court, on this view, set aside the order of acquittal in 'its entirety without examining its correctness and remanded the case to the learned Judicial Magistrate with a direction to try the appellant and the other accused not only on the charge of consuming liquor but also on the further charge of possession of liquor.
Accused Nos. 1 and 3 to 8 did not challenge the correctness of this order made by the High Court, but the appellant impugned it by prefer ring the present appeal with special leave obtained from this Court.
The impugned Order made by the High Court consists of two parts.
One part set aside the order of acquittal and directed retrial of the appellant on the charge of consuming liquor while the other directed that the appellant and accused Nos.
3 to 8 'should also be tried on the further charge of possession of liquor.
The appellant attacked both parts of the Order and the contention urged by him in sup port of the appeal was a two fold one.
The first limb of the contention was that the order setting aside the acquit tal of the appellant for the offence of consuming liquor and directing retrial of the appellant for that offence was improper, since it was not competent to the High Court in appeal to set aside the order of acquittal and direct retri al, unless it_found that the acquittal was wrong.
Here in the present case, the High Court did not even consider whether the acquittal of the appellant was correct or not and without finding that the acquittal was erroneous, pro ceeded to set aside the acquittal and direct retrial.
This, according to the appellant, was impermissible for the High Court to 'do and it was said that the order setting aside the acquittal must, therefore, be reversed and the acquittal restored.
The second limb of the contention related to that part of the impugned order which directed that the appellant and accused Nos.
3 to 8 should be retried not only on the charge of consuming liquor but also on the further charge of possession of liquor.
The argument of the appellant under this head of contention was that in the appeal, the High Court was confined merely to a consideration of the question whether the acquittal of the appellant for the offence of consuming liquor was right or wrong and it was, not compe tent to the High Court 6 1338SCI/76 876 to frame a new charge for possession of liquor and direct trial of the appellant and the other accused on such now charge.
These were the twin grounds on which the order made by the High Court was challenged on behalf of the appellant.
Now, there can be no doubt that there is great force.
in the first part of ' the contention of the appellant.
The learned Judicial Magistrate acquitted the appellant of the offence of consuming liquor.
The State preferred an appeal against the acquittal and manifestly, in this appeal, the acquittal could not be set aside unless the High Court, on a consider ation of the evidence, came to the conclusion that the acquittal was wrong.
It was not competent to the High Court to set aside the acquittal without finding that it was erroneous.
The High Court, however, did not even care to examine whether the acquittal was right or wrong, but merely because it took the view that a further charge should have been framed against the appellant and accused Nos.
3 to 8, it set aside the acquittal and directed retrial of the appellant and the other accused.
This was plainly and indubitably wrong and the: order setting aside the acquittal must, therefore, be quashed.
But from that it does not necessarily follow that the acquittal must be restored.
The High Court having failed to consider the merits of the acquittal,.
the matter would have to go back to the High Court for the purpose of deciding whether on the evidence on record, the acquittal was justified or not.
The appeal being directed against the correctness of the acquittal, the High Court would have to determine whether on merits, the acquittal should be maintained or reversed.
We must, there fore, quash that part of the order of the High Court which set aside the acquittal of the appellant for the offence of consuming liquor and remand ' the case to the High Court for disposing of the appeal against the acquittal of the appel lant on merits.
That takes us to the second limb of the contention directed against the order of retrial on the further charge of possession of liquor.
It is true that originally when the case was tried before the learned Judicial Magistrate, there was no charge against the appellant and accused Nos.
3 to 8 for the offence of consuming liquor and the appeal of the State was also directed 'only against their acquittal for ,the offence of consuming liquor.
But there can be no doubt that if, while hearing the appeal, the High Court found that, on the material before .him, the learned Judicial Magistrate should have framed a further charge against the appellant and accused Nos.
3 to 8 but he failed to do so, the High Court could certainly direct the learned Judicial Magistrate to frame such further charge and try the appel lant and accused Nos. 3 to 8 on such further charge.
The High Court could legitimately in the exercise of its juris diction, set right the error committed by the learned Judi cial Magistrate in not flaming a proper charge.
Here, the High Court, on a consideration of the material which was before the learned Judicial Magistrate, came to the conclu sion that this material warranted the framing of a further charge against the appellant and accused Nos.
3 to 8 for possession of liquor and it, therefore, directed that the case should go back to the learned judicial Magistrate and he should try the appellant and accused Nos.
3 to 8 on 877 such further charge.
The High Court clearly had jurisdic tion to make such an order.
But then, the complaint made on behalf of the appellant was that the material before the learned Judicial Magistrate did not justify the framing of a charge against the appellant and accused Nos.
3 to 8 for possession of liquor and hence the order directing their trial on such further charge was not justified.
This is, however, a complaint on facts and we do not see any reason why we should, in the exercise of our extra ordinary juris diction under Article 136 of the Constitution, entertain such a complaint.
It is true that there are certain obser vations made by the High Court which are a little too wide but it cannot be gained that even a person who participates in a drinking party can in conceivable cases be guilty of the offence of possession of liquor.
Suppose a person is found at a drinking party and he has a glass with him with liquor in it at the time when the raid is carried out, would it not be correct to say that he was at the relevant time in possession of liquor ? The liquor in his glass would be liquor in his possession.
But at the same time it would not be correct to say that merely because a participant in a drinking party can stretch his hand and take liquor for his use and consumption, he can be held to be in possession of liquor.
The question is not whether a participant in a drinking party can place himself in possession of liquor by stretching his hand and taking it but whether he is actu ally in possession of it.
Possession again must be distin guished from custody and it must be conscious possession.
If, for example, a bottle liquor is kept by.
some one in the car or house of a person without his knowledge, he cannot be said to be in possession of the bottle of liquor.
It can not, therefore, be laid down as an absolute proposition that whoever is present at a drinking party must necessarily be guilty of the offence of possession of liquor and must be charged for such offence.
Whether an accused is in posses sion of liquor or not must depend on the facts and circum stances of each case.
Here in the present case, the prose cution will have to establish at the trial by leading satis factory evidence that the appellant and the other accused were in possession of liquor as else the prosecution on the charge of possession of liquor will fail.
The order direct ing trial of the appellant and the other accused for the offence of possession of liquor must, therefore, be main tained, but we think it would be desirable if this trial is taken up after the disposal of appeal by the High Court in regard to the acquittal of the appellant for the offence of consuming liquor.
We accordingly allow the appeal in part and reverse that part of the 'order of the High Court which set aside the acquittal of the appellant for the offence of consuming liquor and remand the case to the High Court for disposing of the appeal against the acquittal of the appellant on merits, but so far as the other part of the order directing trial of the appellant and the other accused on the charge of possession of liquor is concerned, we do not see any reason to interfere with the same and we accordingly reject the appeal in so far as it is directed against that part of the order.
S.R. Appeal partly allowed.
|
Section 66(1)(b) of the Bombay Prohibition Act 1949 makes any person liable for punishment on conviction for the offence of "consuming, using, possessing or transporting any intoxicant or hemp." Section 66(2)(b) prescribes a statutory limit of 0.05 percentage of alcohol in the veinous blood taken from the accused.
In summary case Nos. 798 and 799 of 1972 before the Judicial Magistrate 1st Class, Kodi nar, Gujarat State, the appellant/accused No. 2 along with six others was charged with consumption of liquor while accused No. 1, the owner of an agricultural farm, where a drinking party took place was charged with the offence of possessing liquor.
h spite of the fact that the percentage of alcohol present in the veinous blood taken from the body of accused No. 2 was more than the statutory limit, in view.
breaches of certain statutory rules, in Bombay Prohibi tion (Medical Examination and Blood Test) Rules, 1959, the appellant/accused No. 2 was acquitted along with accused 3 to 8 in whose cases the percentage was less than the statu tory limit.
Accused No. 1 was also acquitted for lack of evidence on the charge of possession of liquor.
In the State appeal, taking the view that in a drinking party there should always be a further charge of possession of liquor, the High Court without examining the correctness of the findings of fact leading to the acquittals, set aside the orders of acquittal in respect of all and 'ordered retrial.
On appeal by special leave, the Court, HELD: (i) In a State appeal against acquittal, the acquittal should not be set aside unless the High Court on a consideration of the evidence.
comes to the. conclusion that the acquittal was wrong.
In the instant case, the High Court did not even consider whether the acquittal of the appellant was correct or not and without finding that the acquittal was erroneous proceeded to set aside the.
acquit tal and direct retrial.
It 'was not competent to the High Court to set aside the acquittal without finding that it was erroneous.
Setting aside the acquittal order and ordering retrial merely because.
it took the view that a further charge should have been framed against the appellant and accused No. 3 to 8 was plainly and indubitably wrong.
[876 B D] (ii) If while hearing an appeal, the High Court, finds that, on the material before it, a further charge should be framed, the High Court can legitimately, the exercise of its jurisdiction set right the error committed by the trial court in not framing a proper charge.
[876 G H] 873 (iii) In the exercise of extra ordinary jurisdiction under Article 136 of the Constitution, the Supreme Court would not ordinarily entertain a complaint on facts.
[877 B] (iv) Possession is distinguishable from custody and it must be conscious possession.
Whether the accused is in possession of liquor or not must depend on the facts and circumstance of each case.
[877 D]
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3613.txt
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Appeal No. 383 of 1961.
Appeal from the judgment and order dated July 21 1959, of the Special Bench of the Calcutta High Court in Matter No. 76 of 1952.
D. R. Prem and R. L. Dhebar, for the appellant and respondents NOS.
2 and 3.
section P. Desai and B. P. Maheshwari, for respondent No. 1 565 1962.
April 30.
The brief facts necessary for present purposes are these.
The respondent had imported 2,000 drums of mineral oil.
Out of this quantity, the appellant, the Collector of Customs, Calcutta, confiscated 50 drums by order dated September 20, 1950.
He also imposed a personal penalty of Rs.61,000/on the respondent under the , No. 8 of 1878, (hereinafter referred to as the Act).
The respondent appealed to the Central Board of Revenue under section 188 of the Act, and this appeal was dismissed in April 1952.
Thereupon the respondent filed a petition under article 226 of the Constitution in the High Court.
We are in the present appeal not concerned with the merits of the case put forward by the respondent, for the matter has not yet been heard on the merits.
When the petition came up before a learned Single Judge a question was raised as to the jurisdiction of the High Court to hear the petition in view of the decision of this Court in Election Commission India vs Saka Venkata Subba Rao.(1) As the learned Single Judge considered the point important, he referred the matter to a larger bench; and eventually the question was considered by a Full Bench if the High Court.
The Full Bench addressed itself two questions in that connection, namely, (i) whether any writ could issue against the Central Board of Revenue which was a party to the writ petition and which was permanently located outside the jurisdiction of the High Court, and (ii) whether if no writ could issue, against the Central Board of Revenue any writ could be issued against the appellant, which was the original authority to pass the order under challenge, when the appellate (1) ; , 566 authority (namely, the Central Board of Revenue) had merely dismissed the appeal.
The Full Bench held on the first question.
that the High Court, had no jurisdiction to issue a writ against the Central Board of Revenue in view of the Precision in the case of Sake Venkata Subba Rao.(1).
On the second question, it held that as the Central Board of Revenue had merely dis missed the appeal against the order of the Collector of Customs Calcutta, the really operative order was the order of the appellant, which was located within the jurisdiction of the High Court, and therefore it had jurisdiction to pass an order against the Collector of Customs in spite of the fact that order had been taken in appeal (which was dismissed) to the Central Board of Revenue to which no writ, could be issued.
The Full Bench further directed that the petition would be placed before the learned Single Judge for disposal in the light of its decision or, the question of jurisdiction.
Thereupon there was an application for a certificate to appeal to this Court, which was granted; and that in how the matter has come up before us.
The only question which 1ells for decision before us in the second question debated in the ' High Court,.
namely, whatever the High Court would have jurisdiction to issue a writ against the Collector of Customs Calcutta in spite of the fact that his order was taken in appeal to the Central Board of Revenue against which the High Court could not issue a writ and the appeal had been dismissed.
There seems to have been a difference of opinion amongst the High Courts in this matter.
The Rajasthan High Courts in Barkatali vs Custodian General of Evacuee Property (1) held that where the A.I.R. (1904) Raj.
567 original authority passing the order was within the jurisdiction of the High Court but the appellate authority was not within such jurisdiction, the High Court would still have jurisdiction to issue a writ to the original authority, where the appellate authority had merely dismissed the appeal and the order of the original authority stood confirmed without any modification whatsoever.
On the other hand, the PEPSU High Court in Joginder Singh Waryam Singh vs Director, Rural Rehabilitation.
Pepsu Patiala, the Nagpur High Court in Burhanpur, National Textile Workers Union, vs Labour Appellate Tribunal of India at Bombay ( 2) and the Allahabad High Court in Azmat Ullah, vs Custodian, Evacuee Property (3 ) held otherwise, taking the view that even Where the appeal was merely dismissed, the order of the original authority merged in the order of the appellate authority, and if the appellate authority was beyond the territorial jurisdiction of the High Court, no writ could issue even to the original authority.
It may be mentioned that the Rajasthan High Court had occasion to reconsider the matter after the decision of this Court in A. Thangal Kunju Mudaliar vs M. Venkita chalam Potti ( 4 ) and held that in view of that decision, itsearlier decision in Barkatali 's case (5) was no longer good law.
The High Court has however not noticed this later decision of the Rajasthan High Court to which the learned Chief Justice who was party to the earlier Rajasthan case was also a party.
The main reason which impelled the High Courts, which held otherwise, was that the order of the original authority got merged in the order of the Appellate authority when the appeal was disposed of and therefore if the High Court had no territorial jurisdiction to issue a writ against the appellate authority it could not issue a writ (1) A.I.R. (1955) Pepsu 91 (3) A. I. R. (1955) All 435.
(2) A. I. R. (4) ; (5) A.I.R. (1954) Raj.
568 against the original authority, even though the appellate authority had merely dismissed the appeal without any modification of the order passed by the original authority.
The question therefore turns on whether the order of the original authority becomes merged in the order of the appellate authority even where the appellate authority merely dismisses the appeal without any modification of the order of the original authority.
It is obvious that when an appeal is made, the appellate authority can do one of three things, namely, (i) it may reverse the order under appeal, (ii) it may modify that order, and (iii) it may merely dismiss the appeal and thus confirm the order without any modification.
It is not disputed that in the first two cases where the order of the original authority is either reversed or modified it is the order of the appellate authority which is the operative order and if the High Court has no jurisdiction to issue a writ to the appellate authority it cannot issue a writ to the original authority.
The question therefore is whether there is any difference between these two cases and the third case where the appellate authority dismisses the appeal and thus confirms the order of the original authority.
It seems to us that on principle it is difficult to draw a distinction between the first tori kinds of orders passed by the appellate authority and the third kind of order passed by it.
In all these three cases after the appellate authority has disposed of the appeal, the operative order is the order of the appellate authority whether it has reversed the original order or modified it or confirmed it.
In law, the appellate order of confirmation is quite as efficacious as an operative order as an appellate order of reversal or modification.
Therefore, if the appellate authority is beyond the territorial jurisdiction of the High Court it seems difficult to bold even in a case where the appellate 569 authority has confirmed the order of the original authority that the High Court can issue a writ to the original authority which may even have the effect of setting aside the order of the original authority when it cannot issue a writ to the appellate authority which has confirmed the order of the original authority.
In effect, by issuing a writ to the original authority setting aside its order, the High Court would be interfering with the order of the appellate authority which had confirmed the order or the original authority even though it has DO territorial jurisdiction to issue any writ to the appellate authority.
We therefore feel that on principle when once an order of an original authority is taken in appeal to the appellate authority which is located beyond the territorial jurisdiction of the High Court, it is the order after the appeal is disposed of; and as the High Court cannot issue a writ against the appellate authority for want of territorial jurisdiction it would not be open to it at issue a writ to the original authority which may be within its territorial jurisdiction once the appeal is disposed of, though it may be that the appellate authority has merely confirmed the order of the original authority and dismissed the appeal.
It is this principle, viz., that the appellate order is the operative order after the appeal is disposed of, which is in our opinion the basis of the rule that the decree of the lower court merges in the decree of the appellate court, and on the same principle it would not be incorrect to say that the order of the original authority is merged in the order of the appellate authority whatsoever its decision whether of reversal or modification or mere confirmation.
This matter has been considered by this Court on a number of occasions after the decision in Saka Venkata Subba Rao 's case.(1) (1) ; 570 In A. Thangal Kunju Mudaliar 's case (1), though the point was not directly in issue in that case, the Court had occasion to consider the matter (see p. 1213) and it approved of the decisions of the PEPSU, Nagpur and Allahabad High Courts, (referred to above).
Then in Commissioner of Income tax vs Messrs. Amritlal Bhogilal and Company (2), a similar question arose as to the merging of an order of the income tax officer into the order of the Appellate Assistant Commissioner passed in appeal in connection with the powers of the Commissioner of Income tax in revision.
Though in that case the order of registration by the Income tax officer was held not to have merged in the order of the Assistant Commissioner on appeal in view of the special provisions of the Income tax Act, this Court observed as follows in that connection at p. 720 : ",There can be no doubt that, if an appeal is provided against an order passed by a tribunal, the decision of the appellate authority is the operative decision in law.
If the appellate authority modifies or reverses the decision of the tribunal, it is obvious that it is the appellate decision that is effective and can be enforced.
In law the position would be just the same even if the appellate decision merely confirms the decision of the tribunal.
As a result of the confirmation or affirmable of the decision of the tribunal by the appellate authority the original decision merges in the appellate decision and it is the appellate decision alone which subsists and is operative and capable of enforcement.
The matter was considered again by this Court, in Madan Gopal Rungta vs Secretary to the Government of Orissa (3) in connection with an order of the (1) (1955)2 S.C.R.1196.
12) (1959) S.C.R. 713, (3) (1962) (Supp.) 3 S.C.R. 966.
571 Central Government in revision under the Mineral Concession Rules, 1949, framed under the Mines and Minerals (Regulation and Development) Act, (No. 53 of 1948) and it was held that when the Central Government rejected the review.
petition against the order of the State Government under the Mineral Concession Rules it was in effect rejecting the application of the appellant of that case for grant of the mining lease to him.
The question of the original order with the appellate order was also considered in that case though it was pointed out in view of r.60 of the Mineral Concession Rules that it is the Central Government 's order in review which is the effective and final order.
Learned counsel for the respondent sought to distinguish Madan Gopal Rungla 's case (1) on the ground that it was based mainly on an interpretation of r. 60 of the Mineral Concession Rules 1949, though he did not pursue this further when section 188 of the was pointed out to him.
The main reliance however of the respondent both in the High Court and before us is on the decision in the State of Uttar Pradesh vs Mohmmed Nooh (2).
That was a case where a public servant was dismissed on April 20, 1948 before the Constitu tion had come into force.
His appeal from the order of dismissal was dismissed in May 1949 which was also before the Constitution came into force.
His revision against the order in the appeal was dismissed on April 22, 1950, when the Constitution had come into force, and the question that arose in that case was whether the dismissed public servant could take advantage of the provisions of the Constitution because the revisional order had been passed after the Constitution came into force.
In that case, this Court certainly held that the order of dismissal passed on April 20, 1948 could not be said to have merged in the orders in appeal and in revision.
It (1) (1962) (Supp.) 3 S.C.R. 906.
(2) ; 572 was pointed out that the order of dismissal was operative of its own strength as from April 20, 1948 and the public servant stood dismissed as from that date and therefore it was a case of dismissal before the Constitution came into force and the.
public servant could not take advantage of the provisions of the Constitution in view of the fact that his dismissal had taken place before the Constitution had come into force.
As was pointed out in Madan Gopal Rungta 's, case(1) Mohammad Nooh 's case (2) was a special case, which stands on its own facts.
The question there was whether a writ under article 226 could be issued in respect of a dismissal which was effective from 1948.
The relief that was being sought was against an order of dismissal which came into existence before the Constitution came into force and remained effective all along even after the dismissal of the appeal and the revision from that order.
It was in those special circumstances that this Court held that the dismissal had taken place in 1948 and it could not be the subject matter of consideration under Art.226 of the constitution, for that would be giving retrospective effect to the Article.
The argument based on the principle of merger was repelled by this Court in that case on two grounds, namely, (i) that the principle of merger applicable to decrees of courts would not be applicable to departmental tribunals, and (ii) that the original order would be operative on its own strength and did not gain greater efficacy by the subsequent order of dismissal of the appeal or revision.
in effect, this means that even if the principle of merger were applicable to an order of dismissed like the one in Mohammad Nooh 's case, (2) the fact would still remain that the dismissal was before the Constitution came into force and therefore the person dismiss could not take advantage of the provisions of the Constitution, so (1) (1962)(Supp.)3 S.C.R.906.
(2) ; 573 far as that dismissal was concerned.
That case was not concerned with the territorial jurisdiction of the High Court where the original authority is within such territorial jurisdiction while the appellate authority is not and must therefore be confined to the special facts with which it was dealing.
We have therefore no hesitation in holding consistently with the view taken by this Court in Mudaliar 's case (1) as well as in Messrs. Amritlal Bhogilat 's (2) that the order of the origin%] authority must be held to have merged in the order of the appellate authority in a case like the present and it is only the order of the appellate authority which is operative after the appeal is disposed of.
Therefore, if the appellate authority is beyond the territorial jurisdiction of the High Court it would not be open to it to issue a writ to the original autbority which is within its jurisdiction so long as it can not issue a writ to the appellate authority.
It is not in dispute in this case that no writ could be issued to the appellate authority and in the circumstances the High Court could issue no writ even to the original authority.
We therefore allow the appeal, set aside the order of the High Court and dismiss the writ petition with costs.
Appeal allowed.
(1) ; (2) (1959) S.C.R. 713.
|
The respondent imported 2,000 drums of mineral oil and the appellant confiscated 50 drums and imposed a personal penalty.
The appeal of the respondent was dismissed by the Central Board of Revenue.
The respondent filed a petition under article 226 of the Constitution in the Calcutta High Court.
A Full Bench of the High Court held that the High Court had no jurisdiction to issue a writ against the Central Board of Revenue in view of the decision in the case of Saka Venkata Subbha Rao.
However, as the Central Board of Revenue had merely dismissed the appeal against the 564 order of the appellant, the High Court further held that it had jurisdiction to pass an order against the appellant.
The appellant came to this Court after obtaining a certificate.
Held that the appellant had merged into that of the Central Board of Revenue and hence no order could be issued against the appellant.
It is only the order of the appellate authority which is operative after the appeal is disposed of.
It is immaterial whether the appellate order reverses the original order, modifies it or confirms it.
The appellate order of confirmation is as efficacious as an operative order as an appellate order of reversal or modification.
As the appellate authority in this case was beyond the territorial jurisdiction of the High Court, it was not open to the High Court to issue a writ to the original authority which was within its jurisdiction.
Election Commission, India vs Saka Vankata Subba Rao, , A. Thangal Kunju Mudatiar vs M. Venkitachalam Poiti, ; , Commissioner of Income tax vs M/s. Amritlal Bhogilal & Co. [1959] section C. R. 713 and Madan Gopal Rungta vs Secretary to the Government of Orissa, (1962) (Supp.) 3 S.C.R. followed.
Barkatali vs Custodian General of Evacuee Property, A. 1.
R. , overruled.
Joginder Singh Waryam Singh vs Director, Rural Rehabilitation, Pepsu, Patiala, A. 1.
R. 1955 Pepsu 91, Burhanpur National Textile Workers Union vs Labour Appellate Tribunal of India at Bombay, A. I. R. , and Azmat Ullah vs Custodian, Evacuee Property, A.I.R. 1955 All 435, approved.
State of U. P. vs Mohammed Nooh, ; , distinguished.
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1477.txt
|
nch of two members in their reasoned order pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a, reference to a larger Bench.
Accordingly the Bench of two members acted within their power is stating the points of law which required clarification and the President acted equally within the bounds of his power in constituting a larger Bench to hear and decide those points.
[795E; 796C] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3955 of 1990.
From the Judgment and Order dated 7.12.1989 of the Delhi High Court in C.W. No. 1060 of 1987.
Dr. V. Gauri Shanker, C.V. Subba Rao, section Rajappa and M. Chandershekharan (N.P.) for the Appellants.
G.L. Sanghi.
Raju Ramachandran, Dhruv Mehta and R.K. Sanghi for the Respondent.
792 The Judgment of the Court was delivered by THOMMEN, J.
Special Leave is granted.
This appeal by the Union of India arises from the Judg ment dated 7.12.1989 of the Delhi High Court in Civil Writ No. 1060 of 1987 setting aside Orders dated 22.10.1986 and 4.3.1987.
The former order was made by a Bench of two mem bers of the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter called the 'Tribunal ') and the latter order was made by the President of the Tribunal.
By their Order dated 22.10.1986, the Bench of two members of the Tribunal stated that they doubted the correctness of an earlier decision of a Bench of three members of the Tribunal in Bakelite Hylam Ltd. Bombay & Anr.
vs Collector of Cus toms, Bombay & Anr., and directed that the case of the present respondent, Paras Laminates (P) Ltd., be placed before the President of the Tribunal for referring it to a larger Bench of the Tribunal.
The President by his Order dated 4.3.
1987 referred the case to a larger Bench of five members.
These two orders were struck down by the High Court stating that the Bench of two members ought to have followed the earlier decision of the larger Bench of 3 Judges and a reference of the case to a still larger Bench was contrary to judicial precedent and judicial discipline.
In Bakelite Hylam, (supra) a Bench of three members had held that the goods in question fell under Tariff Item 84.60 as claimed by the importer in the Bills of Entry.
In the present case, the importer claimed in its Bills of Entry that the goods imported by it fell under Tariff Item 84.60.
But the customs authorities rejected the contention of the importer and classified the goods under Tariff Item 73.15(2).
The importer appealed to the Collector of Customs, but without success.
In its second appeal before the Bench of two members, the importer relied upon the earlier deci sion in Bakelite Hylam (supra) and contended that an identi cal classification ought to have been adopted by the Customs Authorities for identical goods.
The Bench of two members, however, referred the case to the President of the Tribunal for referring the same to a larger Bench.
The order of the Bench of two members and that of the President have been struck down by the High Court by the impugned judgment for the reasons stated above.
Mr. V. Gauri Shanker, appearing for the appellant Union of India, submits that section 129 C of the contains 793 express provisions enabling the President of the Tribunal to constitute larger Benches to resolve conflicts in opinion arising between members of a Bench or between Benches of the Tribunal.
The Tribunal has ample powers to regulate its own procedure, apart from the express provisions of the statute in that behalf.
Counsel contends that the Tribunal has inherent or incidental or ancillary powers to effectuate the statutory powers expressly granted to it.
Counsel submits that the statute must be so construed as to make the confer ment of power efficacious and meaningful.
To deny the power of a Bench of two members to doubt the correctness of an earlier decision and to refer the case to the President for being heard by a larger Bench is to fetter the jurisdiction expressly vested in the Tribunal and thus stifle the growth of law evolving from the decisions of the Tribunal exercis ing judicial powers like a Court, albeit within the statuto ry limits of its jurisdiction.
Mr. G.L. Sanghi, appearing for the respondent (the importer) submits that the Tribunal is a creature of the statute.
Its jurisdiction is limited to the specific powers conferred by the statute.
It has no inherent jurisdiction and its powers are not plenary and are limited to the ex press provisions contained in the statute.
While the powers of a civil court are plenary and unlimited unless expressly curtailed by statute, the powers of a tribunal are the result of express grant and cannot exceed the bounds limited by the constituting statute.
In the present case the powers of the Tribunal are expressly specified in the and those powers, counsel says, do not contain any provision enabling the President to refer a case to a larger Bench whenever a doubt about an earlier decision is ex pressed by another Bench of the same Tribunal.
According to Mr. Sanghi, the Bench should have followed the earlier decision even if the members doubted its correctness, and should have left it to this Court to correct the error, if any.
The Tribunal is constituted by the Central Government under section 129 of the Act.
One of the members of the Tribunal is appointed by the Central Government as its President.
Section 129 C says that the powers and functions of the Tribunal may be exercised and discharged by Benches constituted by the President from amongst its members.
Subject to certain exceptions, a Bench shall consist of one judicial member and one technical member [section 129c(2)].
Sub section (5) of section 129 C provides for a reference of a case by the President in the event of differences in opinion arising amongst members on any point.
This sub section reads: 794 "(5) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ and the case shall be referred by the President for hearing on such point or points by one or more of the other members of the Appellate Tribunal, and such point or points shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who have heard the case including those who first heard it: Provided that where the members of a Special Bench are equally divided, the point or points on which they differ shall be decided by the President.
" Sub section (6) Section 129C says that the Tribunal shall have the power to regulate its own procedure.
It reads: "(6) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or the discharge of its functions, including the places at which the Benches shall hold their sitting.
" Sub sections (7) and (8) of this Section provide that the Tribunal shall, for certain specific purposes, be deemed to be a civil court.
There is no doubt that the Tribunal functions as a court within the limits of its jurisdiction.
It has all the powers conferred expressly by the statute.
Furthermore, being a judicial body, it has all those incidental and ancillary powers which are necessary to make fully effective the express grant of statutory powers.
Certain powers are recog nised as incidental and ancillary, not because they are inherent in the Tribunal, nor because its jurisdiction is plenary, but because it is the legislative intent that the power which is expressly granted in the assigned field of jurisdiction is efficaciously and meaningfully exercised, the powers of the Tribunal are no doubt limited.
Its area of jurisdiction is clearly defined, but within the bounds of its jurisdiction, it has all the powers expressly and im pliedly granted.
The implied grant is, of course, limited by the express grant and, therefore, it can only be such powers as are truly incidental and ancillary for doing all 795 such acts or employing all such means as are reasonably necessary to make the grant effective.
As stated in Maxwell on Interpretation of Statutes, (eleventh edition) "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution.
" See also: Income Tax Officer, Camanore vs M.K. Mohammed Kunhi, ; , 819.
It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question.
This is particularly true when the earlier decision is rendered by a larger Bench.
The ration ale of this rule is the need for continuity, certainty and predictability in the administration of justice.
Persons affected by decisions of Tribunals or Courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters.
Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the adminis tration of justice.
It is, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings being to light what is perceived by them as an erroneous decision in the earlier case.
In such circum stances, it is but natural and reasonable and indeed effica cious that the case is referred to a larger Bench.
This is what was done by the Bench of two members who in their reasoned order pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a reference to a larger Bench.
That the President has ample power to refer a case to a larger Bench is not in doubt in view of sub section (5) of section 129 C, which we have set out above.
That provision clearly says that in the event of the members of a Bench differing in opinion on any point, and the members are equally divided, the case shall be referred to the President for hearing on any such point by one or more of the members of the Tribunal, and such point shall be decided according to the opinion of the majority of the members.
It is true that sub section (5) refers to difference of opinion arising amongst members of a Bench in a particular case, and not specifically where the members of a Bench doubt the correctness of an earlier decision.
However, section 129 C confers power of reference upon the 796 President.
That power should be construed to be wide enough to enable the President to make a reference where members of a Bench find themselves unable to decide a case according to What they perceive to be the correct law and fact because of an impediment arising from an earlier decision with which they cannot honestly agree.
In such cases, it is necessary for the healthy functioning of the Tribunal that the Presi dent should have the requisite authority to refer the case to a larger Bench.
That is a power which is implied in the express grant authorising the President to constitute Bench es of the Tribunal for effective and expeditious discharge of its functions.
In our view, the Bench of two members acted within their power in stating the points of law which required clarifica tion and the President acted equally within the bounds of his power in constituting larger Bench to hear and decide those points.
In the circumstances, we set aside the impugned judgment of the High Court.
The appeal is allowed with costs here and in the High Court.
T.N.A. Appeal allowed.
|
The respondent imported certain goods and claimed in its Bills of Entry that the imported goods fell under Tariff Item No. 84.60.
The Customs Authorities rejected the claim by holding that the goods were classifiable under Tariff Item No. 73.15(2).
The respondents preferred an appeal before the Collector of Customs which was also dismissed.
Thereafter, the respondent filed a second appeal before the Customs, Excise and Gold (Control) Appellate Tribunal con tending that in view of the earlier decision of a Bench of three members of the Tribunal in Bakelite Hylam Ltd. Bombay E.L.T. 240 an identical classification ought to have been adopted by the Customs authorities for identical goods.
By its order dated 22.10.1986 a Bench of two members of the Tribunal stated that they doubted the correctness of the earlier decision of a Bench of the three members of the Tribunal and they referred the case to the President of the Tribunal for constituting a larger Bench.
By its order dated 4.3.1987 the President of the Tribunal referred the case to a larger Bench of five members.
The respondent filed a writ petition in the High Court challenging the orders of the Bench of two members and that of the President of the Tribunal, which struck down both the orders by holding that the Bench of two members ought to have followed the earlier decision of the larger Bench of 3 judges and a reference of the case to a still larger Bench was contrary to judicial precedent and judicial discipline.
In appeal to this Court, it was contended on behalf of the Union of India that Section 129 C of the empowers the Presi 790 dent of the Tribunal to constitute larger Benches to resolve conflicts in opinion arising between members of a Bench or between Benches of the Tribunal.
The Tribunal has ample powers to regulate its own procedure, apart from the express provisions of the statute in that behalf.
On behalf of the respondent, it was contended that the Tribunal is a creature of the Statute.
Its jurisdiction is limited to the specific powers conferred by the statute.
It has no inherent jurisdiction and its powers are not plenary and are limited to the express provisions contained in the statute.
Allowing the appeal, this Court, HELD: 1.
There is no doubt that the Tribunal functions as a. Court within the limits of its jurisdiction.
It has all the powers conferred expressly by the statute.
Further more, being a judicial body, it has all those incidental and ancillary powers which are necessary to make fully effective the express grant of statutory powers.
Certain powers are recognised as incidental and ancillary, not because they are inherent in the Tribunal, nor because its jurisdiction is plenary, but because it is the legislative intent that the power which is expressly granted in the assigned field of jurisdiction is efficaciously and meaningfully exercised.
[794F G] 1.1 Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution.
[795A] Maxwell on Interpretation of Statutes, Eleventh edition and Income Tax Officer, Cannanote vs M.K. Mohammad Kunhi, 15, referred to. 2.
It is true that sub section (5) refers to difference of opinion arising amongst members of a Bench in a particu lar case, and not specifically where the members of a Bench doubt the correctness of an earlier decision.
However, section 129 C confers power of reference upon the President.
That power should be construed to be wide enough to enable the President to make a reference where members of a Bench find themselves unable to decide a case according to what they perceive to be the correct law and fact because of an impediment arising from an earlier decision with which they cannot honestly agree.
In such cases, it is necessary for the healthy functioning of the Tribunal that the President should have the requisite authority to refer the case to a larger 791 Bench.
That is a power which is implied in the express grant authorising the President to constitute Benches of the Tribunal for effective and expeditious discharge of its functions.
[795H; 796A B] 2.1 It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question.
This is particularly true when the earlier decision is rendered by a larger Bench.
The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice.
Persons affected by decisions of Tribunals or Courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters.
Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the adminis tration of justice.
It is, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings bring to light what is perceived by them as an erroneous decision in the earlier case.
In such circum stances, it is but natural and reasonable and indeed effica cious that the case is referred to a larger Bench.
[795B E]
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6520.txt
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ON: Criminal Appeal No. 193 of 1974.
Appeal by Special Leave from the Judgment and order dated 1 3 1974 of The Delhi High Court in Criminal Appeal No. 119/72.
Frank Anthony, N. section Das Bahl and Shushil Kumar for the appellant.
E. C. Agarwala and R. M. Sachthey for the Respondent.
ii The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
The appellant before us was convicted by the learned Special Judge, Delhi of an offence under Section 5(1) (d) read with Section 5(2) of the Prevention of Corruption Act and Section 161 Indian Penal Code, and sentenced to suffer rigorous imprisonment for a period of one year on each count.
He was also sentenced to pay a fine of Rs. 100/ .
The conviction and sentence were confirmed by the High Court and the appellant has come up in appeal by special leave.
The prosecution case briefly was as follows: P.W. 6 Ram Niwas Sharma, an Architect by profession prepared building plans for one M.L. Batla and submitted them to the Delhi Development Authority for sanction.
The plans were submitted on 6th May, 1969.
They were rejected on 26th May, 1969.
Revised plans were thereafter submitted on 16th June, 1969.
Certain objections were raised and in order to comply with those objections P.W.6 went to the office of the Delhi Development Authority on 11 7 1969.
He met the accused who was overseer Section officer and asked him to be permitted to make necessary corrections in the building plans.
Instead of giving the file to P.W.6 the accused demanded a sum of Rs. 30/ as bribe.
P.W.6 told him that he did not have the money with him whereupon the accused asked him to come on 14th July, 1969, in the afternoon with the money.
On 1 4th July, 1969.
P.W.6 went to the AntiCorruption office at about 12 noon and 332 gave a report exhibit P.W.1/A to P.W.9, an Inspector of the Anti Corruption Establishment.
P.W.9 sent for P.Ws. 1 and 2 from the Sales Tax office.
The report made by P.W.6 was read over to them.
Thereafter, P.W.6 produced three ten rupee notes, the numbers of which were noted by P.W.9 in the presence of the Panch witnesses P.Ws. 1 and 2.
Thereafter it was arranged that they should all proceed to the office of the Delhi Development Authority.
There P.W. 5 was to give the bribe to the accused and on his giving the bribe to the accused, P.W. l was to give a signal to P.W. 9.
As arranged P.W.6 went to the office of the Delhi Development Authority alongwith Panch witnesses.
The Inspector stopped at the door of the room.
P.W.6 went to the table of the accused and asked him for the file for the purpose of making necessary corrections in the building plans.
The accused asked him if he has brought the money.
On his saying 'yes ' the file was taken out and given to P.W. 6.
As there were a number of other files on the table the accused, P.W. 6 took the file to another table at a distance of one or two paces from the table of the accused.
After making the corrections P.W. 6 handed over the file to the accused alongwith Its. 30/ .
Instead of taking the money the accused asked P.W. 6 to place the money in the file which he accordingly did.
The accused ' then took the file and placed it under the table, putting his foot on it.
At that stage P.W. 1 gave the agreed signal.
P.W. 9 came to the room, disclosed his identity to the accused and questioned him whether he had accepted Rs. 30/ from P.W. 6.
The accused was stunned and kept mum.
P.W. 9 was then informed by P.W. 6 and the two panch witness that the money was kept in the file under the foot of the accused.
P.W. 9 then took out the file and found the sum of Rs. 30/ in the file.
The numbers of the currency notes were compared with the numbers earlier noted at the Anti Corruption office.
Thereafter, r w. g sent the raid report.
On receipt of it, P.W. 7, Deputy Superintendent of Police took over the investigation.
After completing the investigation, a charge sheet was laid and the accused was duly tried, convicted and sentenced as aforesaid.
The defence of the accused was that P.W. 6 met him on 11th July, 1969 and.
wanted to make some corrections.
He told him that he should file the original sale deed.
P.W. 6 then said that he should come on Monday with the original sale deed.
On 14th July 1969, P.W. 6 came to his office and wanted the file for making the necessary.
corrections.
He took out the file and gave it to P.W 6.
P.W. 6 took the file to another table and brought it back to him after Or 3 minutes.
According to the accused, P.W. 6 must have put the money into the file when he had taken the file to the other table.
When the Police officer came in and questioned him about the receipt of the 333 bribe his straight away told him that he had not taken any money from P.W. 6.
According to the accused, P.W. 6 was annoyed with him on 11th July, 1969, as he thought that he (accused) was delaying his work.
He also stated that Mr. Batla the owner of the plot had threatened him with dire consequences because he had raised objections to the plans submitted by him.
Both the Panch witnesses examined by the prosecution did not fully support the prosecution case.
They resiled from the earlier statement made by them during the course of investigation.
P.W. 1 stated that when P.W. 6 went into the room where the accused was working there was some talk between P.W. 6 and the accused but he did not hear what it was.
He saw the accused taking out the file from the Almirah and giving it to P.W. 6.
P.W. 6 took it to another table and was writing something in the file.
Then he took back the file to the accused.
The accused was busy with his own work.
The complainant placed three ten Rupee notes in the file and handed over the file to the accused who placed it under the table near his feet.
P.W.6 signalled to him and he gave the agreed signal.
The Inspector then entered the room and questioned the accused about the receipt of the bribe.
The accused denied the charge.
He (P.W.1) then informed the Inspector that the money was in the file.
The money was recovered from the file.
The prosecution was permitted to cross examine him.
In cross examination his earlier statements to the Investigating officer were put to him.
He admitted in cross examination that when questioned by the Inspector the accused kept silent for some time as he was perplexed but thereafter told the Inspector that he had not taken any money.
The evidence of the other witness P.W. 2 was on the same lines as P.W. 1 except that he stated that when questioned by the Inspector the accused kept mum and was perplexed.
P.W. 2 was also cross examined by the prosecution and the statements made by him to the Investigating officer were put to him.
Shri Frank Anthony learned Counsel for the appellant submitted that the conviction was based on the uncorroborated testimony of P.W. 6 and that it should, therefore, be quashed.
He urged that Batla, Advocate who had employed P.W.6 as an Architect had been convicted in a Criminal case and that the present complaint was inspired by Batla who had previously threatened the accused with direct consequences.
He pointed out that P.Ws. 1 and 2 stated in their evidence that Batla was actually present in the Anti Corruption office when they were called there by the Inspector.
He invited our attention to the circumstance that some persons were standing near the table of the accused at the time when the bribe was supposed to have been given 334 and argued that it was most unlikely that the accused would have demanded and accepted the bribe when so many people were nearby. 'the learned Counsel further urged that the evidence of P.W.6 that he went to the office of the D.D.A. at 3 or 3.15 p.m.
On 11th July, 1969 could not be true as the noting on the file showed that the file was received at 4.45 p.m.
It was also contended that the lower Courts had erred in law in relying upon the statements made by P.Ws. 1 and 2 to the Police.
It was argued that the evidence of P.Ws. 1 and 2 rendered the evidence of P.W.6 entirely unacceptable.
It was further contended that the lower Courts were wrong in treating the conduct of the accused when questioned by the Police officer as a circumstance against him.
We are unable to agree with the submission of Shri Anthony that no conviction can ever be based on the uncorroborated testimony of a person in the position of P.W.6 who, for the sake of felicity may be described as a "trap witness '.
That a trap witness may perhaps be considered as a person interested in the success of the trap may entitle a Court to view his evidence as that of an interested witness.
Where the circumstances justify it, a Court may refuse to act upon the uncorroborated testimony of a trap witness.
On the other hand a Court may well be justified in acting upon the uncorroborated testimony of a trap witness if the Court is satisfied from the facts and circumstances of the case that the witness is a witness of truth.
Shri Anthony referred us to the decisions of this Court in Ram Prakash Arora vs The State of Punjab,(1) and Darshan Lal vs The Delhi Administration.(3) In the first case Grover, J., observed as follows: "It must be remembered that both Joginder Singh and Dalbir Singh P.Ws. were interested and partisan witnesses.
They were concerned in the success of the trap and their evidence must be tested in the same way as that of any other interested witness and in a proper case the court may look for independent corroboration before convicting the accused person".
All that Grover J., said was that in an appropriate case corroboration may be sought and not that corroboration should invariably be sought In the particular case it was found that the witnesses could not be implicitly relied upon and, therefore, corroboration was necessary.
In the second case a string of circumstances was noticed which made it necessary that evidence of the witnesses who had laid the trap should not be acted upon without independent corroboration.
This (1) A.I.R. 1973 S.C. 498.
(2) A.I.R. 1974 S.C. 218.
335 decision also does not lay down that the uncorroborated testimony of a trap witness can never be acted upon.
That the law did not require any such corroboration was laid down in The State of Bihar.
vs Basawan Singh(1), and Bhanuprasad Hariprasad Dave and Anr vs The State of Gujrat (2).
In Bhanuprasad 's case it was observed by Hegde J., as follows: (at p. 1326): "Now coming back to the contention that the appellants could not have been convicted solely on the basis of the evidence of Ramanlal and the police witnesses, we are of opinion that it is an untenable contention.
The utmost that can be said against Ramanlal, the Dy.
S.P., Erulker and Santramji is that they are partisan witnesses as they were interested in the success of the trap laid by them.
It cannot be said and it was not said that they were accomplices.
Therefore the law does not require that their evidence should be corroborated before being accepted as sufficient to found a conviction".
We have carefully gone through the evidence of P.W. 6.
After perusing the evidence of P.W. 6 we are left with the impression that P.W. 6 is a truthful witness, an impression which we share with the High Court, the final Court of fact.
He has given evidence in a straight forward manner and was unshaken in cross examination.
We are unable to discover any reason to discredit his testimony.
The suggestion which was made to him was that he was aggrieved with the accused as he thought that he was unnecessarily raising objections, That he had a hot altercation with him and that he went to the Anti Corruption office with the help of Shri Batla.
The suggestions are without substance.
P.Ws. 1 and 2 no doubt stated that Shri Batla was present in the Anti Corruption office when they were called there by P.W. 9, the Inspector.
We do not have the slightest doubt that P.Ws. 1 and 2 are not truthful witnesses and that they have given evidence in order to accommodate the accused.
Their evidence on important particulars was contradicted by their earlier statements to the Police.
Here we may refer to the grievance of Shri Anthony that the Trial Judge and the High Court treated the statements made by P.Ws. 1 and 2 to the Police as substantive evidence.
There is no justification for the grievance.
The witnesses, who were treated as hostile by the Prosecution were confronted with their earlier statements to the Police and their evidence was rejected as it was contradicated by their earlier statements.
Such use of the statements (1) ; (2) ; 336 is premissible under section 155 of the Evidence Act and the proviso to section 162(1) of the Code of Criminal Procedure read with section 145, Evidence Act.
Corroboration to the evidence of P.W. 6, if considered necessary, may be found in the following circumstances: First, his evidence is corroborated by the report Exh.
PW. 1/A which he gave to P.W. 9 that day.
Second, his evidence is corroborated by the conduct of the accused when he was questioned by P.W. 9.
P.W. 6 stated that when P.W. 9 entered the room and questioned the accused whether he had accepted Rs. 30/ from him, the accused was stunned and did not reply.
P.W. 9 also stated that the accused kept mum when challenged.
P.W. 2 stated that the accused did not reply and kept mum but added that the accused was perplexed.
Though P.W. 1 first stated in his chief examination that the accused, when questioned denied having received any bribe, later he reluctantly admitted ill cross examination that the accused kept silent for some time as he was perplexed and then denied that he had received any bribe.
The immediate reaction of the accused on being questioned by P.W. 9 is a circumstance which corroborates the testimony of P.W. 6.
another a circumstance which corroborates the testimony of P.W. 6 is that the accused was ready with the file and handed it over to P.W. 6 as soon as he asked for it, indicating thereby that the statement of P.W. 6 that the accused had asked him to come on the afternoon of 14th July, 1969, was true.
Yet another important circumstance which corroborates the evidence of P.W. 6 is that after P.W. 6 handed over the file to the accused he kept it under the table.
It was contended by the learned Counsel for the appellant that the evidence relating to the conduct of the accused when challenged by the Inspector was inadmissible as it was hit by Section 167 Criminal Procedure Code.
He relied on a decision of the Andhra Pradesh High Court in D. V. Narasimhan vs State.(1) We do not agree with the submissions of Shri Anthony.
There is a clear distinction between The conduct of a person against whom an offence is alleged, which is admissible under Section 8 of the Evidence Act, if such conduct is influenced by any fact in issue or relevant fact and the statement made to a Police officer in the course of an investigating which is hit by Section 162 Criminal Procedure Code.
What is excluded by Section 162 Criminal Procedure Code is the statement made to a Police officer in the course of investigation and not the evidence relating to the conduct of an accused person (not amounting to a statement) when confronted or questioned by a Police officer during (1) A.I.R. 1969 A.P. 271.
337 the course of an investigation.
For example, the evidence of the circumstance, simpliciter, that an accused person led a Police officer and pointed out the place where stolen articles or weapons which might have been used in the commission of the offence were found hidden, would be admissible as conduct, under Section 8 of the Evidence Act, irrespective of whether any statement by the accused contemporaneously with or antecedent to such conduct falls within the purview of Section 27 of the Evidence Act [vide Himachal Pradesh Administration vs Om Prakash(1).
The decision of the Andhra Pradesh High Court on which Shri Anthony placed reliance does not support his contention. 'where the learned Judges were not prepared to go into the question whether the evidence relating to the conduct of the accused was admissible as that question did not directly arise for consideration.
On the other hand in Zwinglee Ariel vs State of Madhya Pradesh(2), this Court appeared to be inclined to hold that evidence to the effect that the accused started trembling and showed signs of being frightened on being;, questioned by the Police officer, if proved, was admissible, and, in Rao Shiv Bahadur Singh and Anr.
vs State of Vindhya Pradesh(3), and, State of Madras vs A. Vaidyanatha Iyer(4), this Court actually relied on evidence relating to the conduct on the accused on being confronted by the Police officer with the allegation that he 'had received a bribe.
In Rao Shiv Bahadur Singh case the evidence relating to conduct on which reliance was placed was to the effect that the accused was confused and could furnish no explanation when questioned by the Police officer.
In Vaidyanatha Iyer 's case also evidence to the effect that the accused was seen trembling and that he silently produced the notes from the folds of his dhoti was acted upon.
We, therefore, do not see any reason to rule out the evidence relating to the conduct of the accused, which lends circumstantial assurance to the testimony of P.W. 6.
On a consideration of the entire evidence we arc satisfied that the appellant was rightly convicted.
The other points mentioned by Shri Anthony are of a minor character and do not warrant any interference under Article 136 of the Constitution.
The appeal is accordingly dismissed.
M.R. Appeal dismissed.
(1) ; (2) A.I.R. 1954 S.C. 15.
|
Prakash Chand an overseer Section officer in the Delhi Development Authority office, was charged under section 5(1)(d) read with 8.
5(2) of the Prevention of Corruptions Act and section 161 IPC, for demanding and accepting Rs. 30/ bribe from the trap witness Ram Niwas Sharma.
an architect, for permitting him to make some necessary corrections in the building plans submitted by him to comply with certain objections raised by the D.D.A. On a report by Shri Sharma, an Inspector of Anti Corruption Establishment, accompanied him to the D.D.A office, with two panch witnesses and on receiving a pre arranged signal, entered the room and challenged the accused who was stunned and kept mum.
Then three pre marked ten rupees notes were found in the file dealing with Sharma 's matter, the file was found under the table and the accused had his foot on it.
The panch witnesses did not fully support the prosecution csse.
They resiled from their earlier statements made in the course of investigation were treated as hostile by the prosecution, and were disbelieved by the Court.
The accused was duly tried, convicted and sentenced, and the conviction was upheld by the High Court.
It was contended that the uncorroborated testimony of a trap witness was not sufficient to found the conviction? and also that the evidence relating to the conduct of the accused when challanged by the police inspector was excluded by.
section and was inadmissible in evidence.
Dismissing the appeal, the Court ^ HELD: (1) We are unable to agree that no conviction can ever be based on the uncorroborated testimony of a "trap witness".
Where the circumtance justify it, a court may refuse to act upon the uncorroborated testimony of a. trap witness.
On the other hand a court may well be justified in acting upon the uncorroborated testimony of a trap witness, if the court is satisfied from the facts and circumstances of the case that the trap witness is a witness of truth.
[334C E] The State of Bihar vs Basawan Singh, ; , and Bhanuprasad Hariprasad Dave & Anr.
vs The State of Gujarat, ; , applied.
Ram Prakash Arora vs The State of Punjab, AIR 1973 SC 498 and Darshan Lal vs The Delhi Administration, AIR 1974 SC, 218; differentiated.
The conduct of a person against whom an offence is alleged, is admissible under s.8 of the Evidence Act.
What is excluded by s.162 Cr.
P.C is the 331 Statement made to a police officer in the course of investigation and not the evidence relating to the conduct of an accused person (not amounting to a statement) when confronted or questioned by a police officer, during she course of an investigation.
[336G H, 337A] D. V. Narasimluan vs State, AIR 1969 A.P. 271, held inapplicable.
Himachal Pradesh Administration vs Om Prakash, ; and Zwinglee Ariel vs State of M.P., AIR 1954 SC 15; reaffirmed.
Rao Shiv Bahadur Singh & Anr.
vs State of Vindhya Pradesh, ; and State of Madras v.A. Vaidyanatha Iyer; , , applied.
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3917.txt
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Appeal No. 229 of 1953.
Appeal under Article 132(1) of the Constitution of India from the Judgment and Order dated the 16th December 1952 of the Bombay High Court in Appeal No. 110 of 1952.
M. C. Setalvad, Attorney General of India (Porus 110 868 A. Mehta and R. H. Dhebar, with him) for the appellant.
Rajinder Narain for the respondent.
October 4.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
Was the Government of Bombay entitled, under ' clause (a) of sub section (4) of section 6 of the Bombay Land Requisition Act, 1948 (Bombay Act XXXIII of 1948), to requisition , as for a public purpose, certain premises for "housing a member of the staff of a foreign consulate"?, is the question we have to consider in this appeal, which has arisen out of a writ petition filed under article 226 of the Constitution by the respondent in the Bombay High Court to restrain the State of Bombay from taking such action.
On the bearing of the petition before Tendolkar, J. the State succeeded on the ground that the purpose for which the requisition was made was a "public purpose" within, the meaning of the Act.
But, on appeal, it was held that though the requisition was for a public purpose, the requisition order was invalid, 'as the public purpose must be either a purpose of the Union, or a purpose of the State and in this particular case the accommodation being required for housing a member of a foreign Consular staff was a Union purpose, which was outside the scope of the powers of the State.
Clause (a) of sub section (4) of section 6, omitting portions unnecessary for our present purposes, runs, in these terms: "The State Government may, by order in writing, requistition the premises for the purpose of a State or any other public purpose, and may use or deal with the premises for any such purpose in such manner as may appear to it to be expedient".
The validity of the Act is not questioned as un constitutional or as beyond the scope of the legislative competence of the State.
As the premises were required for housing a member of the staff of a Con 869 sulate, there can be no doubt that it was wanted for a public purpose.
The ultimate source of authority to requisition or acquire property is be found in arcticle 31 of the Constitution.
The requisition or acquisition must be for a public purpose and there must be compensation.
This article applies with equal force to Union legislation and State legislation.
Items 33 and 36 of List I & List II of the Seventh Schedule to the Constitution empower respectively Parliament and the State Legislatures to enact laws with respect to them.
The reasoning by which the learned appellate Judges of the Bombay High Court reached their conclusion is shortly this There can be no public purpose, which is not a purpose of the Union or a purpose of the State.
There are only these two categories to consider under the statute, as the words "any other purpose" in the particular context should be read ejusdem generis with "the purpose of the State".
The provision of accommodation for a member of the foreian consulate staff is a "purpose of the Union" and not a "purpose of the State".
We are unable to uphold this view as regards both the standpoints.
Item 33 in the Union Legislative List (List I)refers to "acquisition or requisitioning of property for the purposes of the Union".
Item 36 in the State List (List II) relates to "acquisition or requisitioning of property, except for the purposes of the Union, subject to the provisions of entry 42 of List III".
Item 42 of the Concurrent Legislative List (List III) speaks of "the purpose of the Union or of a State or for any other public purpose".
Reading the three items together, it is fairly obvious that the categories of "purpose" contemplated are three in number, namely, Union purpose, State purpose, and any other public purpose.
Though every state purpose or Union purpose must be a public purpose, it is easy to think of cases where the purpose of the acquesition or requisition, is neither the one nor the other but a public purpose.
Acquisition of sites for the building of hospitals or educational institutions by private benefactors will be a 'Public purpose, 870 though it will not strictly be a State or Union purpose.
When we speak of a State purpose or a Union purpose, we think of duties and obligations cast on the State or the Union to do particular things for the benefit of the public or a section of the public.
Cases where the State acquires or requisitions property to facilitate the coming into existence of utilitarian institutions, or schemes having public welfare at 'heart, will fall within the third category above.mentioned.
With great respect, we are constrained to say that the ejusdem generis rule of construction, which found favour in the court below for reaching the result that the words "any other public purpose" 'are restricted to a public purpose which is also a purpose of the State., has scarcely any application.
A part from the fact that the rule must be confined within narrow limits, and general or comprehensive words should receive their full and natural meaning unless they are clearly restrictive in their intendment, it is requisite that there must be a distinct genus, which must comprise more than one species, before the rule can be applie If the words "any other public purpose" in the Statute in question have been used only to mean a State purpose, they would become mere surplusage; Courts should lean against such a construction as far as possible.
Even if it is conceded that the law contemplates only two purposes, namely, State purpose and Union purpose, it is difficult to see how finding accommodation for the staff of a foreign consulate is a Union purpose and not a State purpose.
Item I 1 in the Union list specifies "diplomatic, consular and trade representation" as one of the subjects within the legislative competence of Parliament, and under article 73 of the Constitution, the executive power of the Union shall extend to all such matters.
It can hardly be said that securing a room for a member of the staff of a foreign consulate amounts to providing for consular representation, and that therefore it is a purpose of the Union for which the State cannot legislate.
It was conceded by Mr. Rajinder Narain, Counsel for 871 the Respondent, that there is no duty cast upon the Union to provide accommodation for the consulate staff, and this must be so, when we remember that the routine duties of a Consul in modern times are to protect the interests and promote the commercial affairs of the State which he represents, and that his powers, privileges and immunities are not analogous to those of an ambassador.
The trade and commerce of the State which appoints him with the State in which he is located are his primary concern.
The State of Bombay is primarily interested in its own trade and commerce and in the efficient discharge of his duties by the foreign consul functioning within the State.
We are inclined to regard the purpose for which the requisition was made in this case more as a State purpose than as a Union purpose.
In any event, as already pointed out, "other public purpose" is a distinct category for which the State of Bombay can legislate, as the acquisition or requisitioning of property except for the purposes of the Union, is within its competence under item 36 of the State List.
There is another way of looking at the question involved.
An undertaking may have three different facets or aspects, and may serve the purpose of a State, the purpose of the Union and a general public purpose.
Even if one may regard the requisition of a room for the accommodation of a member of a Consulate as one appertaining to a Union purpose, it does not necessarily cease to be a State purpose or a gene ral public purpose.
In this view also, the requisition in this case must be held to have been validly made.
For the reasons given above, the appeal is allowed and the order of Tendolkar J. is restored with costs payable to the appellant by the respondent throughout.
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Held, that the Government of Bombay was entitled, under clause (a) of sub section (4) of section 6 of the Bombay Land Requisition Act, 1948 (Bombay Act XXXIII of 1948) to requisition as for a public purpose, certain premises for 'housing a member of the staff of a foreign consulate '.
The purpose for which the requisition was made was a "public purpose" within the meaning of the Act; and the requisition was made in this case more as a State purpose than as a Union purpose.
In any event "other public purpose", is a category distinct from "Union purpose" and "State purpose" and the acquisition or requisitioning of property by the State except for the purpose of the Union, is within its competence under item 36 of the State List.
An undertaking may have three different facets or aspects and may serve the purpose of a State, the purpose of the Union and a general public purpose.
Even if one may regard the requisition of a room for the accommodation of a member of a consulate as one appertaining to a Union purpose, it does not necessarily cease to be a State purpose or a general public purpose.
Therefore on this view also, the requisition in the present case must be held to have been validly made.
Courts should lean against a construction which would render words in a statute mere surplusage.
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Appeal No. 2177 of1966.
Appeal by special leave from the judgment and order dated July 12, 1963 of the Mysore High Court in Writ Petition No. 1076 of 1962.
Veda Vyasa, R. Ganapathy Iyer, R. N. Sachthey and section P. Nayar, for the appellant.
R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by Shah, J.
The respondents a Hindu undivided family were assessed for the assessment year 1949 50 to tax under s ' 23 of the Mysore Income tax Act on a total income of Rs. 10,100/ The Second Additional Income tax Officer (Urban Circle), Bangalore, commenced a proceeding under section 34 of the Mysore Income tax Act for re assessment of the income of the respondents for the 7 assessment year 1949 50, and served a notice in that behalf on March 6, 1951.
On May 21, 1954 the Income tax Officer determined the respondents ' total income at Rs. 75,957/ .
In appeal against the order, the Appellate Assistant Commissioner of Income tax. 'A ' Range, Bangalore, by order dated November 4, 1961, set aside the order and directed the Income tax Officer to make a fresh assessment after making inquiries on certain matters specified in the order.
At the request of the respondents under section 66(2) of the Mysore Income tax Act, the Commissioner of Income tax, Mysore, referred the following questions to the High Court of Mysore: "1.
On the facts and in the circumstances of the assessee 's case whether within the meaning of section 34 of the Mysore Income tax Act, if a notice under that section is issued within the prescribed period, whether the Income tax Officer can proceed to assess or re assess such escaped income after four years from the close of the assessment year? 2.
On the facts and in the circumstances of the case, whether the Appellate Assistant Commissioner of Incometax is competent to set aside and give directions to the Income tax Officer to re do the assessment in the manner the Appellate Assistant Commissioner of Income tax has done?" At the hearing of the reference, the respondents did not press the first question, and the High Court answered the second question in the affirmative.
The Income tax Officer commenced inquiry directed by the Appellate Assistant Commissioner.
The respondent , then applied to the High Court of Mysore for issue of a writ of prohibition restraining the Income tax Officer from continuing the assessment proceeding for the year 1949 50 on the plea that the proceeding was because of expiry of the period of limitation barred.
The High Court of Mysore upheld the contention of the respondents and allowed the petition.
In the view of the High Court the provisions of section 34 of the Mysore Income tax Act were "more or less similar to Rule 34 of the Mysore Sales Tax Act, 1948.
Hence the present case clearly comes within the rule laid down by this Court in M/s K. section Subbarayappa and Sons vs State of Mysore [(1952)] Mysore L. J. 2341 which means that the present proceedings are barred".
The Commissioner of Income tax has appealed to this Court with special leave.
The question arising in this appeal must, it is common ground, be determined in the light of the provisions of the Mysore Incometax Act, 1923.
Even after the merger of the State of Mysore with 8 the Union of India a proceeding for assessment of income tax relating to the assessment year 1949 50 has to be heard and disposed of under the Mysore Act.
Section 34 of the Mysore Incometax Act reads as follows "If for any reason, profits or gains chargeable to income tax have escaped assessment in any year, or have been assessed at too low a rate, the Income tax Officer may, at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of 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 re assess such income, profits or gains and the provision of this Act shall, so far as may be, apply according as if the notice were a notice issued under that sub section".
A proceeding for re assessment under section 34 of the Mysore Act may be commenced if two conditions co exist: (i)that the profits and gains chargeable to income tax have escaped assessment or have been assessed at too low a rate, and (ii) the notice is served within four years of the end of the year of assessment.
But if a proper notice is served within the period provided by the section, the proceeding may be completed even after the expiry of four years from the close of the assessment year, for the Act prescribes no period for completion of the proceeding.
A notice for re assessment was in fact served on the respon dents on March 6, 1951 under section 34 of the Mysore Act.
That notice was served within four years of the end of the year of assessment 1949 50, and the Income tax Officer was of the view that tie profits or gains chargeable to income tax had escaped assessment in the year 1949 50.
It is true that the Appellate Assistant Commissioner vacated the order of assessment dated May 21, 1954, but he did not set aside the notice served upon the respondents.
He merely remanded the case for further inquiry to be made in the light of the directions given by him.
It is difficult to appreciate the grounds on which it could be held that the proceeding for re assessment to tax the income which had escaped assessment in the year 1949 50 commenced after due notice served on March 1951 was barred.
The High Court was, in our judgment, plainly in error in holding that the proceeding for re assessment was barred.
It must also be remembered that the respondents had under an order of the Commissioner obtained a reference on the first question set out hereinbefore.
That question was not pressed before the High Court, and it must be deemed to have been answered 9 against the respondents.
That question could not thereafter be reagitated by the respondents in a petition for the issue of a writ under article 226 of the Constitution.
The appeal is allowed.
The order passed by the High Court is set aside.
The respondents will pay the costs of the Commissioner in this Court and in the High Court.
Appeal dismissed.
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The Income tax Officer, Bangalore commenced a proceeding under section 34 of the Mysore Income tax Act for reassessment of the income of the respondents for the assessment year 1949 50 and served a notice in that behalf in March 1951, on the respondents.
The Income tax Officer determined the total income of the respondents in May 1954, but the order was set aside by the Appellate Assistant Commissioner in November 1961, and the Income tax Officer was directed to make a fresh inquiry, When the Income tax Officer commenced inquiry, the respondents applied to the High Court for a writ of prohibition and the High Court passed an order restraining the Income tax Officer on the ground that the assessment proceeding was barred because of the expiry of the period of limitation.
In appeal to this Court, Held: The High Court was in error, because, though the Appellate Assistant Commissioner vacated the Income tax Officer 's assessment order of 1954 and remanded the case for further inquiry, the Appellate Assistant Commissioner did not set aside the notice of March 1951 served on the respondents, If a proper notice was served within the period provided by the section (four years from the close of the assessment year) the proceeding could be completed even after the expiry of four years for the Act prescribes no period for completion of the proceeding.
[8E G]
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Civil Appeal Nos. 1 of 1974 and 1355 1356 of 1973.
273 From the Judgment and Order dated 22/24.4.1970 of the Bombay High Court in I.T.R. No 111 of 1963 B.B. Ahuja and Miss A.Subhashni for the Appellant.
F N Kaka, S.N. Talwar, Y. Chaudhary and H.S. Parihar for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These appeals are from the judgment and order of the High Court of Bombay dated 22nd/24th April, 1970.
These are by certificate granted by the High Court under section 66A(ii) of the Indian Income tax Act, 1922.
The judgment under appeal is reported in 81 I.T.R. at page 777.
The familiar yet not always easy to answer question whether a particular receipt is capital or revenue looms large in these appeals arising out of the assessment to income tax for the assessment years 1950 51, 1951 52 and 1953 54, the accounting years respectively ending on 31st May, 1950,31st May, 1951 and 31st May, 1953.
The assessee is a public limited company limited by shares.
It derived income from several sources including certain business operations.
These operations were carried out in India and abroad and used to be carried out, inter alia, in Burma and Siam.
The assessee company carried on business in Burma from 1862 onwards.
In connection with its business of selling timber, the assessee company had to enter into contracts which are mentioned as 'forest leases ' with the Government of Burma.
In the year of account ending on 31st May, 1950 the assesseecompany was the owner of about 15 forest leases.
The agreed position between the parties was that all the forest leases contained provisions and clauses exactly similar to the speciman copy dated 28th October, 1925, which was taken into consideration by the High Court.
It may be mentioned, however, that the forest leases were for the duration of 15 years and in respect of large areas.
Under these leases, the assesseecompany was authorised to fell the teak trees and convert them into the logs and, upon completion of the extraction thereof, to remove the logs after payment of royalty to the Government of Burma for its own purposes.
Clause 27 in these leases authorised the assessee company even after the expiry of the period of 15 years of the lease to remove the logs in respect whereof extraction had been completed upon pay 274 ment of royalty.
The period for such removal under clause 27 was fixed at three years after the expiry of the lease period mentioned in clause 4.
These leases contained renewal clauses.
The forest leases of the assessee company did not commence on the same date and related to different parts of the forests in Burma.
These leases were made as mentioned hereinbefore, in 1862 first and had been continuously renewed from time to time.
It was stated that five similar business organisations obtained forest leases from the Government of Burma for their business in timber.
Before the period of 15 years mentioned in these leases expired, the Second World War started and the Japanese army overran Burma.
The then Government of Burma then extended the periods of current leases until such time as it became possible to resume forest operations and for such further periods as might be required for settlement of the new forest leases to be executed between these business organisations and the Government.
Upon termination of the hostilities, in connection with the resumption of the forest operations, the Government made provisional arrangements in terms of what is referred to in paragraph 7 of the statement of the case as "weight agreement".
The Union of Burma came into existence from 4th January, 1948.
Under section 44(2) of the Constitution of Burma, there was a directive for nationalisation, inter alia, of the forest exploitations.
Thereafter correspondence took place, inter alia, between five European companies who were exploiting forests in Burma under the various leases and the Government in connection with the taking over of the exploitation by the Government of Burma.
The High Court noted the relevant correspondence dealing with such arguments.
On 1st June, 1948, a third of the total teak area mentioned in the 15 forest leases of the ownership of the assessee company was taken over by the Government of Burma.
Forest exploitation in respect of the rest of the 2/3rds area was also taken over by the Government on or about 10th June, 1949.
In that connection, certain correspondence had been addressed by the assessee company to the Government.
The Union of Burma on the one hand and the assessee company and Steel Brothers & Company Ltd. on the other executed an agreement dated 10th June, 1949 on the footing that the forest leases had already been terminated.
The agreement provided for making over by the assesseecompany to the President of the Government of Burma of the assessee company 's 'residuary rights ' under the forest leases together with the non duty paid logs wherever found and also for making over 275 of all the assets pertaining to the forest leases, viz., headquarters, elephants, cattle, stores, buildings, dewelling houses, motor transport, tractors, launches, etc.
and for certain other incidental matters.
The agreement provided for handing over by the President of the Government of Burma the assessee company of 50,000 tons of teak logs of the specified qualities mentioned in clause 7 of the said agreement.
There was no dispute between the parties that in pursuance of the agreement the assessee company had made over to the Government of Burma the assets mentioned in clause 1 of the agreement.
There was also no dispute that in pursuance of the agreement the Government of Burma handed over in all 43,860 tons of logs to the assessee company.
There was no dispute that those 43,860 tons of logs were delivered against three kinds of assets in the following quantities: (1) 28,847 tons against non duty paid logs handed over by the asseessee company to the Government.
(2) 2,946 tons against depreciable assets like land and buildings, launches, furniture and stores.
(3) 12,067 tons against livestock like elephants, etc.
The account of these 43,860 tons of logs delivered by the Government was maintained by the assessee company in what is described in the Income tax Officer 's report as "Burma forests assets realisation reserve account".
These 43,860 tons of logs were sold off by the assessee company from time to time in the accounting years 1949, 1950, 1951 and 1952.
The aggregate sale proceeds during the above four years came to Rs.1,35,55,611 as appears from the assessment order which is annexed to the statement of the case.
In connection with these sale proceeds, the Income tax Officer stated that, as the receipts and sales of logs had taken place over a period of four years, the amount realised had to be allocated amongst the various years.
He further stated that the basis of the allocations was agreed to by the assessee.
He proceeded to make the allocation on the footing that the assessee had incurred costs for getting delivery of these logs at the rate of Rs.225 per ton on 10th June, 1949.
He then considered the proceeds realised and made the allocations for the assessment years 1950 51 and 1951 52 in the manner appearing in paragraph 9 of the statement of the case submitted to the High Court.
Upon allocation made in the above manner, the Income tax Officer 's finding was that in the year ending 31st May, 1950, the assessee had received 18,676 tons of logs.
The sale 276 proceeds of Rs.65,52,153 were received in respect of non duty paid logs delivered to the assessee company.
The sale proceeds of Rs.31,980 were received in respect of logs received against depreciable assets, stores and livestock.
For the accounting year ending 31st May, 1951, the Income tax Officer held that the assessee had received in all 16,299 tons of logs.
The sale proceeds of those logs were allocated as follows: "Rs.5,78,896 in respect of non duty paid logs handed over by the assessee company to the Government, Rs.2,69,975 in respect of the logs delivered against handing over of depreciable assets, stores and livestock." (81 I.T.R. p. 785.) The question that arose upon such allocations having been made in the manner indicated was as to whether the receipt of Rs.65,52,153 in the accounting year ending 31st May, 1950, and Rs.5,78,896 in the accounting year ending 31st May, 1951 was exempt from tax as being a receipt of capital nature as contended by the assessee company.
Similarly, the further question which arose was as to whether sale proceeds amounting to Rs.31,980 in the accounting year ending 31st May, 1950, and Rs.2,69,975 in the accounting year ending 31st May, 1951, in respect of depreciable assets were liable to tax under the Act or were altogether free from such liability.
The Income tax Officer as well as the Appellate Assistant Commissioner made findings against the assessee companies in connection with these amounts.
On behalf of the assessee company it was urged before the Appellate Tribunal that the entire receipt and delivery of the 43,860 tons of logs were on capital account.
The submission was that the assessee 's business of dealing in timber in Burma had got sterilized and the above quantity of logs was received only in respect of the said sterilization or loss of the capital asset.
In connection with that submission, the Appellate Tribunal held against the assessee company that the assessee 's business had not stopped and there was no question of sterilization of its business.
The forest leases owned by the assessee company had expired and were not bound to be renewed and the "residuary rights" available to the assessee company under clause 27 of the forest leases were merely rights to remove the extracted logs within a period of three years from the forest areas.
The assessee company had no interest in land of the forest areas.
The Tribunal, however, observed that though the agreement referred to certain residuary rights under clause 27 of the agreement 277 there was nothing to show that any compensation was paid in respect of any rights available to the assessee under clause 27 of the lease agreement.
The contention that the realisations were in respect of capital assets was rejected.
It was further held that the realisation in respect of logs received against depreciable assets, stores and livestock were profits and liable to tax.
In calculating the profits it was held that the logs received by the assessee company were received by it at the cost value of Rs.225 per ton.
After having recorded the findings in the aforesaid manner, the Tribunal referred to the High Court concerned, i.e., the High Court of Bombay, certain questions of law for the assessment year 1950 51 and 1951 52.
The High Court felt that question No. 1 in both these assessment years need not be answered and this position was agreed to by the parties.
The following questions for these two assessment years were really considered by the High Court: "I. Assessment year 1950 51: . . 2.
Whether, on the facts and in the circumstances of the case, the amount of Rs.65,52,153 or any part thereof was exempt from tax as being a receipt of a capital nature? 3.
Whether on the facts and in the circumstances of the case, the amount of Rs.1,41,156 was liable to tax under the second proviso to section 10(2)(vii) of the Income tax Act, and whether there was any evidence that the conditions of the application of that proviso were all satisfied? 4.
Whether, on the facts and in the circumstances of the case, the amounts of Rs.5,250, Rs.1,025 and Rs.25,705, being the excess realisations over Rs.225 per ton for logs received in respect of depreciable assets, stores and livestock, respectively, were liable to tax under the Act?" "II.
Assessment year 1951 52: 1. . . . . . . 278 2.
Whether, on the facts and in the circumstances of the case, the amount of Rs.5,18,896 or any part thereof was exempt from tax as being a receipt of a capital nature? 3.
Whether, on the facts and in the circumstances of the case, the amounts of Rs.44,407, Rs.8,639 and Rs.2,16,929, being the excess realisations over Rs.225 per ton for logs received in respect of depreciable assets, stores and livestock, respectively, were liable to tax under the Act?" Similarly for the assessment year 1953 54, the questions referred by the Tribunal to the High Court were as follows: "1.
Whether, on the facts and in the circumstances of the case, the amount of Rs.5,58,188 or any part thereof was exempt from tax as being a receipt of a capital nature? 2.
Whether, on the facts and in the circumstances of the case, the amount of Rs.9,493, being the amount of compensation received for stores acquired by the Burmese Government, was liable to tax under the Act?" The High Court answered all these questions in favour of the assessee.
The High Court answered for the assessment year 1950 51 the question 2 in the affirmative for the entire amount, questions 3 & 4 in the negative, for the assessment year 1951 52 the second question in the affirmative and question No. 3 in the negative.
For the assessment year 1953 54 both the questions were answered in the affirmative.
The revenue has come up in appeals.
In order to appreciate the controversy, broad features of the facts, some of which have been noted before, have to be borne in mind.
The business in question of the assessee started in Burma in 1861.
There were 15 agreements with the Government of Burma for exploitation of forests at the relevant time.
The agreements were entered into at different times and provided for expiry of leases on different dates.
At page 27 of the Paper Book a typical agreement dated 28th October, 1925 is indicated.
Similar agreements were entered into for other leases.
The terms provided, inter alia, as follows: General rights "1.
The Contractor shall within the series of of contractor: coupes into which the forest area described in Schedule I and hereinafter 279 referred to as "the Concession Area" shall be subdivided as provided in clause 5 and during the periods for extraction there from prescribed in clause 6 and subject to such further conditions, limitations and restrictions as are hereinafter prescribed have the sole right and license to (a) fell the teak trees gridled or marked in that behalf by the officers of the Forest Department in accordance with the directions contained in clause 8 and any naturally dead standing teak trees; (b) convert into logs all such trees all naturally felled teak trees and all felled teak timber left unloged from former operations; and (c) remove all such logs and all logs were left unextracted from former operations: PROVIDED that is any area to which a scheme for concentrated exploitation accordance with any sanctioned working Plan has been applied the Contractor shall have no rights in standing teak trees under five feet six inches in girth measured at breast height from the ground.
Grant of other 2.
The Government acting on behalf of the rights in Con Secretary of State reserves to itself the cession Area.
right to enter into agreements with other parties for the extraction of timber other than that which the Contractor is entitled to extract under this Agreement from the whole or from any part of the Concession Area.
" The proviso to that clause need not be set out.
Clause 4(1) was as follows: Period during 4.
(1) This Agreement shall come into force which Agreementon the 1st day of January, 1926 and shall is in force unless previously terminated under clause 26 or clause 29 terminated after the expiry of a period of fifteen years; viz. on the 31st day of December, 1940; PROVIDED that in respect of the rights conferred by 280 clause 27 or by sub clause (2) of this clause and in respect of very liability incurred under this Agreement it shall continue in force for such further period as is necessary for the enjoyment of such rights and the enforcement of such liabilities.
" Clause 15 of the agreement authorises the assessee company to cut canals, make water courses, build bridges and other railway works etc.
on certain conditions.
Clause 16 dealt with control of such private railways.
Clause 18 dealt with the inspection etc.
Other relevant clauses were, General respo 19.
Nothing herein contained shall be deemed nsibilities to relieve the Contractor, his agents and of Contractor.
servants of the duty of complying with any Act of the legislature and of the rules thereunder at the time being in force and applying to the Concession Area.
With thirty days from the dates respectively on which measurement statements of timber have been furnished to the Contractor by the Forest Department the Contractor shall pay or to be paid into such Government Treasury as the Government may appoint royalty in respect thereof according to the following rate namely: . . . . . . . . . . . . . . . .
Clause 21 read as follows: Marking of 21.
The Contractor shall be entitled to have timber after the timber which has been measured for Measurement royalty marked at the time of measurement with a Government hammer mark denoting that the timber has been so measured and after payment of such royalty the timber thus marked shall become the property of the Contractor.
" Clause 23 was as follows: "23.
Until teak timber has been marked and royalties have 281 Teak timber been paid thereon in accordance with the Goverment pro preceding clause it shall be deemed to be perty up to property of the Government and the the payment Contractor shall have no right to sell of royalty.
mortgage or hypothecate it or create any charge or lien thereon.
" Clause 27 of the agreement provides as follows: "27.
On the conclusion of the period specified in clause 4 or on the termination of this agreement under clause 26 or clause 29, as the case may be, (a) the contractor shall be allowed a further period of three years for delivering at a measuring station and removing therefrom after payment of royalty on or otherwise dealing as provided in clause 20 with any timber bearing his authorised hammer marks the extraction of which has in accordance with the terms of this agreement been completed before the date such conclusion or termination and on the expiry of such further period he shall cease to have any rights whatever in timber not yet so delivered: Provided that the rates of royalty payable under this clause shall be the same as the rates fixed for the concession area under any new agreement whether with the present contractor or with other parties subsequent to this agreement or in the event of no new agreement being entered into at the rates of royalty set out in clause 20 of this agreement; (b) the contractor shall be given such reasonable time as in the opinion of the Government may be necessary to allow him to dispose of such of his buildings, mills, railways or other structures erected for the purposes of his business under this agreement as are standing on land at the disposal of the Government." Under clause 29 the Contractor was given the rights to terminate the agreement at any time by giving two years notice in writing.
On the 1st January, 1926, there was commencement of the agreement.
31st December, 1940 was the due date of expiry of the agreement.
On 7th April, 1942, there was extension by the Government of Burma of the long term agreement till such time as it became possible H 282 to resume forest operations and for such further period as might be required for settlement of new agreements.
On 24th January, 1948, there was a letter by the Government of Burma to the assessee and others in connection with ending of joint working arrangements between consortium of 5 contractors on the one hand and Government of Burma on the other hand for exploitation of forests.
On 4th February, 1948, there was the assessee 's letter to the Government of Burma indicating their specific rights under the Forest Agreement in respect of logs in the course of extraction on termination of agreements.
on 10th February, 1948, the Burmese Government replied to the assessee 's letter dated 4th February, 1948 informing that the normal period of currency of agreement had already expired, and the life of the agreement had been prolonged under letter dated 7th April, 1942 and also under the Weight Agreement which expired on 1st May, 1947.
Government 's decision to terminate long term pending lease negotiations and to terminate on 31st May, 1948 joint operations in the area intended to be taken over by Government and the Government 's intention to consider any claims of residuary rights under the expiring agreements was also indicated to the assessee.
On 10th June, 1949, there was an agreement between the President of Union of Burma and the assessee and Steel Bros., inter alia, dealing with the residuary rights under clause 27 of the 1925 agreement and the settlement to be made in respect thereof.
The agreement, inter alia, reiterated that whereas under lease under clause 27, there were certain residuary rights as we have noted hereinbefore, whereas certain questions had arisen in the settlement being made by the Government as regards the said rights as well as the assets of the lessees in the forest areas which the lessees desired to surrender to the Government, the parties had agreed to resolve this question indicated under clause 1 therein.
It is not necessary to set out the details here.
These have been set out at pages 80 81 of the Paper Book.
We have set out the relevant portions of the material documents relied before the High Court.
It may be mentioned that the High Court in its judgment has set out the discussion at page 793 of the report between the Government of Burma and the assessee company.
The said discussion recorded is as follows: 283 "The Government of Burma was always the grantor.
Apparently this was so because the forests were always of the ownership of the Government.
The Government was the single owner of all the forests.
These forests were never intended to be transferred to any grantee at any time.
The forest leases were always of duration of 15 years or more.
They always related to extremely large areas which were sub divided into large coupes.
These coupes were also not to be worked at the same time, but according to schedule fixed in respect thereof.
Each specified group of coupes was to be worked within three years.
The extraction of the trees was to be completed within the fixed period of three years.
The schedule fixed was compulsorily to be adhered to.
The work of extraction was to be done in accordance with the rules prescribed for felling, logging and removal.
The Government was accordingly not a seller of any stock in trade and the assessee was not a purchaser of any stock in trade.
The assessee undertook the obligations of various kinds so as to complete the work of extraction as indicated in the contract.
The assessee had to maintain extremely large establishments and headquarters at various places and had in that connection put up various permises including dwelling houses and buildings.
It had to maintain diverse sorts of mechanical appliances and had, inter alia, owned motor transport, tractors, launches, elephants, cattle and diverse assets for the purposes of working these forest leases.
The Government was not concerned in any part of the operations, relating to the extractions done by the assessee from the contract area.
It is of importance that the right of extraction and/or to fell, convert and remove that was given to the assessee was to be exercised in respect of the growing forest trees and/or uncut timber.
There was a further right to log all felled teak timber left unlogged from former operations.
The consideration that was charged by the Government was only the royalty agreed to be paid to the Government.
G The main question, is, whether the acquisition of forest leases by the assessee was capital asset or stock in trade.
The next question which arises for the first two years is whether there is any scope of application of section 10(2)(vii) of Indian Income tax Act, 1922 in respect of the amount of R.S. 1,41,156 for the assessment year 1950 51 284 and for 1951 52 whether the amounts of R.S. 44,407, R.S. 8,639 and R.S. 2,16,929.
being the excess realisations over R.S. 225 per ton for logs received in respect of depreciable assets, stores and livestock were liable to tax under the Act.
The two questions relevant for the assessment year 1953 54 will be dealt with separately.
The main submission by Shri B.B. Ahuja on behalf of the re venue was that the assessee was operating on a wide field in more than one country for obtaining its stock in trade in timber.
The fresh con tracts entered into by the assessee (15 at the material time which commenced and expired at different times, were contracts entered in the course of its business.
It was, therefore, submitted that these were trading contracts.
The assessee 's right under the contract of 1925, according to Shri Ahuja, was to (i) fell teak trees.
The assessee was trading in teak; (ii) convert them into logs; and (iii) remove them on payment of royalty.
Under clause 27 of the Agreement, the assessee had no interest in land as such, it had only a right to collect and take away logs, its stock in trade, it could not fell any fresh trees.
The agreement dated 10th June, 1949 was entered into by the assessee, according to the learned counsel for the revenue, in the course of its business.
He further submitted that 28,847 logs received by the assessee under the agreement dated 10th June, 1949, were in substitution of the logs that it had already cut and had not been able to remove from the forests.
It was urged, it was merely a recompense for its rights in the stock in trade.
It has to be borne in mind that though the assessee had several sources of income including income from business operation, the assessee 's company 's main income was from felling the trees and carried on the said business on an extensive scale.
On behalf of the assessee, it was submitted that forest leases constituted the income producing assets of the company.
Mr. Kaka submitted that these involved the setting up of the entire business and investment of large funds in building dams, canals, roads, railways, buildings, etc.
He drew our attention to clause 15 of the lease agreement which has been set out at page 40 of the Paper Book in Statement of case.
Mr. Kaka further reiterated that the leases were for a long duration with a first right to refusal to any subsequent leases.
Reference was made in this connection to clause 4(2) of the lease agreement appearing at page 30 of the Paper Book.
The Forest leases.
it was 285 urged by him, were not ordinary commercial contracts made in the A course of carrying on their trade or for the disposal of their products.
These leases related to the whole structure of the assessee 's profit making apparatus.
It was further submitted that these regulated the assessee 's activities, defined what they might or might not do and affected the whole conduct of the assessee 's business.
According to him the forest leases, therefore, constituted the capital assets of the assessee 's business.
He relied on a decision in Van Den Berghs Ltd. vs Clark, at 25 and also Hood Bars vs Commissioner of Inland Revenue No. 2. 87 Tax Cases, 188.
Shri Kaka, therefore, submitted that the rights acquired under the contract were three folds viz. (1) to fell trees (2) to convert the felled trees into logs and (3) to remove the logs.
He referred us to clause 1 of the lease Agreement which appears at page 27 of the Paper Book.
Detailed provisions were made in clauses 9, 10 and 11 regarding each of these operations.
It was further submitted that during the initial period of 15 years the assessee had the right to carry on all the three operations while under the residual rights the assessee could only carry on the operations of logging and removal of logs already felled by him.
Under clause 27, the assessee had no rights in the felled logs but only had the right to log and remove them and acquire the same after payment of royalty.
It was his submissions that in the absence of clause 27 the assessee would have no right to the felled trees which would have remained the property of the Government of Burma.
We are of the opinion that he is right.
It was further submitted that the assessee had not rights to felled trees which were not logged and removed within 3 years according to the terms of clause 27 of the lease agreement.
The consideration for the 43,860 tons of logs agreed to be handed over to the assessee was the surrender to the residuary rights under the Forest leases and the acquisition of the assets pertaining to the Forest Leases.
He referred to us in this connection to clause 1 of the Take over Agreement which has been set out at page 80 of the Paper Book.
Mr. Kaka further submitted that one lump sum consideration was paid for both the surrender of the residuary rights and acquisition of assets of the business under clause 7 of the Take over Agreement at H 286 p. 82.
The splitting up of the consideration, according to him, in clause 10 was merely for the implementation of the agreement as Schedule provided in the manner of handing over the logs to the assessee in exchange of certain assets.
If the residuary rights and assets had not been acquired by the Government the assessee would have carried on his business for another 3 years and logged and removed the felled trees.
The assessee was prevented from carrying on this business upon the nationalisation of the forest resources and the consequential acquisition of the residuary rights and assets pertaining to the forest leases belonging to the assessee.
Mr. Kaka urged that compensation therefore paid for acquisition of the residuary rights and assets was for the sterilization of the Company 's business and therefore a capital receipt.
He relied on the observations of Lord Buckmaster at page 463 and Lord Wrenbury at page 465 in Glenburg Union Fireclay Co. Ltd. vs The Commissioner of Inland Revenue, 12 Tax Cases 427.
It was further urged that once it was held that the forest leases constituted the capital assets of the assessee, compensation paid for the sterilization of even part of a capital asset must be regarded as a capital receipt.
Furthermore, according to him, it made no difference whether there was a sale of an asset out and out or it was a means of preventing the acquisition of profits that would otherwise be gained.
He urged that in either case the asset of the company was sterilized or destroyed.
Reliance was placed on the observations of this Court in Commissioner of Income Tax vs Vazir Sultan & Sons, at 191 and Godrej & Co. vs Commissioner of Income Tax, It is, therefore, necessary as mentioned hereinbefore to examine whether the acquisition of forest leases by assessee were acquisitions of capital assets.
Though we will refer to some of the decisions to which our attention was drawn and which were referred to by the High Court, it is well to bear in mind the basic principles.
These are: if there was any capital asset, and if there was any payment made for the acquisition of that capital asset, such payment would amount to a capital payment in the hand of the payee.
Secondly, if any payment was made for sterilization of the very source of profit making apparatus of the assessee, or a capital asset, then that would also amount to a capital receipt in the hand of the recipient.
On the other hand if forest leases were merely stock in trade and payments were made for taking over the stock in trade, then no question of capital receipt comes.
The sum would represent payments of revenue nature or trading receipts.
Whether in a particular case, for the contracts of the type with which we are concerned, payments were capital receipts or not would depend upon the facts and circumstances of the case.
In this 287 connection it is important to bear in mind that normally in trade there A are two types of capital, one circulating capital and the other fixed capital.
Fixed capital is what the owner turns to profit by keeping it in his own possession; circulating capital is what he makes profit of by parting with it and letting it change hands.
Therefore, circulating capital is capital which is turned over and in the process being turned over, yields profits or loss.
It is well settled as the High Court observed in the judgment under appeal that what is capital assets in the hands of one person may be trading assets in the hands of the other.
The determining factor is the nature of the trade in which the asset was employed.
Compensation received for immobilisation, sterilization, destruction or loss, total or partial of a capital asset would be capital receipt.
If a sum represented profit in a new form then that was income but where the agreement related to the structure of assessee 's profit making apparatus and affect the conduct of the business, the sums received for cancellation or variation of such agreement would be capital receipt.
In Senairam Doongarmall vs Commissioner of Income lax, Assam, at 406, this Court observed as follows after discussing several authorities: "All these cases were decided again on their special facts.
Though they involved examination of other decisions in search for the true principles, it cannot be said that they resulted in the discovery of any principle of universal application.
To summarise them: South India Pictures ' case was so decided because the money received was held to be in lieu of commission which would have been earned by the business which was still going, and the receipt was treated as the fruit of the business.
The same reason was given in Jairam Valiji 's case , and the Shamsher Printing Press case In Vazir Sultan 's case (36, I.T.R. 175), the compensation was held to replace loss of capital, and in Godrej 's case , the compensation was said not to have any relation to the likely income or profits but to loss of capital.
Each case was thus decided on its facts.
We have so far shown the true ratio of each case cited before us, and have tried to demonstrate that these cases do no more than stimulate the mind, but none can serve as a H 288 precedent, without advertence to its facts.
The nature of the business, or the nature of the outlay or the nature of the receipt in each case was the decisive factor, or there was a combination of these factors.
Each is thus an authority in the setting of its own facts.
" All these cases have been discussed in the judgment under ap peal at page 795 of 81 I.T.R. As Hidayatullah, J. as the Chief Justice then was observed in 42 I.T.R. at page 392, each case depended upon the facts of each case.
This Court had occasion to consider some of these aspects in Commissioner of Income tax, U.P. vs Gangadhar Baijnath, whereas at page 25 of report referring to several authorities it noted: "The question whether a receipt in capital or income has frequently come up for determination before the courts.
Various rules have been enunciated as furnishing a key to the solution of the question, but as often observed by the highest authorities, it is not possible to lay down any single test as infallible or any single criterion as decisive in the determination of the question, which must ultimately depend on the facts of the particular case, and the authorities bearing on the question are valuable only as indicating the matters that have to be taken into account in reaching a decision: vide Van Den Berghs Ltd. vs Clark ; 3 I.T.R. (Eng. Case) 17 (H.L.).
That, however, is not to say that the question is one of fact, for, as observed in Davies (H.M. Inspector of Taxes) vs Shell Company of China Ltd. ; 22 I.T.R. (suppl.) 1 (C.A.), 'these questions between capital and income, trading profit or no trading profit, are questions which, though they may depend no doubt to a very great extent on the particular facts of each case, do involve a conclusion of law to be drawn from those facts '.
" Similar observations were made in Commissioner of Income tax, Poona vs Manna Ramji and Co., The Court reiterated the same principle.
We have referred to the discussion which took place with the 289 Government of Burma on 28th October, 1925.
Having regard to all A these, the forest leases, in our opinion, affected the very structure of the operation of the assessee.
In this connection we may remind ourselves of the decision of the House of Lords in Van Den Berghs Ltd. vs Clark (H.M. Inspector of Taxes), case).
In that case a Dutch company and the assessee who were competitors in the manufacture and dealing in margarine, in order to end the competition entered into an agreement in 1908, by which they bound themselves to work in friendly alliance and to share their profits and losses in accordance with an elaborate scheme therein specified; further, it was stated that they would promote the commercial, pecuniary, buying and selling and other interests of the two companies.
In 1913 another agreement was entered into modifying the original basis of ascertaining and sharing profits, and, subject thereto, continued in force the provisions of the agreement of 1908 until December, 1940.
During the war the agreements were not operated, but in 1920 a third agreement was made modifying the two previous agreements as to the basis of profit sharing, extending the branches of the business, and again continuing the principal agreement of 1908 till December, 1940.
In 1927, three agreements were made, under which the appellants agreed to determine the agreements of 1908, 1913 and 1920 in consideration of the payments to them of $ 450,000.
The Special Commissioners held that that sum was paid in respect of the pooling agreements, and must be brought in for the purposes of arriving at the balance of the profits of the appellants for the year ending December, 1927, and consequently that the sum was an income receipt.
Finlay, J., held that the cancelled agreements were capital asset of the appellants and that the sum of 450,000 was not an income receipt at all.
The Court of Appeal restored the decision of the Commissioners, who had held that the sum was not received by the appellants in consideration of the surrender of a fixed capital asset, but arose from a transaction attributable to circulating capital, and therefore an income receipt.
By the House of Lords it was held that $ 450,000 was not an item of profit arising to the appellants from the carrying on of their trade, as the agreements which were cancelled were not ordinary commercial contracts made in the course of trading nor merely agreements as to how trading profits should be distributed, but affected the whole conduct of their business.
It was held that money laid out in the cancellation of so fundamental an organisation of a trader 's activities could not be regarded as an income receipt of disbursement.
The agreements formed the fixed framework within which their circulating capital operated, and were not incidental to the working of their profit making machine.
The Court reiterated H 290 the observations and principles laid down by Lord Cave in British Insulated & Helsby Cables Ltd. vs Atherton, The observations of Lord Macmillan at page 25 of 3 I.T.R. (English case) are apposite to the facts before us.
The three agreements which the appellants in that case had consented to cancel were not ordinary commercial contracts made in the course of carrying on their trade; they were not contracts for the disposal of their products or for the engagement of agents or other employees necessary for the conduct of their business.
These regulated the appellant 's activities, defined what the appellants might and what might not do and affected the whole conduct of the appellant 's business.
Accordingly, Lord Macmillan found it in that case, difficult in seeing how money laid out to secure, I or money received for the cancellation of, so fundamental an organisation of a trader 's activities could be regarded as an income disbursement or an income receipt.
Lord Macmillan noted that the legal character of the payment should not be mis judged by the magnitude of payment for the magnitude is a relative term.
But the magnitude of a transaction is not an entirely irrelevant consideration.
With respect we accept this approach of Lord Macmillan to the facts of the present case before us, which appears to be basically similar.
The forest lease therefore constituted, in our opinion, capital assets of the assessee.
The same conclusion is fortified by the observations of House of Lords in the case of Hood Barrs vs Commissioner of Inland Revenue (No. 2), 37 Tax Cases l 88.
In Commissioner of Income tax, Hyderabad Deccan vs Vazir Sultan & Sons, , this Court held that in considering whether compensation paid to an agent on the cancellation of his agency was a capital receipt or a revenue receipt, the first question considered was whether the agency agreement in question was a capital asset of the assessee 's business and constituted its profit making apparatus and was in the nature of its fixed capital, or it was a trading asset or circulating capital or stock in trade of its business.
If it was the former compensation received would be a capital receipt, if the agency was entered into by the assessee in the ordinary course of his business and for the purpose of carrying on that business it would fall into the latter category and the compensation received would be a revenue receipt.
Having regard to the nature of the forest leases which we have discussed before, in our opinion, the payments made for cancellation 291 Or sterilisation of the rights under these leases would be capital receipts.
See in this connection the observations of Lord Buckmaster in the decision of House of Lords in The Glenboig Union Fireclay Co. Ltd. vs The Commissioner of Inland Revenue (supra).
The observations of Lord Wrenbury are at page 465.
We have discussed the facts regarding the cancellation and circumstances under which it was entered, and we may refer to the facts stated in the judgment of the High Court at pages 798 799.
As a result of the above findings the High Court came to the conclusion that sum of Rs.65,52,153 mentioned in question No. 2 for the assessment year 1950 51 and the sum of Rs.5,18,896 mentioned in question No. 2 for the assessment year 1951 52 were related to the 28, 847 tons of logs which are exempt from tax as being receipt of a capital nature on the background of the facts found by the High Court.
Question No. 3 really does not arise because for levy of a balancing charge under section 10(2)(vii) of Income tax Act, 1922, it is absolutely necessary that the depreciable assets should have been sold at a price agreed to between the parties.
See in this connection also the observations of this Court in Commissioner of Income tax vs Motors & General Stores (P) Ltd., But in exchange there is a reciprocal transfer of interest in movable property, a corresponding transfer of interest in another movable property which is often denoted as 'barter '.
The agreement of 10th June, 1949 had resulted from the enforcement of the Government 's policy of nationalisation of forest operation and the agreement does not involve any transaction of sale between the assessee and the Union of Burma.
The assessee company never paid any money by a price in respect of assets delivered to it by the Government, therefore, this amount of Rs.1,41,156 could not be brought to tax against the assessee company under the second proviso to section 10(2)(vii) of the Indian Income tax Act, 1922.
The question accordingly was rightly decided in favour of the assessee.
Regarding question No. 4 in the assessment year 1950 51 and the question No. 3 in the assessment year 195l 52, these related to the delivery of 2,946 and 12,067 tons of logs to the assessee company in respect of the depreciable assets, stores and livestock mentioned in sub clause (b) of clause 1 of the agreement dated 10th June, 1949.
The High Court was right in holding that logs came into possession of the assessee company in consequence of the agreement made on 10th June, 1949 against delivery of all outstanding or residuary rights of the assets to the Government.
The arrangement was in consequence of 292 nationalisation of forest operations in Burma.
The whole of the quantity of 43,860 tons of logs delivered to the assessee company was in lieu of the asset of the forest leases and the other diverse assets which were handed over by the assessee company to the Government on 10th June, 1949.
These logs were not received by the assessee company on revenue account at all.
The fact that the assessee company did not mix up these logs with any of the stock in trade held by it in its ordinary course of business is an indication of the fact that the assessee did receive these as stock in trade.
These logs were received by the assessee company for four years and held by it in the account which is described as 'Burma forest assets realisation reserve account '.
The sale proceeds of these logs could not be held to have been received by the assessee company on revenue account.
The High Court was right.
T he question No. 4 in the first year and the question No. 3 in the second year must be answered in the negative and against the revenue.
We have set out hereinbefore the questions relating to assessment year 1953 54.
It appears from the facts that nothing was paid by the Government to the assessee company in connection with 1/3 area of the forest areas which the Government had taken over from the assessee company on 1st June, 1948.
The assessee company had filed a suit against the Government in connection with the timber logs and stores taken over by the Government on 1st June 1948.
The facts in connection with the delivery of these goods appeared in the letter of the Government to the assessee company dated 24th January, 1948.
In the suit filed by it, the asessee company succeeded in obtaining a decree for Rs.5,58, 188.
The Tribunal held that the timber taken over by the Government in respect of 1/3rd area was stock in trade and the proceeds were taxable.
Mr. Kaka was right in his submission that the timber taken over was towards the residuary rights in respect of the assets lying within 1/3rd area taken over on 1st June, 1948.
The price of the timber as such was never paid by the Government.
In the decree, this sum was awarded in lieu of the rights which the assessee company had under clause 27 in respect of 1/3rd area taken over by the Government.
To these facts, the terms of the agreement dated 10th June, 1949 would be applicable.
This sum cannot therefore be taxed.
On the question No. 2 for the assessment year 1953 54 no argument was advanced before the High Court on behalf of the assessee and the High Court answered the question in the affirmative.
293 In view of the principles involved and the nature of the transactions, we are of the opinion that the High Court was right in answering the question in the manner it did.
In the premises these appeals fail and are dismissed with costs.
P.S.S. Appeals dismissed.
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The assessee Company, carrying on business of selling timber in India and abroad, entered into contracts in the nature of forest leases with the Government of Burma, under which it was authorised to fell teak trees, convert them into logs, and remove them after payment of royalty.
These leases, which were made first in the year 1862, had been continuously renewed from time to time.
Clause 27 of the agreement authorised the assessee company even after the expiry of the lease period of 15 years to remove the logs in respect whereof extraction had been completed, upon payment of royalty during the next three years.
At the relevant time the assessee company was the owner of fifteen such forest leases.
The last of these leases commenced on Ist January 1926 and 31st December, 1940 was the due date of expiry.
However, before the expiry of the period, the Second World War started and the Government of Burma extended them until such time as it became possible to resume forest operations.
After formation of the Union of Burma, the ownership of the forest leases of the assessee company was taken over by the Government of Burma in 1948 49; a third of the total teak area on June 1, 1948 and the rest on or about June 10, 1949.
In terms of an agreement dated 10th June, 1949 between the parties the assessee made over to the Burmese Government its residuary rights under the forest leases together with the non duty paid logs, wherever found, and also all the assets viz. buildings, dwelling houses, etc.
pertaining to the forest leases and received 28,847 tons of teak logs in substitution of non duty paid logs, 2,946 tons against depreciable assets and stores and 12,067 tons against livestock.
The logs so received by the assessee com 270 pany were sold off by it from time to time in the accounting years 1949, 1950, 1951 and 1952.
The Income tax Officer sought to bring these sale proceeds to tax by allocating them amongst the various assessment years.
The questions that arose were: (i) whether the realisation in respect of substituted logs was exempt from tax as being a receipt of capital nature, and (ii) whether the sale proceeds in respect of logs received in lieu of depreciable assets, stores and livestock were liable to tax under the Act or were altogether free from liability.
The Income tax Officer, the Appellate Assistant Commissioner and the Tribunal held against the assessee.
The High Court, however, answered the questions in favour of the assessee.
In these appeals by certificate under section 66A(2) of the Income tax Act, 1922 it was contended for the Revenue that the contracts entered into by the assessee company for obtaining its stock in trade in timber were trading contracts, that under cl. 27 of the agreements the assessee had no interest in land as such, it had only a right to collect and take away logs, its stock in trade, and it could not fell any fresh trees, that 28,847 tons of logs received by the assessee under the agreement were in substitution of the logs that it had already cut and had not been able to remove from the forests, merely as a recompense for its rights in the stock in trade, and that the excess realisation in respect of logs received against depreciable assets, stores and livestock were profits and liable to tax under section 10(2)(vii) of the Income tax Act, 1922.
For the assessee respondent it was contended that the forest leases constituted the income producing capital assets of the company in which it had invested large funds in building dams, canals, roads, railways, buildings etc., that the forest leases were not ordinary commercial contracts made in the course of carrying on their trade or for the disposal of their products, these related to the whole structure of the assessee 's profit making apparatus, that the consideration for the logs received was the surrender of the residuary rights under the forest leases and acquisition of assets of the business under the take over agreement, that the assessee was prevented from carrying on business upon the nationalisation of forest resources and acquisition of residuary rights and assets pertaining to the forest leases.
It was further submitted that the compensation paid to the assessee was the sterilisation of the company 's business and thus a capital receipt, not subject to tax.
Dismissing the appeals, the Court, 271 ^ HELD: 1.1.
The forest leases constituted capital assets of the assessee.
The payments made for cancellation or sterilization of the rights under these leases were, therefore, capital receipts and not liable to tax.
[290E] 1.2.
Whether in a particular case payments were capital receipts or not depends upon the facts and circumstances of the case.
The basic principles are: if there was any capital asset and if there was any payment made for acuisition of that capital asset, such payment would amount to a capital payment in the hands of the payee.
Secondly, if any payment was made for sterilization of the very source of profit making apparatus of the assessee, or a capital asset, then that would also amount to a capital receipt in the hands of the recipient.
If on the other hand, the leases were merely stock in trade and payments were made for taking over the stock in trade then no question of capital receipt comes.
The sum would represent payments of revenue nature or trading receipts.
Compensation received for immobilisation, sterilization, destruction or loss, total or partial, of a capital asset would, therefore, be capital receipt.
If a sum represented profit in a new form then that would be income but where the agreement related to the structure of assessee 's profit making apparatus and affected the conduct of business, the sums received for cancellation or variation of such agreement would be capital receipt.
[286H; 287A D] In the instant case, the forest leases affected the very structure of the operation of the assessee.
The compensation received for the cancellation of assessee Company 's activities could not be regarded as an income receipt, nor the legal character of the payment misjudged by the magnitude of the payment.
[289A; 290C D] Glenboig Union Fireclay Co. Ltd. vs The Commissioner of Inland Revenue, 12 Tax Cases 427; Senairam Doongarmall vs Commissioner of Income tax, Assam, at 406; Commissioner of Income tax, U.P. vs Gangadhar Baijnath, ; Commissioner of Income tax, Poona vs Manna Ramji and Co., ; Van Den Berghs Ltd. vs Clark (H.M. Inspector of Taxes), case): British Insulated & Helsby Cables Ltd. vs Atherton, ; Hood Barrs vs Commissioners of Inland Revenue (No.2), 37 Tax Cases 188; Commissioner of Income tax, Hyderabad Deccan vs Vazir Sultan & Sons, , referred to.
For levy of a balancing charge under section 10(2)(vii) of the Income tax Act, 1922 it was absolutely necessary that the depreciable 272 assets should have been sold at a price agreed to between the parties.
The agreement under which the assessee company received logs by way of compensation in lieu of depreciable assets did not involve any transaction of sale between it and the Union of Burma.
The assessee company never paid any money by way of a price in respect of assets delivered to it by the Government.
Therefore, the sale proceeds of these logs could not be brought to tax against the assessee company under the second proviso to section 10(2)(vii) of the Income tax Act, 1922.
[29 ID F] Commissioner of Income tax vs Motors & General Stores (P) Ltd., , referred to.
The logs delivered to the assessee company in respect of the depreciable assets, stores and livestock came into possession of the assessee in consequence of the agreement against surrender of all outstanding or residuary rights of the assessee to the Government.
The arrangement was in consequence of nationalisation of forest operations.
The fact is that the assessee company did not mix up these logs with any of the stock in trade held by it in its ordinary course of business.
The sale proceeds of these logs could not, therefore, be held to have been received by the assessee company on revenue account.
Consequently, the excess realisation received over the cost incurred in getting delivery of these logs was not liable to tax under the Act.
[29 IG H; 292A C] 4.
Nothing was paid by the Government to the assessee company in connection with 1/3rd area of the forest leases taken over from the assessee company.
The assessee company had filed a suit in connection with the timber logs and stores taken over by the Government and succeeded in obtaining a decree.
The sum awarded in the decree in lieu of the rights which the assessee company had under cl. 27 of the agreement could not, therefore, be taxed.
[292F G] 5.
Normally in trade, there are two types of capital, one circulating and the other fixed.
Fixed capital is what the owner turns to profit by keeping it in his own possession, circulating capital is what he makes profit of by parting with it and letting it change hands.
What is capital assets in the hands of one person may be trading assets in the hands of the other.
The determining factor is the nature of the trade in which the asset was employed.
[287A C]
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5098.txt
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Appeal No. 21 of 1960.
Appeal from the judgment and order dated January 16, 1959, of the Madras High Court in Writ Appeal No. 67 of 1958, arising out of the judgment and order dated July 15, 1958, of the said High Court in Writ Petn.
No. 922 of 1957.
C. B. Aggarwala, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant.
R. Ganapathy Iyer, H. J. Umrigar, R. H. Dhebar and T. M. Sen, for respondent No. 2. 1960.
May 4.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal on a certificate granted by the Madras High Court.
The appellant Company had been carrying on various classes of insurance business other than life insurance after its incorporation in September, 1941.
On October 15, 1956, an extraordinary general meeting of the shareholders of the Company passed a resolution by which all its insurance business was to cease forthwith and no further policies of insurance of any kind were to be issued thereafter.
It was also resolved that no application should be made for renewal of the certificate granted under section 3 of the , No. IV of 1938 (hereinafter called the Act), and that thence forward the Company should only carry on the business of money lending as a loan Company and also to do investment business.
In consequence of these resolu tions, the Company informed the Controller of Insurance in December, 1956, that it was not applying for renewal of its registration for carrying on the business of insurance.
In May, 1957, the Controller wrote to the Company that its certificates for carrying on insurance business would be deemed to be cancelled from July 1, 1957, and the cancellation was notified in the Gazette of India.
It appears that the Government of India had been receiving complaints against the Company.
Consequently on July 17, 1957, the Government of India passed an order under section 33 of the Act directing the Controller of Insurance to investigate the affairs of the Company and to submit a report.
Thereupon the Controller appointed Messrs. Fraser and Ross to act as auditors to assist him in the investigation.
The Company was informed of this order in September 1957.
Thereupon it wrote to the Controller that no order under section 33 of the Act could be passed 860 against it, as it had closed its business of insurance and the order in question was without jurisdiction.
The Controller sent a reply to this communication and pointed to the provisions of section 2D of the Act in justification of the order.
Thereupon the Company made an application under article 226 of the Constitution in the Madras High Court.
Two main contentions were raised by it in the petition.
In the first place it was submitted that the Company having closed all its insurance business no order could be passed against it under section 33.
as that section only applied to companies actually carrying on the business of insurance and that in any case no such order could be passed even with the help of section 2D of the Act.
In the second place it was contended that even if such an order could be passed under section 33 read with section 2D of the Act, it could not be done in the present case, as the Company 's liabilities in respect of its insurance business did not remain unsatisfied or not otherwise provided for.
Messrs. Fraser and Ross as well as the Controller were made parties to the petition.
The petition was opposed on behalf of the Controller, and his contention was that the case was clearly covered by section 2D of the Act and therefore the order under section 33 was validly passed in this case and that it had not been shown that the liabilities had been satisfied or had been otherwise provided for.
The learned Single Judge held that an order under section 33 read with section 2D could be passed against the Company and that it had not been shown that the Company 's liabilities had been satisfied or otherwise provided for.
He therefore dismissed the writ petition.
This was followed by an appeal by the Company, which was dismissed.
The Division Bench sub stantially agreed with the view taken by the learned Single Judge.
Thereupon the Company applied for a certificate to enable it to appeal to this Court and obtained it; and that is how the matter has come up before us.
Mr. Aggarwala appearing for the Company has urged the same two points before us.
The Act was passed in 1938 to control persons carrying on the business of insurance.
Section 2(9) thereof defines an ' insurer ' inter alia as weaning any body corporate 861 (not being a person specified in sub cl.
(c) of this clause) carrying on the business of insurance, which is a body corporate incorporated under any law for the time being in force in India or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act, 1913, as defined by sub section
(2) of section 2 of that Act.
Section 3 provides for registration of any person carrying on the business of insurance and no such business can be carried on unless a certificate of registration for the particular class of insurance business has been obtained from the Controller.
Section 3(4) gives power to the Controller to cancel the certificate for reasons specified therein and section 3(5B) lays down that when a registration is cancelled the insurer shall not after the cancellation has taken effect, enter into new contracts of insurance, but all rights and liabilities in respect of contracts of insurance entered into by him before such cancellation takes effect shall, subject to the provisions of sub section
(5D), continue as if the cancellation had not taken place.
In order to safeguard the interest of policy holders, section 7 provides for deposits by the insurer for various classes of his business.
Section 8 lays down that any deposit made under section 7 shall be deemed to be part of the assets of the insurer but shall not be susceptible of any assignment or charge; nor shall it be available for the discharge of any liability other than liabilities arising out of policies of insurance issued by the insurer so long as any such liability remains undischarged ; nor shall it be liable to attachment in execution of any decree except a decree obtained by a policy holder of the insurer in respect of a debt due upon a policy which debt the policy holder has failed to realise in any other way.
Section 9(1) lays down that where an insurer has ceased to carry on in India any class of insurance business in respect of which a deposit has been made under section 7 and his liabilities in India in respect of business of that class have been satisfied or are other.
wise provided for, the court may on the application of the insurer order the return to the insurer of so much of the deposit as does not relate to the classes of insurance.
, if any, which he continues to carry on.
Under 112 862 section 10 an insurer who carries on business of more than one kind is required to keep a separate account of all receipts and payments in respect of each such class of insurance business.
Section 33(1) with which we are directly concerned, is in these terms: " The Central Government may at any time by order in writing direct the controller or any other person specified in the order to investigate the affairs of any insurer and to report to the Central Government on any investigation made by him: Provided that the controller or the other person may, wherever necessary, employ an auditor or actuary or both for the purpose of assisting him in any investigation under this section.
" Section 2D is in these terms: " Every insurer shall be subject to all the provisions of this Act in relation to any class of insurance business so long as his liabilities in India in respect of business of that class remain unsatisfied and not otherwise provided for.
" The contention of Mr. Aggarwala is that section 33 and section 2D both refer to an insurer which is defined in section 2(9) as a person carrying on the business of insurance.
He, therefore, contends that as soon as the insurer who was carrying on the business of insurance closes it down completely be no longer remains an insurer and the provisions of the Act do not apply to him.
Therefore, according to him, when section 33 provides for an order of investigation by the Central Government such an order can only be made in respect of a, person who is actually carrying on the business of insurance and is thus an insurer and cannot be made against a person who was an insurer but has closed his business.
Further, according to Mr. Aggarwala, section 2D also speaks of an insurer and makes him subject to all the provisions of the Act with respect to any class of insurance business so long as his liabilities in respect of that class remain unsatisfied or not other.
wise provided for and therefore section 2D would only apply to those cases where insurance business is being carried on, though some class of insurance business might have been closed.
The contention therefore is that reading sections 33 and 2D together, no order under 863 section 33 can be made in case of an insurer who has completely closed his business of insurance.
The main basis of this contention is the definition of the word "insurer" in section 2(9) of the Act.
It is pointed out that definition begins with the words " insurer means" and is therefore exhaustive.
It may be accepted that generally the word " insurer" has been defined for the purposes of the Act to mean a person or body corporate, etc., which is actually carrying on the business of insurance, i.e., the business of effecting contracts of insurance of whatever kind they might be.
But section 2 begins with the words " in this Act, unless there is anything repugnant in the subject or context " and then come the various definition clauses of which (9) is one.
It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context.
That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context.
Therefore in finding out the meaning of the word " insurer " in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause.
But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything repugnant in the subject or context.
In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances.
Therefore, though ordinarily the word " insurer " as used in the Act would mean a 864 person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning.
A perusal of a few sections of the Act will illustrate this and immediately show that the word " insurer " has been used in some sections to mean not merely a person actually carrying on the business of insurance but also a person who intends to carry on the business of insurance but has not actually started it and also a person who was carrying on the business of insurance but has ceased to do so.
For example, section 3(2) which deals with an application for registration which naturally has to be made before the business of insurance actually commences, lays down in cl.
(b) that the application shall be accompanied by the name, address and the occupation, if any, of the directors where the insurer is a company incorporated under the Indian Companies Act.
Here the word ,insurer" has been used to indicate the company which is not actually carrying on the business of insurance but is intending to do so and is applying for registration.
Further in section 3(2) (e) which also deals with an application for registration, it is provided that an insurer having his principal place of business or domicile, outside India shall send along with the application a statement verified by an affidavit of the principal officer of the insurer setting forth various requirements.
Here again, the word " insurer " has been used for an intending insurer, for the business of insurance would only begin after the registration certificate is granted on the application made under section 3(2).
Then in section 9 it is provided that, where an insurer has ceased to carry on business, the court may on the application of the insurer order the return to him of the deposit made under section 7.
shows that though the, insurer is not actually carrying on the business of insurance he is still termed an insurer and on his application the deposit may be refunded to him.
Again section 55 which deals with a situation arising out, of the winding up of an insurance company or the insolvency of any other insurer, provides that the value of the assets and liabilities of the insurer shall be ascertained in such manner and upon such basis as the liquidators 865 or the receiver in insolvency thinks fit.
The word " insurer" has thus been used in this section for a person or body corporate, etc., which is not actually carrying on the business of insurance and has gone into liquidation or ' has become insolvent.
Therefore, though the ordinary meaning to be given to the word "insurer " is as given in the definition clause (section 2(9)) and refers to a person or body corporate, etc., carrying on the business of insurance, the word may also refer in the context of certain provisions of the Act to any intending insurer or quondam insurer.
The contention therefore that because the word " insurer" has been used in section 33 or section 2D those sections can only apply to insurers who are actually carrying on business cannot necessarily succeed, and we have to see whether in the context of these provisions an insurer will also include a person who was an insurer but has closed his business.
As we have said already the Act was passed to control the business of insurance in the interest of policy holders and the general public and section 33 is obviously a provision by which the Central Government can order investigation into the affairs of any insurer in order to carry out the policy of the Act.
Could it be said in the circumstances that section 33 only applies to insurers actually carrying on business and not to insurers who have closed their business? If the policy of the Act is to be carried out and the policy holders and the general public are to be protected, the need for making investigation into the affairs of an insurer who has closed his business is greater, for he may have done so dishonestly.
We are therefore of opinion that the word " insurer" as used in section 33 not only refers to a person who is actually carrying on business but in the context of that section and taking into account the policy of the Act and the, purposes for which the control envisaged by the Act was imposed on insurers also refers to insurers who were carrying on the business of insurance but have closed it.
Further if there were any doubt whether the word " insurer " in section 33 refers to those insurers also who had closed their business that doubt in our opinion is completely dispelled by section 2D.
That section 866 provides that every insurer shall be subject to all the provisions of the Act in relation to any class of insurance business so long as his liability in India in respect of business of that class remains unsatisfied or not otherwise provided for.
Obviously this section applies to those insurers who have closed their business.
It was not necessary to enact this section if the word ,insurer" here also meant a person actually carrying on the business of insurance, for the provisions of the Act apply to such a person proportion vigor.
Therefore, when the word " insurer " is used in section 2D it must mean a person who was carrying on the business of insurance but has closed it.
If that is so, section 33, which provides for investigation, would apply to such an insurer who has closed his business, by virtue of section 2D.
Mr. Aggarwala next contends that section 2D would only apply to those cases where an insurer was carrying on different classes of insurance business and had closed some of them but not all of them.
He contends that the section provides that the insurer shall remain subject to the provisions of the Act in relation to any class of insurance business so long as his liabilities with respect to that class of business remain unsatisfied or not otherwise provided for.
This, according to him, contemplates a closure of only some out of many classes of business of insurance and not of all.
We see no reason however to limit the words used in this section only to a case where out of many classes of business, some are closed and others are being carried on.
Under section 13 of the , No. X of 1897, in all Central Acts and Regulations, unless there is anything repugnant in the subject or context, words in the singular shall include the plural and vice versa.
Though therefore section 2D speaks of any class of insurance business in the singular it, includes the plural also and would refer to all classes of insurance business.
Mr. Aggarwala does not contend that where, for example, four classes of business are being carried on and three of them are closed and one is continued, the section will not apply; but he contends that at least one must continue and the section will not apply if all are closed.
We do not see why if the section 867 applies, even though the word "class" is in the singular, to a case where three out of four classes are closed and one is continued it should not apply to a case where all four classes are closed.
We see no repugnancy in the context in holding that if all classes of business are closed the insurer shall be subject to all the provisions of the Act so long as his liabilities in India in respect of any business of all classes remain unsatisfied or not otherwise provided for.
Therefore on a plain reading of, section 2D there can be no doubt that an insurer who has closed all classes of his insurance business remains subject to all the provisions of the Act in relation to such classes so long as his liabilities in India remain unsatisfied or not otherwise provided for.
Therefore section 33 will certainly apply to a case where all classes of insurance business have been closed so long as the liabilities remain unsatisfied or not otherwise provided for.
The first contention of the appellant therefore that no investigation can be ordered under section 33 in its case because it has closed all classes of its insurance business fails.
Turning now to the second contention, the argument on behalf of the appellant is three fold.
In the first place it is urged that an order can only be made under section 33 read with section 2D when the Central Government is satisfied that the liabilities have not been satisfied or otherwise provided for, and that the order should show on the face of it that the Central Government had considered this aspect of the matter and had come to the conclusion that the liabilities remained unsatisfied or not otherwise provided for.
Further there is nothing in the present order to show that the Central Government ever considered this aspect of the matter and was satisfied that the liabilities of the appellant Company remained unsatisfied or not otherwise provided for.
There is no doubt that the order is utterly silent on this point and it was only in his letter of October 15, 1957, that the Assistant Controller pointed out section 2D of the Act and referred to this aspect of the matter.
It seems to us only just and proper that when an order is being passed under section 33 read with section 2D of the Act it should show on the face of it that the 868 Central Government was prima facie satisfied that the liabilities had remained unsatisfied or not otherwise provided for it is only when the liabilities have not been satisfied or otherwise provided for that an order under section 33 read with section 2D would be justified in the case of an insurer who has closed his business.
We use the word " prima facie " advisedly, for it seems to have been suggested in the High Court that no order could be passed under section 33 unless it was proved to the hilt that there were liabilities which remained unsatisfied or otherwise unprovided for.
It is obvious that such proof would only be available after investigation in to the affairs of the insurer.
Therefore in order that section 2D may be workable, all that is required under it is that the Central Government should be satisfied after such prima facie inquiry as it considers necessary that there are reasons to believe that the liabilities of the insurer who has closed his business remain unsatisfied or not otherwise provided for and in coming to this prima facie conclusion the Central Government may make enquiry from the insurer with respect to complaints that it may have received against him.
But the fact that the order does not on the face of it show that the Central Government considered this aspect of the matter would not make it bad, if in subsequent proceedings taken to challenge it is shown that there were materials before the Central Government which would justify its coming to the prima facie conclusion that the liabilities had Dot been satisfied or otherwise provided for, and therefore an investigation into the affairs was called for.
In the present case we find from the materials on the record that there were complaints before the Central Government from those who had claims against the company.
Those complaints were apparently referred to the Company and it does not appear that the Company satisfied the Central Government that the complaints were unjustified.
It was in this situation that the order for investigation was made in July, 1957, after the Company had closed its insurance business.
Further on the materials available on the record it does appear that even now there are claims pending to the tune of about one lac of rupees against the Company.
So it cannot 869 be said that there were no liabilities of the Company outstanding which were not satisfied or otherwise provided for when the order was made in July, 1957.
In the circumstances the order cannot be held to be bad because it does not show on the face of it that there were liabilities which had remained unsatisfied or not otherwise provided for.
In the second place it is urged that there can be no question of satisfying or otherwise providing for liabilities unless the liabilities are ascertained and either admitted or proved.
In other words the argument is that it is only those liabilities which are admitted by the insurer or which have been decreed against him and the decrees have become final which can be taken into account in deciding whether the liabilities have remained unsatisfied or not otherwise provided for.
It is urged that only those liabilities which are ascertained and either undisputed or proved can be satisfied and that the same applies to their being otherwise provided for.
It is true that only those liabilities, which are ascertained and either admitted or proved, can be satisfied; but it does not follow that " provision otherwise " must also be only of liabilities which are ascertained and either admitted or proved.
If that were go a dishonest insurer who closes his business could always get out of the provisions of section 33 read with section 2D by repudiating all claims made against him and then saying that there are no liabilities which remained unsatisfied or otherwise `unprovided for.
There can be no doubt, therefore, if these provisions have to serve the purpose for which they were enacted, (namely, the protection of the interest of the policy holders and the general public), the words ',not otherwise provided for" in section 2D must refer to liabilities in the nature of claims against the insurer whether the insurer admits them or not and whether a decree has been finally passed in respect of them or not.
The intention of making this provision in section 2D is to ensure that probable claims arising out of the insurance business that is closed are provided for before the insurer who has closed his business can say that he is not governed by all the provisions of the Act.
There can be no doubt, therefore, 113 870 that when " provision otherwise " has to be made it must be with respect to probable claims also that are likely to arise out of the insurance business which has been closed.
In the present case even the Company admits that there are probable claims to the tune of about rupees one lac still pending and in the circumstances until they are satisfied or it is shown that they have been provided for otherwise, all the provisions of the Act, including section 33, will apply to the Company.
The last argument in support of the second contention is that the liabilities have been otherwise provided for.
It is said that the Company deposited Rs. 3,94,000 as security under section 7 of the Act, which is still available to pay off the liabilities of the Company and therefore when such liabilities do not appear to exceed that amount they have otherwise been provided for.
The question thus raised is whether the Company is entitled to take into account the security deposit under section 7 in order to show that the liabilities have been otherwise provided for.
The contention on behalf of the Controller is that when the Act envisages " provision otherwise ", this provision has to be over and above the security deposit made by the Company under section 7.
It appears from section 8 that this deposit is available for the discharge of liabilities arising out of policies of insurance issued by the insurer so long as any such liability remains unsatisfied.
But even if a decree has been obtained by a policy holder on the basis of a liability under the policy he is not entitled to attach any part of this deposit until he shows that he has failed to realise the decree in any other way.
Further it appears that section 8 only contemplates policy holders holding a decree attaching part of the security deposit in case they fail to realise their debt in any other way ; it does not contemplate, for example, third parties who have decrees against an insurer, like the Company (which in its motor insurance business indemnifies the policy holders against third party risk up to a certain extent), doing so.
Such third parties cannot under any circumstances attach any part of the deposit, for section 8 only permits its attachment in the last resort by a policy holder of the 871 insurer in respect of a debt due upon a policy.
But under section 2D the decree of a third party in such a case would be the liability of the insurer in respect of his motor insurance business which could not be realised by attachment of any part of the deposit under section 7.
Besides, even with respect to decrees of policy holders the deposit could only be attached when all other ways of realising the money have failed.
In these circumstances it can hardly be said that the fact that this deposit is there is itself a " provision otherwise " to meet the liabilities of the insurer.
The policy holder cannot attach this deposit unless he first exhausts all other means.
Even if be has got a decree and even if the insurer admits his claim and wants to pay it, he cannot do so out of the money in deposit under 'section 7.
As for third parties who may have decrees against the insurer, they can never attach this deposit in view of the provisions of section 8.
It could not be the intention of the legislature when it was in effect exempting the insurer from all the provisions of the Act on his liabilities being otherwise provided for that such provision should include the security deposit under section 7, when it has made it so difficult for a policy holder to get his debt satisfied from that deposit and when it is clear that a third party could not in any way attach the deposit.
In these circumstances we are of opinion that when section 2D provides that the insurer shall be subject to all the provisions of the Act so long as his liabilities in India in respect of the business which is closed remain unsatisfied or not otherwise provided for, the satisfaction or " provision otherwise " does not refer to the deposit under section 7 and has to be over and above that deposit.
It is true that section 9 provides that the insurer can take back the deposit after satisfying the court that he has satisfied or otherwise provided for his liabilities.
But this " provision otherwise " for the purposes of section 9 must obviously be other than the deposit itself.
Further when the insurer wants to take back his deposit on making " provision otherwise " he will have to satisfy the court that the " provision otherwise " has been fully made and the court will be in a position to investigate into the matter.
This, however, does not mean that if the insurer does 872 not want to take advantage of section 9 of the Act he can say without submitting to the terms of that section that he has made " provision otherwise ", because the deposit which is made under section 7 is more than all his liabilities of the insurance business that he has closed.
It is urged that it is hard, for example, on an insurer who has a large deposit and whose liabilities are small that he should not be able to fall back on his deposit for the purposes of section 2D.
We do not, however, see any hardship in a case of this kind, for if it is a fact that the deposit of the insurer is large and his liabilities are small he can always take advantage of section 9 of the Act and submit to an investigation by the court and take back his deposit after depositing the small sum required to meet his liabilities.
We are, therefore, of opinion that when section 2D speaks of satisfaction or " provision otherwise " for the liabilities of insurance business which is closed it contemplates such satisfaction or " provision otherwise" over and above the deposit made under section 7.
It is not in dispute in this case that there are some liabilities still pending; it is also not in dispute that they are not satisfied and no provision has been made otherwise for them irrespective of the security deposit.
This also appears to have been the position when the order was made in July, 1957.
In the circumstances the order is good and cannot be called in question by the Company.
The appeal therefore fails and is hereby dismissed with costs.
Appeal dismissed.
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The appellant company had been carrying on various classes of insurance business other than life insurance after its incorporation in 1941, but in 1956 the shareholders of the company passed a resolution by which all its insurance business was to be closed.
Accordingly, on application made by the company to the Controller of Insurance, the certificate granted to it for carrying on insurance business was cancelled with effect from July 1, 1957.
in the meantime, complaints against the company were being received by the Government of India, who, thereupon, passed an order on July 17, 1957, under section 33 of the , directing the Controller of Insurance to investigate the affairs of the company and to submit a report.
The company challenged (1)(1923) L.R. 51 I.A. 129.
(2) I.L.R. 858 the legality of the order on the grounds, (1) that as all its insurance business had been closed the Central Government had no jurisdiction to pass an order under section 33 of the Act, which only enables the investigation of the affairs of an insurer who, as defined in section 2(9), is one who is actually carrying on the business of insurance, (2) that such an order could not be sustained under section 2D of the Act as that section was applicable only to those cases where an insurer was carrying on different classes of insurance business and had closed some of them but not all of them, (3) that even if such order could be passed under section 33 read with s.2D it could not be done in the present case as the company 's liabilities did not remain unsatisfied or not otherwise provided for, and (4) that, in any case, the order in question was invalid because it did not show on the face of it that the Central Government was prima facie satisfied that the liabilities had remained unsatisfied or not otherwise provided for: Held, (1) that the word " insurer " in section 33 of the , refers not only to a person who is actually carrying on the business of insurance but also to one who has subsequently closed it.
(2) that in section 2D of the Act an " insurer " means a person who was carrying on the business of insurance but has closed it.
(3)that the word " class " in section 2D though used in the singular includes the plural also and the section is applicable to the case where an insurer who was carrying on different classes of insurance business closes all of them.
(4) that the expression " not otherwise provided for " in section 2D refers to liabilities in the nature of claims against the insurer whether the insurer admits them or not and whether a decree has been finally passed in respect of them or not.
(5) that under section 2D the satisfaction or " provision other wise " for the liabilities of insurance business which is closed, does not refer to the deposit made under section 7 and has to be over and above that deposit.
(6) that though an order under section 33 read with section 2D of the Act should show on the face of it that the Central Government was prima. ' facie satisfied that the liabilities had remained unsatisfied or not otherwise provided for, the fact that the order does not on the face of it show that the Central Government considered this aspect of the matter would not make it bad, if in subsequent ,proceedings taken to challenge it, it is shown that there were materials before the Central Government which would justify its coming to the prima facie conclusion that the liabilities had not been satisfied or otherwise provided for, and therefore an investigation into the affairs was called for.
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918.txt
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Civil Appeal No. 3165 of 1981.
From the Judgment and Order dated 20.11.1980 of the Delhi High Court in Writ Petition No. 1632 of 1980.
949 M.K. Ramamurthy, M.A. Krishnamurthy and Miss Kuttu Bansilal for the Appellant.
N.C. Talukdar and M.C. Thinner for the Respondents.
The Judgment of the Court was delivered by SEN, J.
The short point involved in this appeal by special leave from a judgment and order of the Delhi High Court dated November 20, 1980 dismissing in limine the writ petition filed by the appellant, is whether the appellate Order passed by the Director General, Border Roads Organisation dated October 14, 1980, is in conformity with the requirements of r. 27(2) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965 ( 'Rules ' for short) which have been made applicable to the personnel of the Border Roads Organisation.
The facts are that the appellant was appointed as Supervisor (Barracks & Stores) Grade I attached to 60 Road Construction Company, General Reserve Engineering Force on probation for a period of two years by an order dated July 7, 1976.
Before the expiry of the probationary period, the Chief Engineer (project) Dante by an order dated June, 24, 1978 terminated the services of appellant.
The order of termination however could not be served on the appellant as he absented himself without leave.
Thereupon, the Officer commanding by a movement order dated June 27, 1978 transferred the appellant to 19 Border Roads Task Force.
On July 1, 1978 the Officer Commanding forwarded the order of termination issued by the Chief Engineer, but on representation by the appellant, the Director General, Border Roads Organisation by order dated November 17, 1978 cancelled the order of termination presumably on a misapprehension that the period of probation having expired, no order of termination could be made.
He however directed the taking of disciplinary action against the appellant as a deserter since he had absconded from service to evade the service of the order of termination.
After a regular departmental inquiry, the appellant was served with a show cause notice under Article 311 (2) of the Constitution and after considering the representation made by him, the Chief Engineer (Project), Dante imposed on the appellant the punishment of removal from service in exercise of the powers conferred by r. 12 read with r. 11(VIII) of the Rules with effect from 950 June 10, 1980.
Against the order of removal, the appellant preferred an appeal under r. 23 of the Rules before the Director General, Border Roads Organisation.
The Director General by the impugned order dismissed the appeal observing: "After thorough examination of the facts brought out in the appeal, the DGBR is of the opinion that the punishment imposed by the CE (P) DANTAK vide his Order No. 10527/762/EIB dated 24 June 78 was just and in accordance to the Rules applicable.
He has accordingly rejected the appeal.
" Having heard the parties, we are satisfied that in disposing of the appeal the Director General has not applied his mind to the requirements of r. 27(2) of the Rules, the relevant provisions of which read as follows: "27(2).
In the case of an appeal against an order imposing any of the penalties specified in Rule 11 or enhancing any penalty imposed under the said Rules, the appellate authority shall consider.
(a) whether the procedure laid down in these rules has been complied with and if not, whether such noncompliance has resulted in the violation of any provisions of the Constitution of India or in the failure of justice; (b) whether the findings of the disciplinary authority are warranted by the evidence on the record; and (c) whether the penalty or the enhanced penalty imposed is adequate, inadequate or severe; and pass orders (i) confirming, enhancing, reducing or setting aside the penalty; or (ii) remitting the case to the authority which imposed or enhanced the penalty or to any other authority with such direction as it may deem fit in the circumstances of the case.
" 951 The word 'consider ' in rule 27 (2) implies due application of mind '.
It is clear upon the terms of r. 27(2) that the appellate authority is required to consider (1) whether the procedure laid down in the Rules has been complied with; and if not, whether such non compliance has resulted in violation of any provisions of the Constitution or in failure of justice; (2) whether the findings of the disciplinary authority are warranted by the evidence on record; and (3) whether the penalty imposed is adequate; and thereafter pass orders confirming, enhancing etc.
the penalty, or may remit back the case to the authority which imposed the same.
Rule 27(2) casts a duty on the appellate authority to consider the relevant factors set forth in cls.
(a), (b) and (c) thereof.
There is no indication in the impugned order that the Director General was satisfied as to whether the procedure laid down in the Rules had been complied with; and if not, whether such noncompliance had resulted in violation of any of the provisions of the Constitution or in failure of justice.
We regret to find that the Director General has also not given any finding on the crucial question as to whether the findings of the disciplinary authority were warranted by the evidence on record.
It seems that he only applied his mind to the requirement of cl.
(c) of r. 27(2), viz. whether the penalty imposed was adequate or justified in the facts and circumstances of the present case.
There being non compliance with the requirements of r. 27(2) of the Rules, the impugned order passed by the Director General is liable to be set aside.
It is not the requirement of article 311(2) of the Constitution of India or of the Rules of natural justice that in every case the appellate authority should in its order state its own reasons except where the appellate authority disagrees with the findings of the disciplinary authority.
In State of Madras vs A.R. Srinivasan, a Constitution Bench repelled the contention that the State Government 's order compulsorily retiring the delinquent from service was bad as it did not give reasons for accepting the findings of the inquiring tribunal and observed as follows: "Mr. Setalvad for the respondent attempted to argue that the impugned order gives no reasons why the appellant accepted the findings of the Tribunal.
Disciplinary 952 proceedings taken against the respondent, says Mr. Setalvad, are in the nature of quasi judicial proceedings and when the appellant passed the impugned order against the respondent, it was acting in a quasi judicial character.
That being so, the appellant should have indicated some reasons as to why it accepted the findings of the Tribunal; and since no reasons are given, the order should be struck down on that ground alone.
We are not prepared to accept this argument.
In dealing with the question as to whether it is obligatory on the State Government to give reasons in support of the order imposing a penalty on the delinquent officer, we cannot overlook the fact that the disciplinary proceedings against such a delinquent officer begin with an enquiry conducted by an officer appointed in that behalf.
That enquiry is followed by a report and the Public Service Commission is consulted where necessary.
Having regard to the material which is thus made available to the State Government and which is made available to the delinquent officer also, it seems to us somewhat unreasonable to suggest that the State Government must record its reasons why it accepts the findings of the Tribunal.
It is conceivable that if the State Government does not accept the findings of the Tribunal which may be in favour of the delinquent officer, and propose to imposes a penalty on the delinquent officer, it should give reasons why it differs from the conclusions of the Tribunal, though even in such a case, it is not necessary that the reasons should be detailed or elaborate.
But where the State Government agrees with the findings of the Tribunal which are against the delinquent officer, we do not think as a matter of law, it could be said that the State Government cannot impose the penalty against the delinquent officer in accordance with the findings of the Tribunal unless it gives reasons to show why the said findings were accepted by it.
The proceedings are, no doubt, quasi judicial; but having regard to the manner in which these enquiries are conducted, we do not think an obligation can be imposed on the State Government to record reasons in every case.
In Som Datta Datta vs Union of India & Ors, a Constitution Bench of this court rejected the contention that the order of the Chief 953 of the Army Staff confirming the proceedings of the Court Martial under section 164 of the Army Act and the order of the Central Government dismissing the appeal of the delinquent under sec.
165 of the Army Act were illegal and ultra vires as the did not give reasons in support of the orders, and summed up the legal position as follows: "Apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, there is no legal obligation that the statutory tribunal should give reasons for its decision.
There is also no general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision.
" To the same effect is the decision in Tara Chand Khatri vs Municipal Corporation of Delhi & Ors.
Accordingly, the appeal must succeed and is allowed.
The impugned order passed by the Director General, Border Roads Organization is set aside and he is directed to dispose of the appeal afresh after applying his mind to the requirements of r. 27(2) of the Central Civil Services (Classification, Control & Appeal) Rules, 1965, with advertence to the points raised by the appellant in his petition of leave.
There shall be no order as to costs.
N.V.K. Appeal allowed.
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The Central Civil Services (Classification, Control and Appeal) Rules 1965 by Rule 27 casts a duty on the Appellate Authority in the case of an appeal against an order imposing any of the penalties specified in Rule 11 to consider: (a) whether the procedure laid down in the rules has been complied with: and if not, whether such non compliance has resulted in violation of any of the provisions of the Constitution or in the failure of justice (b) whether the findings of the disciplinary authority are warranted by the evidence on record; and (c) whether the penalty imposed is adequate and thereafter pass orders confirming, enhancing etc.
the penalty, or remit back the case to the authority which imposed the same.
The appellant was appointed as Supervisor in the Border Roads Organisation on probation for a period of two years.
Before the expiry of the probation period, the Chief Engineer terminated this services.
The order of termination however could not be served as the appellant absented himself without leave.
He was later transferred and the Officer Commanding forwarded the order of termination to him.
On his representation the Director General cancelled the order of termination on a misapprehension that the period of probation having expired no order of termination could be made.
He, however, directed that the taking of disciplinary action against him as a deserter since he had absconded from service to evade service of the termination order.
After a regular departmental enquiry, he was served with a show cause notice under article 311(2) of the Constitution and after consideration of his representation, the Chief Engineer imposed the punishment of removal from service under Rule 12 read with Rule 11 of the Central Civil Services (Classification, Control and Appeal) Rules 1965.
948 The appeal under Rule 23 of the Rules preferred by the appellant was dismissed by the Director General observing, that 'after thorough examination of the facts brought out in the appeal, the punishment imposed upon the appellant was just and in accordance with the rules '.
The writ petition having been dismissed in limine the appellant appealed by special leave to this court.
Allowing the appeal ^ HELD: The word 'consider ' in Rule 27(2) implies 'due application of mind '.
[951A] In the instant case, there is no indication in the order that the Director General was satisfied as to whether the procedure laid down in the Rules had been complied with.
No finding has been given on the crucial question as to whether the findings of the disciplinary authority were warranted by the evidence on record.
[951C] 2.
The Director General only applied his mind to the requirement of clause (c) of Rules 27(2) viz. whether the penalty imposed was adequate or justified in the facts and circumstances of the case.
Rule 27(2) casts a duty on the appellate authority to consider the relevant factors set forth in clauses (a), (b) and (c) thereof.
[951E] 3.
There being non compliance with the requirements of Rule 27(2) of the Rules, the order passed by the Director General is set aside.
He is directed to dispose of the appeal afresh after applying his mind to the requirements of Rule 27(2) of the Rules.
[951E; 953E] 4.
It is not the requirement of article 311(2) of the Constitution of India or of the Rules of natural justice that in every case the appellate authority should in its order state its own reasons except where the appellate authority disagrees with the findings of the disciplinary authority.
[951F] State of Madras vs A.P. Srinivasan, AIR 1966 SC 1827; Som Datt Datta vs V.O.I. and Ors.
and Tara Chand Khatri v, Municipal Corporation of Delhi and Ors., AIR 1977 SC 567, referred to.
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Civil Appeal No. 1155 of 1971.
(Appeal by Special Leave from the Judgment and Order dated 17 11 1969 of the Allahabad High Court in First Appeal No. 178/61).
section C. Manchanda, Sadhu Singh, R. N. Kapoor, Mrs. Nirmala Gupta, Uzzal Singh and J. M. Khanna for the appellant.
Gobind Das, P. P. Rao, Girish Chandra and section P. Nayar for the respondents.
The Judgment of the Court was delivered by BEG, J.
This is an appeal by special leave against the judgment and order of a Division Bench of the Allahabad High Court given by it on 17th November, 1969, dismissing a plaintiff 's first appeal arising out of an original suit for a declaration that the order passed by the Commissioner of Income tax, Lucknow, on 2nd April, 1956, reducing the appellant in rank from the post of an Income tax Officer to that of an Income tax Inspector, was void and inoperative.
It appears that the appellant was in service upto 30th April 1958, when he was prematurely retired.
The appellant also claimed Rs. 20,904/ as arrears of salary, but he reduced this claim to Rs. 16,561.29.
The appellant was originally appointed on 22nd November 1922, as Lower Division Clerk, and, thereafter, promoted as Income tax Inspector in 1942.
He was promoted to the post of Income tax Officer in 1945.
His case was that he had worked to the entire satisfaction of his immediate superior officers and higher authorities and had earned a number of certificates highly appreciative of his work.
He was confirmed early in 1952 as an Income tax Officer.
He was, however, placed under suspension on 30th September, 1953, by the Commissioner of Income Tax, U.P., Lucknow, on the basis of a preliminary enquiry on allegations involving corruption and violation of service rules.
582 Charges were framed on 30th December, 1953, by Shri A. K. Bose, Deputy Director of Investigations, who was appointed by the Commissioner of Income tax as the Inquiring Officer.
The preliminary enquiry had been conducted by Shri G. section Srivastava, Inspecting Assistant Commissioner of Income tax, Meerut.
That first charge was that the appellant had entered into partnership with others, under the name of Gautam Cycle Mart, Meerut, in 1939, in contravention of the Government Servants ' Conduct Rules.
The second charge was that he had made various investments in the name of various members of his family far in excess of and disproportionate to the known sources of his income.
His high standard of living and expenditure were also mentioned there.
The third and the last charge gave particulars of thirteen assessment cases in which the appellant was alleged to be either "grossly negligent, careless, inefficient, and/or corrupt in the performance of his duties as Income tax Officer".
The appellant 's defences included alleged confused nature of charges characterized by him as "vague, over lapping, intermingled" and wrongly joined together.
He also pleaded that there had been an enquiry in 1949, by Shri A. R. Sachdeva, Asstt.
Inspecting Commissioner, into some of the matters mentioned in the charges, and about others in 1952 by Shri R. N. Srivastava, another Inspecting Commissioner, and that the appellant had been exonerated of the allegations and imputations made against him on each occasion.
One of his defences was that a fresh enquiry into the same charges was not permissible under the Departmental rules and was also barred by rules of natural justice.
He also complained of failure to give him opportunity to produce nine witnesses in his defence with some documents.
It is evident that the questions raised by the appellant depended on findings of fact.
All relevant facts had been examined by the officer who held the enquiry and by the punishing authority.
No malafides against either the Inquiring Officer, Shri A. K. Bose, Deputy Director Investigation, or against the punishing authority was alleged.
There are, however, suggestions that Shri G. section Srivastava and Shri R. N. Srivastava, Inspecting Assistant Commissioners, were pursuing the appellant for some unknown reason which we do not find stated anywhere.
We fail to see how these two officers, who neither conducted the actual departmental trial nor could have any influence over the punishing authority, could cause any miscarriage of justice or do anything to vitiate the departmental trial merely because they held preliminary inquiries before framing charges.
The defence of the appellant seemed something similar to the much too common a defence of the accused in criminal trials attributing all their misfortunes to the hostility of the police.
583 The question whether the appellant was given a reasonable opportunity to lead evidence and to be heard or not is largely a question of fact.
It is only when an opportunity denied is of such a nature that the denial contravenes a mandatory provision of law or a rule of natural justice that it could vitiate the whole departmental trial.
Prejudice to the government servant resulting from an alleged violation of a rule must be proved.
The plea that the appellant has been subjected to trial on allegations which had been the subject matter of previous enquiries overlooks that no charge was framed as a result of any previous enquiry.
Therefore, the two authorities cited: The State of Assam & Anr.
vs J. N. Roy Biswas, and R. T. Rangachari vs Secretary of State, do not help the appellant.
If an inquiry is held, at a particular stage, possibly to determine whether regular proceedings should be drawn up or started, it does not debar a departmental trial.
That was the nature of the previous enquiries.
It appears that it is only after the appellant 's activities had become more notorious that further enquiry was undertaken and regular charges framed.
It is possible that the appellant may have been emboldened by the failure of officers to report earlier that charges should be framed and tried.
In any case, this could not stand in the way of the first regular enquiry in the course of which charges were actually framed and fully enquired into by Officers whose integrity and sense of justice is not challenged.
As for the denial of the opportunity to produce nine witnesses in defence, all that is suggested is that these witnesses could only state what opinions they had formed about the work, efficiency, and integrity of the appellant.
They could not say anything about the particular instances which formed the subject matter of the charges against the appellant.
It is not uncommon for astute Govt.
servants, facing such enquiries, to give long lists of witnesses and documents so as to either prolong an enquiry or to prepare grounds for future litigation.
Unless the exclusion of evidence is of a kind which amounts to a denial of natural justice or would have affected the final decision it could not be material.
In the case before us, it has not even been shown how the witnesses whose production was said to have been disallowed could help the appellant 's case on specific charges.
Indeed, we do not know whether any evidence which the appellant tried to produce was really wrongly excluded and at what stage and for what reasons.
All these are questions of fact which should be, initially, raised in the departmental trial.
After that, if there was any patent error a writ petition lay.
Finally, the 584 trial Court and the High Court had considered at some length all relevant questions raised.
Learned Counsel for the appellant has handed over a very carefully and laboriously prepared statement of facts of the case to show us that the evidence did not support the charges levelled against the appellant.
It was also submitted that, apart from the charges relating to partnership in the Gautam Cycle Mart, no other charge was found substantiated.
Furthermore, it was submitted that, after the inquiring officer had found that the Gautam Cycle Mart was started in 1942 and not in 1939, the appellant should have been given a further opportunity to meet a new case.
No rule was cited in support of such a technical objection to the nature of the charge which would cover the starting of the Gautam Cycle Mart at any time subsequent to 1939 also.
In any case, it was for the appellant to satisfy the Departmental authorities, which had looked into the case upto its final stages, that he had suffered some injustice which to be set right.
He had been given a second opportunity by the punishing authority before it inflicted the punishment of demotion.
Nothing further was required by law.
And, it was probably because the appellant was absolved of charges involving corruption in the discharge of his duties that he was given the lesser punishment of demotion and neither dismissed nor removed from service.
A suit challenging the validity of departmental proceedings cannot be treated as an appeal from the findings in the departmental proceedings or the punishment inflicted upon the Govt.
servant even if these are erroneous.
A question which could effect the result in a civil suit has to be of such nature that it goes to the root of the jurisdiction and the conduct of the department trial and vitiates the result.
It is only if the departmental proceeding in null and void that a plaintiff in such a suit could obtain the relief he had asked.
We are unable to see what point had been raised by the appellant which could have had that effect upon the departmental proceedings.
In Smt.
Ujjam Bai vs State of & Anr.
, this Court said (at P. 835): "A tribunal may lack jurisdiction if it is improperly constituted, or if it fails to observe certain essential preliminaries to the inquiry.
But it does not exceed its jurisdiction by basing its decision upon an incorrect determination of any question that it is empowered or required (i.e.) has jurisdiction to determine".
After citing a passage from Halsbury 's Laws of England, 3rd Edn.
11, page 59, this Court held (at p. 836): 585 The characteristic attribute of a judicial act or decision is that it binds, whether it be right or wrong.
An error of law or fact committed by a judicial or quasi judicial body cannot, in general, be impeached otherwise than on appeal unless the erroneous determination relates to a mauer on which the jurisdiction of that body depends.
These princi ples govern not onnly the findings of inferior courts stricto strictio also the findings of administrative bodies which are deemed be acting in a judicial capacity.
Such bodies are deemed to have been invested with power to err within the limits of their jurisdiction; and provided that they keep within those limits, their decisions must be accepted as valid unless set aside on appeal".
Learned Counsel for the appellant said all that could possibly be said on behalf of his client.
He pointed out that the High Court had given its judgment eight months after it had heerad argumenst.
He urged that the result was that the High Court did not deal with a number of submissions made because they had, apparently, been forgotten.
The Civil Procedure Code does not provide a time limit for the period between the hearing of arguments and the delivery of a judgment.
Nevertheless, we think that an unreasonable delay between hearing of arguments and delivery of a judgment, unless explained by exceptional or extraordinary circumstances, is highly undesirable even when written arguments are submitted.
It is not unlikely that some points which the litigant considers importan may have escaped notice.
But, what is more important is the litigants must have complete confidence in the results of litigation.
This confidence tends to be shaken if there is excessive delay between hearing of arguments and delivery of judgments.
Justice, as we have often observed, must not only be done but must manifestly appear to be done.
On 4th March, 1971, however, the High Court refusing the certificate of fitness of the case for appeal to this Court observed that questions had been attempted to be raised before it in asking for certification which had not been argued at the time when the first appeal was heard by the High Court.
We find that one of the learned Judges who dismissed the application for a certificate of fitness of the case had also heard the arguments in the first appeal.
There is no affidavit before us that any particular points argued before the Division Bench had not been referred to or dealt with by the Bench.
Moreover, the Division Bench had probably not dealt with all arguments on questions of fact because it did not consider it necessary to do so.
After all, it was not hearing an appeal against the findings of the departmental authorities.
It pointed this out.
Furthermore, after hearing the arguments of the learned Counsel for the appellant, we are ourselves unable to see any point which could be raised on behalf of the appellant capable of vitiating the departmental proceedings.
Unless such a point could be raised, there could be no declaration that the departmental proceedings were null and void.
There is also an application before us for revocation of grant of special leave to appeal by this Court on the ground that some material 586 facts were suppressed or misrepresented for the purpose of obtaining special leave.
Although the special leave petition does not state that all the points sought to be raised by it were not argued before the Division Bench, this is not enough to merit cancellation of the special leave to appeal which was granted by this Court.
At the time of grant of special leave, the order refusing grant of certificate of fitness of the case for appeal to this Court must have been before this Court.
We are unable now to see the point on which special leave was granted.
But, that too would not, by itself, merit a revocation of special leave at this stage after hearing arguments.
We, therefore, dismiss both the appeal and the application for revocation of special leave.
Parties will bear their own costs.
P.B.R. Appeal dismissed.
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After holding a departmental enquiry on certain charges of contravention of Government Servants ' Conduct Rules, the appellant was reduced in rank.
His suit for a declaration that the impugned action was void and inoperative was dismissed.
The High Court dismissed his appeal.
On appeal, it was contended that the departmental enquiry was vitiated on account of material irregularities, and that, as a result of excessive delay, between the date of hearing and delivery of judgment by the High Court, it did not deal with a number of submissions made by him and thereby caused prejudice.
Dismissing the appeal to this Court, ^ HELD: (1)(a) The question whether the appellant was given a reasonable opportunity to lead evidence and was sufficiently heard or hot is largely a question of fact.
It is only when an opportunity denied is of such a nature that the denial contravenes mandatory provision of law or a rule of natural justice that it could vitiate the whole departmental trial.
Prejudice to the Government servant from an alleged violation of a rule must be proved.[583C] (b) The plea that the appellant had been subjected to trial on allegations which had been the subject matter of previous enquiries overlooks that no charge was framed as a result of any previous enquiry.
If an enquiry was held at a particular stage, possibly to determine whether regular proceedings should be drawn up or started, it did not debar a departmental trial.
[583D] State of Assam & Anr.
vs J. N. Roy Biswas ; and R. T. Rangachari vs Secretary of State, AIR 1937 PC 27, held inapplicable.
(c) It was not shown whether any evidence which the appellant tried to produce was really wrongly excluded and at what stage and for what reasons.
All these are questions of fact which should be raised in the departmental trial.
After that if there was any patent error a writ petition lay.
[584A] (d) A suit challenging a departmental proceeding cannot be treated as an appeal from the findings in those proceedings or against a punishment inflicted upon the Government servant even if these were erroneous.
A question which could affect the result in a civil suit has to be of such a nature that it goes to the root of the jurisdiction that the conduct of the departmental trial illegally and vitiates the result.
It is only if the departmental proceeding is null and void that a plaintiff could obtain the reliefs he had asked for.
[584E F] Smt.
Ujjam Bai vs State of U.P. & Anr.
[1963] 1 S.C.R. 778 @ 835, 836, referred to.
(e) Unless a point could be raised on behalf of an appellant which is capable of vitiating the departmental proceedings there could be no declaration that the departmental proceedings were null and void.
[585H] 581 (2) The Civil Procedure Code does not provide a time limit for the period between the hearing of arguments and the delivery of a judgment.
Nevertheless, an unreasonable delay between the hearing of arguments and delivery of judgment, unless explained by exceptional or extraordinary circumstances, is highly undesirable even when written arguments were submitted.
It is not unlikely that some points which the litigant considered important might have escaped notice.
But, what is more important is that litigants must have complete confidence in the results of litigation.
This confidence tends to be shaken if there excessive delay between hearing of arguments and delivery of judgments.
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Civil Appeal NO 900 of 1987 From the Judgment and order dated 12.2.1987 of the Calcutta High Court in Matter No. 676 of 1978.
Dr. Y.S. Chitale, Anil Mitra, P.H. Parekh, D. Chandfachud, S.C. Ghosh and R.K. Dhil1on for the Appellants.
K. Parasaran Attorney General for Union of India.
498 K.N. Bhat, A. Subba Rao and Miss Madhu Moolchandani for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
I had the advantage of reading in draft the judgment proposed to be delivered by my learned Brother Ranganathan, J.
It is, however, necessary to add a few sentences.
I was reluctant to take up this matter as it arises out of a decision of the Division Bench of the High Court of Calcutta.
That decision was occasioned by a reference made by the Chief Justice of that High Court on a reference made by me to the Chief Justice sitting singly in that Court.
In the High Court I had not expressed any view on the contentions urged.
In those circumstances both the parties requested me to take up the matter.
It was in these circumstances that I became a party to this judgment.
I agree with my learned Brother that the appeal should be dismissed and the order he proposes to make as to costs.
It is not necessary in view of the facts and circumstances of the case to refer in detail to the reasons.
I would, however, make it clear that I prefer the view of the Division Bench of the Madhya Pradesh High Court in the case of L.S. Nair vs Hindustan Steel Ltd. Bhilai, AIR 1980 MP 106.
I would prefer this view in preference to that of the F. Iearned Single Judge of the Bombay High Court in Miscellaneous Petition No. 458/79 Elliot Waud Hill (P) Ltd. vs Life Insurance Corpn.
Further, it is necessary to reiterate that in this case we have proceeded on the short question canvassed before the Division Bench of the High Court out of which this appeal arises, i.e., whether the impugned Act which provides for eviction of unauthorised occupants from public premises to the extent it has been extended to premises belonging or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Govt.
is ultra vires or beyond the legislative power of the Parliament to extend the applicability of the Act to such premises.
It is only this question which was mooted before the High Court and required consideration by us under Article ,136 of the Constitution.
It is, therefore, not necessary to express any view on any other aspect of the matter.
Furthermore, as has been emphasised by my learned Brother there was no dispute as to whether the premises in the present appeal is a public premises.
Therefore, the question whether the premises in question or of this type is a public premises is not an aspect into which we were required to go.
499 For the purpose of this appeal once it is held that the Public Premises (Eviction.
Of Unauthorised occupants) Act, 1971 is intra vires the Parliament, no further issue between the parties survive because no other contention was raised before the Division Bench of the High Court and also in this appeal under Article 136 of the Constitution, no other issue can be canvassed.
It is, therefore, not necessary, in my opinion, to consider whether the provisions of 1971 Act even if intra vires would prevail upon the provisions of the State legislation.
Hence, for the purpose of this appeal it is unnecessary to express any view on the amplitude and scope of Article 254 of the Constitution.
Indu Bhusan Bose vs Rama Sundari Devi & Anr., ; is a decision of five learned Judges of this Court affirming the Calcutta view which held that the legislation in question in that case was to be found in Entries 6, 7 & 13 of List III of the 7th Schedule of the Constitution and neither in Entry 18 of II Schedule nor in Entry 3 of II Schedule of the Constitution.
It rejected the Bombay view expressed in ,4.
C. Patel vs Vishwanath Chadda, ILR Respectfully, it has to be taken that the legislation in question must be understood in its pith and substance and so understood the Act in question in the instant case, is in respect of transfer of property other than agricultural land and, as such, falls in Entry 6 of List III of the 7th Schedule to the Constitution.
It is clear from the said decision and the subsequent decision reaffirming the same view in V. Dhanapal Chettiar vs Yesodai Ammal, ; that the subject matter of housing accommodation and control thereof falls within the purview of concurrent list.
In that view of the matter, it cannot in my opinion, be canvassed that the 197 1 legislation in question was beyond the competence of the legislature.
With these observations I agree with respect with my learned Brother that the appeal should be dismissed without any order as to cost section RANGANATHAN, J. The first appellant is a private limited company.
The company is occupying a portion of premises No. 18, Russel Street, Calcutta.
The premises belong to the United Commercial Bank, a statutory corporation constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970.
The appellant company claims to be the tenant of the Bank but this is not admitted by the respondent Bank.
The Bank alleges that the appellant company, when somewhat differently constituted, had been allowed to occupy a portion of the Bank 's premises as licensee in consideration of 500 certain accountancy and secretarial services which it was required to render to the Bank.
It appears that sometime in 1975 the respondent Bank issued a notice of eviction to the appellant company under Section 13(6) of the West Bengal Premises Tenancy Act, 1956 (hereinafter referred to as 'the 1956 Act ').
Subsequently, however, the Bank issued a notice dated 4.2.1977 to the appellants under the Public Premises (Eviction of Unauthorised occupants) Act, 1971 (hereinafter referred to as 'the 1971 Act '), which is an Act of Parliament.
The appellants thereupon filed a writ petition in the Calcutta High Court being Matter No. 676 of 1978.
Though several contentions appear to have been raised in the writ petition, the judgment of the Division Bench of the Calcutta High Court dated 12th February, 1987, (which is the one presently under appeal) records that "the only question which has been mooted and agitated before us is whether the impugned Act which provides for eviction of unauthorised occupants from public premises to the extent it has been extended to premises belonging or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Government is ultra vires as it was beyond the legislative power of the Parliament to extend the applicability of the said Act to such premises." Though the appellants are interested only in denying the legislative power of Parliament in so far as it purports to extend the applicability of the 1971 Act to premises belonging to or taken on lease by what may be described as public sector corporations, the contention as urged is somewhat broader.
The argument goes to the extent of urging that only the State legislatures, and not Parliament, is competent to legislate on the topic of landlordtenant relationships in respect of land and buildings.
This has been the principal contention addressed to us by Dr. Chitale appearing on behalf of the appellants.
The 1971 Act received the assent of the President on 23rd August, 1971 but it is deemed to have come into force on the 16th day of September, 1958 for certain 'historical ' reasons which are not relevant for our purposes.
The Act provides for the eviction of 'unauthorised occupants from public premises and for certain incidental matters.
section 2(c) defines premises ' to mean 'any land or any part of a building and to include garden, grounds and outhouses appurtenant to the building or fittings affixed thereto '.
The expression 'public premises ' has been defined in Section 2(e) of the Act.
This definition is in three parts.
Sub clause ( 1) of clause (e) takes in premises belonging to, or taken on lease or requisitioned by, or on behalf of, the Central Government, as well as premises placed by that Government under the control of either House of Parliament for providing residential 501 accommodation to the members of the staff of the Secretariat of either House of Parliament.
Sub clause (3) of clause (e) takes in premises belonging to certain local authorities in the Union Territory of Delhi.
Sub clause (2) of clause (e) brings in premises belonging to or taken on lease by, or on behalf of, various kinds of bodies, such as Universities, Institutes of Technology, Board of Trustees of Major Port Trusts and the Bhakra Management Board.
It takes in any premises belonging to or taken on lease by, or on behalf of, a Government company or its subsidiary.
It also takes in and this is what we are concerned with here premises of "any corporation (not being a company as defined in section 3 of the or a local authority) established by or under a Central Act and onwed or controlled by the Central Government".
There is no dispute that the premises in question in the present appeal is "public premises" within the meaning of the Act.
The Act contemplates the appointment of an Estate officer who is a high placed officer of the Government or of the relevant statutory authority in respect of public premises controlled by that authority.
The Act enables the Estate officer to call upon "unauthorised occupants" of public premises (meaning persons occupying such premises without authority or continuing in occupation after the authority to do so has expired or has been determined for any reason) to show cause why they should not be evicted and to proceed to evict them, if need be, after considering the cause, if any, shown by the persons concerned in response to a notice served on them.
It also contains powers to remove unauthorised constructions, demolish unauthorised constructions, dispose of property left on public premises by unauthorised occupants, require payment of rent or damages in respect of public premises and so on.
An order passed by the estate officer, under the provisions of the Act, is appealable, the appellate authority being the District Judge or such other judicial officer of not less than 10 year 's experience as a District Judge and subject to the above right of appeal, the orders passed by the estate officer are final.
Section 15 bars the jurisdiction of Courts to entertain any suits or proceedings in respect of, inter alia, the eviction of any person who is in unauthorised occupation of public premises.
This, broadly, is the outline of the 1971 Act.
Before proceeding to deal with the contentions urged before us, it is necessary to refer to two more enactments, which have a bearing on the topic of discussion before us.
It has been mentioned earlier that the Bank had served a notice on the appellants under the 1956 Act.
This Act, which received the H 502 assent of the President on 30th March, 1956, is on the pattern of the lease and rent control legislation prevalent in various States.
It regulates, inter alia, the matter of eviction of tenants of buildings situated in Calcutta and certain important cities and localities of the State where there is scarcity of housing accommodation.
It is not necessary to set out the provisions of this Act except one.
Under the second proviso to section 1(3) the Act is not to apply to (a) any premises belonging to any local authority, (b) any premises belonging to or requisitioned by Government and (c) any tenancy created by Government in respect of any premises taken on lease by Government.
The premises in the present case does not fall within any of these categories and, according to the appellants before us, the provisions of 1956 Act were squarely applicable and should have been resorted to by the Bank for evicting them.
This is one.
The other relevant statute is the West Bengal Public Land (Eviction of Unauthorised occupants) Act, 1962, (hereinafter referred to as 'the 1962 Act ').
This legislation is on the same pattern as the 1971 Act, a pattern which appears to have been in existence in various States, conferring special powers on statutorily named officers to evict unauthorised occupants of public premises.
The definitions of 'land ', 'public land ' and 'unauthorised occupation ' contained in sections 2(2), 2(7) and 2(8) are so wide as to leave no doubt that the premises belonging to the Bank would be within the scope of the said Act and that proceedings for eviction of the appellants could also be initiated by the Collector under that Act.
It thus appears that the procedure for the eviction of the petitioners will be governed by the 1971 Act as well as either or both of the State Acts and the question is, which of these will prevail? The appellants urge that a legislation of this type will fall within the legislative field exclusively open to the State legislatures and that the 1971 Act is ultra vires Parliament in so far as it purports to affect the appellants ' rights.
It will be convenient, at this stage, to set out all the relevant entries in the Seventh Schedule of the Constitution that may have a bearing on the discussion before us along with the corresponding entries under the 7th Schedule to the Government of India Act, 1935.
These are: CONSTITUTION 1935 ACT List I Union List List I Federal List ENTRY 3 ENTRY 2 Delimitation of cantonment Naval, military and air force works; 503 areas, local self government local self government in cantonment in such areas, the consti areas, the constitution and powers tution and powers within within such areas of cantonment such areas of cantonment authorities, the regulation of house authorities and the regula accommodation in such areas, and the tion of house accommodation delimitation of such areas.
including the control of rents in such areas.
ENTRY 10 ENTRY 32 Works, lands and buildings vested Property of the Union and in, or in the possession of, His the revenue therefrom, but Majesty for the purposes of the as regards property situated Dominion (not being naval, military in a State* * * subject to or air force works), but? as regards legislation by the State, save property situate in a Province, in so far as Parliament by law subject always to Provincial otherwise provide.
legislation, save in so far as Dominion law otherwise provides, and, as regards property in an Acceding State held by virtue of any lease or agreement with that State, subject to the terms of that lease or agreement.
ENTRY 43: ENTRY 33: Incorporation7 regulation Corporations, that is to say, the and winding up of trading incorporation, regulation and corporations, including winding up of trading corporations, banking, insurance and including banking, insurance and financial corporations hut financial corporations, but not not including co operative including corporations owned or societies.
controlled by an Acceding State and carrying on business only within that State or co operative societies, and of corporations, whether trading or not, with objects not confined to one unit, ENTRY 44: but not including universities.
Incorporation, regulation and winding up of corpora tions, whether trading or not, with objects not confined to one State, but not including universities.
504 LIST II STATE LIST LIST II PROVlNClAL LIST ENTRY 18: ENTRY 21: Land, that is to say, rights Land, that is to say, rights in or over land, land tenun in or over land, land tenures, including the relation of including the relation of landlord and tenant, and the landlord and tenant, and the collection of rents; transfer collection of rents; transfer, and alienation of agricultural alienation and devolution of land; land improvement a agricultural land; land agricultural loans; improvement and agricultural colonization.
loans; colonization; courts of Wards; encumbered and attached estates; treasure trove.
List 111 CONCURRENT LIST LIST 111 CONCURRENT LIST ENTRY 5: ENTRY 7: Marriage and divorce; infants, Wills, intestacy, and succession, and minors; adoption; wills save as regards agricultural intestacy and succession; land.
joint family and partition; all matters in respect of which parties in judicial proceedings were immedia tely before the commencement of this Consti tution subject to their personal law.
ENTRY 6: ENTRY 8: Transfer of property other Transfer of property other than agricultural land; than agricultural land; regis registration of deeds and tration of deeds and documents.
documents.
ENTRY 7: ENTRY 10: Contracts, including part Contracts, including partnership, ship, agency, contracts of agency, contracts of carriage, carriage, and other special and other special forms of forms of contracts, but not contracts,but not including including contracts relating contracts relating to agricultural land.
to agricultural land.
505 One thing may be made clear at the outset.
The present argument may not have been open to the appellants if the premises of the bank could be said to be premises belonging to the Union Government.
In that case, the legislation to the extent it governs such premises can be said to fall under entry 32 of List I as one covering the "property of the union".
Though, the premises being situated in Calcutta, any legislation under that entry in regard thereto would be subject to State legislation, the State legislation can only govern "save in so far as Parliament by law otherwise provides".
Parliament having provided otherwise by the 1971 Act, that Act will, it can be said, prevail over the 1956 and 1962 Acts.
It is, however, common ground before us that though the Bank is a corporation wholly owned and controlled by the Government, it has a distinct personality of its own and its property cannot be said to be the property of the Union.
The position, indeed, is beyond the pale of controversy after the decisions of this Court in Bacha.
F.Guzdarv.
C. r. T.; , ; State Trading Corporation of India Ltd. vs C.T.O.,[1964] 4 S.C.R. 99; A.P. State Road Transport Corporation vs I.T.O. [1964] 7 S.C.R. 17; Heavy Engineering Mazdoor Union vs State, ; Vidarbha Housing Board vs I. T. O.,[1973] and Western Coalfields Ltd. vs Special Area Development Authority, ; It is, therefore, not possible for the respondents to support the legislation, qua the premises in question, under Entry 32 of List I. Entry 32 of List I being out of the way, Dr. Chitale, appearing on behalf of the appellants, contends that the legislation squarely falls under Entry 18 of List II.
He points out that judicial decisions have given the word `land ' in Entry 18 a very wide interpretation so as to comprehend not only land of all types rural or urban, agricultural or non agricultural, vacant or built up but also `buildings ' put up thereon.
Since the entry specifically includes the relationship of landlord and tenant, there can be no doubt that tenancy legislations pertaining to land and buildings derive their authority from Entry 18.
He referred in this context inter alia, to Manohar vs C. Desai, AIR 1951 Nag 33; A. C. Patel vs Vishwanath Chadda, ILR , Raman Doss v State, AIR 1954 ALL 707; Darukhanawala vs Khemchand, ILR ; M. Karuna vs State, AIR 1955 Nag.
153; Kevalchand vs Dashrathlal, I.L.R. ; Sukumar Dutta vs Gauriskanker, ; Raval & Co. vs Ramackandran, AIR 1967 Mad. 57 and a detailed and comprehensive judgment of Parekh J. in Elliot Waud and Hill P. Ltd. vs L.I.C., [1980] Bom.
C.R. 590 Which we are informed is pending consideration on appeal, before a Full Bench of the Bombay High Court.
We do not, however, propose to discuss 506 these cases at length firstly, because there is a contrary line of decisions also vide Mangtulal vs Radheshyam, AIR 1953 Pat.
14; Milap Chand vs Dwarakadas, AIR 1954 Raj. 252; Nawal Mal vs Nathu Mal, AIR 1962 Raj 193, Rama Sundari vs Indu Bhushan, AIR 1967 Cal 355; L.S. Nair vs Hindustan Steel Ltd., AIR 1980 M.P. 106 and Bapalal & Co. vs Thakur Das, AIR 1982 Mad. 309 and the judgment presently under appeal and secondly, because a question as to the interpretation of Entry 18 (or its predecessor, Entry 21 of the Provincial List under the Government of India Act, 1935, (hereinafter referred to as 'the 1935 Act ') had arisen before the Federal Court and the Privy Council and some of the above judgments have also been considered in certain earlier decisions of this Court.
It would, therefore, be appropriate to refer to these decisions: (1) The earliest of the decisions relevant in this context is the decision of the Federal Court in United Provinces vs Atiga Begum, That case was concerned with the interpretation of Entry 21 of List II in the Seventh Schedule to the Government of India Act, 1935.
It raised the issue of the validity of the United Provinces Regularisation of Remissions Act (14 of 1938).
In view of an unprecedented fall in the prices of agricultural produce, the United Provinces Government directed a remission in the rents payable by tenants to their landlords.
But this remission was declared by the High Court to be unauthorised and inoperative as being in contravention of the provisions of the Agra Tenancy Act, 1926.
The Provincial Legislature, therefore, passed the impugned Act which precluded any question as to the validity of the orders of remission being raised in courts.
This Act was held by a Full Bench of Allahabad High Court to be ultra vires the Legislature.
The Provincial Government appealed to the Federal Court.
The Federal Court held that the legislation was clearly governed by Entry 21.
The learned Chief Justice observed: "The subjects dealt with in the three legislative lists are not always set out with scientific definition.
It would be practically impossible for example to define each item in the Provincial List in such a way as to make it exclusive of every other item in that List, and Parliament seems to have been content to take a number of comprehensive categories and to describe each of them by a word of broad and general import.
In the case of some of these categories such as "Local Government", "Education", "Water", "Agriculture" and "Land", the general word is amplified and explained by a number of example or illustrations, some of 507 which would probably on any construction have been held to fall under the more general word, while the inclusion (of) others might not be so obvious.
Thus "Courts of Wards" and 'treasure trove ' might not ordinarily have been regarded as included under the head "Land", if they had not been specifically mentioned in item no 21.
I think, however, that none of the items is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
I deprecate any attempt to enumerate in advance all the matters which are to be included under any of the more general descriptions; it will be sufficient and much wiser to determine each case as and when it comes before this Court.
" The Court then proceeded to hold that, if the Provincial Legislature could legislate in respect of collection of rents, it must also have the power to legislate with respect to any limitation on the power of a landlord to collect rents, that is to say, with respect to the remission of rents as well as to their collection.
(2) The next decision, on certain observation in which Dr. Chitale placed considerable reliance is that of the Privy Council in Megh Raj vs Allah Rakhia, AIR 1947 PC 72.
In that case the question was whether the Punjab Restitution of Mortgaged Lands Act, an Act of the Punjab Legislature, was void as being ultra vires of the Punjab Legislature.
The Act applied to mortgagees in possession of certain lands.
The expression 'land ' was defined as "land which is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes subservient to agriculture or for pasture" and included, inter alia, "the sites of buildings and other structures on such lands.
" The object of the impugned Act was the relief of mortgagors by giving them restitution of the mortgaged premises on conditions more favourable than those under the mortgage deed and by providing for a procedure before the Collector which was more summary than that before the ordinary Courts.
The contention before the Privy Council, on behalf of the Punjab Province, was that the provisions of the impugned Act were traceable to item 21 supplemented, it need be, by item 2 of the Provincial Legislative List of the 1935 Act.
The appellants, on the other hand, contended that the impugned Act went beyond the limits of the Legislative powers of the Province under list II and could not be supported by invoking the 508 powers of the Province under List III (i.e. Entries 4, 7, 8 and 10 corresponding to Entries 13, 5, 6 and 7 of List III under the Constitution).
It was pointed out that certain provisions of the impugned Act were repugnant to the provisions of the Indian Contract Act and the Code of Civil Procedure.
The Judicial Committee came to the conclusion that the legislation was clearly covered by Entry 21 in List III.
In so holding, they observed: "The key to item 21 is to be found in the opening word "land".
That word is sufficient in itself to include every form of land, whether agricultural or not.
Land indeed is primarily a matter of provincial concern.
The land in each Province may have its special characteristics in view of which it is necessary to legislate, and there are local customs and traditions in regard to land holding and particular problems of provincial or local concern which require provincial consideration.
It would be strange if the land in a province were to be broken up into separate portions some within and some outside the legislative powers of the province.
Such a conflict of jurisdiction is not to be expected.
Item 21 is part of a constitution and would on ordinary principles receive the idest construction, unless for some reason, it is cut down either by the terms of Item 21 itself or by other parts of the constitution which has to be read as a whole.
As to Item 21 "land", the governing word is followed by the rest of the item, which goes on to say, "that is to say".
These words introduce the most general concept "rights in or over land." "Rights in land" must include general rights like full ownership or leasehold or all such rights.
"Rights over land" would include easements or other collateral rights, whatever form they might take.
Then follow words which are not words of limitation but of explanation or illustration, giving instances which may furnish a clue for particular matters; thus there are the words "relation of landlord and tenant and collection of rents.
" These words are appropriate to lands which are not agricultural equally with agricultural lands.
Rent is that which issues from the land.
Then the next two sentences specifically refer to agricultural land, and are to be read with item 7, 8 and 10 of List 3.
These deal with methods of transfer or alienation or devolution which may be subject to federal legislation but do not concern the land itself, a sphere in which the provincial and federal powers are con 509 current, subject to the express exception of the specific head of agricultural land which is expressly reserved to the provinces.
The remainder of Item 21 specifies important matters of special consequence in India relating to land.
The particular and limited specification of agricultural land proves that "land" is not used in Item 21 with restricted reference to agricultural land but relates to land in general.
Item 2 is sufficient to give express powers to the provinces to create and determine the powers and jurisdiction of Courts in respect of land, as a matter ancillary to the subject of item 21.
It is next necessary to consider the terms of the impugned Act, which it is said is ultra vires of the Province, and compare them with the terms of the constitution just quoted.
But before that is done, it may be observed that there is no express provision in the constitution referring by name to mortgages, though mortgages are of particular importance in India as a subject of ordinary business life and of litigation and of legislation.
But a constitution does not generally deal with particular transactions or types of transactions, and mortgages of land would, in their Lordships ' judgment, as a matter of construction, properly fall under Item 21 in so far as they are mortgages of land, though in certain aspects they include elements of transfer of property and of contract.
But they form a type of transaction which may properly be regarded as sui generis, incidental to land and included within Item 21 except in so far as they fall within Items 8 and 10 of List 3 which again contain an express exception in the case of agricultural land.
Their Lordships cannot accept the view that so important a subject as mortgages was left out of the Constitution and merely left to the Governor General 's powers under section 104, Constitution Act as a residual subject.
So far as land at least is concerned, Item 21 would include mortgages as an incidental and ancillary subject.
The impugned Act, as already explained, has the main purpose of giving relief to mortgagors by enabling them to obtain restitution of the mortgaged lands on terms less onerous than the mortgage deeds require.
It is limited to existing mortgages of land as defined in section 3, effected prior to 8.6.1901.
That definition restricts it to land "occupied or 510 let for agricultural purposes or for purposes subservient to agriculture or for pasture".
The addition of the word "pasture" has been relied on as extending the scope of the Act beyond agriculture, but pasture is certainly "land" within Item 21 or Item 3.
It may have been mentioned ex abundanti cautela but in any case it is sufficiently allied to agriculture generally to be treated as a species of agricultural land or at least as land occupied or let for purposes subservient to agriculture and as such within the general scope of an Act dealing with agricultural land.
Section 3 of the Act goes on, it is true, to give a number of specific types of land which are included, but they are all governed by the controlling words of sub.s.(1) which limits the whole Act to agricultural land in the sense already stated.
Thus head (b) of sub s (1) of section 3, must be read as referring to an estate or holding in the only class of land with which the Act deals.
The same is true of all the other heads in the sub section, dues, rent, water rights, occupancy, trees, all come within the category of rights in or over land within Item 21 List 3, and all are governed by the same controlling reference to agriculture or agricultural purposes.
This reading of the section is supported by the qualification of trees as trees standing on such land, that is agricultural land.
Section 7 and 8 of the impugned Act embody its main substantive provisions for the refief of mortgagors and need not be repeated here.
The rest of the Act deals with ancillary matters like procedure which fall within the powers given by Item 2 and also by Item 21.
If, as their Lordships think, the impugned Act is limited to agricultural land, items, 7, 8 and 10 of List III do not affect the position at all since agricultural land is excluded in these entries.
But, in any event, the Act does not deal with wills or transfer of property at all; it does certainly deal with mortgages but, as their Lordships have already stated, mortgage though not expressly mentioned in the Constitution, are properly to be classed not under the head of contracts, but as special transactions ancillary to the entry of "land" (3) The next decision of this court to which our attention is drawn is the decision of this court in Atma Ram vs State of Punjab, [1959] (Suppl.
1) SCR 748.
The poini in controversy in this decision 511 was the constitutional validity of the Punjab Security of Land Tenures Act (10 of 1953) as amended by Act 11 of 1955, which sought to provide for the security of land tenure and other incidental matters.
The impugned Act admittedly dealt with holdings as defined in the Punjab Revenue Act, 1887.
It limited the area which might be held by a land owner for the purpose of self cultivation and released surplus area to be utilised for resettling ejected tenants.
Section 18 conferred upon tenants the right to purchase from the land owners the lands held by them and thus themselves to become the land owners at prices which would be below the market value.
The land owners affected by the impugned Act contended that under Entry 18 of List II of the Seventh Schedule to the Constitution the State Legislature was incompetent to enact a law limiting the extent of land to be held by a land owner and that the provisions of the impugned Act contravened their fundamental rights.
On the question of the legislative competence the Court made the following observations: "At the outset, it is necessary to deal with the question of legislative competence, which was raised on behalf of some of the petitioners, though not on behalf of all of them.
This argument of want of legislative competence goes to the root of the impugned Act, and if it is well founded, no other question need be gone into.
It has been argued that Entry 18 of List II of the Seventh Schedule to the Constitution, should not be read as authorising the State Legislature to enact a law limiting the extent of the land to be held by a proprietor or a landowner.
Entry 18 is in these words:" " 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." "It will be noticed that the Entry read along with article 246(3) of the Constitution, has vested exclusive power in the State to make laws with respect to "rights in or over land, land tenures including the relation of landlord and tenant . ".
The provisions of the Act set out above, deal with the landlord 's rights in land in relation to his tenant, so as to modify the landlord 's rights in the land, and correspondingly, to expand the tenant 's rights therein.
Each of the expressions "rights in or over land" and "land 512 tenures", is comprehensive enough to take in measures of reforms of land tenures, limiting the extent of land in cultivating possession of the land owner, and thus, releasing larger areas of land to be made available for cultivation by tenants.
Counsel for some of the petitioners who challenged the legislative competence of the state Legislature, were hard put to it to enunciate any easily appreciable grounds of attack against Entry 18 in List II of the Seventh Schedule.
It was baldly argued that Entry 18 aforesaid was not intended to authorise legislation which had the effect of limiting the areas of land which could be directly held by a proprietor or a land owner.
It is difficult to see why the amplitude of the words "rights in or over land" should be cut down in the way suggested in this argument.
" In support of its conclusion, the Court referred to the decisions United Provinces vs Mst.
Atiqa Begum, and Megh Raj vs Allah Rakhia, AIR 1947 PC 72.
We may next refer to the decision in Manaklal Chhotalal vs M.G. Makwana & Ors. ; The question here arose in the context of the Bombay Town Planning Act.
A scheme drafted by the Ahmedabad Municipal Corporation after following the procedure prescribed under the Act was sanctioned by the State Government.
As a result of this the petitioners were allotted a much smaller extent of land than they originally owned within the city of Ahmedabad and they were also directed to pay certain sums as their share of contribution.
The petitioners challenged the competence of the State Legislature to enact the legislation in question.
The Court upheld the legislation by reference to Entry 18 of List II as well as Entry 20 of List III ("Economic and Social planning").
Reviewing the provisions of the Act in question, the Court came to the conclusion that the legislation in question could be said to be a legislation in regard to land.
Various aspects dealt with in the Act, according to the Court, could be considered to deal with land and accordingly, competence of the State Legislature to enact the measure in question could be found in Entry 18.
Indu Bhusan Bose vs Rama Sundari Devi, ; is a decision of five Judges of this Court and was rendered on an appeal from the Calcutta case cited earlier.
The question for consideration 513 was whether the act of a rent controller in fixing fair rent for certain premises within the cantonment area of Barrackpore was valid.
The claim of the respondent owner was that the appellant was not entitled to the protection of 1956 Act since "regulation of house accommodation including the control of rents" in cantonment areas was the subject matter of Entry 3 of the federal list under the 1935 Act.
The State legislature, it was therefore argued, could not competently extend the 1956 Act (applicable in other parts of the State) to the cantonment areas.
This plea was upheld.
However, one of the contention raised on behalf of the appellants was that the power of Parliament under Entry 3 of List I does not extend to regulating the relationship between landlord and tenant as that power vests in the State Legislature either under Entry 18 of List II or Entries Nos. 6, 7 and 13 of List III.
In support of this contention reliance was placed on a decision of the Bombay High Court in A.C. Patel vs Vishwanath Chada, ILR 1954 Bombay 434, referred to earlier.
In that case, the Bombay High Court was concerned with the applicability of the Bombay Rent Restriction Act (No. 57) of 1947 to contonment areas.
The Court first expressed the opinion that Act was referrable to Entry 21 of the List II of the 1935 Act.
Relying upon the English Interpretation Act applicable to interpret the 1935 Act, the Court held that the word 'land ' in that entry would include buildings also so as to confer jurisdiction on the Provincial Legislature to legislate on relations between landords and tenants of buildings.
Then the Court expressed the view that the legislation could not be said to be one dealing with house accommodation.
The Supreme Court was, however, clear that the legislation was covered by the language of Entry 2 of the Federal List.
However, appropos the first aspect of the High Court 's decision, the Supreme Court observed: "We have felt considerable doubt whether the power of legislating on relationship between landlord and tenant in respect of house accommodation or buildings would appropriately fall in Entry 21 of List II of the Seventh Schedule to the Government of India Act, 1935, or in the corresponding Entry.
18 of List II of the Seventh Schedule to the Constitution.
These Entries permit legislation in respect of land and explain the scope by equating it with rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents.
It is to be noted that the relation of landlord and tenant is mentioned as being included in land tenures and the expression "land tenures" would not, in our opinion, appropriately cover tenancy of buildings or of house accommodation.
That expression is 514 Only used with reference to relationship between landlord and tenant in respect of vacant lands.
In fact,.
leases in respect of non agricultural property are dealt with in the Transfer of Property Act and would much more appropriately fall within the scope of Entry 8 of List III in the Seventh Schedule to the Government of India Act read with Entry 10 in the same List or within the scope.
Entry 6 of List III in the Seventh Schedule to the Constitution read with Entry 7 in the same list leases and all rights governed by leases, including the termination of leases and eviction from property leased, would be covered by the field of transfer of property and contracts relating thereto.
However, it is not necessary for us to express any definite opinion in this case on this point because of our view that the relationship of landlord and tenant in respect of house accommodation situated in cantonment areas is clearly covered by the Entries in List I.
In the Constitution, the effect of Entry 3 of List I is that Parliament has exclusive power to make laws in respect of the matters contained in that Entry, notwithstanding the fact that a similar power may also be found in any Entry in List II or List III.
Article 246 of the Constitution confers exclusive power on Parliament to make laws with respect to any of the matters enumerated in List I, notwithstanding the concurrent power of Parliament, and the State Legislature, or the exclusive power of the State Legislature in Lists III and II respectively.
The general power of legislating in respect of relationship between landlord and tenant exercisable by the State Legislature either under Entry 18 of List 11 or Entries 6 and 7 of List 111 is subject to the overriding power of Parliament in respect of matters in List I, so that the effect of Entry 3 of List I is that, on the subject of relationship between landlord and tenant insofar as it arises in respect of house accommodation situated in cantonment areas, Parliament alone can legislate and not the State Legislature .
In the view, we are unable to affirm the view of the Bombay High Court in A. Patel 's case, which is based on the interpretation that Entry ' in List I of the Seventh Schedule to the Government to India Act only permitted laws to be made for requisitioning of property, acquiring of property and allocation of property only.
" The Court then proceeded to consider the decision in Darukhanawala 515 v Khemchand, ILR ; Kewalchand vs Dashrathlal, ILR ; Babu Jagtanand Sri Satyanarayanji ILR 40 Patna at 625 and expressed the view that all these cases had placed a narrow interpretation on the expression "regulation of house accommodation" used in the relevant entry of the Union List.
Having said this, the Court concluded: "On the other hand, the Rajasthan High Court in Nawal Mal vs Nathu Lal, ILR II Rajasthan 421; held that the power of the State Legislature to legislate in respect of landlord and tenant of buildings is to be found in Entries, 6, 7 and 13 of List lll of the Seventh Schedule to the Constitution and not in Entry 18 of List ll, and that power was circumscribed by the exclusive power of Parliament to legis late on the same subject under Entry 3 of List I.
That is also the view which the Calcutta High Court has taken in the judgment in appeal before us.
We think that the decision given by the Calcutta High Court is correct and must be upheld." (6) Dr. Chitale also placed considerable reliance on Union of India vs Valluri B. Chaudhary, ; which dealt with the validity of the Urban Land (Ceiling & Regulation) Act, 1976.
Counsel for the appellant relied, in particular, upon the procedure adopted by Parliament in enacting this piece of legislation.
The legislatures of eleven States considered it desirable to have a uniform legislation enacted by Parliament for the imposition of a ceiling on urban property for the country as a whole.
They passed resolutions under article 252(1) of the Constitution authorising Parliament to legislate on this topic.
Parliament, accordingly, enacted the Urban Land (Ceiling and Regulation) Act, 1976.
In the first instance, the Act covered the eleven States which had passed the above resolutions.
Subsequently, the Act was adopted by resolution passed by the legislatures of six more States.
The primary object and purpose of the Act was the imposition of a ceiling on vacant land in 'urban agglomerations ', the acquisition by the Government of such land in excess of the prescribed ceiling, the regulation of construction of buildings on such land and matters connected therewith.
All this was done with a view to prevent the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bring about an equitable distribution of land in urban agglomeration to subserve the common good in furtherance of the Directive Principles enunciated in article 39(b) and (c) of the Constitution.
The controversy before the Court 516 turned mainly on the construction of Articles 251 and 252 of the Constitution and certain allied questions.
Dr. Chitale, however, laid em phasis on three important aspects of this legislation and decision.
The first was the language of the resolutions passed by the States in this context, which appear to have been on the same lines and one of which is set out in the judgment.
They contained the following paragraphs: "Whereas this Assembly considers that there should be a ceiling on Urban Immovable Property And whereas the imposition of such a ceiling and acquisition of urban immovable property in excess of that ceiling are matters With respect to which Parliament has no power to make law for the State except as provided in Articles 249 and 250 of the Constitution of India" (underlining added) The second was the preamble to the legislation in question.
After setting out the long title to the Act and the object and purpose of the legislation in terms already described, the preamble to the Act contains the following para: "And whereas Parliament has no power to make laws for the State with respect to the matters aforesaid except as provided in Articles 249 and 250 of the Constitution.
" The third was the following passage from the judgment: "We are afraid this contention cannot be accepted.
It is not disputed that the subject matter of Entry 18 List II of the Seventh Schedule i.e. land covers 'land and buildings ' and would, therefore, necessarily include vacant land.
The expression 'urban immovable property ' may mean 'land and buildings ' or 'buildings or land '.
It would take in lands of every description i.e. agricultural land, urban land or any other kind and it necessarily includes vacant lands." (underlining added) Stopping here for a brief review of the above decisions, it will be seen that except for Indu Bhushan 's case which will be discussed later, the other rulings are not helpful in deciding the issue before us.
Atiqa Begum and Atma Ram concerned a legislation that clearly pertained to 517 land in fact, land governed by systems of land tenure prevalent in the States of Uttar Pradesh and Punjab.
In Allah Rakhia, the impugned Act was limited to agricultural land and, since the items in the concurrent list excluded such land, was covered by Entry 21.
In Maneklal, the legislation primarily concerned land, though not agricultural land, for, as observed in State vs Peter, ; at p. 292, "land is at the base of all development".
It is not quite certain that the provisions of the Act also affected buildings, but if indeed any buildings were affected, that was only incidental.
As pointed out by the Court, the primary target of the legislation was only urban land, the ways and means of developing it and proper utilisation of land situate within the municipal limits.
These decisions no doubt establish two propositions: ( 1) The opening word 'land ' in entry 18 is not restricted to agricultural land as are the latter portions of it.
It would cover all types of land rural or urban, agricultural or non agricultural, vacant fallows or pastures.
(2) The words which follow 'land ' only make it clear that the legislative entry takes in not merely the tangible immovable property one normally describes as land but also all kinds of intangible rights or interests, in or over, land in the broad sense explained above.
The phrases which follow the words "rights in or over land" in the entry are illustrative and are not restrictive.
They only make it clear that the legislative entry takes in not merely the tangible immovable property one describes as land but also all kinds of intangible rights or interests, in or over, land in the broad sense explained above.
But none of the decisions contain any support for the further proposition that the legislative entry should be so interpreted as to cover houses and buildings as well as the relationship of landlord and tenant in regard thereto or the collection of rents therefrom.
We are unable to agree with Dr. Chitale that this further proposition emerges from the decision in Union of India vs Valluri B. Chaudhary, ; The Urban Land Ceiling Act also was a legislation primarily intended to deal with vacant lands.
If one scans the provisions of the Act it is clear that the theme of the Act was only to place a ceiling on vacant lands in cities or what we call urban agglomerations and to ensure equitable distribution of such urban vacant lands.
The pith and substance of the legislation was with regard to urban land and its provisions in respect of buildings were incidental to the main objective of the urban land ceiling.
In this context, it is perhaps not without significance that as against the proposal of the States for a ceiling on 'urban immovable.
property ' Parliament restricted the legislation to vacant land.
In the light of these circumstances the declaration in the preamble to the Act is basically correct that the pith and substance of the legislation was 'land ' and this is exclusively within the State 's legislative domain by 518 virtue of Entry 18 of List II.
We do not also agree with the counsel that the passage extracted from the judgment reflects a decision of the Court that land includes 'lands and buildings '.
It proceeds on a concession to that effect.
That apart, the context of the above observation is also interesting.
The Court was dealing with a contention that the resolution of the States had authorised Parliament to impose a ceiling on urban immovable property and that the legislation imposing a ceiling on urban land was on a different subject and thus contrary to the resolution.
The Court, rejecting this argument, pointed out that since 'urban immovable property ' was a wider expression which also included 'land ', there was no contradiction between the resolution and the legislation.
It is in this context that a reference, on admission, regarding the scope of Entry 18 finds a place in the passage.
Neither was the scope of the entry in issue in the case nor can the isolated sentence, on admission, be treated as a decision by the court.
We now come to Indu Bhushan 's case.
While the counsel for the respondents would have it that this ruling has concluded the present issue in their favour, Dr. Chitale contends that this is not so.
He points out that the court has been careful to say that "it is not expressing any final opinion" regarding Entry 21.
It has, at another place, referred to the framing of house tenancy legislation "either under Entry 18 of List II or Entries 6, 7 and 13 of List III" which also indicates that the Court had not made up its mind as to whether this type of legislation will fall under List II or List III.
It is submitted also that an analysis of the Calcutta and Rajasthan decisions approved by it would show that they had not at all been considering any conflict between entries in Lists II and III and were concerned only with the interpretation of Entry 2 in List I and Entry 21 of List II.
Dr. Chitale, therefore, urges that Indu Bhushan cannot be taken as a decision that house tenancy legislation cannot come under Entry 18 of List II.
We are not, however, persuaded that Indu Bhushan 's case is capable of being brushed aside so easily.
It is true that, ultimately, the decision in that case turned on the wider interpretation of Entry 2 of List I favoured by the Supreme Court in preference to the narrower one preferred by Bombay.
Nevertheless the judgment contains a specific discussion of the terms of Entry 21.
This is because the Bombay High Court had first discussed the terms of this entry and expressed an opinion thereon.
The Supreme Court considered the High Court 's interpretation of the entry and disagreed therewith.
The view of the Supreme Court on the entry has been set out in some detail and cannot be ignored.
Not only this, in the last para of its judgment the Court has 519 reaffirmed the earlier discussion and interpretation.
We have extracted earlier this concluding para of the judgment.
In our view the effect of this para cannot be explained away by trying to analyse the Calcutta and Rajasthan decisions to see what they had actually decided.
The important thing is how the Supreme Court understood what the two High Courts had decided.
This is set out in the two sentences of the last paragraph of the judgment, which have been underlined in the extract set out earlier.
The Supreme Court then specifically affirmed this to be the correct ratio.
We are, therefore, of the opinion that Indu Bhushan must be taken to have expressed a view that premises tenancy legislation in so far as it pertains to houses and buildings is referable not to entry 18 of List II but to entries 6, 7 and 13 of List III.
As pointed out by the learned Attorney General, Indu Bhushun has been understood, as above, in the subsequent decision of the Supreme Court in Jaisingh Jairam Tyagi vs Maman Chand; , The decision of the larger Bench of the Supreme Court in V. Dhanpal Chettiar vs Yesodai Ammal, ; , also re inforces the same line of thinking.
The question for consideration in this case was whether, in respect of a tenancy governed by Tamil Nadu Buildings (Lease and Rent Control) Act, it was necessary for the landlord to issue a notice under section 106 of the Transfer of Property Act terminating the tenancy before he could obtain an order of eviction against the tenant.
This question was answered in the negative.
In the course of its discussion the Supreme Court observed as follows: "Under the Transfer of Property Act the subject of "leases of Immovable Property" is dealt with in Chapter, V. Section 105 defines the lease, the lessor, the lessee and the rent.
Purely as a matter of contract, a lease comes into existence under the Transfer of Property Act.
But in all social legislations meant for the protection of the needy, not necessarily the so called weaker section of the society as is commonly and popularly called, there is appreciable inroad on the freedom of contract and a person becomes a tenant of a landlord even against his wishes on the allotment of a particular premises to him by the authority concerned.
Under section 107 of the Transfer of Property Act a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
None of the State Rent Acts has abrogated or affected this provision.
Section 520 108 deals with the rights and liabilities of lessors and lessees.
Many State Rent Acts have brought about consider able changes in the rights and liabilities of a lessor and lessee, largely in favour of the latter, although not wholly.
The topic of Transfer of Property other than agricultural land is covered by Entry 6 of List III in the Seventh Schedule to the Constitution.
The subject being in the Con current List, many State Rent Acts have by necessary implication and many of them by starting certain provisions with non obstante clause have done away with the law engrafted in section 108 of the Transfer of Property Act except in regard to any matter which is not provided for in the State Act either expressly or by necessary implication.
" The above passage clearly proceeds on the view that the subject matter of housing accommodation falls within the purview of the Concurrent List.
It would have strengthened the landlord 's contention in Dhanpal Chettiar 's case to urge that the terms of the house control legislation being traceable to List II and not to List III, the provisions of the Transfer of Property Act could not affect the same at all.
If Indu Bhushan had been understood as having left the question open, it is difficult to imagine that, before the larger Bench of the Court, counsel would not have raised the issue again.
The discussion and ratio of Dhanpal Chettiar fall into place only on the view that by that time it was taken as settled law that State House control legislations were referable to the legislative powers conferred by the Concurrent List.
So much in regard to precedents.
But, leaving precedents aside, let us proceed to consider the terms of the legislative entry itself, treating the observations in Indu Bhushan as merely of persuasive value.
We agree that entry 18 should be given as wide a constriction as possible consistent with all the other entries in all the three legislative lists.
The entry deals with four main topics: land, transfer and alienation of agricultural land, land improvement and agricultural loans and colonisation.
The second and third of these clearly pertain to agricultural land.
Perhaps the last also does, because, usually, by colonisation we mean conversion into buildings and industrial sites of what was previously agricultural land but, may be, it is wider and includes colonisation of vacant non agricultural land as well.
Any way, as the decisions have unanimously held there is no reason why the first topic viz. land should be narrowly interpreted.
It should be understood as including all types of land rural or urban, agricultural or non agricultural, arid, cultivated, fallow or vacant.
But, what is 'land '? This can 521 be gathered from the other words of the entry which attempt a paraphrase.
They say in effect that legislation in regard to 'land ' will comprise of legislation in regard to three things, that is to say, (i) rights in or over land; (ii) land tenures, including the relationship of landlord and tenant; and (iii)collection of rents.
In our opinion, the true import of the word 'land ' can be gathered if we try to ascertain the proper interpretation and ambit of these three phrases, particularly, the first two among them, in the context of other entries in the Union List.
Doing so, is it possible to interpret this entry as encompassing within its terms legislation on the relationship of landlord and tenant in regard to houses and buildings? That is the question.
After careful consideration, we have reached the conclusion that the answer to this question has to be in the negative for a number of reasons: 1.
As pointed out in Megh Raj, there was good reason for placing land ' in the Provincial List.
Land indeed is primarily a matter for provincial concern.
It is well known that land in each Province had its special characteristics.
There were local customs and traditions in regard to landholding and particular problems of local concern which required provincial consideration.
There are no such special features that require placing buildings also in the State list.
The problem of scarcity of house accommodation is a general feature all over the country thanks to India 's post independent industrial development involving large influxes of population into towns, big and small, from the villages.
Urban housing problems are almost the same throughout the country despite minor differences here and there and uniform nationwide legislation in regard thereto, atleast on same common aspects, is also a necessary desideratum.
In other words, the subject is appropriate for an entry in the Concurrent List.
Such a need for a uniform legislation by the Centre was felt even in respect of vacant urban land, (where unlike agricultural land, there are no special features which need varying provincial treatment) despite its being on the State List.
It is all the more imperative in respect of public premises, i.e., buildings belonging to the Union or to public sector corporations which have all India operations.
It is, therefore, only appropriate that 'buildings ' should be an item in the Concurrent Legislative List.
522 2.
A scrutiny of the Legislative lists would show that the Constitution uses different expressions in different places, appropriate to the context and these entries indicate an awareness on the part of the Constitution of the distinction between various kinds of property.
Entries 32, 87 and 88 of List I and Entry 6 of List III use the word 'property ', a word of the widest connotation, which takes in not merely land, buildings and other immovable properties but also all kinds of rights and interests in tangible and intangible properties.
There are Entries 35 and 49 of List II which make specific reference to 'lands and buildings '.
The expression 'land ' is used, therefore, obviously where reference to land only is intended.
Even the width of this expression is cut down and reference is confined only to 'agricultural land ' as in Entries 47 and 48 of List II, 6 and 7 of List III and even 18 of List II.
In this scheme of the entries, it would be inappropriate to interpret the word 'land ' in Entry 18 as including buildings also.
The Bombay case, in interpreting Entry 21 of the 1935 Act, was bound to take into account the terms of section 3 of the (English) Interpretation Act, 1889 which specifically defined 'land ' in the widest sense as including all 'messages, tenements and hereditaments, houses, and buildings of any tenure".
The assistance of the Interpretation Act cannot be invoked to interpret the entries in the Constitution.
The entry in question specifically refers to the relationship of landlord and tenant but this is in the part of the entry which reads: "land tenures including the relationship of landlord and tenant".
The words "land tenures", are not followed by a comma in some of the editions though the 1935 Act and some of the other editions and text books on the Constitution have a comma in between.
But this makes no difference.
The words "tenant" and "tenure" have a common derivation and the expression 'tenure ' no doubt comprehends within it the relationship of landlord and tenant.
But this had to be specified and clarified because in India, the expression "land tenures", as pointed out in Indu Bhushan, has acquired a special significance.
It connotes various types of holdings of land, involving the King or the Government, the zamindar, the inamdar and various other types of holders, lessors, sub lessors, lessees and sub lessees under or through them and evolved at various stages of Indian history by various rulers, nawabs and chieftains Hindu, Muslim and British differently in different parts of the country.
Sir Baden Powell has written a vast treatise on such law systems prevalent in India.
The Constitution in section 31A contains a clue that expression like "estate" and "land tenures" have a special meaning in relation to land, connoting the relationship among 523 its owner, holder and other intermediary for the time being, be it on tenancy or otherwise and the collection of rents therefrom.
Section 31A also describes some of these relationships.
The system had developed so many complications and nuances that a determined liquidation of all these special types of relationships had to be achieved by special provisions in the chapter on fundamental rights.
Viewed in this background, the words "relationship of landlord and tenant and the collection of rents" cannot impart a wider meaning to the words "land" and "land tenure" used in the entry.
While, on the one the hand, the words in Entry 18 have to be given the widest meaning possible, it has to be borne in mind that the entries in the various lists have to be read together and construed in such a manner as to give a meaning and content to all of them.
We need hardly say that the Constitution should be so interpreted as to reconcile all concerned and relevant entries (See: Hoechst Pharmaceuticals vs State, ; and the Dhillon case: ; If we give the word "land" a meaning so as to include buildings and also give the words "rights in or over land" a wide interpretation as we have to, in view of the discussion and ratio in Megh Raj vs Allah Rakhia, AIR 1947 P.C. 72 this entry will be seen to cover almost all kinds of not only transfer but also alienation and devolution of, or even succession to, lands and buildings.
The interpretation thus placed will affect not merely leases and, therefore, a small part of the contents of the item regarding 'transfer of property '; it will apply equally to sales, mortgages, charges and all other forms of transfer of all kinds of interests in land and buildings and this make such a substantial inroad into the scope of Entry 6 in the concurrent list as to denude it of all application except to property other than land and buildings.
The word "property" used in Entry 6 will thus lose even its normal meaning not to speak of its being given the widest meaning possible appropriate to a legislative entry.
It will mean that though transfer of property other than agricultural land is in the Concurrent List, the State will have exclusive power to legislate in respect of transfer of all property in the nature of land and buildings; in other words, for the words "transfer of property other than agricultural land", we will be substituting "transfer of property other than lands and buildings".
It will mean that though wills, intestacy and succession are in item 5 of the Concurrent List, the State can legislate exclusively in respect of devolution of land and buildings of all description.
It will render Entry 35 of List 11 a surplusage in so far as it refers to "lands and buildings".
We do not think that such an interpretation should be favoured.
The more harmonious interpretation would be that any sub 524 ject matter that involves the element of transfer or alienation of any property (other than agricultural land) or of devolution (on testamentary or intestate succession) of any property or contract (other than one in relation to agricultural land) will fall in the Concurrent List and not in the State List even though it may relate to land or buildings.
Another feature of the entries in the Lists also lends support to our view.
Reference has been made to Entry 3 of List I by which, inter alia, Parliament has been given exclusive power to enact lease and rent control legislation in cantonment areas.
Entry 5 of List II is the corresponding entry regarding local self government in areas of States excluding cantonment areas.
Had it been the intention to confer legislative power on the State Legislature in regard to housing and rent control accommodation in the States, one would have expected a repetition in Entry 5 of List Il or, at least, in entry 18 of List II of the words of entry 3 of List I.
We do not think that the omission of those crucial words in Entry S or 18 can be attributed to more inadvertance.
We have earlier referred to Dr. Chitale 's reference to the Urban Land Ceiling Act, 1971 and pointed out how the preamble to the Act does not support counsel 's interpretation of Entry 18.
We may point out, on the other hand, that quite a few (though not all) State Legislations on house and rent control (including the 1956 Act) have been enacted after obtaining the President 's assent.
This indicates a legislative recognition that such legislation stems from the Concurrent List and not the State List.
The learned Attorney General sought to derive some support for his contention also from the wording of Entry 32 of List I which deals with the 'property of the Union ', an expression wide enough to comprehend all kinds of property, essentially lands and buildings.
It does three things at the same time: (a) it enables Parliament to legislate exclusively with respect to all property belonging to the Union; (b) it, however, subjects such power, in so far as property situated within the territory of any State is concerned, to any legislation of the State in regard thereto; (c) it nevertheless authorises Parliament to provide otherwise by law.
525 This language is somewhat analogous to that of article 254(2) and is consistent with a special provision for an item, which, otherwise, would primarily be covered by the Concurrent List on which both Parliament and State Legislature can legislate.
It may be usefully contrasted with Entries like Nos. 23 and 24 of List ll where the language of the entry clearly grants primacy to Parliamentary legislation in regard to a part of the field occupied by an entry in the State List.
There is some force in this contention which, effectively, is that if land and buildings were so clearly covered by Entry 18 of List II, either the wording of entry 32 would have been made subject to List Il of Entry 18, in this regard, like nos.
23 and 24 would have been made subject to List 1. 9.
It is also a relevant consideration that, while the interpretation suggested by appellants completely denies power to Parliament to legislate on the subject matter under consideration, the interpretation preferred by us does not exclude the States ' power to legislate with respect to the topic.
It recognises a concurrent power in Parliament and State Legislatures.
For the reasons discussed above, we are of opinion that all the legislations coming up for consideration in the present case are referable to entries in the Concurrent List and the topic of legislation is not referable to Entry 18 List II.
The provisions of the 1971 Act, in so far as they are made applicable to the premises of the respondent bank are, therefore, intra vires and valid.
Once it is held that the 1971 Act is intra vires Parliament, no further issue between the parties would seem to survive for consideration for, as we have already pointed out, no other contention was raised before the Division Bench of the High Court.
However, there was some discussion before us as to whether the provisions of the 1971 Act, even if intra vires, would prevail against the provisions of the State legislations.
In this context, Dr. Chitale invited our attention to Jain Ink Manufacturing Co. vs LIC, ; where this Court held that the provisions of the 1971 Act will prevail against the provisions of the Delhi Rent Control Act, 1956 and the Delhi Slum Areas (Improvement & Clearance) Act, 1956 on the grounds that it was both a later Act and a special Act.
He submitted that the decision in the case is the subject matter of reference to a larger Bench and that we should, therefore, defer our decision in the present case to await the result of the reference.
We do not think this is called for.
In our opinion, that decision has no reference to the issues before us.
In that 526 case, all the three legislations were Parliamentary legislations (Delhi being a Union Territory) and the question was regarding the inter se overlap among the three Acts touching upon the same subject matter viz. eviction of a tenant by a landlord.
Here the legislations which are said to occupy this, same field are one of Parliament of 1971 and two of the State of West Bengal of 1956 and 1962, all passed in exercise of the powers conferred with respect to matters contained in the Concurrent List.
The resolution of a conflict, if any, between the two will have to be in terms of Article 254 of the Constitution.
This article reads: Inconsistency between laws made by Parliament and laws made by the Legislatures of States (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provisions repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent,.
prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.
It will be convenient, before applying the provisions of the article to the facts of the present case, to refer to the elucidation of the scope of its provisions by decisions of this Court.
In Zaverbhai Amaidas vs State, [1955] SCR 799 the question whether a provision in Central Act 527 XXIV if 1946 as amended by the Act LII of 1950 would prevail against a provision in Bombay Act XXXVI of 1947.
Both legislations were referable to the Concurrent List and the State law had been passed after obtaining the assent of the Governor General.
Referring to article 254(2), the Court said: "This is, in substance, a reproduction of section 107(2) of the Government of India Act, the concluding portion thereof being incorporated in a proviso with further additions.
Discussing the nature of the power of the Dominion Legislature, Canada, in relation to that of the Provincial Legislature, in a situation similar to that under section 107(2) of the Government of India Act, it was observed by Lord Watson in Attorney General for Outario vs Attorney General for the Dominion, that though a law enacted by the Parliament of Canada and within competence would over ride Provincial legislation covering the same field, the Dominion Parliament had no authority conferred upon it under the Constitution to enact a statute repealing directly any Provincial statute.
That would appear to have been the position under section 107(2) of the Government of India Act with reference to the subjects mentioned in the Concurrent List.
Now by the proviso to Article 254 (2) the Constitution has enlarged the powers of Parliament.
and under that proviso, Parliament can do what the Central Legislature could not under section 107(2) of the Government of India Act and enact a law adding to, amending, varying or repealing a law of the State, when it relates to a matter mentioned in the Concurrent List.
The position then is that under the Constitution Parliament can, acting under the proviso to article 254(2), repeal a State law.
But where it does not expressly do so, even then, the State law will be void under the provision if it conflicts with a later "law with respect to the same matter" that may be enacted by Parliament.
" Later, the Court observed: "It is true, as already pointed out, that on a question under article 254( 1) whether an Act of Parliament prevails against a law of the State, no question of repeal arises; but the principle on which the rule of implied repeal rests, namely, that if the subject matter of the later legislation is identical 528 with that of the earlier, so that they cannot both stand together, then the earlier is repealed by the later enactment, will be equally applicable to a question under Article 254(2) whether the further legislation by Parliament is in respect of the same matter as that of the State law.
We must accordingly hold that section 2 of Bombay Act No. XXXVI of 1947 cannot prevail as against Section 7 of the Essential Supplies (Temporary Powers) Act No. XXIV of 1946 as amended by the Act No. LII of 1950.
" It is sufficient to cite certain observations from one more judgment on this aspect: Hoechst Pharmaceuticals vs State, ; which had to consider an alleged conflict between a provision of a State sales tax law and a provision of an order made under the Essential Commodities Act of Parliament.
The case dealt with several points with which we are not here concerned.
Expatiating on the scope of Article 254, the Court observed: "article 254 of the Constitution makes provision first, as to what would happen in the case of conflict between a Central and State law with regard to the subjects enumerated in the Concurrent List and secondly, for resolving such conflict.
article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter.
(1) lays down that if a State law relating to a concurrent subject is 'repugnant ' to a Union law relating to that subject, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void.
To the general rule laid down in cl.
(1), cl.
(2) engrafts an exception, viz. that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a con current subject.
In such a case, the Central Act will give way to the State Act only to the extent of inconsistency between the two, and no more.
In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concur rent subject would be that the State Act will prevail in that State and override the provisions of the Central Act in their applicability to the State only.
The predominance of the State law may however be taken away if Parliament legis 529 lates under the Proviso to cl.
The proviso to article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the 'same matter '.
Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law ill become void as soon as the subsequent law of Parliament creating repugnancy is made.
A State law would be repugnant to the Union law when there is direct conflict between the two laws.
Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together.
" The present case is clearly governed by the primary rule in Article 254(1) under which the law of Parliament on a subject in the Concurrent List prevails over the State law.
article 254(2) is not attracted because no provision of the State Acts (which were enacted in 1956 and 1962) were repugnant to the provisions of an earlier law of Parliament or existing law.
The fact that the 1956 Act was enacted, after being reserved for the President 's assent is, therefore, immaterial.
Even if the provisions of the main part of Article 254(2) can be said to be somehow applicable, the proviso, read with Article 254(1) reaffirms the supermacy of any subsequent legislation of Parliament on the same matter even though such subsequent legislation does not in terms amend, vary or repeal any provision of the State Legislation.
The provisions of the 1971 Act will, therefore, prevail against those of the State Acts and were rightly invoked in the present case by the respondent Rank.
Dr. Chitale, while initially formulating his contentions, outlined an argument that the provision in the 1971 Act appointing one of the officers of the respondent bank as the Estate officers is violative of Article 14.
We do not see any substance in this contention.
In the very nature of things, only an officer or appointee of the Government, statutory authority or Corporation can be thought of for implementing the provisions of the Act.
That apart, personal bias cannot necessarily be attributed to such officer either in favour of the bank or against any occupant who is being proceeded against, merely because he happens to be such officer.
Moreover, as pointed out earlier, the Act provides for an appeal to an independent judicial officer against orders passed by the Estate officer.
These provisions do not, therefore, suffer from any infirmity.
In fact, Dr. Chitale did not pursue this objection seriously.
530 No other contention was urged.
The appeal, therefore, fails and is dismissed.
We would, however, make no order as to costs as it is the existence of a multiplicity of statutory provisions that enabled the appellant to come to Court.
S.L. Appeal dismissed.
|
The first appellant in this appeal, a private limited company, occupying a portion of the premises belonging to the United Commercial Bank, claimed to be the tenant of the Bank, but this was not admitted by the respondent Bank.
The Bank alleged that the appellant company had been allowed to occupy a portion of the Bank 's premises as licensee in consideration of certain accountancy and secretarial services rendered to the Bank.
The Bank had issued a notice of eviction to the appellant company under the West Bengal Premises Tenancy Act, 1956 ( 'the 1956 Act ').
Subsequently, the Bank issued a notice to the appellants under the Public Premises (Eviction of unauthorised occupants) Act, 1971 ( 'the 1971 Act ') which is an Act of the Parliament.
The appellants filed a writ petition in the High Court, agitating the question whether the impugned Act which provides for eviction of unauthorised occupants from public premises belonging to or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Government was ultra vires as it was beyond the legislative power of the Parliament to extend the applicability of the said Act to such premises.
The appellants were interested in denying the legislative power of Parliament in so far as it purported to extend the applicability of the 1971 Act to the premises belonging to or taken on lease by public sector corporations.
Their argument went to the extent of urging that only the State legislatures and not Parliament were competent to legislate on a topic of landlord tenant relationship in respect of land and buildings.
According to the appellants, the provisions of 1956 Act were squarely applicable and should have been resorted to by the Bank for evicting them.
494 The appellants contended that a legislation of the type of West A Bengal Land (Eviction of unauthorised occupants) Act, 1962 (1962Act), which was on the pattern of the 1971 Act, would fall within the legislative field exclusively open to the State Legislatures and that the 1971 Act was ultra vires the Parliament in so far as it purported to affect the appellants ' rights.
Dismissing the appeal, the Court, ^ HELD: Per Sabyasachi Mukharji, J.
His Lordship agreed with Ranganathan, J. that the appeal should be dismissed.
His Lordship preferred the view of the Madhya Pradesh High Court in L.S. Nair vs Hindustan Steel Ltd. Bhilai, A.I.R. 1980 M.P. 106 to the view of the Bombay High Court in Miscellaneous Petition No. 458/79 Elliot Waud Hill (P) Ltd. vs Life Insurance Corpn.
This Court had in this Case proceeded on the short question whether the impugned Act which provides for eviction of unauthorised occupants from public premises to the extent it had been extended to premises belonging or taken on lease by a corporation established by or under a Central Act and owned or controlled by the Central Government, was ultra vires or beyond the legislative power of the Parliament to extend the applicability of the Act to such premises.
[498D G] There was no dispute, as emphasised by Ranganathan, J., as to whether the premises in question or of this type was a public premises.
For the purpose of this appeal, once it was held that the Public Premises (Eviction of Unauthorised occupants) Act was intra vires the Parliament, no further issue between the parties survived.
It was not necessary to consider whether the provisions of the 1971 Act even if intra vires would pervail upon the provisions of the State Legislation.
For the purpose of this appeal, it was unnecessary to express any view on the amplitude and scope of Article 254 of the Constitution.
[498H; 499A B] It had to be taken that the legislation in question must be under stood in its pith and substance, and so understood, the Act in question in this case is in respect of transfer of property other than agricultural land and as such falls in Entry 6 of List III of the 7th Schedule to the Constitution.
It is clear from the decision of this Court in Indu Bhusan Bose vs Rana Sundari Devi and Anr., ; and the subsequent decision in V. Dhanapal Chettiarv.
YesodaiAmmal; , that the subject matter of housing accommodation and control thereof falls within the purview of concurrent list.
In that view 495 of the matter, it could not be convassed that the 1971 legislation in question was beyond the competence of the legislature.
[499C E] Per section Ranganathan, J.
The present agrument of the appellants might not have been open to them if the premises of the Bank could be said to be premises belonging to the Union Government In that case, the legislation to the extent it governs such premises can be said to fall under Entry 32 of List I as one covering the "property of the Union".
Though, the premises being situated in Calcutta any legislation under that entry in regard thereto would be subject to State Legislation, the state Legislation can only govern "save in so far as Parliament by law otherwise provides." Parliament having provided otherwise by the 1971 Act, that Act will prevail over the 11/56 and 1962 Acts.
Though the Bank was a corporation wholly owned and controlled by the Government, it had a distinct personality of its own and its property could not be said to be the property of the Union.
The position was beyond the pale of controversy after the decision of this Court in Bacha F.Guzdar vs C.I.T., ; ; State trading Corporation of India Ltd. vs C.T.O., [1964] 4 S.C.R. 99, and many other cases.
lt was not possible for the respondents to support the legislation qua the premises under Entry 32 of List I. [505A D] Entry 32 of List I being out of the way, the appellants contended that the legislation squarely regularly fell under Entry 18 of List II.
A question as to the interpretation of Entry 18 (or its predecessor, Entry 21 of the Provincial List under the Government of India Act, 1935) had arisen before the Federal Court and Privy Council, and also was considered in some decisions of this Court, which, except in the case of Indu Bhusan Bose vs Rama Sundari Devi, ; , were not helpful in deciding the issue before the Court.
In respect of Indu Bhushan 's case, while the respondents contended that the ruling concluded the issue in their favour, the appellants urged that it could not be taken as a decision that the house tenancy legislation could not come under Entry 18 of List II.
[505E; 506B C; 513C] It was true that the decision in Indu Bhushan 's case ultimately turned on the wider interpretation of Entry 2 of List I favoured by this Court, nevertheless, the judgment contains a specific discussion of the terms of Entry 21.
Indu Bhushan must be taken to have expressed a view that premises tenancy legislation in so far as it pertains to houses and buildinYs is referable not to Entry 18 of List II but to entries 6,7 496 and 13 of List III.
The decision of the larger Bench of this Court in V. Dhonpal Chettier vs Yesodai Ammal, ; , also reinforced the same line of thinking.
The discussion and ratio of Dhanpal Chettier fall into place only on the view that by that time it was taken as settled law that State house control legislations were referable to the legislative powers conferred by the Concurrent List.
[513C; 520D E] Entry 18 should be given as wide a construction as possible consistent with all the other entries in all the three legislative Lists.
There is no reason why the first topic dealt with by the entry, viz. land, should be narrowly interpreted.
lt should be understood as including all types of land, rural or urban, agricultural or non agricultural, arid, cultivated, fallow or vacant, What is 'land ' can be gathered from the other words of the entry which attempt a paraphrase.
It is not possible to interpret this entry as encompassing within its terms legislation on the relationship of landlord and tenant in regard to houses and buildings.
All the legislation coming up for consideration in the present case are referable to entries in the concurrent List and the topic of legislation is not referable to Entry 18 of List II.
The provisions of the 1971 Act, in so far as they were made applicable to the premises of the respondent Bank, are intra vires and valid.
[520F H; 525E] Once it was held that the 1971 Act is infra vires the Parliament, no further issue between the parties survived.
There was some discussion r. before this Court as to whether the provisions of the 1971 Act, even if intra vires, would prevail against the provisions of the State legislations.
This case is clearly governed by the primary rule in Article 254(1) of the Constitution under which the law of Parliament on a subject in the concurrent List prevails over the State Law.
Article 254(2) of the Constitution is not attracted because no provision of the State Acts (enacted in 1956 and 1962) were repugnant to the provisions of an earlier law of Parliament of existing law.
Even if the provision of the main part of Article 254(2) can be said to be somehow applicable, the proviso, read with Article 254(1), reaffirms the supremacy of any subsequent legislation of Parliament on the same matter even though such subsequent legislation does not in terms amend, vary or repeal any provision of the State Legislation.
The provisions of the 1971 Act will, therefore, prevail against those of the State Acts and were rightly invoked in this case by she respondent Bank.
[525F; 529C E] There was no substance in the appellants ' contention that the provision in the 1971 Act appointing one of the officers of the respondent Bank as the Estate officers was violative of Article 14.
[529F] 497 The appeal failed.
L.S. Nair vs Hindustan Steel Ltd. Bhilai, A.I.R. 1980 M.P. 106; Elliot Waud Hill (P) Ltd. vs Life Insurance Corporation Miscellaneous Petiton No. 458/79 before Bombay High Court; Indu Bhusan Bose vs Rama Sundari Devi and Anr. ; ; A.C. Patel vs Vishwanath Chadda, ILR 1954 Bombay 434; V. Dhanapal Chettiar vs Yasodai Ammal, ; ; Bacha P. Guzdar vs C.I.T., ; ; State Trading Corporation of India Ltd. vs C.T.O [1964] 4 SCR 99; A.P. State Raod Transport Corporation vs I.T.O.; , ; Heavy Engineering Mazdoor Union vs State, ; Vidarbha Housing Board vs I.T.O., ; Western Coalfields Ltd. vs Special Area Development Authority; , ; Manohar vs C.G. Deasi, AIR 1951 Nag. 33; Raman Dass vs State, AIR 1954 All.
707; Darukhanawala vs Khemchand, ILR ; M. Karuna vs State, AIR 1955 Nag 153, Kewalchand vs Dashrathlal, ILR ; Sukumar Dutta vs Gaurishankar, ; Raval & Co. vs Ramachandran, AIR 1967 Mad. 57;Mangtulal vs Radhey Shyam, AIR 1953 Pat.
14; Milap Chand vs Dwarakadas, AIR 1964 Raj 252; Rama Sundari vs Indu Bhusan, AIR 1967 Cal. 355; Nawal Mal vs Nathu Mal, AIR 1962 Raj. 193; Bapalal & Co. vs Thakur Das, AIR 1982 Mad. 309; Vnited Province vs Atiga Begum, ; Megh Raj vs Allan Rakhia, AIR 1947 PC 72; Atma Ram vs State of Punjab, [1959] Supp.
1 S.C.R. 748; Manaklal Chhotalal vs M.G. Makwana & Ors., ; ; Babu Jagtanand Sri Satyanarayanji, ILR 40 Patna 625; Union of India vs Valluri section Chaudhary, ; , State vs Peter; , , 292; Jaisingh Jairam Tyagi vs Maman Chand, ; ; Hoechst Pharmaceuticals vs State; , ; Dhillon 's case, [1972] 2 S.C.R. 33; Jain Ink Manufacturing Co. vs LIC, ; and Zaverbhai Amaidas vs State, [1955] S.C.R. 799, referred to.
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5757.txt
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vil Appeal No. 536 of 1962.
Appeal from the judgment and decree dated March 26.
1958, of the High Court at Patna in First Appeal No. 340 of .1951.
147 Niren De, Additional Solicitor General, N.D. Karkhanis and B.R.G.K. Achar, for the appellant.
Bishan Narain, P. D. Himmatsinghka section Murthy and B.P. Maheshwari, for the respondent.
The judgment of the Court was delivered by Wanchoo, J.
This is an appeal on a certificate granted by the Patna High Court.
The respondent sued the Union of India as representing G.I.P. Railway, Bombay and E.I.R. Calcutta for recovery of damages for non delivery of 31 bales of piece goods, out of 60 bales which had been consigned to Baidyanathdham from Wadibundar.
This consignment was loaded in wagon No. 9643 on December 1. 1947.
It is not in dispute that the consignment reached Mughalsarai on the morning of December 9, 1947 by 192 On goods train.
After reaching Mughalsarai, the wagon was kept in the marshaling yard till December 12, 1947.
It wag sent to Baidyanadham by 214 On goods train from Mughalsarai at 6 40 p.m. on December 12, 1947 and eventually reached Baidyanathdham on December 21, 1947.
The respondent who was the consignee presented the railway receipt on the same day for delivery of the consignment.
Thereupon the railway delivered 29 bales only to the respondent and the remaining 31 bales were said to be missing and were never delivered.
Consequently on August 311948, notice was g:yen under section 80 of the Civil Procedure Code and this was followed by the suit out of which the present appeal has arisen on November 20, 1948.
The consignment had been booked under risk note form Z which for all practical purposes is in the same terms as risk note form B.
The respondent claimed damages for non delivery on the ground that the non delivery was due to the misconduct of the servants of the railway, and the claim was for a sum of Rs. 36,461/12/ .
The suit was resisted by the appellant and a number of defences were taken.
In the present appeal we are only concerned with two defences.
It was first contended that the suit was barred by section 77 of the Indian Railways Act, No. IX of 1890, (hereinafter referred to as the Act), inasmuch as notice required therein was not given by the respondent.
Secondly it was contended that the consignment was sent under risk note form Z and under the terms of that risk note the railway was absolved from all responsibility for loss, destruction or deterioration of goods consigned thereunder from any cause whatsoever except upon proof of misconduct of the railway of its servants.
and that the burden of proving such misconduct subject to certain exceptions was on the respondent and that the respondent had failed to discharge that burden.
Further in compliance with the terms of the risk note, the railway made a disclosure in the written statement as to how the consignment was dealt with throughout the period it was in its possession or control.
The case of the railway in this connection was that there was a theft in the running train between Mughalsarai and 148 Buxar on December 12, 1947 and that was how part of the con signment was lost.
As the loss was not due to any misconduct on the part of the railway or its servants and as the respondent had not discharged the burden which lay on him after the railway had given evidence of how the consignment had been dealt with, there was no liability on the railway.
On the first point, the trial court held On the basis of certain decisions of the Patna High Court that no notice under section 77 was necessary in a case of non delivery which was held to be different from loss.
On the second point relating to the responsibility of the railway on the ' basis of risk note form Z, the trial court held that it had not been proved that the loss was due to misconduct of the railway or its servants.
It therefore dismissed the suit.
Then followed an appeal by the respondent to the High Court.
The High Court apparently upheld the finding of the trial court on the question of notice under s.77.
But on the second point the High Court was of opinion that there was a breach of the condition of disclosure provided in risk note Z under which the consignment had been booked, and therefore the appellant could not take advantage of the risk note at all and the liability of the railway must be assessed on the footing of a simple bailee.
It therefore went on to consider the liability of the railway as a simple bailee and held on the ' evidence that the railway did not take proper care of the wagon at Mughalsarai and that in all probability the seals and rivets of the wagon had been allowed to be broken there and all arrangements had been completed as to how the goods would be removed from the wagon when the train would leave that station and this could only be done either by or in collusion with the servants of the railway at Mughalsarai.
In this view of the matter the High Court allowed the appeal and decreed the suit with costs As the judgment was one of reversal and the amount involved was over rupees twenty thousand, the High Court granted a certificate.
and that is how the matter has come up before us.
We .shall first deal with the question of the notice.
We are in this case concerned with the Act as it was in 1947 before its amendment by Central Act 56 of 1949 and Central Act No. 39 of 1961 and all references in this judgment must be read as applying to the Act as it was in 1947.
Now section 77 inter alia provides that a person shall not be entitled to compensation for the loss, destruction or deterioration of animals or goods delivered to be carried ' by railway, unless his claim to compensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery of the animals or goods for carriage by railway.
There was a conflict between the High Courts on the question whether non delivery of goods carried by railway amounted to less within the meaning of section 77.
Some High Courts (including the Patna High Court) held that a case of non delivery was distinct from a case of loss and no notice under section 77 was necessary .in the case of non delivery.
Other High Courts however took a contrary view and held that a case of non delivery also was a case of loss.
This conflict has now been resolved by the decision of this Court in Governor General in Council vs Musaddilal (1) and the view taken by the Patna High Court has been overruled.
This Court has held that failure to deliver goods is the consequence of loss or destruction and the cause of action for it is not distinct from the cause of action for loss or destruction, and therefore notice under section 77 is necessary in the case of non delivery which arises from the loss of goods.
Therefore notice under section 77 was necessary in the present case.
It is true that the respondent stated in the plaint in conformity with 'the view of the Patna High Court prevalent in Bihar that no notice under s.77 was necessary as it was a case of non delivery.
But we find in actual fact that a notice was given by the respondent to the railway on April 10, 1948 to the Chief Commercial Manager, E.I.R. in which it was stated that 60 bales of cloth were booked for the respondent but only 29 bales had been delivered and the balance of 31 bales had not been delivered.
Therefore the respondent gave notice that if the bales were not delivered to him within a fortnight, he would file a suit for the recovery of Rs. 36,461/12/ , and the details as to how the amount was arrived at were given in this notice.
It is true that the notice was not specifically stated to be a notice under section 77 of the Act but it gave all the particulars necessary in a notice under that section.
This notice or letter was sent within six months of the booking of the consignment.
A similar case came up before this Court in Jetmull Bhojraj vs The Darjeeling Himalayan Railway Co. Ltd.(2) and this Court held that the letter to the railway in that case was sufficient notice for the .purpose of section 77 of the Act. 'Following that decision we hold that the letter in the present case which is even more explicit is sufficient notice for the purpose of S: 77 of the Act.
We may add that the learned Additional Solicitor General did not challenge this in view of the decision in Jetmull Bhojraj 's case(2).
This brings us to the second question raised in the appeal.
We have already indicated that the High Court held that as the burden of disclosure which was on the railway had not been discharged there vas a breach of one of the terms of the risk note Z and therefore the risk note did not apply at all and the responsibility of the railway had to be assessed under ' section 72 (1) of the Act.
This view of the law has been contested on behalf of the appellant and it is urged that after the risk note is executed either in form Z or in form B, the responsibility of the railway must be judged in accordance with the risk note even if there is some breach of the condition as to disclosure.
It may be mentioned that risk note form Z and risk note form B are exactly similar in their terms insolar as the responsibility of the railway is concerned for risk note 150 form B applies to individual consignment while form Z is executed by a party who has usually to send goods by railway in large numbers.
Risk note form Z is general in its nature and applies to all consignments that a party may send after its execution.
It is proved that the consignment in this case was covered by risk note form Z.
The main advantage that a consignor gets by sending a consignment under from Z or form B is a specially reduced rate as compared t3 the ordinary rate at which goods are carried by the railway and it is because of this specially reduced rate that the burden is thrown on the consignor in a suit for damages to prove misconduct on the part of the railway or its servants in the case of loss etc.of the goods, subject to one exception.
On the other hand the argument on behalf of the respondent is that the view taken by the Patna High Court is right and it is the duty of the railway administration under the risk note, as soon as there is non delivery and a claim is made on the railway for compensation, to disclose how the consignment was dealt with throughout while it was in its possession or control and that its failure to do so results immediately in breach of the contract with the result that the responsibility of the railway has to be judged solely on the basis of section 72 (1) of the Act ignoring the risk note altogether.
Section 72 (1) defines the responsibility of the railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway to be the same as that of a bailee under sections 152 and 161 of the , subject to other provisions of the Act.
Sub section (2) of section 72 provides that an agreement purporting to limit the responsibility under section 72 (1) can be made subject to two conditions, namely, (i) that it is in writing signed by or on behalf of the person sending or delivering to the railway administration the animals or goods, and (ii) that it is in a form approved by the Governor General.
Sub section (3) of section 72 provides that nothing in the common law of England or in the Carriers Act 1865 regarding the responsibility of common carriers with respect to carriage of animals or goods shall affect the responsibility as in this section defined of the railway administration.
So the responsibility of the railway for loss etc. is the same as that of a bailee under the Indian Contract Act.
But this responsibility can be limited as provided in section 72 (2).
For the purpose of limiting this responsibility risk notes form B and form Z have been approved by the Governor General and where goods are booked under these risk notes the liability is limited in the manner provided thereunder.
It is therefore necessary to set out the relevant terms of the risk note, for the decision of this case will turn on the provisions of the risk note itself.
The risk note whether it is in form B or form Z provides that where goods are carried at owner 's risk on specially reduced rates, the owner agrees or undertakes to hold the railway administration 151 "harmless and free from all responsibility for any loss, deterioration or destruction of or damage to all or any of such consignment from any cause whatever, except upon proof that such loss, destruction, deterioration or damage arose from the misconduct on the part of the railway administration or its servants".
"thus risk notes B and Z provide for complete immunity of the railway except upon proof of misconduct.
But to this immunity there is a proviso and it is the construction of the proviso that arises in the present appeal.
The proviso is in these terms: "Provided that in the following cases: (a) Non delivery of the whole of a consignment packed in accordance with the instruction laid .down in the tariff or where there are no instructions, protected otherwise than by paper or other packing readily removable by hand and fully addressed, where such non delivery is not due to accidents to train or to fire; (b) . . . "The railway administration shall be bound to disclose to the consignor how the consignment was dealt with throughout the time it was in its possession or control, and if necessary, to give evidence thereof before the consignor is called upon to prove misconduct, but, if misconduct on the part of the railway administration or its servants cannot be fairly inferred from such evidence, the burden of proving such misconduct shall lie upon the consignor".
It is not in dispute that the present case comes under cl(a) of the risk note.
An exactly similar provision in risk note form B came up for consideration before the Privy Council in Surat Cotton Spinning & Weaving Mills vs Secretary Of State for India in Council, ( ') and the law on the subject was laid down thus at pp.181 182: "The first portion of the proviso provides that the Rail way Administration shall be bound to disclose to the consignor 'how the consignment was dealt with through out the time it was in its possession or control, and, if necessary to give evidence thereof, before the consignor is called upon to prove misconduct '.
In their Lordships ' opinion, this obligation arises at once upon the occurrence of either of cases (a) or (b), and is not confined to the stage of litigation.
Clearly one object of the provision is to obviate, if possible, the necessity for litigation.
On the other hand, the closing words of the obligation clearly apply to the litigious stage.
As to the extent of the disclosure, it is confined to the period during which the (1) [1927] L.P LXIV: 152 consignment was within the possession or control of the Railway Administration; it does not relate, for instance, to the period after the goods have been the fatuously removed from the premises.
On the other hand, it does envisage a precise statement of how the consignment was dealt with by the Administration or its servants.
The character of what is requisite may vary according to the circumstances of different cases, but, if the consignor is not satisfied that the disclosure has been adequate, the dispute must be judicially, decided.
As to the accuracy or truth of the information given, if the consignor is doubtful or unsatisfied, and considers that these should be established by evidence, their Lordships are of opinion that evidence before a Court of law is contemplated, and that as was properly done in the present suit, the Railway Administration should submit their evidence first at the trial.
"At the close of the evidence for the Administration two questions may be said.to arise, which it is important to keep distinct.
The first question is not a mere question of.procedure, but iS whether they have discharged their obligation of disclosure, ' and, in regard to this, their Lordships are of opinion that the terms of the Risk Note require a step in procedure, which may be said to :be Unfamiliar in the practice of the Court; if the consignor is not satisfied with the ' disclosure made their Lordships are clearly of opinion that is for him tO say so, and to call on the Administration to fulfill their obligation .Under the contract, and that the Administration should then have the opportunity to meet the demands of the consignor before their case is closed; any question as to whether the consignor 's demands go beyond the obligation should be then determined by the Court.
If the Administration fails to take the opportunity to satisfy the demands of the consignor so far as endorsed by the Court, they will be in breach of their contractual obligation of disclosure.
"The other question which may be said to arise at this stage is whether misconduct may be fairly inferred from the evidence of the Administration; if so, the consignor is absolved from his original burden of proof.
But, in this case, the decision of the Court may be given when the evidence of both sides has been completed.
It is clearly for the Administration to decide for themselves whether they have adduced all the evidence which they consider desirable in avoidance of such fair "inference of misconduct".
They will doubtless keep in mind the provisions of s.114 of the Indian Evidence Act".
With respect we are of opinion that this exposition of the law relating to risk note B applies also to risk note Z and we accept it 153 as correct.
Thus the responsibility of the railway.
administration to disclose to the consignor how the consignment was dealt with thrOughOut the time it Was in its possession or control arises at once under the agreement in either of the cases (a) or (b) and is not confined to the stage of litigation.
But we are not prepared to accept the contention on behalf of the respondent that this responsibility to make full disclosure arises immediately the claim is made by the consignor and if the railway immediately on such claim being made does not disclose all the facts to the consignor, there is immediately a breach of this term of the contract contained in the risk note.
It is true that the railway is bound to disclose to the consignor how the Consignment was dealt with throughout the time it was in its possession even before any litigation starts; but we are of opinion that such disclosure is necessary only where the consignor specifically asks the railway to make :the disclosure.
If no such disclosure is asked for, the administration need not make it before the ' litigation.
In the present case there is ' no proof that any disclosure was asked for in this behalf by the consignor at any time before the, suit was filed.
Therefore if the railway did not disclose how the consignment was dealt with throughout before the suit was filed, it cannot be said to have committed breach of this term of the contract.
The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its servants.
if the disclosure is asked for before the litigation commences and is not given or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the court then to say if a suit is brought whether there has been Ia breach of this term ' of the contract.
After this, comes the stage where the consignor or the consignee ' being dissatisfied brings a suit for compensation.
At that stage evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation to the Consignor or which might have been made in the written statement in reply to the suit.
When the railway administration has given its evidence in proof of the disclosure and the plaintiff is not satisfied with the disclosure made in the evidence, the plaintiff is entitled to ask the court to call upon the railway to fulfil its obligation under the contract and the railway should then .have the opportunity of meeting the demands of the plaintiff before its case is closed.
Thus in addition to the evidence that the railway may adduce on its own and in doing so the railway has necessarily to keep in mind the provisions of section 114 of the Indian Evidence Act, the plaintiff can and should draw the attention of the court if he feels that full disclosure has not been made.
, In .that case he can ask the court to require the railway to make further disclosure and should tell the court what further disclosure he wants.
It is then for the court to decide whether the further disclosure .desired by the plaintiff should be made by the railway, and if the court decides that such further disclosure 154 should be made the railway has to make such further disclosure as the court orders it to make on the request of the plaintiff.
If the railway fails to take the opportunity so given to satisfy the demands of the plaintiff, endorsed by the court, the railway would be in breach of its contractual obligation of disclosure.
It is at this stage therefore that the railway can be truly said to be in breach of its contractual obligation of disclosure, and that breach arises because the railway failed to disclose matters which the court on the request of the plaintiff asks it to disclose.
The question then is what is the effect of this breach.
It is remarkable that the Privy Council did not lay down that as soon as the breach is made as above the risk note comes to an end and the responsibility of the railway is that of a bailee under section 72 (l) of the Act.
In the observations already quoted, the Privy Council has gone on to say that after this stage is over, the question may arise whether misconduct may be fairly inferred from the evidence of the railway.
It seems to us therefore that even if there is a breach of the term as to full disclosure it does not bring the contract to an end and throw the responsibility on the railway as if the case was a simple case of responsibility under section 72(1) of the Act; the case is thus not assimilated to a case where the goods are carried at the ordinary rates at railway risk.
The reason for this seems to be that the goods have already been carried at the reduced rates and the consignor has taken advantage of that term in the contract.
Therefore, even though there may be a breach of the term as to complete disclosure by the railway the consignor cannot fall back on the ordinary responsibility of the railway under section 72 (1) of the Act as if the goods had been carried at railway 's risk at ordinary rates, for he has derived the advantage of the goods having been carried at a specially reduced rates.
The risk note would in our opinion continue to apply and the court would still have to decide whether misconduct can be fairly inferred from the evidence of the railway, with this difference that where the railway has been in breach of its obligation to make full disclosure misconduct may be more readily inferred and section 114 of the Indian Evidence Act more readily applied.
But we do not think that the conditions in the risk note can be completely ignored simply because there has been a breach of the condition of complete disclosure.
The view of the Patna High Court that as soon as there is breach of the condition relating to complete disclosure the risk note can be completely ignored and the responsibility of the railway judged purely on the basis of section 72 (1) as if the goods were carried at the ordinary rates on railway 's risk cannot therefore be accepted as correct.
We may point out that in Surat Cotton Spinning and Weaving Mills Limited 's case, (I) the plaintiffs wanted the guard of the train to be examined and he was undoubtedly a material witness.
Even so the witness was not examined by the railway.
Finally therefore the Privy council allowed the appeal with these observations at p. 189: "While their Lordships would be inclined to hold that the respondent, by his failure to submit the evidence of Rohead, was in breach of his contractual obligation to give the evidence necessary for disclosure of how the consignment was dealt with, they are clearly of opinion that the failure to submit the evidence of Rohead, in the circumstances of this case, entitles the court to presume, in terms of section 114 (g) of the Evidence Act, that "Rohead 's evidence, if produced, would be unfavorable to the respondent, and that, in consequence, misconduct by complicity in the theft of some servant, or servants of the respondent may be fairly inferred from the respondent 's evidence".
These observations show that even though there may be a breach of the obligation to give full disclosure that does not mean that the risk note form Z or form B can be ignored and the responsibility of the railway fixed on the basis of section 72 (1) as a simple bailee.
If that was the effect of the breach, the Privy Council would not have come to the conclusion after applying section 114 (g) of the Evidence Act in the case of Rohead that misconduct by complicity in the theft of some servant or servants of the railway may be fairly inferred from the railway 's evidence.
The appeal was allowed by the Privy Council after coming to the conclusion that misconduct by the servant or servants of the railway might be fairly inferred from the evidence including the presumption under section 114(g) of the Evidence Act.
It seems to us clear therefore that even if there is a breach of the obligation to make full disclosure in the sense that the railway does not produce the evidence desired by the plaintiff in the suit even though the request of the plaintiff is endorsed by the court, the effect of such breach is not that the risk note is completely out of the way, the 'reason for this as we have already indicated being that the consignor has already taken advantage of the reduced rates and therefore cannot be allowed to ignore the risk note altogether.
But where there is a breach by the railway of the obligation to make full disclosure the court may more readily infer misconduct on the part of the railway or its servants or more readily presume under section 114 (g) of the Evidence Act against the railway.
This in our opinion is the effect of the decision of the Privy Council in Surat Cotton Spinning and Weaving 'Mills Limited 's case(1).
As we have already said we are in respectful agreement with the law as laid down there.
So far as the present appeal is concerned, there was no de by the consignor for disclosure before the suit.
Even after the suit was filed there was no statement by the respondent at any (1) [1937] L.R. 64 I.A. 176.
156 stage that the disclosure made by the appellant in the evidence was in any way inadequate.
The respondent never told the court after the evidence of the railway was over that he was not satisfied with the disclosure and that the railway be asked to make further disclosure by producing such further evidence as the respondent wanted.
In these circumstances it cannot be said in the present case that there was any breach by the railway of its responsibility to make full disclosure.
In the circumstances we are of opinion that the risk note would still apply and the court would have to decide whether misconduct on the part of the railway can be fairly inferred from the evidence produced by it.
If the court cannot fairly infer misconduct from the evidence adduced by the railway, the burden will be on the respondent to prove misconduct.
that burden, if it arises, has clearly not been discharged for the respondent led no evidence on his behalf to discharge the burden.
We therefore turn to the evidence to see whether from the evidence produced by the railway a fair inference of misconduct of the railway or its servants can be drawn on the facts of this case.
It is not in dispute in this case that the wagon containing the consignment arrived intact at Mughalsarai on December 9, 1947.
Besides there is evidence of Damodar Prasad Sharma, Assistant Trains Clerk, Mughalsarai, P.W. 14, who had the duty to receive trains at the relevant time that 192 Dn. goods train was received by him on line No. 4 and that there were two watchmen on duty on that line for examining the goods train and they kept notes of the same.
He also produced the entry relating to the arrival of the train and there is nothing in the entry to show anything untoward with.this wagon when the train arrived at Mughalsarai.
His evidence also shows that the train was sent to the marshaling yard on December 11, 1947.
Finally there is the evidence of Chatterji (P.W. 8) who is also an Assistant Trains Clerk.
It was his duty to make notes with respect to goods trains which left Mughalsarai.
He stated that this wagon was sent by train No. 214 on December 12, 1947 in the evening.
He also stated that the wagon was in good condition and produced the entry relating to this wagon.
It appears however from his evidence that rivets and seals are examined by the watch and ward staff and they keep record of it.
Apparently therefore he did not actually inspect the wagon before it left though he says that it was in good condition.
The relevance of his evidence however is only this that in his register showing the dispatch of trains there is no entry to the effect that there was any thing wrong with this wagon when it was dispatched.
The most important evidence however is of the guard of the train, Ram Prasad Ram (P.W. 2).
He stated that before the train started from Mughalsarai he patrolled both sides of it and the place from where the train started was well lighted and watch and ward staff also patrolled the area.
He also stated that the rivets and seals of all the wagons in the train were checked at Mughal sarai and there was apparently nothing wrong with them.
Now if 157 the evidence of the guard is believed it would show that the wagon containing the consignment was intact at Mughalsarai upto the time 214 goods train including this wagon left Mughalsarai.
If so there would be no reason to hold that anything was done to the wagon before the train left Mughalsarai.
It may be mentioned that the trial court accepted the evidence of the guard while the High Court was not prepared to believe it.
On a careful consideration of the evidence of the guard we see no reason why his evidence should not be believed.
It is obviously the duty of the guard to see that the train was all right, when he took charge of it.
It appears that in discharge of his duty the guard patrolled the train on both sides and looked at rivets and seals to see that they were intact.
It is, however, urged that the guard 's evidence does not show that the seals which he found intact were the original seals of Wadibundar and the possibility is not ruled out that the original seals might have been tampered with and new seals put in while the train was in the marshaling yard at Mughalsarai for two days, as the evidence of the watch and ward staff had not been produced.
It would perhaps have been better if the evidence of the watch and ward staff had been produced by the railway; but if the evidence of the guard is believed that the seals and rivets were intact when the train left Mughalsarai, the evidence of the watch and ward staff is ' not necessary.
It is true that the guard does not say that the seals were the original seals of Wadibundar but it appears from the evidence of Jagannath Prasad (P.W. 9) who was the Assistant Station Master at Dildarnagar that he found when the train arrived there that the northern flapdoors of the wagon were open while southern flapdoors were intact with the original seals.
This evidence suggests that the original seals could not have been tampered with when the train left Mughalsarai and that the guard 's evidence that seals and rivets were intact shows that nothing had happened to the wagon while it was at Mughalsarai.
Further it is also in evidence that there is ample light in the marshalling yard at Mughalsarai and that watch and ward staff is posted there as well.
So the chances of tampering with the seals and rivets in the marshalling yard in the circumstances are remote.
As such the evidence of the guard that the seals and rivets were intact when he left with the train on the evening of December 12, would apparently exclude the possibility that there was any tampering with the wagon before it left Mughalsarai.
It is true that on the last day when the evidence for the railway was recorded and the guard had been recalled for further cross examination it was suggested to him that the railway servants at Mughalsarai had removed the bales and were responsible for the theft.
He however denied that.
But it is remarkable that if the respondent was dissatisfied with the evidence of the guard which was to the effect that the wagon was all right when he left Mughalsarai with the train on December 12, it did not ask the court to order the railway to produce the evidence of the watch and ward staff with respect to this wagon while it was in the marshalling yard at Mughalsarai.
The respondent could ask for such disclosure.
If the court L/B(D)2SCI 12 158 had accepted the request and the railway had failed to produce the evidence of the watch and ward staff it may have been possible to use section 114 of the Evidence Act and hold that the watch and ward staff having not been produced their evidence, if produced, would have gone against the railway.
But in the absence of any demand by the respondent for the production of the watch and ward staff which he could ask for, we see no reason why the statement of the guard to the effect that seals and rivets of the wagon were intact when he left Mughalsarai with the train should not be accepted.
In the absence of any demand by the respondent for the production of watch and ward staff his mere suggestion that the railway servants at Mughalsarai might have committed the theft cannot be accepted.
There is the further evidence of the guard as to what happened between Mughalsarai and Buxar.
It appears between these two stations the train stops only at Dildarnagar.
The evidence of the guard however is that the train suddenly stopped between the warner and home signals before it reached Dildarnagar.
He therefore got down to find out what the trouble was.
He found that the hosepipe between two wagons had got disconnected and this resulted in the stoppage of the train.
The evidence further is that the hosepipe was intact when the train started from Mughalsarai.
He made a note of this in his rough memo book which was produced.
It is noted by him that the northern flap door of this wagon was open.
He reconnected the hosepipe and went up to Dildarnagar.
There he reported the matter to the station staff.
His further evidence is that there were three escorts with the train and that they were guarding the train when the train was standing between the warner and the home signals before it reached Dildarnagar.
Nothing untoward was reported to him by these escorts.
It was at this stop between the two signals that the guard noticed that the rivets and seals of this wagon on one side had been broken.
The case of the railway is that there was theft in the running train between Mughalsarai and Buxar and that is how part of the consignment was lost.
The evidence of the guard does suggest that something happened between Mughalsarai and Dildarnagar and then between Dildarnagar and Buxar.
In addition to this the evidence of the station staff at Dildarnagar is that the flapdoors of this wagon were found open when the train arrived at Dildarnagar.
The contents were not checked at Dildarnagar as there was no arrangement for checking at that station.
The wagon was resealed at Dildarnagar, and the fact was noted in the station master 's diary.
It may be mentioned that the evidence of the station staff was that the wagon was resealed though the guard says that it was riveted also at Dildarnagar.
The entry in the guard 's rough memo however is only that the wagon was resealed.
The guard certainly says that it was rivetted also at Dildarnagar but that is not supported by the station staff and the entry in the guard 's rough memo.
It seems that the statement of the guard may be due to some error on his 159 part.
That may also explain why, when the train arrived at Buxar, the flapdoor again was found open, for it had not been rivitted at Dildarnagar.
Then the evidence of the Buxar station staff is that the northern flapdoors of this wagon were open when the train arrived at Buxar.
It was then resealed and rivetted and was detached for checking.
The checking took place on December 14th at Buxar.
It was then found that one side had the original seals of Wadibun dar while the other side had the seals of Buxar.
On checking the wagon, 27 bales were found intact, covering of one bale was torn and one bale was found loose and slack.
This evidence asto what happened between Mughalsarai and Buxar thus makes it probable that there was theft in the running train between Mughalsarai and Buxar and that may account for the loss of part of the consignment.
It is however contended on behalf of the respondent that no evidence was produced from Mughalsarai asto what happened while the wagon was in the marshalling yard and that the seal book which is kept at every railway station containing entries of resealing when a wagon is resealed was not produced from Mughalsarai and an adverse inference should be drawn from this non production.
We are however of opinion that the evidence of the guard to the effect that the seals were intact when he left Mughalsarai with the train is sufficient to show that the wagon was in tact with the original seals when it left Mughalsarai and there fore it is not possible to draw any adverse inference from the non production of the watch and ward staff or the seal book of Mughalsarai in the circumstances of this case.
It would have been a different matter if the respondent had asked for the production of the seal book as well as the evidence of the watch and ward staff.
But the respondent contented itself merely with the suggestion that a theft might have taken place at Mughalsarai which was denied by the guard and did not ask the court to order the railway to produce this evidence.
In these circumstances in the face of the evidence of the guard and the fact that one seal on the southernside of the door was of the original station.
we do not think that it is possible to draw an adverse inference against the railway on the ground that the evidence of the watch and ward staff and the seal book at Mughalsarai were not produced.
The seal book would have been of value only if the wagon had been resealed at Mughalsarai but there is in our opinion no reason to think that the wagon had been resealed at Mughalsarai after the evidence of the guard that he found the seals and rivets intact when he left Mughalsarai with the train.
On a careful consideration of the evidence therefore we are of opinion that a fair inference cannot be drawn from the evidence of the railway that there was misconduct by the railway or its servants at Mughalsarai during the time when the wagon was there.
If the evidence of the guard is accepted, and we do accept it, there can be no doubt that the loss of the goods took place be case of theft in the running train between Mughalsarai and 160 Buxar.
There is no evidence on behalf of the respondent to prove misconduct and as misconduct cannot fairly be inferred from the evidence produced on behalf of the railway, the suit must fail.
We therefore allow the appeal, set aside the judgment and decree of the High Court and restore that of the Additional Subordinate Judge.
In the circumstances of this case we order parties to bear their own costs throughout.
Appeal allowed.
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Out of a consignment of 60 bales of piece goods despatched by the Railway, under risk note Form Z, only 29 bales were delivered to the respondent who was the consignee.
By sending the consignment thus, the consignor got a specially reduced rate but the burden was thrown on him, of proving misconduct on the part of the railway or its servants, if there was a loss of goods.
The risknote also imposed an obligation on the Railway, to disclose how the consignment was dealt with by it, during the time the consignment was in its possession or control.
The respondent wrote a letter to the Chief Commercial Manager of the Railway stating that 60 bales were booked but only 29 bales had been delivered, and that a suit for damages would be filed.
The letter was sent within 6 months of the booking of the consignment ,and contained the details as to how the amount of damage was arrived at.
Later on, a notice was given under section 80 of the Civil Procedure Code, 1908, and a suit was filed for damages.
But, before the filing of the suit, there was no demand by the consignor for a disclosure as to how the consignment was dealt with by the Railway throughout the period it was in its possession or control.
The Railway however, made a disclosure in its written statement as.
to how the consignment was, dealt with throughout that period.
Its defence was that, there was a theft in the running train and that was how part of the consignment was lost and not due to any misconduct on the part of the Railway or its servants.
Even after the suit was filed and evidence let in at the trial, by the railway there was no statement by the respondent at any stage that the disclosure made by the Railway in the written statement or in the evidence, was in any way inadequate.
The resplendent never told the court after the evidence of the Railway w.as over, that he was net satisfied with the disclosure and that the Railway should be asked to make a further disclosure.
The suit was dismissed by the trial court but decreed on appeal, by the High Court.
In the appeal to the Supreme Court it was contended that, (i) the, suit was barred by section 77 of the Indian Railways Act, 1890, inasmuch as notice required therein was not given by the respondent, and (ii) under the terms of the risk note the Railway was absolved from all responsibility for the less of the goods consigned thereunder, from any cause whatsoever.
except upon proof of misconduct of the Railway or its servants, that the burden of proving such misconduct was on the respondent and that the respondent had failed to discharge the burden.
HELD: (i) A notice under section 77 of the Act is necessary in the case of non delivery which arises from the loss of goods.
Though the letter, written by the respondent to the Chief Commercial Manager, was not specifically stated to be a notice under the section it gave all 'the 'particulars necessary for such a notice and it was also given within time prescribed.
Therefore, the letter was sufficient notice for the purpose of the Act, [149 D F] 146 Governor General in Council vs Musaddilal [1961]3 S.C.R. 647 and Jatmull Bhojraj vs The Darjeeling Himalayan Railway Co.Ltd. ; , followed.
(ii) The view of the High Court, that there was a breach of the condition relating to complete disclosure, and that on such breach the risk note could be completely ignored and the responsibility of the Railway judged purely on the basis of section 72(1) of the Act, as if the goods were consigned at the ordinary rates on the Railway 'srisk, was not correct.
[154 H] The responsibility of the railway administration to disclose to the consignor as to how the consignment was dealt with throughout the time it was in its possession or control arises at once, under the risk note, in either of the cases referred to therein, and is not confined to the stage of litigation.
But such disclosure is necessary only where a consignor specifically asks the railway to make the disclosure.
If no such disclosure is asked for, the administration need not make it before the litigation.
Therefore, if the Railway did not make the disclosure, before the suit was filed, it could not be said to have committed a breach of the term of the contract [153 A D] The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its servants.
If the disclosure is asked for before litigation commences and is not given, or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the court to say, if a suit is filed, whether there .has been a breach ,of the term.
At that stage, evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation, to, the consignor, or which might have been made in the written statement.
When the administration has given its evidence in proof of the disclosure, if the plaintiff is not satisfied with the disclosure made in evidence, he is entitled to ask the court to call upon the railway to fulfill its obligation under the contract, and the railway should then have the opportunity of meeting the demands of the plaintiff.
It is then for the court to decide whether the further disclosure desired by.
the plaintiff should be made by the railway, and if the court decides that it should be made, the railway has to make such further disclosure as the court orders.
If the railway fails to take that opportunity to satisfy the demands of the plaintiff endorsed by the court, the railway, at that stage, would be in breach of its contractual obligation of disclosure.
[153 E 154 B] The effect of the breach however is not to bring the contract to an end and throw the responsibility on the railway, as if the case was a simple case of responsibility under s.72(1).
The risk note would continue to apply and the court would have to decide whether the misconduct can be fairly inferred from the evidence of the railway, with the difference that, where the railway has been in breach of its obligation to make full disclosure, misconduct may be more readily inferred and section 114 of the Evidence Act more readily applied.
But the conditions of the risk note cannot be completely ignored, simply because there has been a breach of the condition of complete disclosure.[154 D G] Surat Cotton Spinning & Weaving Mills vs Secretary of State for India in Council [1937] 64 I.A. 176, applied.
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1935.txt
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il Writ Petition 747 of 1985.
(Under Article 32 of the Constitution of India).
S.R. Rangarajan and K.B. Rohtagi for the Petitioner.
Manoj Swarup and Miss Lalita Kohli Advocates for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
This writ petition under Article 32 of the Constitution has been filed by Baldev Raj Sharma against an order of the Bar Council of Punjab and Haryana rejecting his application for enrolment as an advocate.
On 4 March, 1972 the petitioner passed the Bachelor of Arts examination from the Punjabi University, Patiala.
In 1978 he joined the Bachelor of Laws (Academic) course in Kurukshetra University.
The course is of two years ' dura tion.
The petitioner completed the course and on 1 January, 1981 he was awarded the degree of Bachelor of Laws (Academ ic) by the Kurukshetra University.
During the year 198 1 the petitioner joined the LL.B. (Professional) course in the third year in Kanpur University as a regular student.
The Kanpur University confers two distinct degrees, LL.B. (General), which is a two year course, and LL.B. (Profes sional), which is a three year course.
A person who has been awarded the LL.B. (General) degree is eligible for admission to the LL.B, (Professional) third year.
The petitioner says that there is no distinction in the Rules and Regulations of the Kanpur University on whether LL.B. (General) course should be pursued by regular attendance or as a non collegi ate student.
It is urged that the LL.B. degree of the Kanpur University is recognised by the Bar Council of India for the purpose of enrolment as an advocate.
The petitioner attended classes as a regular student of the LL.B 864 (Professional) Course third year of the Kanpur University as required by the Rules and Regulations framed by that Univer sity.
He appeared in the final examination and was declared successful.
On 22 July, 1982 the degree of LL.B. (Profes sional) was issued by the Kanpur University to him.
Thereaf ter, on 4 August, 1982 the petitioner applied to the State Bar Council of Punjab and Haryana with the necessary enrol ment fee for enrolment as an advocate under the .
On 26 April, 1983 the Bar Council of Punjab and Haryana denied enrolment to the petitioner as an advocate on the ground that the petitioner has not fulfilled the conditions laid down in Rule 1(1)(c) of the Rules of the Bar Council of India framed under section 7(h) and (i), section 24(1)(c)(iii) and (iiia) and section 49(1)(d).
The detailed grounds of refusal supplied to the petitioner by the Bar Council of Punjab and Haryana state that the petitioner had obtained his Bachelor of Laws degree from the Kurukshetra University as a result of the examination held in April, 1980 as a private candi date.
It was an LL.B. (Academic) degree obtained in two years ' study as a private candidate.
The third year of law was pursued by him as a regular student from V.S.S.D. Col lege, Kanpur of the Kanpur University from which institution he obtained the professional degree.
It was further stated that the petitioner had not fulfilled the conditions laid down in the provisions detailed earlier as he had passed his two years ' law course as a private candidate from Kurukshe tra University and the third year law only by regular at tendance at the V.S.S.D. College, Kanpur.
It appears that the State Bar Council, upon receiving the application of the petitioner for enrolment as an advocate, obtained the opin ion of the Bar Council of India and in conformity with that opinion the State Bar Council has refused enrolment.
Section 24(1)(c) provides as follows: "24.
Persons who may be admitted as advocates on a State roll(1) Subject to the provisions of this Act, and the rules made thereunder, a person shall be qualified to be admitted as an advocate on a State roll, if he fulfils the following conditions, namely: (c) he has obtained a degree in law (i) . . (ii) . . 865 (iii) after the 12th day of March, 1967, save as provided in sub clause (iiia), after under going a three year course of study in law from any University in India which is recognised for the purposes of this Act by the Bar Coun cil of India; or (iiia) after undergoing a course of study in law, the duration of which is not less than two academic years commencing from the academ ic year 1967 68, or any earlier academic year from any University in India which is recog nised for the purposes of this Act by the Bar Council of India.
" Sub clause (iii) of clause (c) of section 24(1) entitles a person to be admitted as an advocate on a State roll if he has obtained a degree in law after 12th March, 1967 after under going three years ' of study in law in any University in India recognised for the purposes of the by the Bar Council of India.
An exception to this is provided by sub cl.
(iii) of cl.(c), under which a person is quali fied for admission as an advocate if he has obtained a degree in law after undergoing a course of study in law, the duration of which is not less than two academic years com mencing from the academic year 1967 68, or any earlier academic year from any University in India recognised for the purposes of the Act by the Bar Council of India.
The petitioner obtained a degree of Bachelor of Laws (Profes sional) from the Kanpur University in the examination of 1981.
He had pursued the third year course only of study pertaining to that degree as a regular student ,of the V.S.S. 'D. College, Kanpur in Kanpur University.
The Bar Council of India has framed Rules under the .
Rule 1(1)(c) of of the Bar Council of India Rules, 1975 provides that except as provided in section 24(1)(c)(iiia) of the a degree in law obtained from any University in the territory of India after 12th March, 1967 shall not be recognised for the purposes of section 24(1)(c)(iii) of the Act unless the conditions specified there are fulfilled, including the condition "that the course of study in law has been by regular, attendance at the requisite number of lectures, tutorials and moot courts in a college recognised by a University".
These rules were replaced by a fresh set of rules in 1984 and the new Rule 1(1)(c) is almost identical.
The Rule clearly requires that the course of study in law should have been by regular attendance for the requisite number of lectures, tutorials and moot courts and practical training.
The Rule envisages that for the entire period of the law course there must be a regular attendance of the student before he can satisfy the conditions necessary for enrolment as an advocate under the .
The Rules amplify what is intended in section 24(1)(c)(iii) 866 of the Act.
The three years ' course of study envisaged by that subclause in the Act intends that the three years ' course of study in law must be pursued by maintaining regu lar attendance.
We are unable to say that there is any inconsistency between the Act and the Rule.
So also in a case falling under cl.
(iii) of section 24(1)(c) of the Act, a course of study in law must be pursued for not less than two academic years in terms of that sub clause and Rule 1(1)(c) will apply to such a case also.
There is a substantial difference between a course of study pursued as a regular student and a course of study pursued as a private candi date.
The policy underlying the relevant provisions of the Bar Council Rules indicates the great emphasis laid on regular attendance at the law classes.
The conditions are specifically spelt out when the Act is read along with the Rules.
When so read, it is plain that a candidate desiring enrolment as an advocate under the must fulfil the conditions mentioned in section 24(1)(c)(iii) or section 24(1)(c)(iiia) read with Rule 1(1)(c) of the Bar Council of India Rules, 1975.
In the present case the petitioner failed to do so.
His application for enrolment was rightly reject ed.
The writ petition is dismissed, but in the circum stances, there is no order as to costs.
P.S.S. Petition dismissed.
|
Sub clause (iii) of cl.
(c) of section 24(1) of the entitles a person to be admitted as an advocate on a State roll if he has obtained a degree in law after 12th March, 1967 after undergoing three years ' of study in law.
Under sub cl.
(iii) of cl.
(c) a person is considered quali fied for admission as an advocate if he has obtained a degree in law after undergoing a course the duration of which is not less than two academic years commencing from the academic year 1967 68 or any earlier academic year.
Rule 1(1)(c) of of the Bar Council of India Rules, 1975 requires that the course of study in law should have been by regular attendance for the requisite number of lectures, tutorials and moot courts and practical training.
The petitioner had obtained his Bachelor of Laws (Aca demic) degree in 1980 as a private candidate.
He then pur sued the third year of law as a regular student from the Kanpur University and obtained the professional degree in 1982.
Thereafter, he applied to the State Bar Council of Punjab and Haryana for enrolment as an advocate under the Act.
The State Bar Council denied enrolment on the ground that he had not fulfilled the conditions laid down in Rule 1(1)(c) of the Rules.
Dismissing the writ petition, HELD: A candidate desiring enrolment as an advocate under the must fulfil the conditions mentioned in section 24(1)(c)(iii) or section 24(1)(c)(iiia) read with Rule 1(1)(c) of the Bar Council of India Rules, 1975.
In the instant case, the petitioner failed to do so.
His applica tion for enrolment was, therefore, rightly rejected.
[866C] Sub clause (iii) of section 24(1)(c) when read along with Rule 1(1)(c) 863 intends that the three years course of study in law must be pursued by maintaining regular attendance.
So also, in a case failing under sub cl.
(iiia) of section 24(1)(c) a course of study in law must be pursued for not less than two academic years and Rule l(1)(c) will apply to such a case also.
The petitioner had passed his two year 's law course as a private candidate and the third year law only by regular attendance.
He was, therefore, not entitled to be enrolled as an advo cate.
[865H 866A, 864E]
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6243.txt
|
vil Appeal Nos.
2839 40 of 1989 etc.
From the Judgment and Order dated 6.12.
1984 of the Delhi High Court in R.F.A. Nos. 113 and 114 of 1968.
K. Parasaran, Attorney General, T.S. Krishnamurthy Iyer, B.R.L. Iyengar, M.S. Gujaral, F.S. Nariman, A.K. Ganguli, K. Swamy, C.V. Subba Rao, R.D. Agrawala, P. Parmeshwaran, O.P. Sharma, R.C. Gubrele, K.R. Gupta, R.K. Sharma, K.L. Rathee, Chandulal Verma, Subhash Mittal, section Balakrishnan, N.B. Sinha, K.K. Gupta, Sanjiv B. Sinha, M.M. Kashyap, P.C. Khunger, Swaraj 321 Kaushal, Pankaj Kalra, S.K. Bagga, Ravinder Narain, Sumeet Kachwala, section Sukumaran, K.R. Nagaraja, S.S. Javali, Ms. Lira Goswami, D.K. Das, B.P. Singh, Ranjit Kumar, Santosh Hegde, M.N. Shroff, P.N. Misra, D.C. Taneja, P.K. Jena, A.K. Sanghi and M. Veerappa for the appearing parties.
The Judgment of the Court was delivered by PATHAK, CJ.
The question of law referred to us for decision in these cases is: "Whether under the Land Acquisition Act, 1894 as amended by the Land Acquisition (Amendment) Act, 1984 the claimants are entitled to sola tium at 30 per cent of the market value irre spective of the dates on which the acquisition proceedings were initiated or the dates on which the award had been passed"? It would suffice if we briefly refer to the facts in the Civil Appeals arising out of Special Leave Petitions Nos.
8194 8195 of 1985: Union of India & Another vs Raghubir Singh.
The land belonging to the respondents in village Dhaka was taken by compulsory acquisition initiated by a notifica tion under section 4 of the Land Acquisition Act, 1894 issued on 13 November, 1959.
The award with regard to compensation was made by the Collector on 30 March, 1963.
A reference under section 18 of the Act was disposed of by the Additional District Judge on 10 June, 1968.
He enhanced the compensation.
The respondents preferred an appeal to the High Court claiming further compensation.
During the pendency of the appeal the Land Acquisition (Amendment) Bill 1982 was introduced in Parliament on 30 April, 1982, and became law as the Land Acquisition (Amendment) Act, 1984 when it received the assent of the President on 24 September, 1984.
The High Court disposed of the appeal by its Judgment and Order dated 6 December, 1984.
While it raised the rate of compensation, it also raised the rate of interest payable on the compensa tion, and taking into account the change in the law effected by the Land Acquisition (Amendment) Act, 1984 (referred to hereinafter as "the Amendment Act") it awarded solatium at 30 per cent of the market value.
The Judgment and Order of the High Court is the subject of these appeals.
When these cases came up before a Bench of two learned Judges 322 (E.S. Venkataramiah and R.B. Misra, JJ.) on 23 September, 1985, they referred to two earlier decisions of this Court and expressed the view that the question set forth above required re examination by a larger Bench of five Judges.
It was further directed that the other questions involved in the petitions would be considered after the aforesaid ques tion had been resolved by the larger Bench.
The two deci sions referred to in the Order of the learned Judges are K. Kamalajammanniavaru (dead) by Lrs.
vs Special Land Acquisi tion Officer, decided by O. Chinnappa Reddy and Sabyasachi Mukharji, JJ.
on 14 February, 1985 and Bhag Singh and Ors.
vs Union Territory of Chandigarh, ; decided by P.N. Bhagwati, C.J., A.N. Sen and D.P. Madon, JJ.
on 14 August, 1985.
Solatium is awarded under sub section
(2) of section 23 of the Land Acquisition Act.
Before the Amendment Act was enacted the sub section provided for solatium at 15 per cent of the market value.
By the change introduced by the Amendment Act the amount has been raised to 30 per cent of the market value.
Sub section
(2) of section 30 of the Amendment Act specifies the category of cases to which the amended rate of solatium is attracted.
In K. Kamalajammanniavaru, (supra), the two learned Judges held that sub section
(2) of section 30 referred to orders made by the High Court or the Supreme Court in ap peals against an award made between 30 April, 1982 and 22 September, 1984, and that therefore solatium at 30 per cent alone pursuant to sub section
(2) of section 30 had to be awarded in such cases only.
In Bhag Singh (supra), however, the three learned Judges held that sub section
(2) of section 30 referred to proceedings relating to compensation pending on 30 April, 1982 or filed subsequent to that date, whether before the Collector or before the Court or the High Court or the Supreme Court, even if they had finally terminated before the enactment of the Amending Act.
In taking that view they overruled K. Kamalajammanniavaru, (supra) and approved of the opinion expressed in another case, State of Punjab vs Mohinder Singh and another, decided by section Murtaza Fazal Ali, A. Varadarajan and Ranganath Misra, JJ.
on 1 May, 1985.
At the outset, a preliminary objection has been raised by Shri B.R.L. Iyengar to the validity of the reference of these cases to a larger Bench.
He contends that the mere circumstance that a Bench of two learned Judges finds itself in doubt about the correctness of the view taken by a Bench of three learned Judges should not provide reason for refer ring the matter to a larger Bench.
The preliminary objection raised by Shri Iyengar has been vigorously resisted by the 323 appellants.
Having regard to the submissions made before us, we think it necessary to lay down the law on the point.
India is governed by a judicial system identified by a hierarchy of courts, where the doctrine of binding precedent is a cardinal feature of its jurisprudence.
It used to be disputed that Judges make law.
Today, it is no longer a matter of doubt that a substantial volume of the law govern ing the lives of citizens and regulating the functions of the State flows from the decisions of the superior courts.
"There was a time: ' observed Lord Reid, "when it was thought almost indecent to suggest that Judges make law They only declare it . .
But we do not believe in fairy tales any more "The Judge as law Maker" p. 22.
" In countries such as the United Kingdom, where Parliament as the legislative organ is supreme and stands at the apex of the constitution al structure of the State, the role played by judicial law making is limited.
In the first place the function of the courts is restricted to the interpretation of laws made by Parliament, and the courts have no power to question the validity of Parliamentary statutes, the Diceyan dictum holding true that the British Parliament is paramount and all powerful.
In the second place, the law enunciated in every decision of the courts in England can be superseded by an Act of Parliament.
As Cockburn CJ.
observed in Exp.
Canon Selwyn, "There is no judicial body in the country by which the validity of an Act of Parliament could be questioned.
An act of the Legislature is superior in authority to any Court of Law".
And Ungoed Thomas J., in Cheney vs Conn, referred to a Parliamentary statute as "the highest form of law . .which prevails over every other form, of law.
" The position is substantially different under a written Consti tution such as the one which governs us.
The Constitution of India, which represents the Supreme Law of the land, envis ages three distinct organs of the State, each with its own distinctive functions, each a pillar of the State.
Broadly, while Parliament and the State Legislature in India enact the law and the Executive government implements it, the judiciary sits in judgment not only on the implementation of the law by the Executive but also on the validity of the Legislation sought to be implemented.
One of the functions of the superior judiciary in India is to examine the compe tence and validity of legislation, both in point of legisla tive competence as well as its consistency with the Funda mental Rights.
In this regard, the courts in India possess a power not known to the English 324 Courts.
Where a statute is declared invalid in India it cannot be reinstated unless constitutional sanction is obtained therefore by a constitutional amendment or an appropriately modified version of the statute is enacted which accords with constitutional prescription.
The range of judicial review recognised in the superior judiciary of India is perhaps the widest and the most extensive known to the world of law.
The power extends to examining the validi ty of even an amendment to the Constitution, for now it has been repeatedly held that no constitutional amendment can be sustained which violates the basic structure of the Consti tution.
(See His Holiness Kesavananda Bharati Sripadagalava ru vs State of Kerala, ; Smt.
Indira Nehru Gandhi vs Shri Raj Narain, ; Minerva Mills Ltd. and others vs Union of India and others, [1980] 2 SCC 591 and recently in S.P. Sampath Kumar etc.
vs Union of India and Ors.
, ; With this impressive expanse of judicial power, it is only right that the superi or courts in India should be conscious of the enormous responsibility which rests on them.
This is specially true of the Supreme Court, for as the highest Court in the entire judicial system the law declared it is, by Article 141 of the Constitution, binding on all courts within the territory of India.
Taking note of the hierarchical character of the judi cial system in India, it is of paramount importance that the law declared by this Court should be certain, clear and consistent.
It is commonly known that most decisions of the courts are of significance not merely because they consti tute an adjudication on the rights of the parties and re solve the dispute between them, but also because in doing so they embody a declaration of law operating as a binding principle in future cases.
In this latter aspect lies their particular value in developing the jurisprudence of the law.
The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transaction forming part of his daily affairs.
And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a Court.
But like all principles evolved by man for the regula tion of the social order, the doctrine of binding precedent is circumscribed in its governance by perceptible limita tions, limitations arising by reference to the need for re adjustment in a changing society, a re adjustment of legal norms demanded by a changed social context.
This need for 325 adapting the law to new urges in society brings home the truth of the Holmesian aphorism that "the life of the law has not been logic it has been experience".
Oliver Wendell Holmes, "The Common Law" p. 5 and again when he declared in another study that Oliver Wendell Holmes, "Common Carriers and the Common Law", (1943) 9 Curr.
L.T. 387, 388 "the law is forever adopting new principles from life at one end," and "sloughing off" old ones at the other.
Explaining the conceptual import of what Holmes had said, Julius Stone elaborated that it is by the introduction of new extra legal propositions emerging from experience to serve as premises, or by experience guided choice between competing legal propositions, rather than by the operation of logic upon existing legal propositions, that the growth of law tends to be determined.
Julius Stone, "Legal Systems & Lawyers Rea soning", pp.
58 59.
Legal compulsions cannot be limited by existing legal propositions, because there will always be, beyond the frontiers of the existing law, new areas inviting judicial scrutiny and judicial choice making which could well affect the validity of existing legal dogma.
The search for solu tions responsive to a changed social era involves a search not only among competing propositions of law, or competing versions of a legal proposition, or the modalities of an indeterminacy such as "fairness" or "reasonableness", but also among propositions from outside the ruling law, corre sponding to the empirical knowledge or accepted values of present time and place, relevant to the dispensing of jus tice within the new parameters.
The universe of problems presented for judicial choice making at the growing points of the law is an expanding universe.
The areas brought under control by accumulation of past judicial choice may be large.
Yet the areas newly presented for still further choice, because of changing social, economic and technological conditions are far from inconsiderable.
It has also to be remembered, that many occasions for new options arise by the mere fact that no generation looks out on the world from quite the same van tage point as its predecessor, nor for the matter with the same perception.
A different vantage point or a different quality of perception often reveals the need for choice making where formerly no alternatives, and no problems at all, were Perceived.
The extensiveness of the areas for judicial choice at a particular time is a function not only of the accumulation of past decisions, not only of changes in the environment, but also of new insights and perspec tives both on old problems and on the new problems thrown up by changes entering the cultural and social heritage.
326 Not infrequently, in the nature of things there is a gravity heavy inclination to follow the groove set by prece dential law.
Yet a sensitive judicial conscience often persuades the mind to search for a different set of norms more responsive to the changed social context.
The dilemma before the Judge poses the task of finding a new equilibri um, prompted not seldom by the desire to reconcile opposing mobilities.
The competing goals, according to Dean Roscoe Pound, invest the Judge with the responsibility "of proving to mankind that the law was something fixed and settled, whose authority was beyond question, while at the same time enabling it to make constant readjustments and occasional radical changes under the pressure of infinite and variable human desires." Roscoe Pound, "an Introduction to the Phi losophy of Law" p. 19.
The reconciliation suggested by Lord Reid in "The Judges as Law Maker" pp. 25 6 lies in keeping both objectives in view, "that the law shall be certain, and that it shall be just move with the times.
" An elaboration of his opinion is contained in Myers vs Director of Public Prosecutions, , where he expressed the need for change in the law by the court and the limits within which such change could be brought about.
He said: ibid at p. 1021.
"I have never taken a narrow view of the functions of this House as an appellate tribu nal.
The common law must be developed to meet changing economic conditions and habits of thought, and I would not be deterred by ex pressions of opinion in this House in old cases.
But there are limits to what we can or should do.
If we are to extend the law it must be by the development and application of fundamental principles.
We cannot introduce arbitrary conditions or limitations: that must be left to legislation.
And if we do in effect change the law, we ought in my opinion only to do that in cases where our decision will produce some finality or certainty.
" Whatever the degree of success in resolving the dilemma, the Court would do well to ensure that although the new legal norm chosen in response to the changed social climate repre sents a departure from the previously ruling norm, it must, nevertheless.
carry within it the same principle of certain ty, clarity and stability.
The profound responsibility which is.borne by this Court in its choice between earlier established standards and the formulation of a new code of norms is all the more sensitive and significant because the 327 response lies in relation to a rapidly changing social and economic society.
In a developing society such as India the law does not assume its true function when it follows a groove chased amidst a context which has long since crum bled.
There will be found among some of the areas of the law norms selected by a judicial choice educated in the experi ence and values of a world which passed away 40 years ago.
The social forces which demand attention in the cauldron of change from which a new society is emerging appear to call for new perceptions and new perspectives.
The recognition that the times are changing and that there is occasion for a new jurisprudence to take birth is evidenced by what this Court said in The Bengal Immunity Company Limited vs The State of Bihar and Others, , when it ob served that it was not bound by its earlier judgments and possessed the freedom to overrule its judgments when it thought fit to do so to keep pace with the needs of changing times.
The acceptance of this principle ensured the preser vation and legitimation provided to the doctrine of binding precedent, and therefore, certainty and finality in the law, while permitting necessary scope for judicial creativity and adaptability of the law to the changing demands of society.
The question then is not whether the Supreme Court is bound by its own previous decisions.
It is not.
The question is under what circumstances and within what limits and in what manner should the highest Court over turn its own pronouncements.
In the examination of this question it would perhaps be appropriate to refer to the response of other jurisdictions, specially those with which the judicial system in India has borne an historical relationship.
The House of Lords in England provides the extreme example of a judicial body which until recently disclaimed the power to overrule it self.
It used to be said that the House of Lords did never overrule itself but only distinguished its earlier deci sions.
An erroneous decision of the House of Lords could be set right only by an Act of Parliament.
(See Street Tramways vs London County Council, ; and Radcliffe vs Ribble Motor Services Ltd., ,245. ) Apparent ly bowing to the pressure of a reality forced upon it by reason of a rapidly gathering change in the prevailing socio economic structure, on 26 July, 1966, Lord Gardiner, L.C., made the following statement on behalf of himself and the Lords of Appeal in Ordinary: "Their lordship regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases.
It provides at least 328 some degree of certainty upon which individu als can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules.
Their lordships nevertheless recog nise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law.
They propose therefore to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.
In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal Law.
" Since then the House of Lords has framed guidelines in a series of cases decided upto to 1975 and the guidelines have been summarised in Dr. Alan Paterson 's "Law Lords" 1982: pp.
156 157.
He refers to several criteria articulated by Lord Reid in those cases.
The freedom granted by the 1966 Practice Statement ought to be exercised sparingly (the 'use sparingly ' crite rion) (Jones vs Secretary of State for Social Services, [1972] A.C. at 966.
A decision ought not to be overruled if to do so would upset the legitimate expectations of people who have entered into contracts or settlements or otherwise regulated their affairs in reliance on the validity of that decision (the 'legitimate expectations ' criterion) (Ross Smith vs Ross Smith, , 303 and Indyka vs Indyka, [1969] I A.C. 33, 69.) 3.
A decision concerning questions of construction of statute or other documents ought not to be overruled except in rare and exceptional cases (the 'Construction ' criterion) Jones, at 966.
4(a) A decision ought not to be overruled if it would be impracticable for the Lords to foresee the consequences of departing from it (the 'unforseeable consequences ' crite rion) (Steadman vs Steadman, ,542.
(b) A decision ought not to be overruled if to do so would involve a change that ought to be part of a 329 comprehensive reform of the law.
Such changes are best done 'by legislation following on a wide survey of the whole field ' (the 'need for comprehensive reform ' criterion) (DPP vs Myers, , 1022; Cassell vs Broome, ; , 11086 and Haughton vs Smith, [1975] A.C. 476,500).
In the interest of certainty, a decision ought not to be overruled merely because the Law Lords consider that it was wrongly decided.
There must be some additional reasons to justify such a step (the 'precedent merely wrong ' crite rion) Knuller vs DPP, [1973] A .C. 435,455; 6.
A decision ought to be overruled if it causes such great uncertainty in practice that the Parties ' advisers are unable to give any clear indication as to what the courts will hold the law to be (the 'rectification of uncertainty ' criterion) Jones, at 966; Oldendroll & Co. vs Tradex Export, S.A. 1974 479,533,535. 7.
A decision ought to be overruled if .in relation to some broad issue or principle it is not considered just or in keeping with contemporary social conditions or modern conceptions of public policy (the 'unjust or outmoded ' criterion) ibid Conway vs Rimmer, ; ,938.
Dr. Paterson noted that between the years 1966 and 1988 there were twenty nine cases in which the House of Lords was invited to overrule one of its own precedents, that the House of Lords did so in eight of them, while in a further ten cases at least one of the Law Lords was willing to overrule the previous House of Lords precedent.
In a consid erable number of other cases, however, the Law Lords seemed to prefer to distinguish the earlier decisions rather than overrule them.
The High Court of Australia, the highest Court in the Commonwealth, has reserved to itself the power to reconsider its own decision, but has laid down that the power should not be exercised upon a mere suggestion that some or all the member of the later Court would arrive at a different con clusion if the matter were res integra.
In the Tramways case; , , Griffith, C.J., while doing so administered the following caution: "In my opinion, it is impossible to maintain as an abstract proposition that Court is either legally or technically bound by previ ous decisions.
Indeed, it may, in a proper case, be 330 its duty to disregard them.
But the rule should be applied with great caution, and only when the previous decision is manifestly wrong, as, for instance, if it proceeded upon the mistaken assumption of the continuance of a repealed or expired Statute, or is contrary to a decision of another Court which this Court is bound to follow; not, I think, upon a mere suggestion, that some or all of the members of the later Court might arrive at a different conclusion if the matter was res integra.
Otherwise there would be grate danger of want of continuity in the interpretation of law.
" In the same case, Barton, J. observed at p. 69: " . .
I would say that I never thought that it was not open to this Court to review its previous decisions upon good cause.
The question is not whether the Court can do so, but whether it will, having due regard to the need for continuity and consistency in the judicial decision.
Changes in the number of appointed Justices can, I take it, never of themselves furnish a reason for review . .
But the Court can always listen to argument as to whether it ought to review a particular decision, and the strongest reason for an overruling is that a decision is manifestly wrong and its continuance is injurious to the public interest".
In the United States of America the Supreme Court has explicitly overruled its prior decision in a number of cases and reference will be found to them in the judgment of Brandeis, J. in State of Washington vs Dawson & Co., ; where he said: "The doctrine of Stare decisis should not deter us from overruling that case and those which follow it.
The decisions are recent ones.
They have not been acquiesced in.
They have not created a rule of property around which vested interests have clustered.
They affect solely matters of a transitory nature.
On the other hand, they affect seriously the lives of men, women and children, and the general welfare.
Stare decisis is ordinarily, a wise rule of action.
But it is not a univer sal, inexorable command.
The instances in which the Courts have disregarded its admonition a re many.
" 331 Elaborating his point in his dissenting judgment in David Burnel vs Coronado Oil & Gas Company, ; ; 76 L.Ed. 815, Brandeis, J. observed: "Stare decisis usually the wise policy, because in most matters it is more important that the applicable rule of law be settled right.
Compare National Bank vs Whitney, 103 U.S. 99; 26 L.Ed.
443 444.
This is commonly true even where the error is a matter of serious concern, provided correction can be had by legislation.
But in cases involving the Feder al Constitution, where correction through legislative action is practically impossible, this Court has often overruled its earlier decisions.
The Court bows to the lessons of experience and the force of better reasoning recognising that the process of trial and error, so fruitful in the physical sciences, is appropriate also in the judicial function.
" The Judicial.
Committee of the Privy Council also took the view that it was not bound in law by its earlier deci sions, but in In re Compensation to Civil Servants, L.R. ; A.I.R. 1929 P.C. 84, 87 it declared that it "would hesitate long before disturbing a solemn decision by a previous Board, which raised an identical or even a simi lar issue for determination" and reiterated that reservation in the Attorney General of Ontario vs The Canada Temperance Federation, L.R. 76 Q.A. 10 and Phanindra Chandra Neogy vs The King; , These cases from England, Australia and the United States were considered by this Court in The Bengal Immunity Company Limited vs The State of Bihar and others, (supra), perhaps the first recorded instance of the Supreme Court in this country being called upon to consider whether it could overrule an earlier decision rendered by it.
A Bench of seven Judges assembled to consider whether the majority decision of a Constitution Bench of five Judges in State of Bombay vs The United Motors (India) Ltd., ; should be reconsidered.
Four Judges of the Bench of seven said it should and voted to overrule the majority decision in the United Motors, (supra).
The remaining three voted to the contrary.
Das, Acting C.J., speaking for himself and on behalf of Bose, Bhagwati and Jafar Imam, JJ, preferred the approach adopted by the United States Supreme Court since, in the view of that learned Judge, the position in India approximated more closely to that obtaining in the United states rather than to the position in England, where Parlia ment could rectify the situation by a simple majority, and to that in Australia, where the mistake could be 332 corrected in appeal to the Privy Council.
The learned Judge observed: "There is nothing in our Constitution which pre vents us from departing from a previous decision if we are convinced of its error and its baneful effect on the general interests of the public." And reference was made to the circumstance that Article 141 of the Constitution made the law declared by this Court binding on all Courts in India.
Speaking with reference to the specific case before the Court, the learned Judge referred to the far reaching effect of the earlier decision in the United Motors (supra) on the general body of the consuming public, and that the error committed in the earlier decision would result in perpetuat ing a tax burden erroneously imposed on the people, giving rise to a consequence "manifestly and wholly unauthorised." The learned Judge observed: "It is not an ordinary pronouncement declaring the rights of two private individuals inter se.
It involves an adjudication on the taxing power of the States as against the consuming public generally.
If the decision is errone ous, as indeed we conceive it to be, we owe it to the public to protect them against the illegal tax burdens which the States are seeking to impose on the strength of that errone ous recentdecision".
Cautioned that the Court should not differ merely because a contrary view appeared preferable, the learned Judge affirmed that "we should not lightly dissent from a previous pronouncement of this Court.
" But if the previous decision was plainly erroneous, he pointed out, there was a duty on the Court to say so and not perpetuate the mistake.
The appeal to the principle of stare decisis was rejected on the ground that (a) the decision intended to be overruled was a very recent decision and it did not involve overruling a series of decisions, and (b) the doc trine of stare decisis was not an inflexible rule, and must, in any event, yield where following it would result in perpetuating an error to the detriment of the general wel fare of the public or a considerable section thereof.
Since then the question as to when should the Supreme Court overrule its own decision has been considered in several cases.
Relying on the Bengal Immunity case, Khanna, J. remarked that certainly in the law, which was an essen tial ingredient of the Rule of Law, would be considerably eroded if the highest court of the land lightly overruled the view expressed by it in earlier cases.
One instance where such overruling could be permissible was a situation where contextual values giving birth to the earlier view had altered substantially since.
333 In Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Ors.
, ; he explained: "Some new aspects may come to light and it may become essen tial to cover fresh grounds to meet the new situations or to overcome difficulties which did not manifest themselves or were not taken into account when the earlier view was pro pounded.
Precedents have a value and the ratio decidendi of a case can no doubt be of assistance in the decision of future cases.
At the same time we have to, as observed by Cardozo, guard against the notion that because a principle has been formulated as the ratio decidendi of a given prob lem, it is therefore to be applied as a solvent of other problems, regardless of consequences, regardless of deflect ing factors, inflexibly.
and automatically, in all its pristine generality (see Selected Writings, p. 31).
As in life so in law things are not static.
" In Lt. Col. Khajoor Singh vs The Union of India & Anoth er; , the majority of this court emphasised that the court, should not depart from an interpretation given in an earlier judgment of the court unless there was a fair amount of unanimity that the earlier decision was manifestly wrong.
In Keshav Mills Company vs Commissioner of Income Tax, ; ,921 this court observed that a revision of its earlier decision would be justified if there were compelling and substantial reasons to do so.
In Sajjan Singh vs State of Rajasthan, ; ,947 948 the court laid down the test: 'Is it absolutely necessary and essential that the question already decided should be reo pened? ', and went on to observe: 'the answer to this ques tion would depend on the nature of the infirmity alleged in the earlier decision, its impact on public good and the validity and compelling character of the considerations urged in support of the contrary view. ' There can be no doubt, as was observed in Girdhari Lal Gupta vs D.H. Mill, ; that where an earlier relevant statutory provision has not been brought to the notice of the court, the decision may be reviewed, or as in Pillani Investment Corporation Ltd. vs I.T.O. 'A ' Ward, Calcutta & Anr., ; , if a vital point was not considered.
A more compendious examination of the problem was undertaken in Keshav Mills Company vs Commissioner of Income Tax, (supra) where the Court pointed out: "It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should 334 govern the approach of the Court in dealing with the ques tion of reviewing and revising its earlier decisions.
It would always depend upon several relevant considerations: What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to any relevant and materi al statutory provision, or was any previous decision of this Court bearing on the point not noticed? Is the court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be the impact of the error on the general administration of law or on public good? Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts? And, would the reversal of the earlier decision lead to public inconven ience, hardship or mischief? These and other relevant con siderations must be carefully borne in mind whenever this Court is called upon to exercise its jurisdiction to review and revise its earlier decisions.
These considerations become still more significant when the earlier decision happens to be a unanimous decision of the Bench of five learned Judges of this Court.
" Much importance has been laid on observing the finality of decisions rendered by the Constitution Bench of this Court, and in Ganga Sugar Company vs State of Uttar Pradesh, ; , 782 the Court held against the finality only where the subject was 'of such fundamental importance to national life or the reasoning is so plainly erroneous in the light of later thought that it is wiser to be ultimately right rather than to be consistently wrong '.
It is not necessary to refer to all the cases on the point.
The broad guidelines are easily deducible from what has gone before.
The possibility of further defining these guiding principles can be envisaged with further juridical experience, and when common jurisprudential values linking different national systems of law may make a consensual pattern possible.
But that lies in the future.
There was some debate on the question whether a Division Bench of Judges is obliged to follow the law laid down by a Division Bench of a larger number of Judges.
Doubt has arisen on the point because of certain observations made by O. Chinnappa Reddy, J. in 335 Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, AIR 1985 SC 23 1.
Earlier, a Division Bench of two Judges, of whom he was one, had expressed the view in T.V. Vatheeswaran vs The State of Tamil Nadu, that delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle a person under sentence of death to invoke Article 21 of the Constitution and demand the quashing of the sentence of death.
This would be so, he observed, even if the delay in the execution was occasioned by the time necessary for filing an appeal or for considering the reprieve of the accused or some other cause for which the accused himself may be responsible.
This view was found unacceptable by a Bench of three Judges in Sher Singh & Ors.
vs State of Punjab, ; where the learned Judges observed that no hard and fast rule could be laid down in the matter.
In direct disagreement with the view in T.V. Vatheeswaran, (supra), the learned Judges said that account had to be taken of the time occupied by pro ceedings in the High Court and in the Supreme Court and before the executive authorities, and it was relevant to consider whether the delay was attributable to the conduct of the accused.
As a member of another Bench of two Judges, in Javed Ahmed Abdul Hamid Pawala, (supra) O. Chinnappa Reddy, J. questioned the validity of the observations made in Sher Singh, (supra) and went on to note, without express ing any concluded opinion on the point, that it was a seri ous question "whether a Division Bench of three Judges could purport to overrule the judgment of a Division Bench of two Judges merely because there is larger than two.
The Court sits in Divisions of two and three Judges for the sake of convenience and it may be inappropriate for a Division Bench of three Judges to purport to overrule the decision of a Division Bench of two Judges.
Vide Young vs Bristol Aero plane Co. Ltd., It may be otherwise where a Full Bench or a Constitution Bench does so.
" It is pertinent to record here that because of the doubt cast on the validity of the opinion in Sher Singh, (supra), the question of the effect of delay on the execution of a death sentence was referred to a Division Bench of five Judges, and in Triveniben vs State of Gujarat, AIR 1989 SC 142 the Constitution Bench overruled T.V. Vatheeswaran, (supra).
What then should be the position in regard to the effect of the law pronounced by a Division Bench in relation to a case raising the same point subsequently before a Division Bench of a smaller number of Judges? There is no constitu tional or statutory prescription in the matter, and the point is governed entirely by the practice in India of the Courts sanctified by repeated affirmation over a century of time.
It cannot be doubted that in order to promote consist ency and certainty 336 in the law laid down by a superior Court, the ideal condi tion would be that the entire Court should sit in all cases to decide questions of law, and for that reason the Supreme Court of the United States does so.
But having regard to the volume of work demanding the attention of the Court, it has been found necessary in India as a general rule of practice and convenience that the Court should sit in Divisions, each Division being constituted of Judges whose number may be determined by the exigencies of judicial need, by the nature of the case including any statutory mandate relative there to, and by such other considerations which the Chief Jus tice, in whom such authority devolves by convention, may find most appropriate.
It is in order to guard against the possibility of inconsistent decisions on points of law by different Division Benches that the rule has been evolved, in order to promote consistency and certainty in the devel opment of the law and its contemporary status, that the statement of the law by a Division Bench is considered binding on a Division Bench of the same or lesser number of Judges.
This principle has been followed in India by several generations of Judges.
We may refer to a few of the recent cases on the point.
In John Martin vs The State of West Bengal, ; a Division Bench of three Judges found it right to follow the law declared in Haradhan Saha vs State of West Bengal, ; decided by a Division Bench of five Judges, in preference to Bhut Nath Mate vs State of West Bengal, ; decided by a Division Bench of two Judges.
Again in Smt.
India Nehru Gandhi vs Shri Raj Narain, Beg, J. held that the Constitution Bench of five Judges was bound by the Constitution Bench 01 ' thirteen Judges in His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala, [1973] Suppl.
1 SCR.
In Ganapati Sitaram Balvalkar & Anr.
vs Waman Shripad Mage (Since Dead) Through Lrs., this Court expressly stated that the view taken on a point of law by a Division Bench of four Judges of this Court was binding on a Division Bench of three Judges of the Court.
And in Mattulal vs Radhe Lal, ; this Court specifically observed that where the view expressed by two different Division Benches of this Court could not be reconciled, the pronouncement of a Division Bench of a larger number of Judges had to be, preferred over the deci sion of a Division Bench of a smaller number of Judges.
This Court also laid down in Acharaya Maharajshri Narandrapra sadji AnandprasadjiMaharaj etc.
vs The State of Gujarat & Ors., ; that even where the strength of two differing Division Benches consisted of the same number of Judges, it was not open to one Division Bench to decide the correctness or other wise of the views of the other.
The principle was reaffirmed in Union of India & Ors.
vs Godfrey Philips India Ltd., [1985] 4 337 SCC 369 which noted that a Division Bench of two Judges of this Court in Jit Ram vs State of Haryana, ; had differed from the view taken by an earlier Division Bench of two Judges in Motilal Padampat Sugar Mills vs State of U.P., ; on the point whether the doctrine of promissory estoppel could be defeated by invoking the defence of executive necessity, and holding that to do so was wholly unacceptable reference was made to the well accepted and desirable practice of the later Bench referring the case to a larger Bench when the learned Judges found that the situation called for such reference.
We are of opinion that a pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or a smaller number of Judges, and in order that such decision be binding, it is not necessary that it should be a decision rendered by the Full Court or a Constitution Bench of the Court.
We would, however, like to think that for the purpose of imparting certainty and endowing due authority decisions of this Court in the future should be rendered by Division Benches of at least three Judges un less, for compelling reasons that is not conveniently possi ble.
Upon the aforesaid considerations, and in view of the nature and potential of the questions raised in these cases we are of the view that there was sufficient justification for the order dated 23 September, 1985 made by the Bench of two learned judges referring these cases to a larger Bench for reconsideration of the question decided in K. Kamalajam mannivaru (dead) by Lrs., (supra) and Bhag Singh and Ors., (supra).
The preliminary objection raised by learned counsel for the respondents to the validity of the reference is overrruled.
We now come to the merits of the reference.
The refer ence is limited to the interpretation of section 30(2) of the Land Acquisition (Amendment) Act of 1984.
Before the enact ment of the Amendment Act, solatium was provided under section 23(2) of the Land Acquisition Act (shortly, "the parent Act") at 15% on the market value of the Land computed in accordance with section 23(1) of the Act, the solatium being provided in consideration of the compulsory nature of the acquisition.
The Land Acquisition Amendment Bill, 1982 was introduced in the House of the People on 30 April, 1982 and upon enactment the Land Acquisition Amendment Act 1984 commenced operation with effect from 24 September, 1984.
section 15 of the Amendment Act amended section 23(2) of the parent Act and substituted the words '30 per centum ' in place of the words '15 per centum '.
Parliament intended that the be 338 nefit of the enhanced solatium should be made available albeit to a limited degree, even in respect of acquisition proceedings taken before that date.
It sought to effectuate that intention by enacting section 30(2) in the Amendment Act, section 30(2) of the Amendment Act provides: "(2) the provisions of sub section
(2) of section 23 . of the principal Act, as amended by clause (b) of section 15 . . of this Act . . shall apply and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against any such award under the provisions of the principal Act after the 30th day of April, 1982 [the date of introduction of the Land Acquisition (Amendment) Bill, 1982, in the House of the People] and before the commencement of this Act." In construing section 30(2), it is just as well to be clear that the award made by the Collector referred to here is the award made by the Collector under section 11 of the parent Act, and the award made by the Court is the award made by the Principal Civil Court of Original Jurisdiction under section 23 of the parent Act on a reference made to it by the Collector under section 19 of the parent Act.
There can be no doubt that the benefit of the enhanced solatium is intended by section 30(2) in respect of an award made by the Collector between 30 April 1982 and 24 September, 1984.
Likewise the benefit of the enhanced solatium is extended by section 30(2) to the case of an award made by the Court between 30 April 1982 and .24 September 1984, even though it be upon reference from an award made before 30 April, 1982.
The question is: what is the meaning of the words "or to any order passed by the High Court or Supreme Court on appeal against any such award?" Are they limited, as con tended by the appellants, to appeals against an award of the Collector or the Court made between 30 April 1982 and 24 September 1984, or do they include also, as contended by the respondents, appeals disposed of between 30 April, 1982 and 24 September 1984 even though arising out of awards of the Collector or the Court made before 30 April, 1982.
We are of opinion that the interpretation placed by the appellants should be preferred over that suggested by the respondents.
Parliament has identified the appeal before the High Court and the appeal before the Supreme Court by describing it as an appeal against 'any such award '.
The submission on behalf of the respondents is that the words 'any such award ' mean the award made by the Collector or Court, and carry no 339 greater limiting sense; and that in this context, upon the language of section 30(2), the order in appeal is an appellate order made between 30 April 1982 and 24 September 1984 in which case the related award of the Collector or of the Court may have been made before 30 April 1982.
To our mind, the words 'any such award ' cannot bear the broad meaning suggested by learned counsel for the respondents.
No such words of description by way of identifying the appellate order of the High Court or of the Supreme Court were neces sary.
Plainly, having regard to the existing hierarchical structure of for a contemplated in the parent Act those appellate orders could only be orders arising in appeal against the award of the Collector or of the Court.
The words 'any such award ' are intended to have deeper signifi cance, and in the context in which those words appear in section 30(2) it is clear that they are intended to refer to awards made by the Collector or Court between 30 April, 1982 and 24 September, 1984.
In other words section 30(2) of the Amendment Act extends the benefit of the enhanced solatium to cases where the award by the Collector or by the Court is made between 30 April, 1982 and 24 September, 1984 or to appeals against such awards decided by the High Court and the Su preme Court whether the decisions of the High Court or the Supreme Court are rendered before 24 September, 1984 or after that date.
All that is material is that the award by the Collector or by the Court should have been made between 30 April, 1982 and 24 September, 1984.
We find ourselves in agreement with the conclusion reached by this Court in K. Kamalajammanniavaru (dead) by Lrs.
vs Special Land Acquisi tion Officer, (supra), and find ourselves unable to agree with the view taken in Bhag Singh and Others vs Union Terri tory of Chandigarh, (supra).
The expanded meaning given to section 30(2) in the latter case does not, in our opinion, flow reasonably from the language of that sub section.
It seems to us that the learned judges in that case missed the sig nificance of the word 'such ' in the collocation 'any such award ' in section 30(2).
Due significance must be attached to that word, and to our mind it must necessarily intend that the appeal to the High Court or the Supreme Court, in which the benefit of the enhanced solatium is to be given, must be confined to an appeal against an award of the Collector or of the Court rendered between 30 April, 1982 and 24 Septem ber, 1984.
We find substance in the contention of the learned Attorney General that if Parliament had intended that the benefit of enhanced solatium should be extended to all pending proceedings it would have said so in clear language.
On the contrary, as he says, the terms in which section 30(2) is couched indicate a limited extension of the benefit.
The Amendment Act has not been made generally retrospective with 340 effect from any particular date, and such retrospectivity as appears is restricted to certain areas covered by the parent Act and must be discovered from the specific terms of the provision concerned.
Since it is necessary to spell out the degree of retrospectivity from the language of the relevant provision itself, close attention must be paid to the provi sions of section 30(2) for determining the scope of retrospective relief intended by Parliament in the matter of enhanced solatium.
The learned Attorney General is also right when he points out that it was never intended to define the scope of the enhanced solatium on the mere accident of the disposal of a case in appeal on a certain date.
Delays in the superi or Courts extend now to limits which were never anticipated when the right to approach them for relief was granted by statute.
If it was intended that section 30(2) should refer to appeals pending before the High Court or the Supreme Court between 30 April, 1982 and 24 September, 1984, they could well refer to proceedings in which an award had been made by the Collector from anything between 10 to 20 years before.
It could never have been intended that rates of compensation and solatium applicable to acquisition proceedings initiated so long ago should now enjoy the benefit of statutory en hancement.
It must be remembered that the value of the land is taken under section 11(1) and section 23(1) with reference to the date of publication of the notification under s.4(1), and it is that date which is usually material for the purpose of determining the quantum of compensation and solatium.
Both section 11(1) and section 23(1) speak of compensation being determined on the basis, inter alia, of the market value of the land on that date, and solatium by section 23(2), is computed as a per centage on such market value.
Our attention was drawn to the order made in State of Punjab vs Mohinder Singh, (supra), but in the absence of a statement of the reasons which persuaded the learned Judges to take the view they did we find it difficult to endorse that decision.
It received the approval of the learned Judges who decided Bhag Singh (supra), but the judgment in Bhag Singh, (supra) as we have said earlier, has omitted to give due significance to all the material provisions of section 30(2), and consequently we find ourselves at variance with it.
The learned Judges proceeded to apply the principle that an appeal is a continuation of the proceeding initiated before the Court by way of reference under section
18 but, in our opinion, the application of a general principle must yield to the limiting terms of the statutory provision itself.
Learned counsel for the respondents has strenuously relied on the general principle that the appeal is a re hearing of the original matter, but we are not satisfied that he is on good ground in invoking that principle.
Learned counsel 341 for the respondents points out that the word 'or ' has been used in section 30(2), as a disjunctive between the reference to the award made by the Collector or the Court and an order passed by the High Court or the Supreme Court in appeal and, he says, properly understood it must mean that the period 30 April, 1982 to 24 September, 1984 is as much applicable to the appellate order of the High Court or of the Supreme Court as it is to the award made by the Collector or the Court.
We think that what Parliament intends to say is that the benefit of section 30(2) will be available to an award by the Collector or the Court made between the aforesaid two dates or to an appellate order of the High Court or of the Supreme Court which arises out of an award of the Collector or the Court made between the said two dates.
The word 'or ' is used with reference to the stage at which the proceeding rests at the time when the benefit under section
30(2) is sought to be extended.
If the proceeding has terminated with the award of the Collector or of the Court made between the aforesaid two dates, the benefit of section 30(2) will be applied to such award made between the aforesaid two dates.
If the proceeding has passed to the stage of appeal before the High Court or the Supreme Court, it is at that stage when the benefit of section 30(2) will be applied.
But in every case, the award of the Collector or of the Court must have been made between 30 April, 1982 and 24 September, 1984.
In the result we overrule the statement of the law laid down in Mohinder Singh, (supra) and in Bhag Singh and Anoth er, (supra) and prefer instead the interpretation of section 30(2) of the Amendment Act rendered in K. Kamalajammanniava ru (dead) by Lrs.
(supra).
The cases will now be listed before a Division Bench of three learned Judges for hearing on the merits of the other points raised in the cases.
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A common question of law having arisen in this group of cases for determination by this Court, they were heard together.
Lands of Respondents in Civil Appeal Nos.
2839 40 of 1989 were acquired under the Land Acquisition Act.
The Collector made the award for compensation on March 30, 1963 and on a reference, being made under Section 18 of the Act, the Additional District Judge enhanced the compensation by his order dated June 10, 1968.
The Respondents appealed to the High Court seeking further enhancement.
During the pendency of the appeal, Land Acquisition (Amendment) Bill 1982 was introduced on April 30, 1982 and became an Act on Sept. 24, 1984.
The High Court disposed of the appeal on Dec. 4, 1984 and apart from raising the quantum of compensa tion, also awarded a solatium at 30 per cent in terms of the Amendment Act 1984.
The State appealed to this Court.
The matter initially came up before a Division Bench on September 23, 1985.
The Bench had before it two decisions of this Court wherein divergent views were expressed.
The two decisions were: In K. Kamalajammanniavaru 's (dead) by Lrs.
vs Special Land 317 Acquisition Officer,, This Court (composed of.two Judges) took the view that award of 30 per cent solatium under the amended Section 23(2) by the High Court or the Supreme Court were applicable only where the award appealed against was made by the Col lector or the Court between April 30, 1982 and Sept. 24, 1984.
In the second decision, Bhag Singh & Ors. vs Union Territory of Chandigarh, ; , this Court (comprised of three Judges) took a contrary view and ruled that even if an award was made by the Collector or the Court on or before April 1982 and an appeal against such award was pending before the High Court or this Court on 30.4.1982 or was filed subsequent to that date, the provisions of amended Section 23(2) and 28 of the Land Acquisition Act would be applicable as the appeal was a continuation of the reference made under Section 18 and as such the appellate Court must apply the amended provision on the date of the decision of the appeal.
In this way the decision in Kamalajammanniava ru 's case was overruled by this Court in Bhag Singh 's case and the Court approved another decision of Division Bench comprised of three Judges in Mohinder Singh 's case which merely directed payment of enhanced solatium and interest without giving any reasons.
In view of the conflicting decisions on the point of two Judges Bench before, whom these cases come up for considera tion, referred to this Larger Bench the question: whether under the Amended Section 23(2), the claimants were entitled to solatium at 30 per cent of the market value irrespective of the dates on which the land acquisition proceedings were initiated or on the dates on which the award had been passed.
Overruling the preliminary objection as to the maintain ability of the reference of matters to a larger Bench, this Court disposing of the reference and directing that the appeals be now listed for hearing on merits, HELD: Solatium is awarded under sub section (2) of Section 23 of the Land Acquisition Act.
Before the Amendment Act was enacted, the Sub section provided for solatium at 15 per cent of the market value.
By the change introduced by the Amendment Act the amount has been raised to 30 per cent of the market value.
Sub section (2) of Section 30 of the Amendment Act specifies the category of cases to which the amended rate of solatium is attracted.
[322D] 318 What Parliament intends to say is that the benefit of Section 30(2) will be available to an award by the Collector or the Court made between 30th April 1982 and 24th September 1984 or to an appellate order of the High Court or of the Supreme Court which arises out of an award of the Collector or the Court made between the two said dates.
The word 'or ', is used with reference to the stage at which the proceeding rests at the time when the benefit under Section 30(2) is sought to be extended.
If the proceeding has terminated with the award of the Collector or of the Court made between the aforesaid two dates, the benefit of Section 30(2) will be applied to such award made between the aforesaid two dates.
If the proceeding has passed to the stage of appeal before the High Court or the Supreme Court, it is at that stage when the benefit of Section 30(2) will be applied.
But in every case the award of the Collector or of the Court must have been made between April 30, 1982 and September 24, 1984.
[339D G] A pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or a smaller number of Judges, and in order that such decision be bind ing, it is not necessary that it should be a decision ren dered by the full Court or a Constitution Bench of the Court.
For the purpose of imparting certainty and endowing due authority, decisions of this Court in the future should be rendered by Division Benches of at least three Judges unless, for compelling reasons that is not conveniently possible.
[337C D] The Land Acquisition Bill 1982, was introduced in the House of the People on 30th April, 1982 and upon enactment the Land Acquisition Act, 1984, commenced operation with effect from 24th Sept. 1984.
Section 15 of the Amendment Act amended Section 23(2) of the parent Act and substituted the words "30 per cent" in place of the words "15 per cent".
Parliament intended that the benefit of the enhanced solati um should be made available albeit to a limited degree even in respect of acquisition proceedings taken before the date.
It sought to effectuate that intention by enacting Section 30(2) in the Amendment Act.
[337G H; 338A] There can be no doubt that the benefit of the enhanced solatium is intended by Section 30(2) in respect of an award made by the Collector between 30th April 1982 and 24th September 1984.
Likewise the benefit of the enhanced solati um is extended by Section 30(2) to the case of an award made by the Court between April 30, 1982 and September 24, 1984, even though it be upon reference from an award made before April 30, 1982.
[338E] 319 One of the functions of the Superior Judiciary in India is to examine the competence and validity of legislation both in point of legislative competence as well as its consistency with the Fundamental Rights.
In this regard the Courts in India possess a power not known to the English Courts.
[323G H] Exp.
Canon Selwyn, and Cheney vs Conn, , referred to.
The range of judicial review recognised in the Superior Judiciary of India is perhaps the widest and the most exten sive known to the world of law.
The power extends to examin ing the validity of even an amendment to the Constitution for now it has been repeatedly held that no Constitutional amendment can be sustained which violates the basic struc ture of the Constitution.
[324B] His Holiness Kesavananda Bharti Sripadagalavaru vs State of Kerala, ; Smt.
Indira Nehru Gandhi vs Shri Raj Narain, ; Minerva Mills Ltd. and others vs Union of India and others, [1980] 2 SCC 591; S.P. Sampath Kumar etc.
vs Union of India and Ors.
, ; The Court overruled the statement of the law laid down in the cases of State of Punjab vs Mohinder Singh & Anr.
and Bhag Singh and Others vs Union Territory of Chandigarh and preferred the interpretation of Section 30(2) of the Amend ment Act rendered in K. Kamalajammanniavaru (dead) by Lrs.
vs Special Land Acquisition Officer.
Oliver Wendell Holmes, "The Common Law", p. 5; Oliver Wendell Homes, "Common Carriers and the Common Law", [1943] 9 Curr.
L.T. 387, 388; Julius Stone, "Legal Systems & Law yers Reasoning", p. 58 59; Roscoe Pound, "An Introduction to the Philosophy of Law", p. 19; "The Judge as Law Maker", pp.
Myers vs Director of Public Prosecutions, L.R. 1965 A.C. 1001 & 1021; The Bengal Immunity Company Limited vs The State of Bihar and Others, ; Street Tramways vs London County Council, ; ; Radcliffe vs Ribble Motor Services Ltd., ; 245; Dr. Alan Paterson 's "Law Lords", [1982] pp.
156 157; Jones vs Secretary of State for Social Services, [1972] A.C. at 966; Ross Smith vs Ross Smith, , 303; Indyka vs Indyka, [1969] I A.C. 33, 69; Construction by Jones, at 966; Steadman vs Steadman, , 542; DPP vs Myers, [1965] A.C. 1001, 320 1022; Cassell vs Broome,/1972] A.C. 1027, 1086; Haughton vs Smith, [1975] A.C. 476,500; Knullerv.
DPP, [1973] A.C. 435,455; Conway vs Rimmer, ; , 938; Tramways case; , ; State of Washington vs Dawson & Co., , ; David Burnel vs Coronado Oil & Gas Company, ; , ; Compare National Bank vs Whitney, ; , 26 L.Ed.
443 444; Compensation to Civil Servants, , A.I.R. , 87; Attorney General of Ontario vs The Canada Temperance Federation, L.R. 78 I.A. 10; Phanindra Chandra Neogy vs The King, ; ; State of Bombay vs The United Motors (India) Ltd.; , ; Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Ors., ; ; Lt.
Col. Khajoor Singh vs The Union of India & Anr., ; ; Keshav Mills Compa ny vs Commissioner of Income Tax; , , 921; Sajjan Singh vs State of Rajasthan, ; , 947948; Girdhari Lal Gupta vs
D.H. Mill; , ; Pillani Investment Corporation Ltd. vs
I.T.O. 'A ' Ward, Calcutta & Ant., ; ; Ganga Sugar Company vs State of Uttar Pradesh; , , 782; Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, ; T.V. Vatheeswaran vs The State of Tamii Nadu, ; Sher Singh & Ors.
vs State of Punjab, ; ; Triveniben vs State of Gujarat, AIR 1989 SC 142; John Martin vs The State of West Bengal, ; ; Haradhan Saha vs State of West Bengal, ; ; Bhut Nath Mate vs State of West Bengal; , ; Mattulal vs Radhe Lal, ; ; Acharaya Maharajshri Narandraprasadji Anandprasadji Maharaj etc.
vs The State of Gujarat & Ors., ; ; Union of India & Ors.
vs Godfrey Philips India Ltd., ; ; Jit Ram vs State of Haryana, ; ; Motilal.
Padampat Sugar Mills vs State of U. P.; ,
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6095.txt
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Civil Appeal Nos. 1614, 1652 and 1637 of 1979.
Appeals by Special Leave from the Judgment and order dated S 3 5 1979 of the Allahabad High Court in Civil Misc.
Writ Nos.
4170/71, 4130/71 and 4193/71.
AND PETITIONS FOR SPECIAL LEAVE To APPEAL (CIVIL) Nos.
6246, 6252, 6373 & 8050/79.
From the Judgment and order dated 3 5 1979 of the Allahabad High Court in Civil Misc.
Writ Nos. 4150, 4173, 4793 and 442/71.
F. section Nariman, Bhaskar Gupta, Rajesh Khaitan, Rohington Nariman and P. R. Seethrama for the Appellants in CA 1614/79.
A. K. Sen, Manoj Swarup, Mis Lalita Kohli and section K. Srivastva for the Appellants in CA No. 1652/79 and SLPS.
6146 and 637379.
R. A. Gupta for the Petitioner in SLP No. 6252/79.
N. N. Sharma and N. N. Kacker for the Petitioner in SLP No. 8050/79.
Lal Narain Sinha Att.
in C.A. 1614.
Rishi Ram Adv.
General, U.P. in C.A. 1652.
Raju Ramchandran and o. P. Rana for the Respondents in All the Appeals.
The Judgment of V. R. Krishna Iyer, section Murtaza Fazal Ali and D. A. Desai, JJ. was delivered by Desai, J., R. section Pathak, J. gave a separate opinion on behalf of A. D. Koshal, J. and himself.
DESAI, J. Acquisition of industrial undertakings involved in manufacturing sugar, a commodity satisfying the basic necessity, in larger public interest and the attempt of the owners of the undertakings to thwart the same, paints the familiar landscape in this group of appeals.
As a sequel to the serious problems created by the owners of certain sugar mills in the State of Uttar Pradesh for cane growers and labour employed in sugar mills, having an adverse impact on general economy of the areas where these sugar mills were situated And with a view to ameliorating the situation posing a threat to the economy, 335 the Governor of Uttar Pradesh promulgated an ordinance on July 3, to 1971, styled as U.P. Sugar Undertaking (Acquisition) ordinance.
1971 (13 of 1971) ( 'ordinance ' for short), with a view to transferring and vesting sugar undertakings set out in the Schedule to the ordinance in the U.P. State Sugar Corporation Ltd. ( 'Corporation ' for short), a Government Company within the meaning of section 671 of the .
Subsequently, by U.P. Sugar Undertakings (Acquisition) Act, 1971, (U.P. Act 23 of 1971) ( 'Act ' for short), the ordinance was repealed and was replaced.
Schedule to the Act enumerates 12 sugar undertakings (referred to as 'scheduled undertakings ') and by the operation of section 3, these scheduled undertakings stood transferred to and vested in the Corporation from the appointed day, i.e. July 3, 1971, the date on which the ordinance was issued.
On the promulgation of 7 the ordinance 11 writ petitions were filed in the Allahahad High Court under Article 226 of the Constitution challenging the constitutional validity of the ordinance and when the Act replaced the ordinance effective from August 27, 1971, the writ petitions were amended incorporating the challenge to the Act also.
The ordinance and the Act were challenged in the High Court on the following grounds: (1) The State legislature had no legislative competence to enact it; (2) The Act violated article 31 of the Constitution because the acquisition was not for a public purpose and the compensation proposed in the Act was illusory; (3) The Act was in breach of article 19(1)(f) and (g) of the Constitution; (4) The Act infringed the gurantee of equality enshrined in article 14 of the Constitution.
A Division Bench of the High Court by a common judgment dated May 37 1979, repelled the contentions on behalf of the petitioners and upheld the constitutional validity of the Act.
Hence these appeals by the original petitioners, the owners of the scheduled undertakings.
Mr. F. section Nariman, learned counsel who led on behalf of the appellants, confined his attack to two grounds: (a) U.P. State legislature lacked legislative competence to enact the impugned Act; and (b) compensation awarded for acquisition in violative of article 31(23 as it stood prior to its amendment by the Constitution (Twenty fifth Amendment) Act, 1971, which came into force on April 20, 1972.
Mr. R. A. Gupta who appeared in SLP.
6252/79, canvassed an additional contention that the impugned Act is violative of article 14 inasmuch as those similarly situated and similarly circumstanced sugar under takings have 336 not been acquired and the petitioners ' scheduled undertakings have been singled out for a drastic treatment of take over by way of acquisition.
The main thrust of the attack was that the U.P. Legislature lacked legislative competence to enact the impugned Act.
There were two distinct limbs of this submission which would be examined separately.
The first limb of the submission was that in exercise of legislative power flowing from Entry 52 List I the Parliament made the requisite declaration in section 2 of the Industries Development and Regulation) Act, 1951 ( 'IDR Act ' for short), and in view of placitum 25 of the first schedule to the IDR Act sugar being a declared industry, that industry goes out pf Entry 24 List II, and hence U. P. State legislature was denuded of all legislative power to legislate in respect of sugar industry and as the impugned legislation is in respect of industrial undertaking in sugar industry, the impugned legislation is void on account of legislative incompetence.
The learned Attorney General countered it by saying that the power to acquire property derived from entry 42 in List III is an independent power and the impugned Act being in pith and substance an Act to acquire scheduled undertakings, meaning thereby the properties of the scheduled undertakings, the power of the State legislature to legislate in this behalf is referable to entry 42 and remains intact irrespective of the fact that sugar is a declared industry, control of which is taken over by the Union Government pursuant to the declaration made under section 42 of the IDR Act.
This necessitates an analytical examination of the relevant entries keeping in view legislative perspective and the historical background through which these entries have passed.
Entry 7 in the Union List reads as under: "7.
Industries declared by parliament by law to be necessary for the purpose of defence or for the prosecution of war.
" Entry 32 in the same List reads: "52.
Industries, the control of which by the Union is declared by parliament by law to be expedient in the public interest " Entry 24 in List II (State List) reads as under: "24.
Industries subject to the provisions of entries 7 and 52 of List I." It may be noted here that entry 33 in List I, entry 36 in List II and entry 42 in List III were amended by section 26 of the Constitution (Seventh Amendment Act by which entry 33 of List I and entry 36 of List II 337 were deleted and entry 42 in List III was amended to read as set out hereinabove.
Entry 33 in List I and entry 36 in List II conferred legislative power on the Union and the States respectively for acquisition or requisitioning of property for its own purpose.
Constitution (Seventh Amendment) Act, 1956, which made the aforementioned amendment was designed to clear the ambiguity about the power of acquisition and requisitioning of property being not a power incidental to any of the legislative powers but an independent power by itself.
The object behind the amendment has been thus explained.
"The existence of three entries in the legislative lists (33 of List I, 36 of List II and 42 of List III) relating to the essentially single subject of acquisition and requisitioning of property by the Government gives rise to unnecessary technical difficulties in legislation.
In order to avoid these difficulties and simplify the constitutional position, it is proposed to omit the entries in the Union and State Lists and replace the entry in the concurrent list by a comprehensive entry covering the whole subject" (see Statement of objects and Reasons in respect of Constitution (Seventh Amendment) Act, 1956).
Having set out the historical background, attention may now be turned to the scope and content of legislative power of Union and the States flowing from entry 52 in List I and entry 24 in List II in respect of the topic of 'industry. ' The scope and content of entry 52, List I and entry 24, List II has to be demarcated with precision to avoid a possible confusion likely to emanate from an inter dependence and interaction of the two entries. 'Industry ' as a head of legislation is to be found in entry 24, List II with this limitation that it is subject to the provisions of entries 7 and 52, List I.
The difference in the language in which entries 7 and 52 are couched has a bearing on the interruption of entry 52.
In the former case if a declaration is made by the Parliament that the particular industry is necessary for the purpose of defence or for prosecution of the war, parliament would be exclusively entitled to legislate in respect of that industry to the exclusion of State legislatures because the requisite declaration will have the effect of taking out that industry from entry 24, List II.
A declaration by the parliament by law to assume control over any particular industry in public interest is a sine qua non to clothe Parliament with power under entry 52, List I to legislate in respect of that industry because otherwise industry as a general head of legislation is in the exclusive sphere of State legislative activity pursuant to entry 24, List II.
Distribution of legislative powers as enacted in Part XI and article 246 clearly demarcate the field of legislative activity reserved for Parliament and for State legislatures and also the concur 338 rent list in respect of which both can legislate subject to other provisions of part XI.
Sub article
(3) of article 246 provides that the State legislature has exclusive power to make laws with respect to any of the matters enumerated in List.
II in the Seventh Schedule.
A fortiori, industry being the matter enumerated in List II the State legislature has exclusive power to legislate in respect of it and keeping aside for the time being the words 'subject to the provisions of entries 7 and 52 of List I ', the State legislature alone can legislate in respect of the legislative head 'industry. ' Ipso facto, parliament would not have power to legislate in respect of industry as a legislative head.
Now, entry 52, List I on its own language does not provide a field of legislative activity for the Union Parliament unless and until a declaration is made by parliament by law to assume control over specified industries.
The embargo on the power of Parliament to legislate in respect of industry which is in List II would be lifted once a declaration is made by Parliament by law as envisaged by entry 52, List I.
In the absence of a declaration as envisaged by entry 52, List I, it is incontrovertible that Parliament has no power to legislate on the topic of industry.
Entry 52, List I on its own language does not contemplate a bald declaration for assuming control over specified industries, but the declaration has to be by law to assume control of specified industries in public interest.
The legislation enacted pursuant to the power to legislate acquired by declaration must be for assuming control over the industry and the declaration has to be made by law enacted, of which declaration would be an integral part.
Legislation for assuming control containing the declaration will spell out the limit of control so assumed by the declaration.
Therefore, the degree and extent of control that would be acquired by Parliament pursuant to the declaration would necessarily depend upon the legislation enacted spelling out the degree of control assumed.
A mere declaration unaccompanied by law is incompatible with entry 52, List I. A declaration for assuming control of specific industries coupled with law assuming control is a pre requisite for taking legislative action under entry 52, List I. The declaration and the legislation pursuant to declaration to that extent denude the power of State legislature to legislate under entry 24, List II.
Therefore, the erosion of the power of the State legislature to legislate in respect of declared industry would not occur merely by declaration but by the enactment consequent on the declaration prescribing the extent and scope of control.
When a declaration is made as contemplated by entry 52 List T in respect of any particular industry, it is contended that, that industry as a topic of legislation would be removed from the legislative sphere of the state.
What is the effect of a declaration made in respect of mines and minerals as contemplated by entry 54 has been succinctly laid down by a Constitution Bench of this 339 Court in Baijnath Kedia vs State of Bihar & Ors.
J(1) in the following terms: "Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament.
Any legislation by the State after such declaration and trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature .
The only dispute, therefore, can be to what extent the declaration by Parliament leaves any scope for legislation by the State legislature.
If the impugned legislation falls within the ambit of such scope it will be valid, if outside it, then it must be declared invalid " Sugar is a declared industry.
Is it, however, correct to say that once a declaration is made as envisaged by entry 52 List I, that industry as a whole is taken out of entry 24, List II? In respect of an identical entry 54, List I in the passage extracted above it is said that to the extent declaration is made and extent of control laid, that much and that much alone is abstracted from the legislative competence of the State legislature.
It is, therefore, not correct to say that once a declaration is made in respect of an industry that industry as a whole is taken out of entry 24, List II Similarly, in State of Haryana & Anr.
vs Chanan Mal, etc.
while upholding the constitutional validity of the Haryana Minerals (Vesting of Rights) Act, 1973, after noticing the declaration made in section 2 of the Mines & Minerals (Regulation and Development) Act, 1957, ( 'Mines & Minerals Act ' for short), as envisaged by entry 54.
List I it was held: "Moreover, power to acquire for purposes of development and regulation has not been exercised by Act 67 of 1957.
The existence of power of Parliament to legislate on this topic as an incident of legislative power on another subject is one thing.
Its actual exercise is another.
It is difficult to see how the field of acquisition could become occupied by a central Act in the same way as it had been in the West Bengal case even before Parliament legislates to acquire land in a State." These pronouncements demonstrably show that before State legislature is denuded of power to legislate under entry 24, List II in respect of 340 a declared industry, the scope of declaration and consequent control assumed by the Union must be demarcated with precision and then proceed to ascertain whether the impugned legislation trenches upon the excepted field The declaration made in s 2 of IDR Act reads as under: "It is hereby declared that it in expedient in the public interest that the Union should take under its control the industries specified in the First Schedule.
" The contention is that as there are no words of limitation to be found in section 2 in respect of the control assumed by the declaration by the Union, the necessary concomitant of such declaration is that the State legislature is totally denuded of any power to deal with such declared industry.
To buttress this argument reference was made to the declaration made by the Union pursuant to entry 54, List I, as set out in section 2 of the Mines & Minerals Act which reads as under: "It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided.
" Absence of the expression "to the extent hereinafter provided" was pressed into service to point out that while in respect of mines ind minerals the Union has assumed control to the extent provided in the Mines Minerals Act, in the case of declared industries the control is absolute, unlimited, unfettered or unabridged and, therefore, everything that would fall within the connotation of the word 'control ' would be within the competence of the Union and to the same extent and degree the State legislature would be denuded of its power to legislate in respect of that industry.
It was said that in respect of declared industries total control is assumed by the Union and, therefore, entry 24, List II on its import must be read industry minus the declared industry because entry 24, List II is subject to entries 7 and 52, List I. Undoubtedly the Union is authorised to assume control in respect of any industry if parliament by law considers it expedient in the public interest.
The declaration has to be made by the Parliament, but the declaration has to be by law not a declaration simpliciter.
The words of limitation on the power to make declaration are 'by law '.
Declaration must be an integral part of law enacted pursuant to declaration.
The declaration in this case is made in an Act enacted to provide for the development and regulation of certain industries.
Therefore, the control was assumed not in abstract but for a specific and avowed object, viz., development 341 and regulation of certain industries.
The industries in respect of which control was assumed for the purpose of their development and regulation have been set out in the Schedule.
This control is to be exercised in the manner provided in the statute, viz., IDR Act.
The declaration for assuming control is to be found in the same Act which provides for the limit of control.
The deducible inference is that Parliament made the declaration for assuming control in respect of declared industries set out in the Schedule to the Act to the extent mentioned in the Act.
It is difficult to accept the submission that section 2 has to be read dehors the Act and not forming part of the Act.
This would be doing violence to the art of legislative draftsmanship.
It is open to Parliament in view of entry 52, List I, to make a declaration in respect of industry or industries to the effect that the Union will assume its control in public interest.
It is not to be some abstract control.
The control has to be concrete and specific and the manner of its exercise has to be laid down in view of the well established proposition that executive authority must have the support of law for its action.
In a country governed by rule of law, if the Union, an instrumentality for the governance of the country, has to exercise control over industries by virtue of a declaration made by Parliament, it must be exercised by law.
Such law must prescribe the extent of control, the manner of its exercise and enforcement and consequence of breach.
There is no such concept as abstract control.
The control has to be concrete and the mode and method of its exercise must be regulated by law.
Now, Parliament made the declaration not in abstract but as part of the IDR Act and the control was in respect of industries specified in the First Schedule appended to the Act itself.
Sections 3 to 30 set out various modes and methodology, procedure and power, to effectuate the control which the Union acquired by virtue of the declaration contained in section 2.
Industry as a legislative head finds its place in entry 24, List II.
The State legislature can be denied legislative power under entry 24 to the extent Parliament makes declaration under entry 52 and by such declaration Parliament acquires power to legislate only in respect of those industries in respect of which declaration is made and to the extent as manifested by legislation incorporating the declaration and no more.
The Act prescribes the extent of control and specified it.
As the declaration trenches upon the State legislative power it has to be construed strictly.
Therefore, even though the Act enacted under entry 54 which is to some extent in pari materia with entry 52 and in a parallel and cognate statute while making the declaration the Parliament did use the further expression "to the extent herein provided" while assuming control, the absence of such words in the declaration in section 2 would not lead to the conclusion that the control assumed was to be something in abstract, total and unfettered and not as per various 342 provisions of the IDR Act.
The lacuna, if any, is made good by hedging the power of making declaration to be made by law.
Legislative intention has to be gathered from the Act as a whole and not by piecemeal examination of its provisions.
It would, therefore, be reasonable to hold that to the extent Union acquired control by virtue of declaration in section 2 of the IDR Act as amended from time to time, the power of the State legislature under entry 24, List II to enact any legislation in respect of declared industry so as to encroach upon the field of control occupied by IDR Act would be taken away.
This is clearly borne out not only by the decision in Baijnath Kedia 's case (supra) where undoubtedly while referring to the control assumed by the Union by a declaration made in section 2 of the Mines & Minerals Act, it was said that to what extent such a declaration would go is for Parliament to determine and this must be commensurate with public interest, and once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament.
It is not merely some abstract control but the extent of the control assumed by the Union by the provisions of IDR Act pursuant to declaration made by Parliament that the State Legislature to that extent, that is, to the extent the provisions of IDR Act occupies this field, is denuded of its power to legislate in respect of such declared industry.
The respondents assert the validity of the impugned legislation contending that upon its true construction and proper ascertainment of its object, it is a legislation for acquisition of scheduled undertakings and the power to acquire by legislation such scheduled undertakings by the State is derived from entry 42, List III.
The controversy, therefore, centers round the question whether the impugned legislation is in respect of a declared industry referable to entry 24 or one for acquition of scheduled undertakings in exercise of the power of acquisition and requisitioning of property derived from entry 42, List III.
Appellants contend that a reference to Objects and Reasons for enacting the impugned legislation would show that the owners of scheduled undertakings had created serious problems for the cane growers and labour which created an adverse impact on the general economy of the areas where these undertakings were situated, the legislation was enacted to acquire the undertaking and pay compensation and also pay cane growers and labour on high priority and to restart undertakings for crushing season.
It was said that these are purely managerial functions discharged by owners of undertakings and if the impugned Act was devised and enacted primarily to assume these managerial functions, the Act would be beyond the legislative competence of the State legislature as it trenches upon the field occupied by IDR Act specifically 343 enacted to empower Union Government to provide effective control over industrial undertakings in declared industry to prevent mismanagement, or to rectify the same by taking over management.
When validity of a legislation is challenged on the ground of want of legislative competence and it becomes necessary to ascertain to which entry in the three lists the legislation is referable to, the Court has evolved the theory of pith and substance.
If in pith and substance a legislation falls within one entry or the other but some portion of the subject matter of the legislation incidentally trenches upon and might enter a field under another List, the Act as a whole would be valid not with standing such incidental trenching.
This is well established by a catena of decisions [see Union of India vs H. section Dhillon,(1) and Kerala State Electricity Board vs Indian Aluminium Co.(2)].
After referring to these decisions in State of Karnataka & Anr.
vs Ranganatha Reddy & Anr.
etc.(3) Untwalia, J. speaking for the Constitution Bench has in terms stated that the pith and substance of the Act has to be looked into and an incidental trespass would not invalidate the law.
The challenge in that case was to the Nationalisation of contract carriages by the Karnataka State, inter alia, on the ground that the statute was invalid as it was a legislation on the subject of interstate trade and commerce.
Repelling this contention the Court unanimously held that in pith and substance the impugned legislation was for acquisition of contract carriages and not an Act which deals with inter State trade and commerce.
To start with, it is necessary first to ascertain in pith and substance to what entry in a particular list the impugned legislation is referable.
If it is referable to entry other than 24, List II, such as entry 42, List III, it would be necessary to precisely ascertain whether it in any way trenches upon the field occupied by the declaration made by Parliament to assume control over sugar industry as manifested by the various provisions of the IDR Act.
Section 3 of the Act provides for vesting of scheduled undertakings from the appointed day in the Corporation.
Section 4 provides for consequences of vesting.
Section 5 makes it obligatory on every person in whose possession or custody or under whose control any property or asset, book of account, register or other document comprised in that undertaking may be, to forthwith deliver the same to the Collector.
Section 7 provides for determination and mode of payment of compensation for acquisition of scheduled undertakings.
Section 8 provides for claims to be satisfied out of compensation payable to the 344 owners of the undertakings.
Section 9 provides for avoidance of certain secured debts consequent upon acquisition.
Section 11 provides for appeal and section 12 provides for constitution of a Tribunal to perform the functions assigned to it by the Act.
Section 13 provides for powers and procedure of the Tribunal.
Section 14 provides for ouster of jurisdiction of civil courts in respect of any dispute arising from the implementation of the Act.
Section 16 confers protection on the employees of the scheduled undertaking.
The rest are only consequential sections.
A comprehensive examination of all the provisions of the Act indisputably shows that in pith and substance the impugned Act is one Act for acquisition of scheduled undertakings and such acquisition by transfer of ownership of the scheduled undertakings to the Corporation would in no way come in conflict with any of the provisions of the IDR Act or would not trench upon any control exercised by the Union under the various provisions of the IDR Act.
In fact the IDR Act, generally speaking, does not deal with the ownership of industrial undertakings in declared industries.
The Act is primarily concerned with development and regulation of the declared industries.
The Central Government has power under sections 18A and 18AA of the IDR Act to assume direct management or control of industrial undertakings in certain cases and even after acquisition of scheduled undertakings under the impugned legislation the power of the Central Government under sections 18A and 18AA would remain intact.
Even section 18FA provides for taking over management or control of a company which is being wound up with the permission of the High Court and in such a situation the authorised person appointed by the Central Government would be deemed to be Official Liquidator under sub section
(4) of section 18FA.
Provision contained in Chapter IIIAC of IDR Act enables Central Govt.
to direct sale of the industrial undertaking under certain circumstances and in the situation as set out in section 18FE(7) to purchase the same.
But these powers can be exercise irrespective of the fact who at the relevant time, the owner of the undertaking is.
The IDR Act is not at all concerned with the ownership of industrial undertakings in declared industries, except to the extent of control over management of the undertaking by the owner.
Owner is defined in section 3(f) in relation to an industrial undertaking, to mean the person who, or the authority which, has the ultimate control over the affairs of the undertaking, and, where the said affairs are entrusted to a manager, managing director or managing agents, such manager, managing director or managing agent shall be deemed to be the owner of the undertaking.
This deeming fiction enacted in respect of the concept of ownership clearly manifest the legislative intention that IDR Act treats that person to be the owner who has the ultimate control over the affairs of the under 345 taking and if that ultimate control is entrusted to even a manager, for the purposes of the IDR Act the manager would be the owner.
This must be so in the very nature of things because the IDR Act is essentially concerned with the control over the management of the industrial undertakings in declared industries.
By the acquisition under the impugned Act and vesting of the scheduled undertakings in the Corporation the scheduled undertakings will never the less be under the control of the Central Government as exercised by the provisions of the IDR Act because the Corporation would be the owner and would be amenable to the authority and jurisdiction of the Central Government as the provisions of the IDR Act would continue to apply to the scheduled undertakings, sugar being a declared industry, and scheduled undertakings are industrial undertakings within the meaning of the IDR Act.
No provision from IDR Act was pointed out to us to show that in implementing or enforcing such a provision the impugned legislation would be an impediment.
Therefore, there is no conflict between the impugned legislation and the control exercised by the Central Government under the provisions of the IDR Act and there is not even a remote encroachment on the field occupied by IDR Act.
The main thrust of the submission was that the power of acquisition under entry 42, List III is not an independent power but it is incidental to the power to legislate in respect of the various topics in various lists and, therefore, when by a declaration made by the parliament enacted in section 2 of the IDR Act the control over declared industry is assumed by the Union, such control will also comprehend the power to acquire and hence the power of the State legislature to enact legislation for acquisition of property of scheduled undertakings would be denuded as that power as an internal element of control would vest in the Union Government.
The focal point of controversy, therefore, is whether the power of acquisition and requisitioning of property under entry 42, List III is an independent power by itself or it is an integral and inseparable element of the power of control over industry.
Constitution amending process bearing on the three relevant entries may be noticed.
Before the Constitution (Seventh Amendment) Act, 1956, which came into force on November 1, 1956, Entry 33 in List I read: "Acquisition or requisitioning of property for the purpose of the Union.
" Similarly, Entry 36 in List II read: "Acquisition or requisitioning of property except for the purpose of the Union subject to the provisions of entry 42 of List III." 346 At that time entry 42 in List III read: "Principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given".
By the Constitution (Seventh Amendment) Act, the three entries were repealed.
Entry 33 in List I and entry 36 in List II were deleted and a single comprehensive entry 42 in List III was substituted to read: 'Acquisition and requisitioning of property '.
Accordingly, the power to acquire property could be exercised concurrently by the Union and the States.
Even if prior to the deletion of Entry 33 in List I and entry 36 in List II an argument could possibly have been advanced that as power of acquisition of property was conferred both on Union and the States to be exercised either for the purpose of the Union or for the State it was incidental to any other legislative power flowing from various entries in the three Lists and not an independent power, but since the deletion of entry 33 in List I and entry 36 in List II and substitution of a comprehensive entry in List III, it could hardly be urged with confidence that the power of acquisition and requisitioning of property was incidental to other power.
It is an independent power provided for in a specific entry.
Therefore, both the Union and the State would have power of acquisition and requisitioning of property.
This position is unquestionably established by the majority decision in Rustom Cavasjee Cooper vs Union of India(1) where Shah, J. speaking for the majority of 10 Judges held as under: "power to legislate for acquisition of property is exercisable only under entry 42 of List III and not as an incident of the power to legislate in respect of a specific head of legislation in any of the three lists.
" In reaching this conclusion reliance was placed on Rajamundry Electric Supply Corporation Ltd. vs State of Andhra Pradesh.(2) It was, however, urged that the proposition culled out from Rajamundry Electric Supply Corporation case by Shah, J. in R. C. Cooper 's(1) case is not borne out by the observation in the first mentioned case.
In Rajamundry Electric Supply Corporation(2) case the challenge was to the Madras Electric Supply Undertakings (Acquisition) Act, 1949, on the ground that the Madras legislature was not competent to enact the legislation because at the relevant time there was no entry in the Government of India Act, 1935, relating to compulsory acquisition of any commercial or industrial undertaking.
This challenge failed in the High Court 347 but on appeal the challenge was accepted by a Constitution Bench of this Court.
Now, it must be remembered that the impugned legislation in that case was a pre Constitution legislation then governed by the Government of India Act, 1935.
The challenge was that the State legislature had no power to enact a legislation for acquisition of an electrical undertaking.
On behalf of the State the Act was sought to be sustained on the ground that the Act was in pith and substance a law with respect to electricity under entry 31 of the Concurrent List and, therefore, the State legislature was competent to enact the same.
After scrutinising the Act this Court came to the conclusion that in pith and substance the Act was one to provide for acquisition of electrical undertaking and, therefore the State legislature lacked competence to enact the same.
Now, in that case the Advocate General of Madras in his effort to save the impugned legislation advanced an argument before the Constitution Bench that: 'There was implicit in every entry in the legislative lists in the Seventh Schedule to the Government of India Act, 1935, an inherent power to make a law with respect to a matter ancillary or incidental to the subject matter of each entry. ' His further argument was that each entry in the list carried with it an inherent power to provide for the compulsory acquisition of any property, land or any commercial or industrial undertaking, while making a law under such entry.
This argument was in terms repelled relying upon an earlier decision of the Constitution Bench in the State of Bihar vs Maharajadhiraja Sir Kameshwar Singh(1): Repelling this contention of the Advocate General of Madras would mean that the power of acquisition of property is not ancillary or incidental to the subject matter of each entry but in substance it is an independent power by itself.
This also becomes clear from Maharajadhiraja Sir Kameshwar Singh 's case (supra) wherein Das, J. in his concurring judgment repelled the argument of the learned Attorney General appearing for the State contending that the Bihar Land Reforms Act was a law made with respect to matters mentioned in entry 18, List II and not in entry 36, List II.
Entry 18 in List II read: 'Land and Land tenures, etc. ' and it was contended that the impugned legislation was on the subject of land and tenures and would cover acquisition of land also.
Negativing this contention it was held that in that event entry 36 in List II would become redundant.
The pertinent observation is as under: "In my opinion, to give a meaning and content to each of the two legislative heads under entry 18 and entry 36 in List II the former should be read as a legislative category or head comprising land and land tenures and all matters 348 connected therewith other than acquisition of land which should be read as covered by entry 36 in List II.
" It thus clearly transpires that the observation in Cooper 's case supra extracted above that power to legislate for acquisition of property is exercisable only under entry 42 of List III and not as an incident of the power to legislate in respect of a specific head of legislation in any of the three Lists, is borne out from Rajamundary Electric Supply Corporation case and Maharajadhiraja Sir Kameshwar Singh 's cases (supra).
It was, however, urged that this proposition runs counter to the decision of a Constitution Bench of six judges in State of West Bengal vs Union of India.
(1) In that case the State of West Bengal filed a suit against the Union of India challenging the constitutional validity of the Coal Bearing Areas (Acquisition and Development) Act, 1957, on the ground that the Act to the extent it applied to the lands vested in or owned by the State was beyond legislative competence of Parliament.
Power to acquire coal bearing land owned or possessed by the State of West Bengal was amongst others claimed as an integral element of control acquired by the Union pursuant to a declaration made in section 2 of the IDR Act and Mines and Minerals Act enacted in exercise of the legislative power under entries 52 and 54 respectively as coal was both a declared industry and a specified mineral.
This contention was partly accepted to repel the contention that the Union has no power to acquire the property vested in the State since the State itself is also a sovereign authority.
The contention that the property of State cannot be acquired by the Union under entry 42 of List III was repelled.
In reaching this conclusion, another contention was rejected which was also advanced before us.
viz., that if power of acquisition is treated as an independent power both of the Union and the State and could be exercised by the Union and the State with respect to the same property it would lead to such a confusion that there would be no end to it.
A picture of fearful constitutional impasse was drawn urging that the State may acquire property of an Industrial undertaking of a declared industry in exercise of the power under entry 42, List III, and the Union may exercise the same power after control is acquired pursuant to declaration made as envisaged in entry 52 in respect of an industry and this merry go round needs to be averted by harmonious construction and reconciliation of power between the Union and the States.
Such a situation is beyond the realm of practical possi 349 bility.
His wild apprehension stands so effectively answered by West Bengal case (supra) that we cannot improve upon it.
Pertinent observation may be extracted: "Power to acquire or requisition property may since the amendment, be exercised concurrently by the Union and the States.
But on that account conflicting exercise of the power cannot be envisaged.
Article 31(2) which deals with acquisition of all property requires two conditions to be fulfilled: (1) acquisition or requisitioning must be for a public purpose, (2) the law under which the property is acquired or requisitioned must provide for payment of compensation either fixed thereby, or on principles specified thereby.
By cl.
(3) of article 31 no such law as is referred to in cl.
(2) made by the Legislature of a State shall have efficacy unless such law has been reserved for the consideration of the President and has received his assent.
As the President exercises his authority with the advice of the Union Ministry, conflict by the effective exercise of power of acquisition in respect of the same subject matter simultaneously by the Union, and the State, or by the State following upon legislation by the Union cannot in practice be envisaged even as a possibility.
Article 254 also negatives the possibility of such conflicting legislation.
By cl.
(1) of that Article if a law made by the legislature of a State is repugnant to any provision of a law competently made by Parliament, the State law is, subject to cl.
(2) void, clause (2) recognizes limited validity of a State law on matters in the Concurrent List if that law is repugnant to an existing or earlier law made by Parliament, only if such law has been reserved for the consideration of the President, and has received his assent.
By the proviso authority is reserved to the Parliament to repeal a law having even this limited validity.
Assent of the President to State legislation intended to nullify a law enacted by Parliament for acquisition of State property for the purposes of the Union lies outside the realm of practical possibility.
" Therefore, the contention that power of acquisition or requisitioning of property in entry 42, List III, if held to be an independent power wholly falling outside the control assumed by the Union pursuant to the declaration envisaged by entry 52, List II, would lead to a sort of a constitutional impasse, is more imaginary than real.
350 Further, in the minority judgment, Subba Rao, J. has in this context said: "A declaration under entry 52 of List I would no doubt enable Parliament to make a law in respect of an industry, that is to say Parliament may make a law in respect of an existing industry or an industry that may be started subsequently.
So too, before the declaration a State legislature could have made a law in respect of an industry by virtue of entry 24 of List II.
But neither entry 24 of List II nor entry 52 of List I empowers the State legislature before the said declaration or the Parliament after such a declaration to make a law for acquisition of lands.
If the State legislature before the declaration or the Parliament after the declaration wanted to acquire the land it can only proceed to make a law by virtue of entry 42 of List III.
" Reliance was, however, placed on the following passage in West Bengal case (supra) to urge that power of acquisition is an integral and inseparable concomitant of control assumed by the Union: "By making the requisite declarations under entry 54 of List I, the Union Parliament assumed power to regulate mines and minerals and thereby to deny to all agencies not under the control of the Union, authority to work the mines.
It could scarcely be imagined that the Constitution makers while intending to confer an exclusive power to work mines and minerals under the control of the Union, still prevented effective exercise of that power by making it impossible compulsorily to acquire the land vested in the State containing minerals.
The effective exercise of the power would depend if such an argument is accepted not upon the exercise of the power to undertake regulation and control by issuing a notification under entry 54, but upon the will of the State in the territory of which mineral bearing land is situated.
Power to legislate for regulation and development of mines and minerals under the control of the Union would, by necessary implication include the power to acquire mines and minerals.
Power to legislate for acquisition of property vested in the States cannot therefore be denied to the Parliament if it be exercised consistently with the protection afforded by article 31.
" This observation, if properly understood, is in the context of the contention that State property could not be subjected to power of 351 eminent domain and, hence, Union has no power to compulsorily acquire the same.
Therefore, there is no inner conflict between Cooper case (supra) and West Bengal case (supra) on the point that power of acquisition is an independent power referable to entry 42, List III.
However, even if there is a conflict between West Bengal case (supra) and Cooper case on this point, a later larger constitution Bench judgment in Cooper case would impliedly overrule the former to the extent of conflict.
There is on the contrary a good volume of authority for the proposition that the control assumed by the Union pursuant to declaration to the extent indicated in the statute making the declaration does not comprehend the power of acquisition if it is not so specifically spelt out.
In Kannan Devan Hills Produce Company Ltd. vs The State of Kerala & Another,(1) constitutional validity of Kannan Devan Hills (Resumption of Lands) Act, 1971, was challenged on the ground of legislative competence of Kerala State legislature to enact the legislation.
It was urged that in view of the declaration made in section 2 of the Tea Act, 1853, Tea was a controlled industry and, therefore, the State legislature was denuded of any power to deal with the industry.
It was further contended that tea plantation required extensive land and that resumption of land by the impugned legislation would directly and adversely affect the control taken over by the Union and, therefore, the State legislature was incompetent to enact the impugned legislation.
This contention was repelled holding that the impugned legislation was in pith and substance one under entry 18 of List II read with entry 42, List III.
In reaching this conclusion the Court held as under: "It seems to us clear that the State has legislative competence to legislate on entry 18, List II and entry 42 List III.
This power cannot be denied on the ground that it has some effect on an industry controlled under entry 52 List I. Effect is not the same thing as subject matter.
If a State Act, otherwise valid, has effect on a matter in List I it does not cease to be a legislation with respect to an entry in List II or List III.
The object of sections 4 and 5 seems to be to enable the State to acquire all the lands which do not fall within the categories (a), (b) and (c) of section 4(1).
These provisions are really incidental to the exercise of the power of acquisition.
The State cannot be denied a power to ascertain what land should be acquired by it in the public interest".
352 This conclusion was sought to be buttressed by reference to the decision of the Privy Council in Canadian Pacific Railway Company vs Attorney General,(1) wherein it is observed as under: "The appellant, the Canadian Pacific Rly. Co., which owned and managed the Empress Hotel in Victoria, British Columbia, while not denying that the regulation of hours of work was ordinarily a matter of "property and civil rights in the province" under head 13 of section 92 of the British North America Act, 1867, and accordingly within the legislative competence of the provincial legislature, contended, inter alia, that the company 's activities had become such an extensive and important element in the national economy of Canada that the dominion Parliament was entitled under the general powers conferred by the first part of section 91 of the Act of 1867 to regulate all the affairs of the company, even where that involved legislating in relation to matters exclusively reserved to the provincial legislatures by section 92".
It can, therefore, be said with a measure of confidence that legislative power of the States under entry 24, List II is eroded only to the extent control is assumed by the Union pursuant to a declaration made by the Parliament in respect of declared industry as spelt out by legislative enactment and the field occupied by such enactment is the measure of erosion.
Subject to such erosion, on the remainder the State legislature will have power to legislate in respect of declared industry without in any way trenching upon the occupied field.
State legislature which is otherwise competent to deal with industry under entry 24, List II, can deal with that industry in exercise of other powers enabling it to legislate under different heads set out in Lists II and III and this power cannot be denied to the State.
In this connection it would be advantageous to refer to Chanan Mal case (supra).
In that case constitution validity of Haryana Minerals (Vesting of Rights) Act, 1973, and the two notifications issued thereunder was challenged on the ground that the Act and the notifications issued thereunder were repugnant to the Mines & Minerals Act made by Parliament after making a declaration as contemplated by Entry 54, List I. The challenge was that the State legislature was incompetent to legislate on the topic of mines and minerals under entry 23, List II in view of the declaration made under entry 54, List I and the enactment of Act 67 of 1957 (Mines & Minerals Act) 353 by the Parliament.
By the impugned Act and the notifications issued thereunder the State Government of Haryana purported to acquire rights to salt petre, a minor mineral in the land described in the Schedule appended to the notification and by the second impugned notification the State Government announced to the general public that certain salt petre bearing areas in the State of Haryana mentioned therein would be auctioned on the dates given there.
Repelling the contention regarding legislative incompetence it was observed that it is difficult to see how the field of acquisition could become occupied by a Central Act in the same way as it had been in the West Bengal case (supra) even before Parliament legislates to acquire land in a State.
At least until Parliament has so legislated as it was shown to have done by the statute considered by this Court in the case from West Bengal, the field is free for State legislation falling under the express provisions of entry 42 of List III.
It was further observed as under: "It seems difficult to sustain the case that the provisions of the Central Act would be really unworkable by mere change of ownership of land in which mineral deposits are found.
We have to judge the character of the Haryana Act by the substance and effect of its provisions and not merely by the purpose given in the statement of reasons and objects behind it.
Such statements of reasons are relevant when the object or purpose of an enactment is in dispute or uncertain.
They can never override the effect which follows logically from the explicit and unmistakable language of its substantive provisions.
Such effect is the best evidence of intention.
A statement of objects and reasons is not a part of the statute, and, therefore, not even relevant in a case in which the language of the operative parts of the Act leaves no room whatsoever as it does not in the Haryana Act, to doubt what was meant by the legislators: It is not disputed here that the object and effect of the Haryana Act was to acquire proprietary right to mineral deposits in 'land" '.
There is thus a long line of decisions which clearly establishes the proposition that power to legislate for acquisition of property is an independent and separate power and is exercisable only under entry 42, List III and not as an incident of the power to legislate in respect of a specific head of legislation in any of the three lists.
This power of the State legislature to legislate for acquisition of property remains intact and untramelled except to the extent where on 354 assumption of control of an industry by a declaration as envisaged in entry 52, List I, a further power of acquisition is taken over by a specific legislation.
As already pointed out, in pith and substance the impugned legislation is one for acquisition of scheduled undertakings and that field of acquisition is not occupied by the IDR Act which deals with control of management, regulation and development of a declared industry and there is no repugnancy between the impugned legislation and the IDR Act.
Both can co exist because the power acquired by the Union under the IDR Act can as well effectively be exercised after the acquisition of the scheduled undertakings as it could be exercised before the acquisition.
Therefore, the contention that the State legislature lacked legislative competence to enact the impugned legislation must be negatived.
A faint submission was made that nationalisation of industry as a national policy will have to be determined and enforced by the Union keeping in view its Industrial Policy Resolution and such piece meal nationalisation would certainly encroach upon the control assumed by the Union.
Impugned legislation does not purport to nationalise sugar industry in Uttar Pradesh.
And there is no bar to a Government owned company or Corporation to set up sugar manufacturing undertaking under an appropriate licence.
Therefore, the impugned legislation on this account does not encroach upon the occupied field.
The second limb of the submission was that in any event the impugned legislation was designed and enacted to prevent mismanagement and to take over management of the scheduled undertakings as a sequel to acquisition and it trenches into the field occupied by the IDR Act, a Central legislation, and to the extent acquisition enables the Corporation by vesting of the scheduled undertakings in it to take over control and management of the scheduled undertakings, the impugned legislation is void and unenforceable.
Section 20 of the IDR Act was pressed into service to substantiate the submission.
Section 20 of the IDR Act reads as under: "20.
After the commencement of this Act, it shall not be competent for any State Government or a local authority to take over the management or control of any industrial undertaking under any law for the time being in force which authorises any such Government or local authority so to do".
355 Section 20 forbids a State Government or local authority from taking over the management or control of any industrial undertaking in declared industry.
On a correct interpretation, section 20 precludes any State Government or local authority from taking over the control or management of any industrial undertaking under any law for the time being in force which authorises any such Government or local authority so to do.
The impugned legislation was not enacted for taking over management or control of any industrial undertaking by the State Government.
In pith and substance it was enacted to acquire the scheduled undertakings.
If an attempt was made to take over management or control of any industrial undertaking in a declared industry indisputably the bar of section 20 would inhibit exercise of such executive power.
However, if pursuant to a valid legislation for acquisition of scheduled undertaking the management stands transferred to the acquiring body it cannot be said that this would be in violation of section 20.
Section 20 forbids executive action of taking over management or control of any industrial undertaking under any law in force which authorises State Government or a local authority so to do.
The inhibition of section 20 is on exercise of executive power but if as a sequel to an acquisition of an industrial undertaking the management or control of the industrial undertaking stands transferred to the acquiring authority section 20 is not attracted at all.
Section 20 does not preclude or forbid a State legislature exercising legislative power under an entry other than entry 24 of List II, and if in exercise of that legislative power, to wit, acquisition of an industrial undertaking in a declared industry the consequential transfer of management or control over the industry or undertaking follows as an incident of acquisition, such taking over of management or control pursuant to an exercise of legislative power is not within the inhibition of section 20.
Therefore, the contention that the impugned legislation violates section 20 has no merit.
And now to the oft beaten track of legislation being void as being in contravention of article 31(2) as it stood at the relevant time.
The impugned legislation was put on the statute book on August 27, 1971.
Therefore, Art, 31(2) as it stood on the relevant date may be noticed.
The Article as amended by Constitution (Twentyfifth Amendment) Act, 1971, will, therefore, not be attracted.
article 31(2) as it stood at the relevant time reads as under: "31(2).
No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the 356 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 compensation is to be determined and given; and no such law shall be called in question in any court, on the ground that the compensation provided by that law is not adequate.
" Emphasis was placed on the word 'compensation ' retained in article 31(2) after its amendment by the Constitution (Fourth Amendment) Act, 1955, and a reference, was made to Vajravelu Mudaliar vs Special Deputy Collector of Land Acquisition, West Madras, wherein it was held by this Court that even after the amendment of article 31 (2) by the Constitution (Fourth Amendment) Act, 1955, it still retains the expression 'compensation ' after its judicial interpretation by this Court in several decisions, viz., to mean just equivalent to the expropriated owner.
Reference was then made to Union of India vs Metal Corporation of India Ltd. & Anr.
,(2) in which this Court affirmed the interpretation of the word 'compensation ' to mean just equivalent.
Approaching the matter from this angle the Court struck down the Metal Corporation of India (Acquisition) Act, 1965, holding that as the Act has laid down different principles for ascertaining the value of different parts of the undertaking and as all the principles so laid down do not provide for the just equivalent of all parts of the undertaking mentioned therein, the sum total also cannot obviously be a just equivalent of the undertaking.
In reaching this conclusion exception was taken to assessing the value of the used machinery on the basis of written down value arrived at as per the provisions of the Income Tax Act.
This observation cannot be said to be any more good law in view of the decision of a Constitution Bench of this Court in State of Gujarat vs Shantilal Mangaldas & Ors.
,(3) wherein Shah, J., speaking for the Court specifically overruled the Metal Corporation case (supra) observing as under: "The Court then proceeded to hold that the two principles laid down in cl.
(b) of Paragraph II of the Schedule to the Act (i) that compensation was to be equal to the cost price in the case of unused machinery in good condition, and (ii) written down value as understood in the Income tax law was to be the value of the used machinery were irrelevant to the fixation of the value of the machinery as on the date of acquisition.
" 357 "We are unable to agree with that part of the judgment.
The Parliament had specified the principles for determining compensation of the undertaking of the company.
The principles expressly related to the determination of compensation payable in respect of unused machinery in good condition and used machinery.
The principles were set out avowedly for determination of compensation.
The principles were not irrelevant to the determination of compensation and the compensation was not illusory.
" It thus appears well settled that if a legislation provides principles for determining compensation, to wit, written down value as understood in Income tax law to be the value of the used machinery, that principle could neither be said to be irrelevant for determining the compensation nor the compensation so awarded could be styled as illusory.
It was, however, said that this decision in Shantilal Mangaldas is overruled in Cooper 's case and, therefore, the wheel has moved the full circle and the expression 'compensation ' and principle for determining the compensation as interpreted in Vajravelu Mudaliar 's case (supra) is restored.
This is not borne out by the pertinent observation in Cooper 's case (supra) which may be extracted: "Both the lines of thought which converge in the ultimate result, support the view that the principle specified by the law for determination of compensation is beyond the pale of challenge, if it is relevant to the determination of compensation and is a recognized principle applicable in the determination of compensation for property compulsorily acquired and the principle is appropriate in determining the value of the class of property sought to be acquired.
On the application of the view expressed in P. Vajravelu Mudaliar 's case or in Shantilal Mangaldas 's case the Act, in our judgment, is liable to be struck down as it fails to provide to the expropriated banks compensation determined according to relevant principles.
Section 4 of the Act transfers the undertaking of every named bank to and vests it in the corresponding new bank.
Section 6(1) provides for payment of compensation for acquisition of the undertaking and the compensation is to be determined in accordance with the principles specified in the Second Schedule.
Section 6(2) then provides that though separate valuations are made in respect of the several matter specified in Sch.
II of the Act, the amount of compensation shall be deemed to be a single compensation.
Compensation being the equivalent in terms 358 of money of the property compulsorily acquired, the principle for determination of compensation is intended to award to the expropriated owner the value of the property acquired.
The science of valuation of property recognizes several principles or methods for determining the value to be paid as compensation to the owner for loss of his property: there are different methods applicable to different classes of property in the determination of the value to be paid as recompense for loss of his property.
A method appropriate to the determination of value of one class of property may be wholly inappropriate in determining the value of another class of property.
If an appropriate method or principle for determination of compensation is applied, the fact that by the application of another principle which is also appropriate, a different value is reached, the Court will not be justified in entertaining the contention that out of the two appropriate methods, one more generous to the owner should have been applied by the legislature.
" However, it was pointed out that Shelat, J. speaking for himself and Grover, J. in His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala,(1) in terms observed as under: "In State of Gujarat vs Shantilal Mangaldas & Ors.
the decision in Metal Corporation of India was overruled which itself was overruled by R. C. Cooper vs Union of India.
" The question is whether the statement of law in Shantilal Mangaldas (supra) that the principle of awarding compensation on the basis of written down value for used machinery is a valid principle for determining compensation and whether the compensation so awarded was illusory is not overruled by any observation in Cooper 's case.
Undoubtedly, in Kesavananda Bharati case (supra) it is reiterated by Hegde, J. speaking for himself and Mukherjea, J. that it will be for the aggrieved party to clearly satisfy the Court that the basis adopted by the legislature has no reasonable relationship to the value of the property acquired or that the amount to be paid has been arbitrarily fixed or that the same is illusory return for the property taken.
Chandrachud, J. (as he then was), while interpreting the expression 'amount ' in the amended article 31(2) observed as under: "The specific obligation to pay an "amount" and in the alternative the use of the word "principles" for determination of that amount must mean that the amount fixed or 359 determined to be paid cannot be illusory.
If the right to property still finds a place in the Constitution, you cannot mock at the man and ridicule his right.
You cannot tell him 'I will take your fortune for a farthing '." But in the next breath it has been observed that "the amount fixed for being paid to the owner is wholly beyond the pale of challenge that it is inadequate.
The concept of adequacy is directly co related to the market value of the property and therefore, such value cannot constitute an element of that challenge.
" But this was the situation after amendment of article 31(2) by the Constitution (Twentyfifth Amendment) Act.
Even as the article stood at the relevant time it was open to the legislature to fix principle for determining compensation and unless it is shown that the principles are irrelevant to the determination of the value of the property or by working out the compensation according to the principles so specified the compensation becomes illusory, the principles themselves are beyond the pale of challenge before a court of law on the ground that they do not provide adequate compensation.
Now, here the compensation is worked out and specified in the schedule to the impugned Act.
The compensation is determined in round figure.
This Court has in terms accepted that payment of compensation on the basis of written down value calculated according to the Income tax law for used machinery is not irrelevant as a principle for determining compensation.
That principle appears to have been adopted for valuing used machinery though the legislation fixes compensation payable to each undertaking in round sum.
And that was the only part challenged.
It was, however, said that no principle is discernible because not only none was stated on the floor of the House but to a specific question the reply was that principle is not to be disclosed.
Debate in legislature cannot conclude the point.
Here the principle is discernible and that appears to be valid.
It represents the collective will of the House.
To reject it would tantamount to saying that the majority members voted without understanding and appreciating the principles.
However, the principle is extracted in court room debate and it is a valid principle.
A peep into the background leading to the acquisition of the scheduled undertakings would reveal that these scheduled undertakings had a heavy back load of carried forward loss, that even though they were taking sugar cane from cane growers, i.e. the farmers, they failed to pay them the price of sugar cane.
There was labour unrest as labour was not paid.
Generally speaking, they can be styled as 360 sick undertakings and become a drag on the economy of the area.
There was no scope for ploughing back the profits to rejuvenate the machinery because there was no profit.
The situation had not improved even when managements of some of the undertakings were taken over under the IDR Act and, therefore, this desperate situation called for a drastic remedy in public interest and while applying that drastic remedy of acquisition principles which are valid for determining the value of machinery were adopted.
The adequacy or otherwise of compensation on the calculus made by applying the principle is beyond the judicial review.
It would be a day time hallucination to call such principle irrelevant or compensation illusory.
The challenge to the validity of the impugned legislation on the ground of violation of article 31 (2) must accordingly fail.
There remain two minor and incidental points mentioned in passing.
The submissions themselves lacked emphasis.
They are, that (1) no compensation is provided for the agricultural land taken over by the State; (2) good will of the scheduled undertakings was not evaluated as a component of compensation.
With reference to Ishwari Khetan Sugar Mills (P) Ltd., it was said that 36 acres of agricultural land belonging to the company owning the scheduled undertaking was taken over without compensation.
It was countered by saying that agricultural land is not taken over.
It is not clear from the pleadings and record whether agricultural land outside the structures of scheduled undertakings has been acquired and has at all been taken over by the Corporation.
It may be that between various structures of scheduled undertakings there might be some open land but that is part and parcel of scheduled undertakings because any other construction would show that a passage or road between two constructions could not be acquired.
Unless, therefore, it is specifically shown that while acquiring scheduled undertakings agricultural land belonging to the company or the owner owning scheduled undertaking was either acquired or taken over as part of the acquisition it is not possible to accept the submission that there was acquisition of agricultural land without providing compensation for the same.
And as for the good will, less said the better.
The scheduled undertakings were sick units and the sickness was chronic.
A manufacturing unit with heavy carried forward loss and defaulting in payments, possibly facing appointment of Receivers for realising tax arrears, asks compensation for the good will generated by it.
This good will appears to be more imaginary than real or an argument to support an untenable submission.
But the better answer is that there 361 cannot be a good will of a manufacturing undertaking but it can be of a company, a partnership, or a proprietor owning scheduled undertaking and neither the company nor the partnership nor the proprietory unit, if any, has been acquired under the impugned legislation.
Therefore, in evaluating compensation of the scheduled undertakings there is no question of evaluating the good will.
Mr. R. A. Gupta appearing in SLP.
6252/79 raised an additional contention that the impugned Act is violative of article 14 in that selection of petitioners ' scheduled undertakings for acquisition is wholly arbitrary and there is no difference between those selected for acquisition and those left out through all such sugar, undertakings in the State of Uttar Pradesh were similarly situated and similarly circumstanced.
Sustenance was largely sought to be drawn from the Report of Justice Bhargava styled as Sugar Industry Inquiry Commission, 1974, which inter alia, specified 17 sugar undertakings in Uttar Pradesh as prima facie sick sugar mills.
After reading out a portion of the Report it was said that classifying the 12 sugar undertakings for acquisition is not based on any intelligible differentia between those included in the group for acquisition and those left out and that this differential treatment has no rational relationship to the object sought to be achieved by the impugned legislation.
On behalf of respondents learned Advocate General for the State of Uttar Pradesh countered this contention by pointing out that before acquiring the scheduled undertakings the Government had a close review of the condition of the sugar undertakings done for certain specific period set out in the affidavit and ascertained whether the situation had become desperate on account of the persistent default in payment of cane price, purchase tax, labour dues, etc.
The situation in Uttar Pradesh appears to be peculiar in that cane growers go on selling their cane to sugar undertakings probably having little or no option in this behalf because it is a perishable commodity and must be disposed of as early as possible and they have to await payment at the sweet will, whim and caprice of the sugar barons.
Its unhealthy effect on marginal farmers would be intolerable because the cash crop would not fetch any cash and destitution may be the inevitable outcome.
And this phenomenon was repeated year after year.
It was pointed out that a close scrutiny was applied to this persistent default and where the situation in respect of sugar undertakings was desparate they were classified together and they were sought to be acquired.
Can it be said that this classification is not based on any intelligible differentia.
Economic situation of an industrial undertaking may be very good, good, average, bad, intolerable and uneconomic in larger national perspective.
362 It would have been difficult for the Government to group all sugar undertakings with such as were living on coramine doses.
There does appear to be the intelligible differentia by which this classification of those in an intolerable condition has been grouped together.
Acquisition was for an avowed object of rejuvenating these undertakings and thereby improving the economy of the area by providing priority in payment to cane growers, labour, in respect of whom there is no cushion for sufferance.
Thus, this differentia undoubtedly has a rational relationship to the object sought to be achieved by the Act.
The challenge of article 14 was an argument of despair and must be repelled.
These were all the contentions in these appeals and special leave petitions and as there is no merit in any of them, the appeals and the special leave petitions fail and are dismissed with costs in one set.
PATHAK, J. We have had the benefit of reading the judgment prepared by our brother Desai.
While we broadly agree with the final conclusions reached by him on the several points debated before us, we would prefer to refrain from expressing any opinion on the question whether the declaration made by Parliament in section 2 of the Industries (Development and Regulation) Act, 1951 in respect of the industries specified in the First Schedule to that Act can be regarded as limited to removing from the scope of Entry 24 of List II of the Seventh Schedule to the Constitution only so much of the legislative field as is covered by the subject matter and content of that Act or it can be regarded as effecting the removal from that Entry of the entire legislative field embracing all matters pertaining to the industries specified in the declaration.
It seems to us that the observations made by this court in The Hingir Rampur Coal Co., Ltd. and Others vs The State of Orissa and Others,(1) State of Orissa vs M. A. Tulloch and Co.,(2) Baijnath Kedia vs State of Bihar & Ors.(3) and State of Haryana & Anr.
vs Chanan Mal, etc.(4) cannot be of assistance in this behalf.
In each of those cases, the declaration made by Parliament in the concerned enactment limited the control of the regulation of the mines and the development of minerals to the extent provided in the enactment.
Whether the terms in which the declaration has been framed in section 2 of the Industries (Development and Regulation) Act a declaration not expressly limiting control of the specific indus 363 tries to the extent provided by the Act can be construed as being so limited is a matter which, we think, we should deal with in some more appropriate case.
The range of considerations encompassed within the field of enquiry to which the point is amenable has not, to our mind, been sufficiently covered before us.
And for good reason.
The provocation was limited.
For the controversy in the present cases concerning the legislative competence of the State Legislature to enact the U.P. Sugar Undertakings (Acquisition) Act, 1971 can be adequately disposed of on the ground that the legislation falls within Entry 42 of List III and cannot be related to Entry 52 of List I or Entry 24 of List II.
When the impugned enactment truly falls within Entry 42 of List III "acquisition and requisitioning of property" there is a reluctance to enter upon an examination of the mutually competing claims of Entry 52 of List I and Entry 24 of List II entries which deal with "industries", an entirely different subject matter.
With this reservation, we have no hesitation in agreeing with the ultimate conclusions reached by our learned brother on the remaining points of controversy and in concurring with the order proposed by him disposing of these appeals and special leave petitions.
P.B.R. Appeals dismissed.
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By the U.P. Sugar Undertakings (Acquisition) ordinance, 1971 (which later became an Act) twelve sugar undertakings stood transferred and vested in a Government.
undertaking named the U.P. State; Sugar Corporation Limited.
The appellants ' writ petitions before the! High Court impugning the constitutional validity of the Act were dismissed.
In appeal to this Court it was contended on behalf of the appellants that since sugar is a declared industry under the Industries (Development and Regulation) Act, 1951 in view of entry 52 in Union List read with entry 24 in state list further read with article 246.
Parliament alone is competent to pass the law on the subject and not the State Legislature and, therefore, the impugned legislation is void.
Dismissing the appeals, ^ HELD: Industry being a matter enumerated in entry 24 of List II only the State legislature has the exclusive power to legislate in respect of it, but this power is subject to the provisions of entries 7 and 52 of List I.
While under entry 7, if a declaration is made by Parliament that a particular industry is necessary for defence or for the prosecution of war, Parliament, to the exclusion of the State legislature, would be entitled to legislate in respect of that industry, a declaration by Parliament by law to assume control over any particular industry in public interest in a sine qua non to clothe Parliament with power under entry 52, List I to legislate in respect of that industry.
The declaration contemplated by this entry is a declaration by law.
A mere declaration unaccompanied by law is incompatible with entry 52 of List I.
But that does not mean that once a declaration is made in respect of an industry that industry as a whole is taken out of entry 24, List II.
[337 F H; E] Baijnath Kedia vs State of Bihar & Ors. ; at 113 and State of Haryana & Anr.
vs Chanan Mal, etc.
; at 700 referred to.
The control under section 2 of the 1951 Act was assumed for a specific and avowed object namely development and regulation of certain industries.
This control has to be exercised in the manner provided under the statute.
Therefore, Parliament, has made a declaration for assuming control in respect 332 of the declared industries set out in the schedule of the Act only to the extent provided in the Act.
A conspectus of the provisions of the impugned Act shows that in pith and substance it is one for acquisition of scheduled undertakings and such acquisition by transfer of ownership of those undertakings to the Corporation would in no way come in conflict with any of the provisions of the Central Act of 1951.
The Central Act is primarily concerned with development and regulation of declared industries and is not concerned with ownership of industrial undertakings in declared industries, except to the extent of control over management of the undertaking by the owner.
By the acquisition under the impugned Act aud vesting of the undertakings in the Corporation they would still be under the control of the Central Government because the Corporation would be amenable to the authority and jurisdiction of the Central Government.
Therefore, there is no conflict between the impugned legislation and the control exercised by the Central Government under the provisions of the Central Act.
[340 H 341 A. 344 C G. 345 D] There is no force in the argument that the power of acquisition under Entry 42, List II is incidental to the power to legislate in respect of various topic in the lists and, therefore, when the Union assumed control over the declared industry such control comprehends the power to acquire and hence the power of the State Legislature to enact legislation for acquisition of properly of scheduled undertakings would be denude.
By the Constitution (Seventh Amendment) Act, Entry 33 in List I and Entry 36 in List II were deleted and a single comprehensive Entry 42 in List III (acquisition and requisitioning of property) was added.
The power to acquire property can now be exercised concurrently by the Union and the States.
After the substitution of Entry 42 in List III it cannot be said that the power of acquisition and requisitioning of property is incidental to the other power.
It is an independent power provided for in a specific entry.
Therefore, both the Union and the state would have power of acquisition and requisition of property.
[345 E F; 346 B E] There is a long line of decisions which clearly establishes the proposition that power to legislate for acquisition of property is an independent and separate power and is exercisable only under Entry 42, List III and not as an incident of the power to legislate in respect of a specific head of legislation in any of the three lists.
This power of the State legislature to legislate for acquisition of property remains intact and untrammeled except to the extent where on assumption of control of an industry by a declaration as envisaged in Entry 52, List I a further power of acquisition is taken over by a specific legislation.
[353 H 354 A] Rustom Cavasjee Cooper vs Union of India ; at 567, Rajamundry Electric Supply Corporation Ltd. vs State of Andhra Pradesh ; State of Bihar vs Maharajadhiraja Sir Kameshwar Singh State of West Bengal vs Union of India [1964]1 S.C.R. 371, referred to.
The argument that the State legislature lacked competence to enact the impugned legislation is without force.
Legislative power of the State under Entry 24, List II is eroded only to the extent control is assumed by the Union pursuant to a declaration made by the Parliament in respect of a declared 333 industry as spelt out by the legislative enactment and the field occupied by such enactment is the measure of erosion.
Subject to such erosion, on the remainder the State legislature will have power to legislate in respect of declared industry without in any way trenching upon the occupied field.
State legislature, which is otherwise competent to deal with industry under Entry 24, List II, can deal with that industry in exercise of other powers enabling it to legislate under different heads set out in Lists II and III and this power cannot be denied to the State.
[354 C, 352 E F] The contention that the impugned Act is in violation of section 20 of the Central Act has no merit.
The impugned legislation was not enacted for talking over the management or control of any industrial undertaking by the State Government.
In pith and substance it was enacted to acquire the scheduled undertakings.
If an attempt was made to take over the management or control of any industrial undertaking in a declared industry the bar of section 20 would inhibit exercise of such executive power.
The inhibition of section 20 is on the executive power but if as a sequel to an acquisition of an industrial undertaking the management or control of the industrial undertaking stands transferred to the acquiring authority section 20 is not attracted.
It does not preclude or forbid a State legislature exercising legislative power under an entry other than Entry 24 of List II and if in exercise of that legislative power the consequential transfer of management or control over the industry or undertaking follows as an incident of acquisition such taking over of management or control pursuant to an exercise of legislative power is not within the inhibition of section 20.
[355 F, A E] The challenge to the validity of the impugned legislation on the ground of violation of Article 31(2) must fail.
At the time of acquisition the scheduled undertakings had a heavy backlog of carry forward losses, they failed to pay the growers the price of cane purchased, the labour was not paid as a result of which there was labour unrest.
The situation did not improve even when some of the undertakings were taken over under the Central Act and a drastic remedy was called for in public interest and while applying that drastic remedy of acquisition the principle which are valid for determining the value of machinery were adopted.
The adequacy or otherwise of compensation on the calculus made by applying the principles is beyond judicial review.
[360 C, 359 H 360 1] Rustom Cavasjee Cooper vs Union of India ; at 567, Vajravelu Mudaliar vs Special Deputy Collector of Land Acquisition West Madras [1965] 1 SR 614, Union of India vs Metal Corporation of India & Anr. , State of Gujarat vs Shantilal Mangaldas & Ors. ; and His Holiness Kesavananda Bharati Sripadagaivalu vs State of Kerala referred to.
Pathak & Koshal JJ (concurring in the result) It is not necessary in this case to express any opinion on the question whether the declaration made by Parliament in section 2 of the Industries (Development and Regulation) ct, 1951 in respect of the industries specified in the First schedule to that Act can be regarded as limited to removing from the scope of Entry 2 of List II of the Seventh Schedule to the Constitution only so much of the legislative field as is covered by the subject matter.
and content of that Act or it can be regarded as effecting the removal from that entry of the 334 entire legislature field embracing all matters pertaining to the industries specified in.
the declaration.
The controversy in the preset case can be adequately disposed of on the ground that the legislation falls within Entry 42 of Lt m and cannot be related to Entry 52 of List I or Entry 24 of List II.
352 E F, 363 Bl The Hingir Rampur Coal Co. Ltd. and others vs The State of Orissa and others , State of orissa vs M. A. Tulloch and C. [964} 4 SCR 461, Baijnath Kedia vs State of Bihar & ors.
and State of Haryana & Anr.
vs Chanan Mal, etc.
; held inapplicable.
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4200.txt
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Civil Appeal No. 1896 of 1968.
(Appeal by special leave from the judgment and order dated the 21st September, 1962, of the Mysore High Court in Regular Appeal (B) No. 287 of 1956).
H. B. Data and P. C. Bhartari for the appellant.
section T. Desai and Naunit Lal for respondents 3 & 4.
The Judgment of the Court was delivered by SARKARIA, J.
This is a plaintiff 's appeal by special leave directed against a judgment of High Court of Mysore.
The following pedigree table will be helpful in understanding the facts leading up to this appeal: Mahalingappa (died in 1922) Mallappa Appa Saheb Neelkanth Def.
No. I Def.
No. 2 (died on 8 7 46) Chandrakant Smt.
Balabi Def.
No. 3 (wife of Neelkanth Def.
No.4).
The respondents are Hindus governed by Mitakshra School of Hindu Law.
Mahalingappa, the prepositus of the joint family died in 1922, survived by three sons, namely, Malappa, Defendant 1, Appa saheb, Defendant 2, and Neelkanth (The sons are hereafter referred to as `M ',`A ' and `N '), Mahalingappa and his sons constituted a joint Hindu family.
The family was trading in tobacco.
Mahalingappa, J as Karta was managing the joint family business.
After his death, his eldest son.
Neelkanth, father of Chandrakant, Defendant 3, began to look after the management of the family business `N ' also started C. N. Tennis Bidi Factory in the name of his son, Chandrakanth, in 1942 or thereabout.
`N ' died on July 8, 1946.
Thereafter, `A ' (Defendant 2) continued and managed the joint family business and the family concerns with the consent of the other members.
After 1951, the family business was managed by `M ' (Defendant 1).
The appellant had business dealings in tobacco and money dealings with the Defendants ' joint family.
There used to be periodical verification of accounts and acknowledgements were made from time to 289 time by the Manager of the family.
The plaintiff 's accounts were burnt in fire on October 22, 1949 and he had to reconstruct the accounts from available information and ' documents.
On April 15, 1953 accounts were taken, and the amount due from the defendants family to the plaintiff was worked out and verified The accounts thus stated were acknowledged and signed by Defendant 1 and by Defendant 4, as guardian of her minor son, Defendant 3.
A balance of Rs. 69,465/15/ was found due to the plaintiff from the defendants.
With the preceding allegations, the plaintiff on January 28, 1954 instituted the suit for the recovery of Rs. 75,000/ , comprising of Rs. 69,465/15/ , as principal, plus interest at 12 per cent per annum Subsequently by an amendment of the plaint, he added an alternative ground that if the Defendants proved that there had been a partition in the family, they were still liable for the dues pertaining to the ancestral business carried on by all the defendants either as members of the joint Hindu family or as partners of a firm.
Defendants 1 and 2 in their joint written statement admitted that there was an ancestral tobacco business of the family managed by 'N ' till his death in 1946; that after N 's death, the family business was managed by them (M & A) and that all the defendants were jointly liable for the plaintiff 's claim.
The defendants denied that there was ever a partition of the joint family.
They however conceded that a deed of partnership, an agreement and a partition award had been brought into existence from time to time with the sole object of lessening the burden of income tax, and they were not intended to be acted upon.
It was added that after the interim attachment of the property, Defendant 3, taking advantage of these bogus documents, obtained an ex parte decree to show that there had been division of the joint family, and that this decree was not opposed by the answering defendants because they were assured that it would not be executed.
They admitted that the appellant 's claim was partially true, but denied correctness of the total balance claimed as due.
They further averred that the suit was time barred as the acknowledgement relied on by the plaintiff was not legal and could not extend limitation, that interest was wrongly calculated; that, if they ( Defendant 1 and 2) were held liable, they should be allowed to pay in easy instalments.
Defendant 3 filed a separate written statement.
He resisted the plaintiff 's claim, traversed the allegations in the plaint, and denied that there was any acknowledgment made on his behalf on April 15, 1953 by his mother, Defendant 4.
In the alternative he pleaded that she had no authority to acknowledge the debt so as to bind him as he was then a minor.
Defendant 3 further stated that there was a disruption of the joint family status on November 4, 1945 when M, A and N unequivocally expressed their intention to separate, and divided the movables, and thereafter, a decree for partition of the immovable property of the family was passed in 1949 on the basis of an arbitration award.
Defendant 3 asserted that this decree had been acted upon by the parties.
He denied that Defendants 1 and 2 had ever acted manager of the joint family with the consent of the other members, 290 and added that this question could not arise because of the earlier division of the family.
Defendant 4 in her written statement denied the plaintiffs ' claim and supported the contentions raised in his written statement by Defendant 3.
She stated that Defendants 1 and 2, had taken her thumb impressions on certain papers on the representation that they had been properly managing the Tennis Bidi Factory which had fallen to the share of her husband.
She was never informed of the contents of the documents by the Defendants, who took undue advantage of her illiteracy.
The trial court held that the joint family had disrupted in 1945 and the plaintiff was aware of this fact; that the acknowledgements of the debt had been made by Defendants 1 and 2 and not by Defendant 3, and on that account the suit was within time only as against Defendants 1 and 2; that Defendant 3 had on attaining majority repudiated his liability as partner; that the thumb impressions of Defendant 4 on the acknowledgement had been taken by practising fraud; that in any case defendant 4 had no authority to acknowledge the debt on behalf of her minor son.
The Court, however, upheld the appellant 's contention that the old accounts had been destroyed in fire and that the plaintiff was entitled to interest at 12 per cent per annum.
on these findings, the trial court decreed the plaintiff 's claim in toto against Defendants 1 and 2 but dismissed it against Defendants 3 and 4.
Against that judgment and decree of the trial court, the plaintiff preferred an! appeal to the High Court.
The High Court has affirmed the findings of the trial court and dismissed the appeal.
Hence this second appeal by the plaintiff.
Defendants 1 and 2 did not appeal against the decree of the trial court which had consequently become final against them.
It is common ground between the parties that during the life time of Mahalingappa, the family consisting of Mahalingappa and his sons, was a joint Hindu family trading in tobacco.
It is further not disputed that after the death of Mahalingappa, the surviving co parceners continued to be joint and Neelkanth, the eldest son of Mahalingappa, managed the family business as Karta till November 4, 1945.
The first matter in controversy is, whether on November 4, 1945, on account of an unequivocal declaration of an intention to separate made by the three sons of Mahalingappa, there was a disruption of the joint family status ? The courts below have concurrently answered this question in the affirmative.
Mr. Datar, appearing for the appellant contends that this finding of the courts below that there was a division in the family on November 4, 1945, was not based on any evidence whatever and is consequently, unsustainable in law.
291 We are unable to accept this contention.
The finding is based on good evidence which has been found credit worthy after due consideration by the two courts.
Firstly, there is a recital of the fact of division on November 4, 1945, in the partnership deed, exhibit 197, dated October 25, 1946.
This deed has been written on a general stamp paper of the value of Rs. 30.
The date of the purchase of the stamp paper accords with the date of the execution of the deed.
This document therefore, could not have been brought into existence subsequently.
Secondly, there was an endorsement on the Income tax Return exhibit 309, relating to the previous year ending on November 4, 1945, that at the end of the year there has been a change in the status of the family.
Thirdly, there is the Arbitration Award (exhibit 294) dated November 3, 1948, followed by the decree (exhibit 295).
This award is a registered document.
The material recitals in this document are as under: "The plaintiff (Chandrakant Nilkanth) and the defendants Nos. 1, 2 and 3 (Mallappa, Appasaheb and Basawabai, widow of Mahalingappa) were members of joint family.
During the lifetime of the plaintiff 's father, he and the defendants Nos. 1, 2 and 3 were living joint and all the three persons carried on the business of the joint family.
Thereafter as the minds of the plaintiff 's father and of the defendants Nos. 1 and 2 were prejudiced on account of some domestic reasons, they began to live separately in the year 1945.
Thereafter they took accounts of the transactions, with desire to get their immovable and movable properties and other business partitioned and got the capital amount in that business partitioned on 4th November 1945.
So also they effected partitions in the other movables and the ornaments etc.
, of the family Now the defendants Nos. 1 and 2 are objecting about the maintenance to be given to the defendant No. 3 (widow of Mahalingappa) as per agreement deed The contentions of the defendants Nos. 1 and 2 are as follows: We and our deceased eldest brother Sri Nilkanthappa were living joint.
It is true that on 4th November 1945 we all three together have taken the accounts of the business and have made divisions in the capital of the business.
It is true that accordingly we have proportionately divided the remaining movable articles and the ornaments etc.
and have taken the same. " The award bears the signatures of the three arbitrators, and on its basis the court passed a decree on August 9, 1949.
That suit was instituted by Chandrakant, and Basawwa, widow of Mahalingappa, Suryakant, an illegitimate son of Nilkanth, Mallappa Mahalingappa Sadalge and Appasaheb were impleaded as defendants.
Under the award, provision was made for the maintenance of Smt.
Basawwa and the residence of Suryakant, the illegitimate son of Nilkanth.
292 The conclusion based on the above documentary evidence was reinforced by the courts below with admissions made by Defendants 1 and 2, in cross examination, and also with an inference drawn against the plaintiff and Defendant 1 on account of the non production of the account books.
In our opinion, the court below were justified in drawing the inference because Defendant 1, as is apparent from his written statement, is colluding with the plaintiff, and all circumstances suggest that these account books must be with defendant 1.
The case of Defendant 3 is that on November 4, 1945, the accounts of the joint family were worked out and closed.
It was found that there was a capital balance of Rs. 64,023/11/ which was equally divided among the three brothers and the fact of this division was noted in the account books which were in the possession of Defendant 1.
In the witness box, Defendants 1 and 2 admitted that on November 11, 1945, each of the brothers got Rs. 21,340/3/9 and credit entries to that effect were made in the khata of each brother in the account books of the shop.
Defendant 3 by an application (exhibit 169) called upon Defendant 1 to produce in court the account books, in his possession.
Notice of this application was received by Defendant 's Counsel on July 18, 1955.
Despite this notice defendant 1 did not produce the account books when he appeared in the witness box on July 21, 1955.
He made a lame excuse that the account books had been given to Javali pleader after the service of summons in this suit on him (defendant 1) because that pleader had asked him to bring the books containing the plaintiff 's accounts.
But the defendant gave him the books of the Bidi Factory and not of M. B. Sadalge shop.
Defendant 1, in cross examination, clearly admitted that he had given to Javali pleader only those account books which contained the plaintiff 's Khata "and not of previous years".
By any reckoning, this means that he did not hand over the account books relating prior to the years 1949 to Javali Pleader.
Admittedly, after the death of Nilkanth.
he was managing the business upto 1950, and, as such, was supposed to be in possession of the account books.
The courts below were there fore, right in rejecting the explanation given by him for non production of the account books.
The explanation regarding the non production of the books, given by defendant 2, who had managed the business after 1951, was equally unsatisfactory and was rightly discarded.
In the light of what has been said above, it cannot be held that there was no legal evidence before the courts below to base the finding that the joint family had disrupted on November 4, 1945.
It is next contended by Mr. Datar that even if there was some declaration of separation in 1945 and subsequently a decree for partition based on an award was passed in 1949, then also, such declaration, award and decree were never acted upon.
It is submitted that in holding to the contrary, the High Court has committed several errors of record and misconstrued important documentary evidence.
293 According to Mr. Datar, the under mentioned documentary evidence unmistakably shows that the declaration of 1945, the award of 1948 and the partition decree of 1949 were not acted upon: (1).
Affidavits Exhts.
221, 247 and 248 sworn on July 20, 1946, before a Magistrate by Defendants 2, 4 and 1 stating that they are members of a joint Hindu family and Defendant 2 is the manager of the family.
In the affidavit exhibit 247, Smt.
Balabai gave her consent to the management of the affairs of the joint family by defendant 2.
Application dated August 13, 1946 (exhibit 182), by Defendant 1 to Sales tax officer for transfer and registration of the licence, and application exhibit 208, dated September 30, 1946 made by defendants 1 and 2 on their behalf and on behalf of Chandrakant Defendant 3 informing the City Surveyor about the death of Neelkanth and requesting him to enter the Khata in the names of all the three defendants 1 to 3.
(3) Income tax returns Exhs.
309 to 314 filed after the death of Neelkanth.
Resolution, exhibit 335, passed by the Board of Directors in the meeting held on July 30, 1946 permitting defendant 2 to redeem, in the capacity of Karta of the joint family, goods pledged with the Nipani Branch of the Bank by Neelkanth deceased.
exhibit 147, statement, dated September 26, 1953, by defendant 3 requesting the City Surveyor, Nipani that his joint share in Nipani Revision Survey Nos. 1254 and 1264 may be cancelled and the name of defendant 1 may be entered again for both the numbers.
Emphasis is on a sentence in this statement to the effect: "Two months have passed since the said partition".
In accordance with this statement.
the mutation exhibit 263, was attested.
Both the courts below have fully considered this evidence, along with other evidence, and come to the conclusion that these documents do not discount or alter the fact that the joint family had disrupted on November 4, 1945.
The High Court has given reasons why the evidence furnished by the deed of partnership (exhibit 197) and the Arbitration Award, (exhibit 294) can be safely accepted. ' In regard to Exs.
221, 247 and 248, the High Court has said that there is no evidence as to for what purpose these affidavits were sworn to and has rightly emphasised that in the absence of such evidence, it is difficult to draw any inference about the implications of their contents.
Regarding the affidavit exhibit 247, purporting to have been sworn by Smt.
Balabai, the High Court has said that she must have been mentally depressed being in mourning on account of the death of her husband which occurred only 12 days earlier; that she was an illiterate woman who thumb marked whatever documents were presented to her, without understanding its contents.
In this connection, the High Court referred to the statement of defendant 1, wherein he has admitted that during defendant 3 's minority, defendant 1 and defendant 2 were the only persons who looked after the business and defendant 4 never objected to whatever they did.
and that they used 294 to take defendant 4 's thumb impression whenever they thought it necessary in connection with the dealings of M. B. Sadalge shop.
As regards the applications Exs. 182 and 208, the High Court said, there was nothing inconsistent in the recitals of these documents, to show that there was no partition of the joint family.
The recital in exhibit 208 was found to be too technical to spell out the full legal implications of the words "in the joint family".
Referring to the Income tax returns Exs.
310, 311 and 314, submitted on March 15, 1948, November 12, 1949 and February 13, 1954, respectively, the High Court noted that these refer to the accounts of the two concerns and contain somewhat different description in the management.
In exhibit 310, relating to the year ending October 24, 1946, it is stated that N ' and defendants 1 and 2 were Kartas of the family.
In exhibit 311, defendant 2 is mentioned as the manager of the "old Hindu Undivided Family".
Similarly, exhibit 314, purports to have been filed by the H.U.F. relating to the year 1949 50 but this was filed on Feb. 13, 1954 after the institution of this suit.
The income tax returns exhibit 312 and 313 relate to the previous years ending on 12 11 1947 and 22 12 48.
exhibit 312 was submitted on December 26, 1949 and exhibit 313 on December 22, 1953, both by defendant 2.
The status of the assessee in these two returns is mentioned as "Firm".
exhibit 315, is the income tax return relating to the income tax year 1948 49, the previous year of which ended on November 12, 1947.
It was filed by defendant 4 as guardian of her minor son, defendant 3, on December 22, 1949.
The status of the assessee therein is shown as `Individual '.
It relates to the business which was being run under the style of M/s. M. B. Sadalge.
It is mentioned in this return that each of the three defendants .1, 2 and 3 has 1/3 share in the business exhibit 316 is the order of the Income tax officer passed on June 20 1950 wherein it is stated that 1/3 share of defendant 1 in the profits of this firm was assessed on that date.
exhibit 309 is the income tax return relating to the previous year ended on November 4, 1945.
It was filed by defendant 2 in 1946, after Neelkanth 's death.
The High Court has attached great weight to an endorsement on this return, which is to the effect, that there had been a change in the family status.
at the end of the year.
This endorsement has been omitted from the printed copy of exhibit 309.
Consequently, at one stage, it was maintained by the counsel for the appellant that in repeatedly referring to this endorsement the High Court had committed an error of record.
We therefore, sent for the original.
We find that this endorsement is very much there in the original.
This endorsement was a valuable piece of evidence to show that, in fact, there had been a disruption of the joint family status at the end of the previous year, 1944 45, on November 4, 1945.
Thus the evidence furnished by the income tax returns was conflicting.
But the aforesaid endorsement on exhibit 309 was a clincher.
It was a statement made ante litem motam.
It confirmed the testing of 295 Defendant 2 that the partition had taken place in 1945 and this tilted the balance against the contention of the plaintiff.
In such evidentiary value, it out weighs the income tax returns, exhibit 310, 311 and 314, in which the status of the assessee is shown as H.U.F. The High Court was therefore, not wrong in holding that all these documents taken together do not show "that the family of the defendants had continued to be joint.
" Discussing the resolution (exhibit 335)of the Board of Directors passed on July 30, 1946, the High Court said that this resolution was passed only 22 days after the death of Neelkanth and therefore, there was nothing unusual if all the members authorised defendant 2 to redeem the pledged goods as manager of the joint family.
In our opinion, it was not ' unreasonable to hold that the recital in this resolution with regard to defendant 2 being the authorised manager of the joint family, was made as a matter of expediency, and did not discount the case of defendant 4 that the joint family had disrupted on November 4, 1945.
The High Court found that the racital in exhibit 143, that the partition had taken place two months prior to this application, was obviously a mistake, as it was nobody 's case that the partition had taken place in 1953.
This inference also was not implausible.
This document contains other palpable errors of a similar nature.
For instance, therein the age of defendant 3 is mentioned as twenty years, while he was hardly eighteen.
The High Court found that the documentary evidence furnished by the partnership deed (exhibit 197) dated October 25, 1946, the award (exhibit 294) dated October 30, 1948, and the decree (exhibit 295) dated September 15, 1949, passed on its basis was entirely reliable.
It further found that these documents had been acted upon.
In this connection, the High Court, 'rightly relied upon the admissions of defendant 1 in cross examination.
In the witness box, defendant 1 had conceded that all the immovable property that had been allotted to defendant 2 under the award had been sold away by him, and that pursuant to the award, Rs. 7,000/ had been paid to Heerabai and her son, Suryakant.
Defendant 1 further significantly admitted that on October 25, 1946 Rs. 16000/ and odd were to the credit of defendant 3 in the account books of M. section Sadalge Shop.
By virtue of the receipt, exhibit 167, dated August 9, 1949, defendants 1 and 2 acknowledged the deposit of Rs. 16005 15 0 in favour of the minor Defendant 3, payable with interest at Rs. 6/ per cent per annum.
Defendant 1 admitted the correctness of the contents of this receipt.
It is undisputed that subsequently, defendant 3 has not only obtained a decree on the basis of this receipt against defendant 1, but has taken out its execution.
The High Court has also dismissed the effect of the agreement (exhibit 99) which was executed between defendants 1, 2 and defendant 4 as the guardian of the minor, defendant 3 on April 12, 1950.
The main object of this agreement was to safeguard the interests of the minor in the management of the two partnership businesses, namely, 296 M. B. Sadalge Shop and Tennis Bidi Factory in the name of Chandrakant Neelkant Sadalge.
By this agreement, defendants 1 and 2 were called upon to credit to the business whatever amounts they had spent from out of the partnership assets.
The power of each of the defendants with regard to withdrawal of funds from partnership chest for personal expenses, was also restricted.
This arrangement continued to be in force till the partnership was dissolved by another registered deed on April 20, 1951.
Reference has already been made to exhibit 316, an order dated June 20, 1950, of the Income tax officer showing that defendants 1, 2 and 3 were being assessed on the basis that each of them had 1/3rd share in the business.
In a joint Hindu family business, no member of the family can say that he is the owner of one half, one third or one fourth.
The essence of joint Hindu family property is unity of owner ship and community of interest, and the shares of the members are not defined.
Similarly, the pattern of the accounts of a joint Hindu family business maintained by the Karta is different from those of a partnership.
In the case of the former the shares of the individual members in the profits and losses are not worked out, while they have to be worked out in the case of partnership accounts.
In view of all that has been said above, we are of opinion that the concurrent finding of the courts below to the effect, that the joint Hindu family of the defendants had disrupted on November 4, 1945, does not suffer from any legal infirmity or gross error which would justify our interference in this appeal by special leave.
We therefore, take it that no joint Hindu family of the defendants, nor any joint business of such a family was in existence either on October 15, 1949 when the last dealing (vide exhibit 394) of the plaintiff with defendants 1 and 2 took place, or when on April 15, 1953 the accounts were stated and admitted.
Indeed, on the date, April 15, 1953, on which the plaintiff 's cause of action arose, even the partnership was not in existence, the same having stood dissolved since April 20, 1951.
Mr. Datar next contends that even if the joint status of the family stood disrupted from November, 1945, then also, on the principle of section 45, Partnership Act, the acknowledgements made by defendants 1 and 2, representing themselves, jointly or severally, as Karta of the joint Hindu trading family, would, in the absence of public notice to the traders in general or particular notice to the plaintiff, be binding of all the erstwhile members of the joint family.
Reliance for this contention has been placed on a Single Bench judgment of the Bombay High Court in Kashiram Bhagshet Shete vs Bhaga Bhanshet Redij(1).
As against this, Mr. Desai submits that Kashiram 's case (supra) does not lay down the law correctly.
Counsel maintains that the contrary view taken by the other High Courts in these cases is sound : Pramod Kumar Pati vs Damodar Sahu(2); Rengaswami Ayyanagar vs (1) A.I.R. 1945 Bom.
511 (2) I.L. R. 1953 Cuttack 221.
297 Sivyurakasam Pillai(1); Muthyala Ramachandrappa vs Muthyala Narayanappa (2) .
Kashiram 's case (supra) decided by an eminent single Judge certainly supports the proposition propounded by Mr. Datar.
Applying the principle of section 45 of the Partnership Act, 1932, the learned Judge held that unless intimation of the severance of joint status between the members of the joint family is given to the outside creditors who had dealings with the joint family through its karta, either by public notice or individual notice in that behalf, the karta would be deemed to continue to represent the family and to have power to incur debts for family necessity and to make acknowledgements or part payments in `s respect of the same so as to extend the period of limitation.
With great respect to the learned Judge, we do not think that this is a correct enunciation of the law on the point.
Firstly, the legislature has, in its wisdom, excluded joint Hindu trading families from the operation of the Partnership Act.
Section 4 of that Act defines 'partnership ' as "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 further makes it clear that this Act governs only that relation of partnership which arises from contract and not from J status such as the one obtaining among the members of a joint Hindu family trading partnership.
Secondly, the question whether an acknowledgement made by the karta of an erstwhile joint Hindu family after its severance, would extend limitation against all the former members of that family, turns primarily on an interpretation of clause (b) of sub section (3) of s 21 read with section 19 of the Limitation Act, 1908.
Clause (b) of section 21 (3) provides: "Where a liability has been incurred by or on behalf of a Hindu undivided family as such, an acknowledgement or payment made by or by the duly authorised agent of, the manager of the family for the time being, shall be deemed to have been made on behalf of the whole family".
The key words in this clause are the manager of the family for the time being '.
These words unerringly indicate that at the time when the acknowledgement is made and signed, the person making and signing it, must be the manager of a subsisting joint Hindu family.
If at the relevant time the joint Hindu family as such was no longer in existence because of division, or disruption of its joint status, any acknowledgement made by the erstwhile karta of such family cannot keep the debt alive and extend limitation as against all the members of the family, his representative capacity as karta being co terminus with the joint status of the family.
Explanation (II) to section 19 lays down that for the purpose of this section "signed" means signed either personally or by an agent duly authorised in this behalf.
Section 21(1) provides that the expression "agent duly authorised in this behalf" in sections 19 and 20 shall in the case of a person under disability include his lawful guardian or manager or an agent duly authorised in this behalf.
It is well settled that (1) I.L.R. 1942Mad. 251 (F.B.) (2) A.I.R. 1940 Mad.
298 coparceners do not derive their title through the karta of the coparcenary.
Defendants 1 and 2 do not fulfil the requirements of this sub section.
It is therefore the duty of the creditor to ascertain after due enquiry whether the person making the acknowledgement still holds his representative capacity as karta of the family.
The law does not cast any duty upon the members of the family who do not figure in the endorsement or writing admitting the debt to inform the creditor by a general notice about the disruption of the family.
If the creditor fails to make an enquiry and satisfy himself ' about the capacity of the executant to represent the family at the time of making the acknowledgement, he does so at his own peril.
Disruption of the joint family status, as already noticed, puts an end to the representative capacity of the karta and any acknowledgement of a debt made by him after such disruption cannot save the creditors ' claim from becoming time barred against the other members.
The above enunciation of the law is in accord with the view taken by a Full Bench of the Madras High Court in Rangaswamy Ayyangar vs Sivprakasam Pillai (supra) and by a Division Bench consisting of Varadachariar and Abdur Rahman JJ.
in Muthyala Ramachandrappa vs Muthyala Narayanappa (supra), and by a Division Bench of the Orissa High Court in Pramod Kumar Pati vs Damodar Sahu (supra).
We approve of the law enunciated on the point by the High Courts in these cases.
No other point has been argued before us in this appeal which fails and is dismissed with costs.
P.B.R. Appeal dismissed.
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The plaintiff appellant had business dealings with the joint family of the defendants.
He had instituted a suit claiming a certain sum of money from the defendants, one of the grounds being that even if the defendants proved that there had been a partition in the family, the family was still liable for the dues pertaining to the ancestral business carried on by all the defendants either as members of the joint Hindu family or as partners of a firm.
Defendant 3 (respondent) stated that there was disruption of the joint family status on November 4, 1945.
when defendants 1 and 2 and his deceased father unequivocally expressed their intention to separate and divided their movables.
He denied that defendants 1 and 2 had ever acted as managers of the joint family.
The trial Court and the High Court concurrently found that the joint family of the defendants had disrupted on November 4, 1945 and that no joint family business was in existence on the date when the last dealing of the plaintiff with the defendants took place.
On appeal to this Court, it was contended that even if the joint family stood disrupted from November, 1945, in the absence of public notice by defendants 1 and 2 regarding the disruption of the joint family, the acknowledgements made by them as karta of the joint Hindu family would be binding on the erstwhile joint family under section 45 of the Partnership Act, 1932.
Dismissing the appeal, ^ HELD: (1) It is the duty of the creditor to ascertain whether the person making the acknowledgement still holds his representative capacity as karta of the family.
The law does not cast any duty upon the members of the family to inform the creditors by a general notice about the disruption of the family.
If the creditor fails to make an enquiry and satisfy himself about the capacity of the executant to represent the family at the time of making the acknowledgement, he does so at his own peril.
Disruption of the joint family status puts an end to the representative capacity of the karta and any acknowledgement of a debt made by him after such disruption cannot save the creditor 's claim from becoming time barred against the other members.
[298B C] Pramod Kumar Pati vs Damodar Sahu, ILR 1953 Cuttack 221; Rengaswami Ayyangar vs Sivprakasem Pillai, ILR ; Mutayala Ramachandrappa vs Mutayala Narayanappa, AIR 1940 Mad. 339, approved.
Kashiram Bhagshet Shete vs Bhaga Bhanshet Redij A.I.R. over ruled.
(2)(a) The Legislature has excluded the joint Hindu trading families from the operation of the Partnership Act.
Section 4 defines partnership as a relation between persons who have agreed to share the profits of a business, and according to section 5 the Act governs only that relation of partnership which arises from contract and not from status such as the one obtaining among the members of a joint Hindu family ' trading partnership, [297C D] 288 (b) The words "manager of a family for the time being" occurring in section 21(3)(b) of the Limitation Act.
indicate that at the time when the acknowledgement was made and signed, the person making and signing it, must be the manager of a subsisting joint Hindu family.
If at the relevant time the joint Hindu family, as such, was no longer in existence, any acknowledgement made by the erstwhile karta of such family cannot keep the debt alive and extend limitation as against all the members of the family, his representative capacity as karta being co terminus with the joint status of the family.
[297F G] (c) Coparceners do not derive their title through the karta of the coparcenaty.
In the instant case defendants 1 and 2 did not fulfil the requirements of sub section
(1) of section 21 of the Limitation Act.
[298A]
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any case of successful prosecution of the husband or wife at the instance of the wife or the husband could be brought to the notice of the Supreme Court in the course of the arguments in this appeal would show that the spouses had not lightly rushed in the past to criminal courts with complaints of criminal breach of trust against the other spouses though in the day to day life.
There must have been numerous instance where the wife had used the property or cash of the husband for purposes different from the one for which they were given by the husband to be applied by the wife and vice versa.
Therefore, the minimum requirement in such cases is a specific separate agreement whereby the property of the wife or husband was entrusted to the husband or wife and or his or her close relations.
In the absence of such a specific separate agreement in the present case the complaint was rightly quashed.
[242D F] & CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 684 of 1982 From the judgment and order dt.
the 31st May, 1982 of the High Court of Punjab & Haryana at Chandigarh in Crl.
No. 4876M/81.
V.C. Mahajan, and N.S. Das Bahl for the Appellant.
Altat Ahamed for the Respondents.
Mrs. U. Kapoor for the Intervener.
T The following Judgments were delivered FAZAL ALI, J. Sometimes the law which is meant to impart justice and fair play to the citizens or people of the count is so torn and twisted by a morbid interpretative process that instead of giving haven to the disappointed and dejected litigants it negatives their well established rights in law.
The present case reveals the sad story of a helpless married woman who, having been turned out by her husband without returning her ornaments, money and clothes despite repeated demands, and dishonestly misappropriating the same, seems to have got some relief by the court of the first instance but to her utter dismay and disappointment when she moved the High Court she was forced like a dumb driven cattle to seek the dilatory remedy of a civil suit such was the strange and harsh approach of the High Court, with due respect, which seems to have shed all the norms of justice and fair play.
Even so, the High Court is not much to be blamed because in the process of following precedents or decisions of doubtful validity of some courts, it tried to follow suit.
It may be stated that even the old 199 classic Hindu law jurists and celebrated sages conceded certain substantial rights to the women, one of which was what is called Saudayika or stridhan, with which we are concerned here.
This now brings us to a brief discussion of the nature, character and concomitants of stridhan.
In the instant case, we are mainly concerned with that part of stridhan which is the absolute property of a married women during coverture.
Sir Gooroodas Banerjee in 'Hindu Law of Marriage and Stridhana ' while describing the nature of stridhan quoted Katyayana thus: "Neither the husband, nor the son, nor the father, nor the brother, has power to use or to alien the legal property of a woman.
And if any of them shall consume such property against her own consent he shall be compelled to pay its value with interest to her, and shall also pay a fine to the king.
Whatever she has put amicably into the hands of her husband afflicted by disease, suffering from disease, or sorely pressed by creditors, he should repay that by his own freewill. " (P.341) At another place while referring to the nature of a husband 's rights over stridhan during coverture, the author referring to Manu says thus: " . and by the law as expounded by the commentators of the different schools, the unqualified dominion of the husband is limited to only some descriptions of the wife 's property, while as regards the rest he is allowed only a qualified right of use under certain circumstances specifically defined." (p.340) Similarly, while describing the nature of stridhan generally, which is known as saudayika, the author says thus: "First, take the case of property obtained by gift.
Gifts of affectionate kinderd, which are known by the name saudayika stridhana, constitute a woman 's absolute property, which she has at all times independent power to alienate, and over which her husband has only a qualified right, namely, the right of use in times of distress.
" 200 The entire classical text on the subject has been summarised by N.R. Raghavachariar in 'Hindu Law ' (5th Edn) at page 533 (section 487) where the following statement is made: "487.
Powers During Coverture.
Saudayika, meaning the gift of affectionate kindred, includes both Yautaka or gifts received at the time of marriage as well as its negative Ayautaka.
In respect of such property, whether given by gift or will, she is the absolute owner and can deal with it in any way she likes.
She may spend, sell or give it away at her own pleasure by gift or will without reference to her husband and property acquired by it is equally subject to such rights.
Ordinarily, the husband has no manner of right or interest in it.
But in times of extreme distress, as in famine, illness or imprisonment, or for the performance of indispensable duty the husband can take and utilise it for his personal purposes, though even then he is morally bound to restore it or its value when able to do so.
But this right is purely personal to him and cannot be availed of by a holder of a decree against the husband, and if the husband dies with out utilising the property for the liquidation of his debts, his creditors cannot claim to proceed against it in the place of her husband.
" To the same effect is Maines ' treatise on Hindu Law at page 728.
The characteristics of Saudayika have also been spelt out by Mulla 's Hindu law at page 168 (section 113) which gives a complete list of the stridhan property of a woman both before and during coverture, which may be extracted thus: "113.
Manu enumerates six kinds of stridhana: 1.
Gifts made before the nuptial fire, explained by Katyayana to mean gifts made at the time of marriage before the fire which is the witness of the nuptial (adhyagni).
Gifts made at the bridal procession, that is, says Katyayana, while the bride is being led from the residence of her parents to that of her husband 201 (adhyavanhanika) 3.
Gifts made in token of love, that is, says Katyayana, those made through affection by her father in law and mother in law (pritidatta), and those made at time the of her making obeisance at the feet of elders (padavan danika).
Gifts made by father.
Gifts made by mother.
Gifts made by a brother.
" It is, therefore, manifest that the position of stridhan of a Hindu married woman 's property during coverture is absolutely clear and unambiguous; she is the absolute owner of such property and can deal with it in any manner she likes she may spend the whole of it or give it away at her own pleasure by gift or will without any reference to her husband.
Ordinarily, the husband has no right or interest in it with the sole exception that in times of extreme distress, as in famine illness or the like, the husband can utilise it but he is morally bound to restore it or its value when he is able to do so.
It may be further noted that this right is purely personal to the husband and the property so received by him in marriage cannot be proceeded against even in execution of a decree for debt.
Such being the nature and character of stridhan of a woman, it is difficult to countenance the view of the Punjab & Haryana High Court in Vinod Kumar Sethi & Ors.
vs State of Punjab & An.(l) that the stridhan property of a married woman becomes a joint property as soon as she enters her matrimonial home.
We shall deal with this aspect of the matter a little later.
We would first like to narrate the facts of the case to show how the complaint filed by the appellant was wrongly quashed by the High Court.
The general allegations made in the complaint may be summarised as follows: (1) 202 The complainant was married to Suraj Kumar, Accused No. 1 (respondent) on 4.2.72 at Ludhiana according to Hindu rites and customs in the presence of respectable persons.
Accused No.2 was the father and accused Nos.3 to 5 were brothers and No.6 was brother in law of accused No.; It is further alleged that all the accused attended and actively participated in the marriage of the complainant and demanded dowry.
The must important allegation made by the appellant was that her parents and relatives gave by way of dowry articles worth Rs. 60,000/ inclusive of gold ornaments, clothes and other things which were entrusted to accused Nos.1 to 6 on 5.2.72 which were taken into possession by them.
Soon after the marriage, accused No. 1 started harassing, teasing and beating the complainant and ultimately turned her out alongwith her children sometime in the year 1977.
It was avered in para 4 of the complaint that accused never returned the articles to her, the relevant portion of the allegations may be extracted thus: "The articles above mentioned were never given by the accused to the complainant for her use and possession of the same was illegally, dishonestly and malafidely retained by the accused in order to make a wrongful gain to them selves and wrongful loss to the complainant.
The accused refused to give the entrusted articles of dowry, which were the stridhan of the complainant.
On 10.2.1981 when the accused Nos. 1 to 5 came to Ludhiana to attend the proceeding u/s 125 Cr.P.C., filed by the complainant in the Court of Shri S.S. Tiwana, they were persuaded by the parents of the complainant to send the articles entrusted to them at the time of marriage but they gave flat refusal to its notice which was served upon the accused No.1 which was dated 17.12.80, but to no effect.
The accused have thus dishonestly used and converted the articles aforementioned to their own use, who are still in possession of the same in violation of the direction given by the parents of complainant.
The parents of the complainant directed the accused at the time of marriage to give the articles to the complainant for her use, in the presence of the aforesaid persons, but the accused have not done the needful of the demand and have thus committed criminal breach of trust punishable u/s 406 IPC." 203 A perusal of the allegations made in the complaint undoubtedly makes out a positive case of the accused having dishonestly misappropriated the articles handed over to them in a fiduciary capacity.
To characterise such an entrustment as a joint custody or property given to the husband and the parents is wholly unintelligible to us.
All the ingredients of an offense under s.405 IPC were pleaded and a prima facie case for summoning the accused was made out.
In such circumstances, the complainant should have been given an opportunity by the High Court to prove her case rather than quashing the complaint.
Such an exercise of jurisdiction under s.482 Cr.
P.C. is totally unwarranted by law.
We might also mention that alongwith the complaint, a list of valuable articles had also been given, the relevant portion of which may be extracted thus; I. " Jewellery" 1.
Nine complete gold sets 2.
One complete diamond set 3.
Three gold rings 4.
Two golden Bahi (Baju Band) 5.
One golden chain 6.
One shingar patti with golden tikka 7.
One golden nath (Nose ring) 8.
Twelve golden bangles II.
Silver articles 1.
Six glasses and one jug 2.
Two surma danies 3.
One tagari 4.
Two payals III.
Clothes Fifty one sarees, twenty one suits alongwith petti 204 coats, blouses, nighties, shawls, sweaters, night suits, gowns and woollen coat etc., six complete beds with sheets, etc.
" A perusal of the list reveals that so far as the jewellery and clothes, blouses, nighties and gowns are concerned they could be used only by the wife and were her stridhan.
By no stretch of imagination could it be said that the ornaments and sarees and other articles mentioned above could also be used by the husband, If, therefore, despite demands these articles were refused to be returned to the wife by the husband and his parents, it amounted to an offence of criminal breach of trust.
In mentioning the articles in the list, we have omitted furniture and utensils which though also belonged to the complainant yet there is some room for saying that these were meant for joint use of the husband and wife.
Thus, the facts mentioned in the complaint taken at their face value reveal a clear allegation that the stridhan property of the appellant was entrusted to the husband who refused to return the same to her Some courts were of the opinion that in view of section 27 of the and section 14 of the Hindu Succession act, the concept of stridhan property of a woman was completely abolished.
For instance, the Punjab & Haryana High Court in a case reported in Surindra Mohan etc.
vs Smt.
Kiran Saini(1) held thus: "That under the present law on claim can be made on the basis of stridhan, as it has now been completely abolished and cannot avail against statute which makes it the joint property of the parties.
" We are of the opinion that this view of the High Court is not legally sustainable because neither of the two Acts, referred to above, go to the extent of providing that the claim of a woman on the basis of stridhan is completely abolished.
All that the two sections, mentioned above, provide is that if the husband re (1) 1977 Chandigarh Law Report 212 205 fuses to return the stridhan property of his wife, it will be open to the wife to recover the same by properly constituted suit.
The sections nowhere provide that the concept of stridhan is abolished or that a remedy under the criminal law for breach of trust is taken away.
In a later decision in Bhai Sher Singh & Anr.
vs Smt.
Virinder Kaur(1), it was very rightly pointed out by the same High Court that section 27 of the Marriage Act merely provides an alternate remedy to the wife to bring a properly constituted suit in respect of the stridhan property which the husband refused to return.
Thus, it is clear that section 27 merely provides for an alternate remedy and does not touch or affect in any way the Criminal liability of the husband in case it is proved that he has dishonestly misappropriated that stridhan of his wife.
It cannot also be spelt out from any textbook or the sastric law of the Hindus that the two Acts mentioned above take away the stridhan right of a woman at the most these Acts merely modify the concept of stridhan.
It may be useful to refer to certain pertinent observations in the aforesaid case.
"The aforementioned passage shows that a female has an absolute right to use her stridhan in any way she likes and even if her husband can take this property at the time of distress, this right is personal to him, The allegations made in the instant complaint are not that the husband of the respondent has placed her ornaments and jewellery etc.
Out of her way.
What has been alleged therein is that the petitioners who are the parents in law of the respondent have converted the ornaments and clothes, etc.
presented to the respondent at the time of her marriage to their own use.
Section 27 of the empowers a Court while deciding a matrimonial dispute to also pass a decree in respect of property which may jointly belong to both the husband and the wife.
This section at best provides a civil remedy to an aggrieved wife and does not in any way take away her right to file a crimi (1) 206 nal complaint if the property belonging to her is criminally misappropriated by her husband. ' ' In these circumstances, the decision reported in 1977 Chandigrah Law Reporter 212 can no longer be considered good law.
Even in Vinod Kumar 's case (supra) the Full Bench reiterated the view that section 27 in no way abolishes stridhan but expressly recognises the property exclusively owned by the wife.
In this connection, the Court observed thus: "The express words of the provision refer to property 'which may belong jointly to both the husband and the wife '.
It nowhere says that all the wife 's property be longs jointly to the couple or that Stridhan is abolished and she cannot be the exclusive owner thereof.
Indeed, in using the above terminology the statute expressly recognises that property which is exclusively owned by the wife is not within the ambit of Section 27 of the Equally no other provision in the could be pointed out which erodes the concept of Stridhan or in anyway incapacitates the Hindu wife to hold property as an exclusive owner.
" The sheet anchor of the arguments of the counsel for the respondents which is based on the decision of the Punjab & Haryana High Court in Vinod Kumar 's case is that the moment a woman after Marriage enters her matrimonial home, her stridhan property becomes a joint properly of both the spouses and the question of application of section 406 I.P.C is completely eliminated.
It is true that to a great extent this part of the argument of the learned counsel is supported by the aforesaid decision but, in our opinion, the decision, so far as this aspect of the matter is concerned, is wholly unsustainable.
We would first extract the exact ratio held by the High Court in Vinod Kumar 's case: "To conclude, it necessarily follows from the aforesaid discussion that the very concept of the matrimonial home connotes a jointness of possession and custody by the spouses even with regard to the moveable properties exclusively owned by each of them.
It is, therefore, inapt to view the same in view of the conjugal relationship as 207 involving any entrustment or passing of dominion over property day to day by the husband to the wife or vice versa.
Consequently, barring a special written agreement to the contrary, no question of any entrustment or dominion over property would normally arise during coverture or its imminent break up.
Therefore, the very essential prerequisites and the core ingredients of the offence under S.406 of the Penal Code would be lacking in a charge of criminal breach of trust of property by one spouse against the other.
" These observations on doubt support the contention of the learned counsel for the respondent but we find it impossible to agree with the aforesaid observations for the reasons that we shall give hereafter.
We fail to understand the logic of the reasoning adopted by the High Court in investing the pure and simple stridhan of the wife with the character of a joint property.
We are surprised that the High Court should have taken the view that a woman 's absolute property though well recognised by law is interpreted by it as being shorn its qualities and attributes once a bride enters her matrimonial home.
We are clearly of the opinion that the mere factum of the husband and wife living together does not entitle either of then to commit a breach of criminal law and if one does then he/she will be liable for all the consequences of such breach.
Criminal law and matrimonial home are not strangers.
Crimes committed in matrimonial home are as much punishable as anywhere else.
In the case of stridhan property also, the title of which always remains with the wife though possession of the same may sometimes be with the husband or other members of his family, if the husband or any other member of his family commits such an offence, they will be liable to punishment for the offence of criminal breach of trust under sections 405 and 406, IPC.
Afterall how could any reasonable person expect a newly married women living in the same house and under the same roof to keep her personal property or belongings like jewellery, clothing, etc., under her own lock and key, thus showing a spirit of distrust to the husband at the very behest.
We are surprised how could the High Court permit the husband to cast his covetous eyes on the 208 absolute and personal property of his wife merely because it is kept in his custody, thereby reducing the custody to a legal farce.
On the other hand, it seems to that us even if the personal property of the wife is jointly kept, it would be expressly or impliedly kept in the custody of the husband and if he dishonestly misappropriates or refuses to return the same, he is certainly guilty of criminal breach of trust, and there can be no escape from this legal consequence.
The observations of the High Court at other places regarding the inapplicability of section 406 do not appeal to us and are in fact not in consonance with the spirit and trend of the criminal law.
There are a large number of cases where criminal law and civil law can run side by side.
the two remedies are not mutually exclusive but clearly coextensive and essentially differ in their content and consequence.
The object of the criminal law is to punish an offender who commits an offence against a person, property of the State for which the accused, on proof of the offence, is deprived of his liberty and in some cases even his life.
This does not, however, affect the civil remedies at all for suing the wrong deer in cases like arson, accidents, etc.
It is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred.
The two types of actions are quite different in content, scope and import.
It is not at all intelligible to us to take the stand that if the husband dishonestly misappropriates the stridhan property of his wife, though kept in his custody, that would bar prosecution under section 406 I.P.C. Or render the ingredients of section 405 IPC nugatory or abortive.
To say that because the stridhan of a married woman is kept in the custody of her husband, no action against him can be taken as no offence is committed is to override and distort the real intent of the law.
Coming back to the theory of matrimonial home and the stridhan becoming a joint property of the two spouses, the logical effect of the observation made by the High Court is that once a woman enters her matrimonial home she completely loses her exclusive stridhan by the same being treated as a joint property of the spouses.
In other words, if this view is taken in its literal sense the consequence would be to deprive the wife of the absolute character and nature of her stridhan and make the husband a co owner of the same such a concept is neither contemplated nor known to Hindu law of stridhan, nor does it appeal to pure 209 common sense.
It is impossible to uphold the view that once a married woman enters her matrimonial home her stridhan property undergoes a vital change so as to protect the husband from being prosecuted even if he dishonestly misappropriates the same.
For instance, properties like jewellery, clothing, cash, etc.
given by her parents as gifts cannot be touched by the husband except in very extreme circumstances, viz., where the husband is in imprisonment or is in serious distress.
Even then the religion and the law enjoins that the husband must compensate the wife and if he cannot do so, he must pay fine to the King which means that the husband would` be liable to penal action under the present law of the land.
One of the arguments addressed by the counsel for the respondent which had appealed to thee full Bench of the Pun jab & Haryana High Court in Vinod Kumar 's case (supra) as also to our learned Brother Varadarajan, J., is that after entering the matrimonial home the custody of the stridhan entrusted by the wife to her husband becomes a sort of a partnership firm and in this view of the matter the question of criminal breach of trust does not arise.
In our opinion, it is neither appropriate nor apposite to import the concept of partnership in the relationship of husband and wife for the simple reason that the concept of partnership is entirely different from that of the husband 's keeping the stridhan in his custody.
Section 4 of the (hereinafter referred to as the 'Partnership Act ') defines 'partnership ' thus: "partnership" is the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all.
Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm" and the name under which their business is carried on is called the "firm name".
The essential ingredients of a partnership are: (1) that there should be an actual or physical overt act on the part of two persons to embark an a business adventure.
(2) that if any business is carried on by one or any 210 of the partners the profits of the business shall be shared by them in the ratio contained in the partnership agreement.
It is, therefore, manifest that in a partnership the wife must by some clear and specific act indicates that the stridhan which has been entrusted to the husband is to be used for a partnership business and the losses of the firm, if any would have to be shared by both.
In other words, one of the essential conditions of a partnership firm is that every partner must have dominion over the property by virtue of the fact that he is a partner.
This aspect of the matter was highlighted in a decision of this Court in Velji a Raghavji vs State of Maharashtra(1) where the following observations were made: ".
Every partner has dominion over property by reason of the fact that he is a partner.
This is a kind of dominion which every owner of property has over his property.
But it is not dominion of this kind which satisfies the requirements of section 405.
In order to establish 'entrustment of dominion ' over property to an accused person the mere existence of that person 's dominion over property is not enough.
It must be further shown that his dominion .
was the result of entrustment.
" In the instant case, however, there is neither any allegation nor anything in the complaint to show that when the wife entered her matrimonial home she had entrusted the property to her husband so as to make him part owner of the same.
Therefore, the question of the husband 's having dominion over the property does not at all arise.
In fact, the wife has nothing to do with the partnership, if any, and the husband is a pure and simple custodian of the property and cannot use the same for any purpose without her consent.
A pure and simple act of entrustment of the stridhan to the husband does not attract any of the essential ingredients of a a partnership as defined in the Partnership Act.
In the instant case, there is also no question of the wife constituting herself a partner with her husband merely by allowing him to keep the articles or money in his custody.
There is neither any pleading nor any allegation that after her marriage, the appe (1)AIR 211 llant transferred all her properties to her husband for carrying on a partnership business in accordance with the provisions of the Partnership Act.
Thus, in our opinion, it cannot be said that a bare act of keeping stridhan property in the custody of the husband constitutes a partnership and, therefore, a criminal case under section 406 IPC is not maintainable.
It is not necessary for us to multiply cases on this point on which there does not appear to be any controversy.
We have already pointed out that the stridhan of a woman is her absolute property and the husband has no interest in the same and the entrustment to him is just like something which he wife keeps in a Bank and can withdraw any amount whenever she likes without any hitch or hindrance and the husband cannot use the stridhan for his personal purposes unless he obtains the tacit consent of his wife.
When the essential conditions of a partnership do not exist the mere act or factum of entrustment of stridhan would not constitute any co ownership or legal partnership as defined under s.4 of the Partnership Act.
To sum up the position seems to be that a pure and simple entrustment of stridhan without creating any rights in the husband excepting putting the articles in his possession does not entitle him to use the same to the detriment of his wife without her consent.
The husband has no justification for not returning the said articles as and when demanded by the wife nor can he burden her with loss , of business by using the said property which was never intended by her while entrusting possession of stridhan.) On the allegations in the complaint, the husband is no more and no less than a pure and simple custodian acting on b half of his wife and if he diverts the entrusted property elsewhere or for different purposes he takes a clear risk of prosecution under s.406 of the IPC.
On a parity of reasoning, it is mainfest that the husband, being only a custodian of the stridhan of his wife, cannot be said to be in joint possession thereof and thus acquire a joint interest in the property.
For these reasons, the custody or entrustment of stridhan with the husband does not amount to a partnership in any sense of the term and therefore, we are unable to agree with view taken in Vinod Kumar 's case as also with the opinion expressed by our Brother on the points arising in the case.
Another serious consequence as a result of the ratio of the full Bench decision in Vinod Kumar 's case would be to render the 212 provisions of section 406 IPC inapplicable and nugatory even if the husband has the audacity or the importunity of refusing to return the stridhan of his wife.
Furthermore, we shall hereafter show that the view of the Full Bench is in direct contravention of a long course of decisions of this Court on the ingredients of section 405 IPC.
Before coming to this chapter, we would like to say a few things more about the judgment of the High Court which on deeper probe and careful scrutiny seems to be self contradictory.
We are clearly of the opinion that the concept of stridhan property of a married woman becoming a joint property of both the spouses as soon as she enters her matrimonial home and continues to be so until she remains there or even if there is a break in the matrimonial alliance, is in direct contravention of Hindu Law of Sadayika which has been administered since more than a century by High Courts, Privy Council as also this Court.
By a pure and simple figment of the fertile imagination the Judges in Vinod Kumar 's case seem to have rewritten the law of criminal breach of trust contained in sections 405 and 406 IPC so as to carve out an imaginary exception to the application of the Penal Code.
A more tragic consequence of the view taken by the High Court is that even if there is a break in the matrimonial alliance and the wife wants her husband to return her exclusive property and he refuses to return, even then the provisions of section 406 IPC would not apply.
It is an extreme travesty of justice for a court to say that whenever a married woman demands her stridhan property from her husband she should be driven to the dilatory process of a civil court and her husband would be debarred from being prosecuted by a criminal court.
By a strange and ingenious process of holding that such an act of a husband does not attract the provisions of the Penal Code, as the property being joint there is no question of the husband being a trustee or holding the same in a fiduciary capacity.
Such a view, in our opinion, is not only contradictory but what the High Court has said before regarding the applicability of s.27 of the and the nature of stridhan as referred to above is also neither in consonance with logic and reason nor with the express provisions of the Penal Code and seems to us to be inspired by a spirit of male chauvininism so as to exclude the husband from criminal lability merely because his wife has refused to live in her matrimonial 213 home.
We are indeed surprised how could the High Court, functioning in a civilised and socialistic society such as ours, play havoc with judicial interpretation of an important branch of law.
We shall now show how the final view taken by the High Court is clearly contradictory to what it has observed before.
In paragraphs 22A, 23 and 24 of the judgment, the High Court observes as follows: "It must, therefore, be unreservedly stated that the law, as it stands today, visualises a complete and full ownership of her individual property by a Hindu wife and in this context the factum of marriage is of little or no relevance and she can own and possess property in the same manner as a Hindu male.
Once it is held that a Hindu wife can own property in her own right, then it is purely a question of fact whether the dowry or the traditional presents given to her, were to be individually owned by her or had been gifted to the husband alone or jointly to the couple. .
For instance jewellery meant for the personal wearing of the bride, wedding apparel made to her measures specifically, cash amounts put into a fixed deposit ill a bank expressly in her E name; are obvious examples of dowry raising the strongest, if not conclusive presumption, of her separate owner ship in these articles.
Once it is found as a fact that these articles of dowry were so given to her individually and in her own right, then I am unable to see how the mere factum of marriage would alter any such property right and divest her of ownership either totally or partially.
" In these paragraphs the High Court unequivocally and categorically expresses the view that a Hindu woman has complete and full ownership of her individual property and the factum of marriage is of no relevance to determine the nature of the property It also holds that articles like jewellery, wedding apparel and cash, etc., cannot alter any such property right.
In view of this clear finding given by the High Court, how could it make a complete volte face by holding that these very properties after marriage become joint property of both the spouses.
The High Court has not realised that the theory or philosophy of matrimonial home 214 propounded by it stands directly contradicted by its own observations referred to above.
In paragraph 49 of the judgment, the High Court clearly finds that the mere use by the relations of the husband would not have the effect of passing the possession of the property to the Hindu undivided family and in this connection observes thus : Equally, the common use and enjoyment of certain articles of dowry and traditional presents, by the other members of a joint family with the leave and licence of a Hindu wife, cannot have the effect of extending the jointness Of control and custody of the couple to undefined and unreasonable limits.
Consequently, there is no reason to assume that the mere user or enjoyment of the dowry by other members of the house hold, would have the effect of passing the possession and control thereof jointly to the Hindu Undivided Family as such." Thus, these observations run counter and are totally inconsistent and irreconcilable with the view taken by the High Court in paragraph 41 where it has observed thus: "In the light of the above it would be farcical to assume that despite the factum of a marriage and a common matrimonial home the two spouses would stand in a kind of a formal relationship where each is entrusted with or has been passed dominion over the exclusive property of the other. .
The matrimonial home so long as it subsist presumes a jointness of custody and possession by the spouses of their individual as also of their joint properties line.
The inevitable presumption during the existence or the imminent break up of the matrimonial home there fore is one of joint possession of the spouses which might perhaps be dislodged by the special terms of a written contract.
However, to be precise this presumption of joint possession properties within the matrimonial home can subsist only as long as the matrimonial home subsists or on the immediate break up thereof.
" At other places the High Court has observed thus: 215 "47.
In view of the above, it would be equally untenable to hold that either the desertion or the expulsion of one of the spouses from the matrimonial home would result in entrusting dominion over the property belonging to the other so as to bring the case within the ambit of this pre requisite under S.405, Indian Penal Code.
The joint custody and possession once established would thereafter. . exclude either express entrustment or the passing of dominion over the property.
It was rightly argued that if an irate husband or wife walks out from the matrimonial home in a huff, this cannot constitute an entrustment or dominion over the property to the other.
Consequently, unless a special written agreement to the contrary can be established, the strongest presumption arises that during the existence and immediately after the crumbling of the matrimonial home, there was in essence, a joint possession and custody of the property of the spouses therein, including dowry and traditional presents, which would preclude the essentials of entrustment or dominion over the property which form the cornerstone of criminality under s.405, Indian Penal Code.
It cannot, therefore, be prim.
facie presumed that these are exclusively the ownership of the wife or inevitably entrusted either to the husband or his close relations.
As was noticed earlier, if an irate wife in a tantrums abandons the matrimonial home, such like property does not in the eye of law become entrusted to the parents in law or other close relations of the husband No such gullible presumption of entrustment or passing of the dominion of property can be raised in such a situation to come within the mischief of criminality for breach of trust.
Entrustment or dominion over the property has to be unequivocally alleged and conclusively established by proof later.
" The High Court had itself rightly spelt out the legal propositions that the pure and traditional presents given to a bride in a Hindu wedding may be divided into three categories, viz., (a) property intended for exclusive use of the bride, e. g., her personal jewellery, wearing apparel, etc.
216 (b) articles of dowry which may be for common use and enjoyment in the matrimonial home, and (c) articles given as presents to the husband or the parent in law and other members of his family.
With regard to category (a) above, the High Court observed thus: "Similarly as regards the first category of articles meant for the exclusive use of the bride she would retain her pristine ownership therein irrespective or her entry and presence in the matrimonial home or that of her parents in law." The High Court thus accepts the well established rule of Hindu law of stridhan that that articles mentioned in category (a) are meant for the exclusive use of the bride and are her personal property.
Unfortunately, however, with regard to category (c) while discussing the question of the rights of the bride to her exclusive property upon her entry in her matrimonial home, the High Court has wrongly applied what it had previously held with regard to category (a).
In one breath the Judges say that the bride is entitled to retain her ownership irrespective of her entry and presence in the matrimonial home and in the other they come to the conclusion that the moment a married woman enters her matrimonial home, all her properties, including her exclusive property, become a joint property by a fiction of being placed in the custody of her husband or his relations.
While we agree with the first part of the categories, as extracted above, we find it difficult to accept the other propositions adumbrated at a later stage of the judgment which have been fully discussed by us.
We fail to understand how the High Court while finding that joint enjoyment does not divest a Hindu wife of her exclusive ownership still chose to treat it a joint property of the two spouses by the mere factum of joint user.
The two views expressed by the High Court stand contradicted by its own findings and are wholly understandable.
Thus, a detailed analysis of the judgment of the Punjab & Haryana High Court in Vinod Kumar 's case (supra) appears to us to be a mass of confusion and lacks both clarity and coherence.
We are, therefore, unable 217 to uphold or support the view of the High Court that upon entering the matrimonial home the ownership of stridhan property becomes joint with her husband or his relations To this extent, therefore, we overrule this decision and hold that with regard to the stridhan property of a married woman, even if it is placed in the custody of her husband or in laws they would be deemed to be trustees and bound to return the same if and when demanded by her.
The Supreme Court in a large number of cases has held that the fundamental core of the offence of criminal breach of trust.
is that a property must be entrusted and the dominion of the property should be given to the trustee.
In the present case, all these conditions, even according to the findings of the Court though not its conclusion, are clearly established.
That the view of the High Court is absolutely wrong would be clear from a number of authorities, some of which we would like to discuss here.
In Chelloor Manaklal Narayan Ittiravi Nambudiri vs State of Travancore(1) this Court made the following observations: "As laid down in section 385, Cochin Penal Code (corresponding to section 405, Indian Penal Code) to constitute an offence of criminal breach of trust it is essential that the prosecution must prove first of all that the accused was entrusted with some property or with any dominion or power over it It follows almost axiomatically from this definition that the ownership or beneficial interest in the property in respect of which criminal breach of trust is alleged to have been committed, must be in some person other than the accused and the latter must hold it on account of some person or in some way for his benefit." In Jaswantrai Manilal Akhaney vs, State of Bombay(2) Sinha, J. (as he then was) observed thus: "For an offence under section 409, Indian Penal Code, the first essential ingredient to be proved is that the property was entrusted But when section 405 which defines "criminal breach of trust speaks of a person being (1) (2) ; 218 in any manner entrusted with property, it does not contemplate the creation of a trust with all the technicalities of trust.
It contemplates the creation of a relationship whereby the owner of property makes it over to another person to be retained by him until a certain contingency arises or to be disposed of by him on the happening of a certain events.
" In Akharbhai Nazorali vs Md. Hussain Bhai(1) the Madhya Pradesh High Court made the following observations: "It may be that the deduction and retention of the employees ' contribution is a trust created by virtue of that very fact, or by virtue of a provision in statute or statutory rule.
But even apart from the latter, the mere fact of telling the employees that it is their contribution to the provident fund scheme and then making a deduction or recovery and retaining it, constitutes the offence of criminal breach of trust.
This is so obvious that nothing more need be said about it." These observations were fully endorsed and approved by this Court in Harihar Prasad Dubey vs Tulsi Das Mundhra & Ors.(2 where the following observations were made: "This, in our opinion, is a correct statement of the position and we also agree with the learned Judge of the Madhya Pradesh High Court that "this so obvious that nothing more need be said about it We, therefore, think that the impugned order quashing the charge against the respondents is obviously wrong." In Basudeb Patra vs Kanai Lal Haldar(3) the Calcutta High Court observed thus: "Whereas the illustration to section 405 show equally clearly that the property comes into.
(1) AIR 1961 M. P. 37: (2) ; (3) AIR 1949 Calcutta 207, 219 the possession of the accused either by an express entrustment or by some process placing the accused in a position of trust. .
On the facts of the present case, which, as I have said, are not open to question at this stage, it is quite clear that the ornaments were handed over to the petitioner by the beneficial owner in the confidence that they would be returned to the beneficial owner in due time after having been used for the purpose for which they were handed over.
If this is not an entrustment, if is impossible to conceive what can be an entrustment." (Emphasis ours) This ratio was fully approved by this Court in Velji Raghavji Patel vs State of Maharashtra(1) where the following observation were made: "In order to establish " entrustment of dominion" over property to an accused person the mere existence of that person 's dominion over property is not enough.
It must be further shown that his dominion was the result of entrustment.
Therefore, as rightly pointed out by Harris, C.J. the prosecution must establish that dominion over the assets or a particular asset of the partnership was by a special agreement between the parties, entrusted to the accused person.
" In the case of State of Gujrat vs Jaswantlal Nathalal,(2) Hegde, J., speaking for the Court, observed thus: "The expression 'entrustment ' carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner.
Further the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them.
" In Sushil Kumar Gupta vs Joy Shanker Bhattacharjee(3) this Court observed thus: (1) ; (2) ; (3) ; 220 "The offence of criminal breach of trust is committed when a person who is entrusted in any manner with property or with dominion over it, dishonestly misappropriates it or converts it to his own use.
The appellant 's manner of dealing with the money entrusted to his custody clearly constitutes criminal breach of trust.
" In the case of Superintendent & Remembrancer of Legal Affairs, West Bengal vs S.K. Roy (1) this Court held that for 'entrustment ' two things are necessary, viz., (l) the entrustment may arise in "any manner" whether or not it is fraudulent, and (2) the accused must have acquisition or dominion over the property.
In Bhai Sher Jang Singh & Anr.
vs Smt.
Virinder Kaur (supra) the Punjab & Haryana High Court observed thus: It might be that some of the articles which were presented to her are for the use of both the spouses but the ornaments and things of the like nature are certainly meant for her and her alone.
When she makes an allegation in the complaint that either her husband or her parents in law had converted to their own use the ornaments forming the part of her stridhan which she had entrusted to them, the Court has to give legal effect to such allegation and to assume that such ornaments had been made the subject matter of criminal breach of trust.
It is settled law that even in a criminal complaint the complainant is under no obligation to plead the legal effect of the allegations made.
All that is required is that the facts constituting a complaint should be specifically mentioned so that the Court may be able to perform its duty of punishing the accused under the appropriate provision of law if such allegations are made out.
Further more, in a case like this a complaint cannot be quashed without giving the aggrieve wife an opportunity of proving that the ornaments had been given to her at the time of her marriage for her use only." (Emphasis supplied) We fully endorse this decision and hold that it lays down the correct law on the subject.
(1) [1974] 4 S.C.C. 230.
221 There is a judgment of the Allahabad High Court which more or less takes the same view as the Punjab & Haryana High Court in Vinod Kumar 's case (supra).
In Criminal Misc.
Case No. 676 of 1981 (connected with) Criminal Misc.
Case No. 2753 of 1981, Kailash Nath Agarwal & Ors.
vs Prem Pal Agarwal & Anr., (decided on 22.12.1983), the Allahabad High Court, out of the three categories laid down by Punjab & Haryana High Court in Vinod Kumar 's case, accepted only the third category, viz., articles which constitute the individual property of the person for whose use it was given, and held that the rest of the property falling under categories (a) and (b) would be property exclusively meant for the use of the bride and once it was brought to the family home, the possession would be joint unless by an express written agreement there was an entrustment of the property of the bride to other members of the family.
The Allahabad High Court thus also accepts the concept of the property being a joint property in the matrimonial home.
By and large this decision toes the line of the view taken by the Punjab and Haryana High Court in Vinod Kumar 's case.
Furthermore, the High Court has gravely erred in holding that the property could only be claimed by filing a properly constituted civil suit or in accordance with the provisions of the Dowry Prohibition Act or the as the case may be.
This proposition, in our opinion, is wholly incorrect as conceded even by the Punjab , & Haryana High Court in Vinod Kumar 's case.
There is an earlier decision of the Punjab & Haryana High Court which clearly holds that where there is a clear allegation of entrustment by the wife against the husband, he could be prosecuted by a criminal court on a complaint filed by the wife.
In this connection, the Court in Avtar Singh & Anr.
vs Kirpal Kaur Criminal Misc.
No.2144 M of 1979 and Criminal Misc.
No.2145 of 1979, decided on 16 8.79) made the following observations: "In my opinion, where certain thing is lying in trust with a person, offence of dishonest misappropriation would be committed on a date the demand for return of the entrusted articles is made and the same is declined.
According to the complaint, the first demand for the return of the articles was made on January 27, 1976 and it was that date when the demand was declined.
Hence, the offence of misappropriation of the dowry articles lying in trust was committed on January 27, 1976.
" 222 We find ourselves in entire agreement with this decision and hold that this was correctly decided.
This Court has pointed out more than once that the High Court should very sparingly exercise its discretion under section 482 Cr.
In L.V. Jadhav vs Shankarrao Abasaheb Pawar & Ors.(l) (to which two of us were a party), this Court made the following observations: "The High Court, we cannot refrain from observing, might well have refused to invoke its inherent powers at the very threshold in order to quash the proceedings, for these powers are meant to be exercised sparingly and with circumspection when there is reason to believe that the process of law is being misused to harass a citizen." In Smt.
Nagawwa vs Veeranna Shivalingappa Konjalgi & Ors.(2) this Court observed as follows : "Thus, it may be safely held that in the following cases an order of the magistrate issuing process against the accused can be quashed or set aside: (1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) where the discretion exercised by the Magistrate in suing process is capricious and arbitrary having been either on no evidence or on materials which are wholly irrelevant or inadmissible; and (1) AIR [1983]SC 1219.
(2) [1976] Supp.
SCR123 223 (4) where the complaint suffers from fundamental legal defects, such as, want of section, or absence of a complaint by legally competent authority and the like.
The cases mentioned by us are purely illustrative and pro vide sufficient guidelines to indicate contingencies where the High Court can quash proceedings.
" B The same principles would apply mutatis mutandis to a criminal complaint.
We now come to the question as to whether or not a clear allegation of entrustment and misappropriation of properties was made by the appellant in her complaint and, if so, was the High Court justified in quashing the complaint at that stage.
It is well settled by a long course of this Court that for the purpose of exercising its power under section 482 Cr.P.C. to quash a FIR or a complaint the High Court would have to proceed entirely on the basis of the allegations made in the complaint or the documents accompanying the same per se.
It has no jurisdiction to examine the correctness or otherwise of the allegations.
In case no offence is committed on the allegation and the ingredients of s.405 & 406, I.P.C. are not made out, the High Court would be justified in quashing the proceedings.
In the present case, we shall show that the allegations are both clear, specific and unambiguous and, therefore, the complainant should have been given a chance to prove her case.
It is, of course, open to the accused at the trial to take whatever defence that were open to him but that stage had not yet come and therefore, the High Court was totally ill advised to speculate on the merits of the case at that stage and quash the proceedings.
We have narrated the facts in detail in the earlier part of our judgment but we might again, even at the risk of repetition, indicate the bare facts which prima facie make out a clear case under s.406, IPC against the accused.
The important portions of the complaint may be spelt out thus: (1) that all the accused attended the marriage of the appellant with the respondent and demanded dowry from the parents of the appellant in consideration of the marriage.
(2) that the parents of the appellant spent Rs,75,000 on the marriage and dowry articles worth Rs.60,000 224 (inclusive of jewellery, wearing apparel, etc.) were given and entrusted to accused Nos.1 to 6 at the time of the Doli on 5.2.72, (3) that the articles entrusted to the accused were meant for the exclusive use of the appellant, (4) that the dowry articles were never given by the accused to the appellant even for her use and possession of the same was illegally, dishonestly and mala fidely retained by the accused in order to obtain a wrongful gain to themselves and wrongful loss to the appellant, (5) that on 11.12.1980 in the morning, the accused brought the appellant to Ludhiana in three clothes and refused to give the entrusted articles which were the stridhan of the appellant.
Taking all the allegations made above, by no stretch of imagination can it be said that the allegations do not prima facie amount to an offence of criminal breach of trust against the respondent.
Thus, there can be no room for doubt that all the facts stated in the complaint constitute an offence under section 406 IPC and the appellant cannot be denied the right to prove her case at the trial by per empting it at the very behest by the order passed by the High Court.
We therefore, overrule the decisions of the Punjab & Haryana High Court in Vinod Kumar 's case.
By way of post script we might add that we are indeed amazed to find that so deeply drowned and inherently engrossed are some of the High Courts in the concept of matrimonial home qua the stridhan property of a married women that they simply refuse to believe that such properties are meant for the exclusive use of the wife and could also be legally entrusted to the husband or his relatives.
Thus, if the husband or his relatives misappropriate the same and refuse to hand it over to the wife and convert them to their own use and even though these facts are clearly alleged in a complaint for an offence under section 405/406 I.P.C., some courts take the complaint is not maintainable.
Thus, even when clear and specific allegations are made in the complaint 225 that such properties were entrusted to the husband, they refuse to believe these hard facts and brush them aside on the ground that they are vague.
The allegations of the complainant in this appeal and the appeal before the Allahabad and the Punjab & Haryana High Court show that it is not so but is a pure figment of the High Court 's imagination as a result of which the High Court completely shut their eyes to the fact that the husband could also be guilty under section 405/406 I P.C. in view of the clear allegations made in the complaint.
In other words, the High Courts simply refuse to believe that there can be any such entrustment and even if it is so no offence is committed.
Such an approach amounts to a serious distortion of the criminal law, resulting in perpetrating grave and substantial miscarriage of justice to the wife at the hands of the High Courts.
We cannot countenance such a wrong and perverse approach.
For the reasons given above, we are satisfied that as the complaint prima facie disclosed an offence of criminal breach of trust as defined in section 405/406 of the Indian Penal Code the High Court was not justified in quashing`the complaint.
We, therefore, allow this appeal, set aside the judgment of the High Court and restore the complaint filed by the appellant and direct that the accused may be summoned, if not already summoned, and put on trial in accordance with law.
VARADARAJAN, J.
This criminal appeal by special leave is directed against the judgment of a learned Single Judge of the Punjab and Haryana High Court in Criminal Misc.
Case No.4876 of 1981.
The appellant, Pratibha Rani is the estranged wife of the first respondent Suraj Kumar who is the brother of the second respondent Krishan Lal.
One Rattan Chand is the father of respondents 1 and 2 and two others Chander Kumar and Vishwinder Kumar.
One Jugal Kumar is the brother in law of the first respondent.
The appellant filed a criminal complaint for an offence under s.406 I.P.C. against her husband and his father and brothers and brother in law mentioned above in the Court of the Additional Chief Judicial Magistrate, Ludhiana, alleging that she was married to the first respondent at Ludhiana on 4.
2. 1972 according to the Hindu rites and customs.
The material averments in the complaint 226 are these: The aforesaid persons, namely, father, brother and brother in law of the first respondent attended the marriage and demanded dowry from the appellant 's parents as consideration for the marriage.
Accordingly, dowry articles mentioned in the list appended to the complaint, worth Rs. 60,000, in the form of golden articles, clothes and other valuables were given and entrusted to the respondents and four others mentioned in the complaint at Ludhiana time of 'doli ' on 5.2.1972 in the presence of Kapur Chand Jain and six others.
The six respondents in the complaint started teasing, harassing and beating the appellant and they kept her without even food to extract more money from her parents.
They turned out the appellant with her children in the beginning of 1977.
After a great deal of persuasion and intervention by Panchayatdars, respondent 1 came to Ludhiana and took the appellant to his house after giving an undertaking in writing on 21.
6. 1977 not to misbehave with and maltreat the appellant her children.
But after some time all the respondents in the complaint started maltreating the appellant and misbehaving with her.
The articles mentioned in the list were never given by the respondents in the complaint to the appellant for her use but were retained by them illegally and with the dishonest intention of causing wrongful gain to themselves and wrongful loss to the appellant.
The respondents in the complaint brought the appellant to Ludhiana at 4.30 a.m.
On 11.12.1980 and left her near Kailash Cinema Chowk.
They refused to give the articles mentioned in the list which are the stridhan of the appellant to her.
When the appellant 's husband and his brother, Vishwinder Kumar, respondents 1 and 5 in the complaint, came to Ludhiana on 10.2.1981 to attend the proceeding started by the appellant under section 125 Cr.
P.C., her parents persuaded them to return the articles entrusted to them at the time of the marriage but they flatly refused to comply with that demand.
The articles have not been returned in spite of service of notice dated 17.
1981 on the first respondent.
Thus the respondents in the complaint have dishonestly converted the articles belonging to the appellant for their use in violation of the direction of the appellant 's parents given at the time of the marriage to give the articles for the appellant 's use.
The respondents in this appeal filed Criminal Misc.
Case No.4876 of 1981 in the Punjab and Haryana High Court under s.482 of the Code of Criminal procedure for quashing the criminal 227 Proceedings and the complaint taken on file by the Additional Chief Judicial Magistrate, Ludhiana under section 406 I.P.C. and his order summoning them.
Sukhdev Singh Kang, J. before whom the matter came up in the High Court relied strongly upon the observations made by a Full Bench of that High Court in Vinod Kumar Sethi & Ors.
vs State of PunJab and Ors.(l) and has observed in his judgment that the mere handing over of the articles of dowry of stridhana to the husband and other relations at the time of the marriage does not constitute entrustment in the sense of the word used in sections 405 and 406 I P.C. and that it does not amount to passing of dominion over those articles to them.
The learned Judge has observed that there can be such an entrustment only by a subsequent conscious act of volition ` and that in the absence of such an act any allegations of breach of trust between the husband and wife cannot constitute an offence under s.406 I.P.C.
The learned Judge has further observed that between the husband and wife there is always a jointness of control and possession of the properties of the spouse within the matrimonial home and that it goes against the very concept of entrustment of his or her property by one spouse to the other.
In this view, he allowed the petition and quashed the proceeding arising out of the appellant 's complaint, observing that the allegations in the appellant 's complaint are similar to the one in Vinod Kumar 's case (supra) and that this case is fully covered by the ratio in that decision.
The appellant has, therefore, come to this Court in appeal by special leave, impleading the petitioners before the High Court, who are only two out of the six respondents in the complaint, as respondents in this appeal.
In a petition under s.482 Cr.
P.C. for quashing a criminal complaint, the allegations made in the complaint have to be taken to be correct in order to find out whether they constitute the various ingredient of the offence alleged.
In Nagawa Veernna Shivalingappa Konjalgi & Ors ) illustrations have been given of cases in which it may be safely held that an order of a Magistrate issuing process against an accused can be quashed or set aside.
They are: (1) (2) 228 (1) Where the allegations made in the complaint or the statements of the witnesses recorded in support of the same, taken at their face value, make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the accused; (2) Where the allegations made in the complaint are palpably absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused; (3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where the complaint suffers from fundamental legal defects such as want of sanction, or absence of a complaint by a legally competent authority and the like." Article 126 in Mulla 's Hindu Law, Fifteenth Edition, describing what constitutes Stridhana reads: "property given or bequeathed to a Hindu female whether during maidenhood, coverture or widowhood by her parents and their relation or by her husband and his relations is stridhana according to all schools except that the Dayabhaga does not recognise immovable property given or bequeathed by husband to his wife as stridhana." Section 2 of the Dowry prohibition Act, 1961 defines "dowry" as meaning: "any property or valuable security given or agreed to be given either directly or indirectly (a) by one party to a marriage to the other party to the marriage, or (b) by the parents of either party to the marriage, or by any other person to either party to the marriage or to any other person at or before of after the marriage in connection with the marriage of the said parties but does not include dower or mahr in the case of person to whom the Muslim personal law (Shariat) applies.
" 229 In the present complaint of the wife against the husband and , his three brothers, father and brother in law, it is alleged that the marriage was performed at Ludhiana on 4.2.1972 according to Hindu rites and customs and that the father and three brothers and the brother in law of the husband attended the marriage and demanded dowry from the wife 's parents as consideration for the marriage and that accordingly dowry articles worth Rs.60,000, mentioned in the list attached to the complaint, consisting of gold articles, clothes and other valuables were given and entrusted to the husband and the other five respondents in the complaint, at the time of the 'doli ' at Ludhiana on 5.2.
1972 in the presence of Kapur Chand Jain and six other persons.
For the purpose of the petition under s.482 Cr.
P.C. those articles must be prima facie considered to be dowry or stridhana of the appellant wife.
In Velji Raghavjl Patel vs State of Maharashtra,(1) it is observed: "Upon the plain reading of s.405, I.P.C. it is obvious that before a person can be said to have committed criminal breach of trust it must be established that he was either entrusted with or entrusted with dominion over property which he is said to have converted to his own use or disposed of in violation of any direction of law etc.
Every partner has dominion over property by reason of the fact that he is a partner.
This is a kind of dominion which every owner of property has over his property.
But it is not dominion of the kind which satisfies the requirements of section 405.
In order to establish "entrustment of dominion" over property to an accused person the mere existence of that person 's dominion over property is not enough.
It must be further shown that his dominion was the result of entrustment.
Therefore, as rightly pointed out by Harris C.J., the prosecution must establish that dominion over the assets or a particular asset of the partnership was by a special agreement between the parties, entrusted to the accused person.
If in the absence of such a a special agreement a partner receives money belonging to the partnership he cannot be said to have received it in a (1) ; 230 fiduciary capacity or in other words cannot be held to have been "entrusted" with dominion over partnership properties.
" In State of Gujarat vs Jaswantlal Nathalal(1) it is observed: "Before there can be any entrustment there must be a trust meaning thereby an obligation annexed to the owner ship of property and a confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner.
But that does not mean that such an entrustment need conform to all the technicalities of the law of trust see Jaswantrai Manilal Akhaney vs State of Bombay ; , 498 500.
The expression 'entrustment ' carries with it the implication that the person handing over any property or on whose behalf that property is handed over to anther, continues to be its owner.
Further the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them.
" In Sushil Kumar Gupta vs Joy Shankar Bhattacharyya(2), it is observed: "The offence of criminal breach of trust is committed when a person who is entrusted in any manner with property or with dominion over it, dishonestly misappropriates it, or converts it to his own use, or dishonestly uses it or disposes it of, in violation of any direction of law prescribing the mode in which the trust is to be discharged, or of any lawful contract, express or implied, made by him touching such discharge, or wilfully suffers any other person so to do.
" In Superintendent Remembrancer of Legal Affairs, West Bengal vs S.K. Roy(8), it is observed: "There are, however, two distinct parts involved in the commission of the offence of criminal breach of trust.
The first consists of the creation of an obligation in rela (1) ; (2) ; (3) [1974] 4 SCC,230.
231 tion to the property over which dominion or control is acquired by the accused.
The second is a misappropriation or dealing with the property dishonestly and contrary to the terms of the obligation created.
The most important ingredient of an offence under section 406, which is alleged by the wife against her husband, his three brothers, father and brother in law in her complaint in the present case is the entrustment of the dowry articles to the respondent in the complaint and ,their dishonest conversion thereof to their own use.
There is no doubt an allegation in the complaint that these articles were given and entrusted to the respondents in the complaint at Ludhiana at the time of doll on 5 2 1972.
Apart from the husband the other respondents in the complaint, as already stated, are his father, three brothers and brother in law.
The articles were given for the use of the wife If so, could there be entrustment of the articles to such a number of diverse persons? In the background of what usually happens in Hindu marriages namely, placing of the articles presented to the bride in the presence of the elders and others assembled for the occasion and removal thereof after the function is over it has to be seen whether the allegation made in the complaint amounts to entrustment as required by law to make out an offence under section 406 l.
This question has been considered in detail by a Full Bench of the Punjab and Haryana High Court in Vinod Kumar 's case (supra) after an analysis of several decision relating to the question.
The learned Single Judge who has quashed the complaint in the present case on a petition of the husband and one of his brothers has heavily relied upon that Full Bench decision of his Court.
What runs through the judgment of the learned Judges in that case is the concern of the Court for the peaceful and harmonious relationship between the spouses in a matrimonial home and a careful consideration of the question whether the ingredient of entrustment" exists in such cases.
Therefore, it is necessary to note what has been observed in some of the paragraphs of the judgment to that case.
The learned Chief justice speaking for the Bench has observed: "21.
The present set of cases presents a sad spectacle of a house divided against itself, not merely in the biblical but in the literal sense, where wives are ranged against their husbands in acrimonious criminal prosecu 232 tions.
The challenge on behalf of the husbands and their relations is focussed basically against the charge of breach of trust under Section 406 of the Indian Penal Code, levelled against them.
Now the core of the argument on behalf of the petitioners is that the very concept of any entrustment or passing dominion over her property by the wife to the husband does not arise at all so long as the marriage subsists.
The contention is that the very nature of the conjugal relationship itself would negative any such stand.
On this premise it is contended that the basic pre requisite of the entrustment of property or dominion over property being lacking and non existent, no offence under Section 406, Indian renal Code, can possibly be made out.
Therefore, it was argued that even accepting the first information reports as they do not and indeed cannot disclose a cognizable offence under Section 406.
The petitioners, therefore, seek the quashing of the proceedings forthwith rather than being obliged to go through the tortuous mill of a police investigation or the consequent criminal trial." "25.
Now apart from the principle, the most ancient texts of Hindu Law have always been categoric that dowry, as commonly understood, was stridhana and thus in the exclusive ownership of the bride." "26.
Now once it is so held that articles of dowry and traditional presents given at the wedding are owned by the bride individually in her own right, then one fails to see how by the mere fact of her bringing the same into her husband 's or parents in law 's household, would forth with divest her of the ownership thereof.
Separate and individual right to property of the wife therein cannot vanish into thin air the moment the threshold of the matrimonial home is crossed.
To say that at that point of time she would cease to own such property altogether and the title therein would pass to her husband or in any case she would lose half of her right therein and become merely a joint owner of the same, with the family of her husband, does not appear to me as even remotely warranted either by the statute, principles or logic.
No such marriage hazard against the wife can be implied in law.
233 Once she owns property exclusively, she would continue to hold and own it as such despite marriage and coverture and the factum of entering the matrimonial home. " "35.
To conclude on this aspect, I find nothing in the codification of Hindu Law which in any way abolishes the concept of stridhana or the right of a Hindu wife to exclusive individual ownership.
Indeed the resultant effect of such enactments is to put the Hindu female wholly at par with the Hindu male, if not at a higher pedestal with regard to individual ownership of the property.
Now having held as above that Hindu wife can exclusively own and hold property including her dowry and traditional presents given at the wedding, the decks are cleared for tackling the core question posed at the very outset.
What indeed is the true legal relationship of the husband and wife qua the property individually owned by each within the four walls of the matrimonial home? Does the wife stand entrusted with the property belonging to her husband individually and vice versa the husband stands entrusted with such property vesting in the exclusive ownership of the wife? It is the answer to this question which in essence would determine the attraction and applicability of Section 405, I.P.C betwixt the spouses. " "41.
It bears 'repetition that the question herein has to be examined against the backdrop of the matrimonial home.
What truly is the concept and essence thereof had come up for exhaustive consideration earlier before a Full Bench in Kailash Vati vs Ayodhia Parkash, ILR (1977) 1 Punj.
& Har. 642 in the context of Hindu Law itself.
It is, therefore, apt to refer to the authoritative enunciation therein: "To my mind, the idea of the matrimonial home appears to lie at the very centre of the concept of marriage in all civilised societies.
It is indeed around it that generally the marriage tie revolves.
The home epitomizes the finer nuances of the marital status.
The bundle of indefinable rights and duties which 234 bind the husband and the wife can perhaps be best understood only in the context of their living together in the marital home The significance of the conjugal home in the marriage tie is indeed so patent that it would perhaps be wasteful to elaborate the 8 same at any great length.
Indeed, the marital status and the conjugal home have been almost used as interchangeable terms." and "To summarise, I have attempted to show by reference to Anglo American Jurisprudence that the a concept of the marital home lies at the very centre of the idea of marriage in all civilised societies.
Perhaps from primeval times when human beings lived sheltered in subterranean caves to the modern day when many live perched in flats in high rise apartments within the megapolis, the husband and the wife have always hankered for a place which may be their very own and which they may call a home.
The innumerable mutual obligations and rights which stem from the living together of man and wife are undoubtedly beyond any precise definition and stand epitomized by the concept of the matrimonial home.
" In the light of the above it would be farcical to assume that despite the factum of a marriage and a common matrimonial home the two Spouses would stand in a kind of a formal relationship where each is entrusted with or has been passed dominion over the exclusive property of the other.
Rather it appears to me that the conjugal relationship and the existence of a matrimonial home automatically obviates any such hyper technicalities of an entrustment or dominion over property.
It seems inapt to conceive the relationship as a day to day entrustment of the property of the husband to the custody of the wife or vice versa of the property of the wife to the husband.
The matrimonial home so long as it subsists presumes a jointness of custody and possession by the spouses of their individual as also of their joint properties which can not be divided by any metaphorical line.
In a homely metaphor in the context of the modern commercialised world it has been said that the marriage relationship is not one of 235 "I and You limited" but that of "We limited".
Whilst the law undoubtedly now clearly recognises the individual ownership of property by the husband and wife, the necessary assumption in law, therefore, would be that during the existence or even the imminent break up the matrimonial home the concept of jaintness of possession therein seems to be a paramount one.
The inevitable presumption during the existence or the imminent break up of the matrimonial home therefore is one of joint possession of the spouses which might perhaps be dislodged by the special terms of a written contract.
However, to be precise this presumption of joint possession of properties within the matrimonial home can subsist only as long as the matrimonial home subsists or on the immediate break up thereof." "42 43.
The aforesaid position seems to be well borne out by a homely example which was rightly advanced by Mr. Bhandare on behalf of the petitioners.
It was submitted that where a husband entrusts a specific amount to a wife for paying the school fees of their children but in a shopping spree she converts the same into sarees for herself, would she thereby become liable to breach of trust under Section 406, Indian Penal Code? The answer would obviously appear to be in the negative.
Similarly where a husband misuses or even appropriates any property exclusively belonging to his wife within the matrimonial home he hardly comes within the ambit of criminality under Section 406, Indian Penal Code.
Usually if not invariably where the husband is the bread winner he brings home the month 's wages and bands them over to the wife to be spent on the family.
Would it be possible to say that if she use the same for herself and even against the consent of her husband she would be committing a criminal breach of trust? Obviously the answer would appear to be in the negative." "44.
One may now turn precisely to the language of the Code itself.
405 is in the following terms: 236 "405.
Criminal Breach of trust: Whoever being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in, which such trust is to be discharged or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other Person so to do, commits criminal breach of trust.
" It is well setted that from a legal contract, or violation of direction of law, the entrustment of property or dominion over property are the per requisites for the applicability of the aforesaid provision.
Once it is held as above, that property within the matrimonial home is in the joint possession and custody (despite rights of the individual ownership therein) then these very per requisites of entrustment or dominion over property cannot be easily satisfied betwixt the spouses inter se.
It is indeed well settled that the very concept of the jointness of possession and custody would rule out the entrustment or dominion over property betwixt such joint custodians.
In line with the concept of joint ownership where the possession of one joint owner is deemed to be the possession of all, the analogy,is to be extended that existence of the property within the matrimonial home rises a presumption that both the husband the wife are in possession thereof jointly and not that each one has entrusted his exclusive property to the custody of other.
Subscribing to the latter view would be both overly hypertechnical and subversive of the very concept of marriage, the matrimonial home and the inevitable mutual trust which conjugality necessarily involves." "45.
It is obviously because of the afore said legal position and this inarticulate peremise underlying the same that the learned counsel for the State and the complainants were unable to cite even a single case of conviction for criminal breach of trust betwixt husband and wife.
Even when 237 pointedly asked, counsel conceded that despite the diligent research neither under the Indian Penal Code, nor under the analogous provisions of English law could they lay their hands for over a century and a half on any case where such a conviction had been upheld.
This paucity, rather the total absence of precedent, indirectly buttresses the view I have expressed above on principle and the statutory provisions.
An analogy in their context may well be drawn from the Law of Partnership.
However, at the very outset I would notice that the position is not identical because partnership envisages a joint or co ownership of partnership property whereas in a conjugal relationship, as shown above, the spouses may well be the individual and exclusive owners of their respective properties.
Nevertheless a marked similarity therein is that in partnership, co ownership necessarily connotes a jointness of possession of partnership properties whilst the same position inheres in the matrimonial home where the spouses are deemed to be jointly in possession and custody.
Now, barring some ancient notes of discordance, it seems to be now well accepted that a partner cannot be held guilty of criminal breach of trust qua partnership property except by virtue of a special agreement either written or conclusively established.
This had always been so in English law until it was specifically and altered by Statute 31 and 32 Victoria c. 116 and it is now governed by the special provisions of the same and subsequent legislation.
In India, however, in the absence of any statutory change, the legal position would continue to be the same.
This came up for pointed consideration before a Full Bench of five Judges in Bhuban Mohan Das vs Surendra Mohan Das, AIR 1951 Cal, 69.
The relief sought therein of quashing the proceedings under section 406, Indian Penal Code, betwixt partners, was granted whilst holding that a charge under section 406, Indian Penal Code cannot be framed against a person who, according to the complainant, is a partner with him and is accused of the offence in respect of property belonging to them as partners.
P.B. Mukharji, J. in his concurring judgment observed as under (Para 46) : "The question here is of much broader application and of a more fundamental nature.
Its fundamen 238 tal nature is this that the very conception of partner ship precludes possibility of entrustment or dominion of the partnership property by one partner as against the other and, therefore, precludes any possible operation of the crime under Section 406 Penal Code, of criminal breach of trust by one partner against the other in respect of the partnership property." The aforesaid view has been expressly referred to and approved by their Lordships in Velji Raghavji vs State of Maharashtra,(1) with the following added observations (at pp.
1435 36) : ".
Every partner has dominion over property by reason of the fact that he is a partner.
This is a kind of dominion which every owner of property has over his property.
out it is not dominion of this kind which satisfies the requirements of S.405.
In order to establish `entrustment of dominion ' over property to an accused person the mere existence of that person 's dominion over property is not enough.
It must be further shown that his dominion was the result of entrustment.
Therefore, as rightly pointed out by Harris, C.J., the prosecution must establish that dominion over the assets or a particular asset of the partnership was, by a special agreement between the parties entrusted to the accused person.
If in the absence of such a special agreement partner receives money belonging to the partnership he cannot be said to have received it in a fiduciary capacity or in other words cannot be held to have been 'entrusted ' with dominion over partnership properties.
" If that is so in the partnership relation it appears to me that it would be more so in the conjugal relationship with regard to the property within the matrimonial home." "46. .
The nature, character and the incident of property within the matrimonial home, so long as the marriage subsists, seem to be such that except by a special written agreement, no entrustment or dominion etc.
Of the individual property of the spouses to each other can b e presumed.
Equally, herein the specific and ascertainable (I) A.T.R. 1965 S.C. 1433 239 property of each spouse within the matrimonial home can , be so equivocal and problematic as to oust the requisite mens rea with consequent criminality with regard thereto until the title to such property is clearly and specifically established.
If the civil remedy seems to be adequate betwixt partners, during the subsistence of partnership there is no reason why it would not equally be so betwixt spouses in an existing matrimonial home during the subsistence of the conjugal relationship.
As already referred to, apart from the civil remedy under the general law, added provisions exist in this context under S.27 of the buttressed by the procedural provisions of 0.32 A of the Code of Civil Procedure.
" "47.
In view of the above, it would be equally untenable to hold that either the desertion or the expulsion one of the spouses from the matrimonial home would result in entrusting dominion over the property belonging to the other so as to bring the case within the ambit of this pre requisite under S.405, Indian Penal Code.
The joint custody and possession once established would thereafter exclude either express entrustment or the passing of dominion over the property.
It was rightly argued that if an irate husband or wife walks out from the matrimonial home in a huff, this cannot constitute an entrustment or dominion over the property to the other.
Consequently, unless a special written agreement to the contrary can be established, the strongest presumption arises that during the existence and immediately after the crumbling of the matrimonial home, there was in essence, a joint possession and custody of the property of the spouses therein, including dowry and traditional presents, which would preclude the essentials entrustment of dominion over the property which form the corner stone of criminality under S.405, Indian Penal Code." "49.
Equally the common use and enjoyment of certain articles of dowry and traditional presents, by the other members of a joint family with the leave and licence of a Hindu wife, cannot have the effect of extending the jointness of control and custody of the couple to undefined 240 and unreasonable limits.
Consequently, there is no reason to assume that the mere use or enjoyment of dowry by other members of the household, would have the effect of passing the possession and control thereof Jointly to the Hindu Undivided Family a such.
" "50.
In the aforesaid context, pointed reference must be made to the opening word 'whoever ' of S.405 of the Code to highlight that the criminal law does not take ken of any proximity of relationship for the offence of breach of trust.
"Whoever" would include within its ambit the parents in law, the brothers in law, sisters in law (and other close relations of the husband) of a Hindu wife provided that the basic ingredients of entrustment or passing of dominion over her separate individual property stands fully satisfied.
Apart from the peculiarity of the conjugal relationship and the consequent sharing of the matrimonial home, the existence of the blood relationship of the parties does not seem to be relevant for the applicability or otherwise of S.406 of the Code, Since the other members of the Hindu Joint family, to which the husband may belong, would not be covered by the presumption of jointness of custody v and possession of their individual properties by the spouses alone, they cannot by the mere fact of kinship be excluded from the scope of sections 405 and 406 of the Code.
" "56.
To conclude, it necessarily follows from the aforesaid discussion that the very concept of the matrimonial home cannotes a jointness of possession and custody by the spouses even with regard to the movable properties exclusively owned by each of them.
It is, therefore, inapt to view the same in view of the conjugal relationship as involving any entrustment or passing of dominion over property day to day by the husband to the wife or vice versa.
Consequently, barring a special written agreement to the contrary, no question of any entrustment or dominion over property would normally arise during coverture or its imminent break up.
There fore, the very essential pre requisites and the core ingredients of the offence under S.406 of the Penal Code would be lacking in a charge of criminal breach of trust of 241 property by one spouse against the other.
Inevitably, therefore, the purported allegations of breach of trust betwixt husband and wife so long as the conjugal relation ship lasts and the matrimonial home subsists, cannot constitute an offence under Section 406 of the Indian Penal Code, subject to any special written agreement.
Equally, as against the close relations of the husband, no facile presumption of entrustment and dominion over the dowry can be raised prims facie and this inevitably has to be by a subsequent conscious act of volition which must be specifically alleged and conclusively established by proof.
Lastly, because of the definition in section 2 of the Dowry Prohibition Act, the offences under the said Act cannot come within the ambit of section 406 of the Indian Penal Code as these cannot stand together on the same set of facts." "57.
Hence the answer (to the question) posed at the very outset is rendered in the affirmative.
The bond of matrimony, therefore, bar the spectre of the criminal breach of trust qua the property of the spouses at the very threshold of the matrimonial home.
It cannot enter its hallowed precincts except through the back door of a special written contract to the contrary with regard to such property.
" I have extracted above several passages from the Judgment of the learned judges of the Full Bench in Vinod Kumar 's case (supra) since I share their view and concern for peace and harmony in matrimonial homes and feel that the learned Single Judge who has quashed the wife 's complaint in the present case was justified in relying heavily upon that judgment of the Full Bench.
In these circumstances, 1 think that in the absence of a separate agreement and specific entrustment by the wife to the husband and of his relations and vice versa of the property of the husband to the wife and or her relation, it would not be possible to draw an inference of entrustment of custody or dominion over the property of one spouse to the other and his or her relations so as to attract the stringent provisions of s.406 I.P.C.
The offense of criminal breach of trust is cognizable and non bailable and punishable with imprisonment for a term of three years or 242 with fine or with both.
In the absence of such a separate agreement for specific entrustment of the property of either spouse the appropriate remedy would appear to be by way of a civil suit where there is scope for the parties to the marriage coming together at the instance of relations, elders and well wishers and patching up their differences.
Entertaining complaints of the irate wife or husband against the husband or wife without even an allegation of a specific and separate agreement constituting entrustment of the property of the wife or the husband would have disastrous effects and consequences on the peace and harmony which ought to prevail in matrimonial homes.
It is seen from para 45 of the judgment in Vinod Kumar 's case (supra) that in spite of diligent research no instance of any case of successful prosecution of the husband of wife at the instance of the wife or the husband could be brought to the notice of the learned Judges.
It may be stated that none was brought to the notice of this Court either in the course of the arguments in this appeal.
This would show that the spouses had not lightly rushed in the past to criminal courts with complaints of criminal breach of trust against the other spouses though in the day to day life there must have been numerous instances where the wife had used the property or cash of the husband for purposes different from the one for which they were given by the husband to be applied by the wife and vice versa.
I am anxious that no light hearted change should be brought about in the position and that the minimum requirement in such cases is a specific separate agreement whereby the property of the wife to husband was entrusted to the husband or wife and or his or her close relations.
In the absence of such a specific separate agreement in the complaint, in the present case, I am of the opinion that the learned Single Judge was perfectly justified in following the decision of the Full Bench in Vinod Kumar s case (supra) and quashing the wife 's complaint filed against the husband and his close relations.
I would, therefore, dismiss the appeal.
In view of the majority decision, this appeal is allowed, the judgment of the High Court is set aside and the complaint filed by the appellant is restored.
The accused may now be summoned and put on trial in accordance with law.
|
The appellant Pratibha Rani, the estranged wife of the first respondent Suraj Kumar, filed a criminal complaint against her husband, his father, his three brothers and a brother in law in the court of the Additional Chief Judicial Magistrate, Ludhiana, alleging; (i) that she was married to the first respondent at Ludhiana on 4 2. 1972 according to Hindu rites and customs; (ii) that the aforesaid persons, namely, father, brothers and brother in law of the first respondent attended the marriage and demanded dowry from the appellants ' parents as consideration for the marriage; (iii) that the dowry articles mentioned in the list worth Rs 60,000 in the form of gold ornaments, clothes and other valuables were given and entrusted to the respondents and four others at Ludhiana at the time of 'doli ' on 5. 2. 1972 in the presence of Kapur Chand Jain and six others; (iv) that all the six respondents, from the time of marriage started teasing, harassing and beating her and they kept her without even food to extract more money from her parents; (v) that they turned out the appellant with her children in the beginnings of 1977 (vi) that after a great deal of persuasion and intervention by Panchayatdars, respondent No. I came 192 to Ludhiana and took her to his house, after giving an undertaking in writing on 21.
6. 1977 not to misbehave with and not to maltreat the appellant and her children; (vii) that after some time all the respondents in the Complaint not only started again maltreating the appellant and misbehaving with her, but also brought the appellant at 4.30 a.m.
On 11.12.80 and left her near Kailash Cinema Chowk, (viii) that the articles (the stridhana) mentioned in the list appended to the complaint were never given by the respondents to the appellant for her use but were retained by them illegally and with the dishonest intention of causing wrongful gain to themselves and wrongful loss to the appellant y (ix) that when the appellants ' husband and his brother, Vishwinder Kumar, respondent 1 and 5 in the complaint, came to Ludhiana on 10 2.81 to attend the proceedings started by the appellant under section 125 Criminal Penal Code her parents persuaded them to return the articles entrusted to them at the time of the marriage but they flatly refused to comply with that demand; (x) that the articles have not been returned in spite of service of notice dated 17.12.81 on the first respondent; (xi) that the respondents in the complaint have dishonestly, thus, converted the articles belonging to the appellant for their use in violation of the instructions of the appellants ' parents given at the time of the marriage to give the articles for the appellants ' use and that (xii) they individually and jointly committed the offences under sections 405 and 406 Indian Penal Code.
Thereupon respondent No. 1 filed Criminal Misc.
Application No. 4876 of 1981 in the Punjab and Haryana High Court under section 482 of the Code of Criminal Procedure for quashing the criminal proceedings and the complaint taken on file by the Additional Chief Judicial Magistrate, Ludhiana under section 406 IPC and his order summoning them.
A Learned Single Judge of the High Court relying strongly upon the observations made by a Full Bench of that High Court in Vinod Kumar Sethi & Ors.
vs State of Punjab & Ors.
reported in allowed the petition and quashed the proceedings arising out of the appellants ' complaint, observing that the allegations in the appellants ' complaint are similar to the one in that case and therefore, fully covered by the ratio in that decision.
Hence the appeal by special leave.
Allowing the appeal, the Court, ^ HELD; (Per E.lzal Ali, J.) (on behalf of Sabyasachi Mukharji, J. and himself) 1.1 The stridhan property of a married woman cannot acquire the character of a joint property of both the spouses as soon as she enters her matrimonial home so as to eliminate the application of section 406 IPC.
The position of stridhan of a Hindu married woman 's property during coverture is absolutely clear and unambiguous; she is the absolute owner of such property and can deal with it in any manner she likes She may spend the whole of it or give it away at her own pleasure by gift or will without any reference to her husband.
The entrustment to the husband of the stridhan property is just like something which the wife keeps in a bank and can withdraw any amount when ever she likes without any hitch or hindrance.
Ordinarily, the husband has no right or interest in it with the sole exception that in times of extreme distress, as 193 in famine, illness or the like, the husband can utilize it but he is morally bound to restore it or its value when he is able to do so.
This right is purely personal to the husband and the property so received by him in marriage cannot be proceeded against even in execution of a decree for debt.
[206F; 201D E] Suraj Kumar & Anr. vs Pratibha Rani, Criminal Misc.
Petition No. 4876 of 1981 Punjab & Haryana High Court reversed.
Vinod Kumar Sethi & Ors.
vs State of Punjab & Anr.
; Surinder Mohan vs Smt Kiran Saini, 1977 Chandigarh Law Reporter 212; Kailash Vati vs Ayodhya Parkash, ILR (1977) 1 Punjab & Haryana 642 (FB) overruled.
1.2 A perusal of the allegations made in the complaint undoubtedly makes out a positive case of the accused having dishonestly misappropriated the articles handed over to the n in a fiduciary capacity.
To characterise such an entrustment as a joint custody or property given to the husband and the parents is wholly unintelligible.
A perusal of the list reveals that so far as the jewellery and clothes, blouses, nighties and gowns are concerned they could be used only by the wife and were her stridhan.
By no stretch of imagination could it be said that the [ornaments and sarees and other articles mentioned above could also be used by the husband.
If, therefore, despite demands these articles were refused to be returned to the wife by the husband and his parents, it amounted to an offence of criminal breach of trust.
All the ingredients of an offence under section 405 IPC were pleaded and a prima facie case for summoning the accused was made out.
In such circumstances, the complaint should have been given an opportunity by the High Court to prove her case rather than quashing the complaint.
Such an exercise of jurisdiction by the High Court under section 482 Cr.
P. is totally unwarranted by law.
[203A; 204B D; 203B C] 2.1 Criminal law and matrimonial home are not strangers.
Crimes committed in matrimonial home are as much punishable as anywhere else.
The mere factum of the husband and wife living together does not entitle either of them to commit a breach of criminal law and if one does then he/she will be liable for all the consequences of such breach.
In the case of stridhan properly also, the title of which always remains with the wife though possession of the same may sometimes be with the husband or other members of his family, if the husband or any other member of his family commits such an offence, they will be liable to punishment for the offence of criminal breach of trust under sections 405 and 406 IPC.
Just as a newly married woman living in the same house and under the same roof cannot be expected to keep her personal property or belongings like jewellery, clothing, etc.
under her own lock and key thus showing a spirit of distrust to the husband at the very behest, a husband cannot be permitted to cast his covetous eyes on the absolute and personal property of his wife merely because it is kept in his custody, thereby reducing the custody to a legal farce.
On the other hand, even if the personal property of the wife is jointly kept it would be deemed to be expressly or impleedly kept in the custody of the husband and i f he dishonestly misappropriates or refuses 194 to return the same, he is certainly guilty of criminal breach of trust, and there can be no escape from this legal consequence.
[207E G; 208B Cl 2.2 It is an anathema to suppose that when a civil remedy is available, a criminal prosecution is completely barred.
The two remedies are under civil law and the other under criminal law are not mutually exclusive but coextensive and essentially differ in their content and consequences.
Therefore, it cannot be said that, if the husband dishonestly misappropriates the stridhan property of his wife though kept in his custody, that would not par prosecution under section 406 IPC or render the ingredients of section 405 IPC nugatory or abortive.
To say that because the stridhan of a married woman is kept in the custody of her husband no action against him can be taken as no offence is committed is to override and distort the real intent of law.
[208E F] 3.1 Neither section 27 of the nor section 14 of the Hindu Succession Act, go to the extent of providing that the claim of a woman on the basis of stridhan is completely abolished, or that a remedy under the criminal law for breach of trust is taken away.
All that the two sections, provide is that if the husband refuses to return the stridhan property of his wife, it will be open to the wife to recover the same by a properly constituted suit.
[204G H; 205A] 3.2 Section 27 of the merely provides for an alternate remedy and does not touch or affect in any way the criminal liability of the husband in case it is proved that he has dishonestly misappropriated the stridhan of his wife.
It cannot also be spelt out from any textbook or the sastric law of the Hindus that these two Acts take away the stridhan right of a woman at the most these Acts merely modify the concept of stridhan.
[205C D] Bhai Sher Jang Singh & Anr.
vs Smt.
Virinder Kaur, approved.
Surinder Mohan vs Smt.
Kiran Saini, 1977 Chandigarh Law Reporter 212 over ruled.
4.1 It is neither appropriate nor apposite to import the concept of partner ship of husband and wife for the simple reason that the concept of partnership is entirely different from that of the husbands ' keeping the stridhan in his custody.
From the definition of the partnership in section 4 of the Indian Partnership Act, it is manifest that in a partnership the wife must by some clear and specific act indicate that the stridhan which has been entrusted to the husband is to be used for a partnership business and the losses of the firm, if any, would have to be shared by both.
A pure and simple act of entrustment of the stridhan to the husband does not attract any of the essential ingredients of a partnership as defined in the Partnership Act.
When the essential conditions of a partnership do not exist.
the mere factum of entrustment of stridhan would not constitute any co ownership or legal partnership, There is also no 195 question of the wife, constituting herself a partner with her husband merely by allowing him to keep the article or money in his custody.
Further, in this case, there is, neither any pleading nor any allegation that after her marriage, the appellant transferred all her properties to her husband for carrying on a partnership business in accordance with the provisions of the Partnership Act.
Therefore, a criminal prosecution under section 406 IPC is maintainable.
[209E; 210B C; G; 211C D] Vinod Kumar Sethi & Ors.
vs State of Punjab & Anr.
; Surinder Mohan etc.
V. Smt.
Kiran Saini, 1977 Chandigarh Law Reporter 212; Kailash Vati vs Ayodhya Parkash, ILR (1973) 1 Punjab & Haryana, P 612; Kailash Nath Agarwal & Ors.
vs Prem Pal Agarwal & Anr.
case No. 676 of 1981 connected with Crl.
case No. 2753 of 1981 decided on 22.12.83 Allahabad High Court overruled.
In the instant case, however, there is neither any allegation nor anything in the complaint to show that when the wife entered her matrimonial home she had entrusted property to her husband so as to make him part owner of the same.
Therefore, the question Or the husband having dominion over the property does not at all arise.
In fact the wife has nothing to do With the partnership, if any and the husband is a pure and simple custodian of the property and cannot use the Same for any purposed without her consent.
[210E F] The concept of stridhan property of a married woman becoming joint property of both the spouses as soon as she enters her matrimonial home and continues to be so until she remains there or even if there is a break in the matrimonial alliance, is in direct contravention of Hindu law of Sadayika which has been administered since more than a century by High Court, Privy Council and also the Supreme Court.
[212C D] 4.2 The Full Bench decision in Vinod Kumar 's case would not only render the provisions of section 406 IPC inapplicable and nugatory even if the husband has the audacity or the importunity of refusing to return the stridhan of his wife, but also be in direct contravention of a long course of decisions of Supreme Court on the ingredients of section 405 IPC.
[212A B] By a pure and simple figment of the fertile imaginations, the Judges in the Vinod Kamat 's case seem to have rewritten the law of criminal breach of trust contained in sections 405 and 406 IPC so as to carve out an imaginary exception to the application of the Penal Code more tragic consequence of the view taken by the High Court is that even if there is a break in the matrimonial alliance and the wife wants her husband to return her exclusive property and he refuses lo return even then the provisions of section 406 IPC would not apply.
It is an extreme travesty of justice for a court to say that whenever a married demands her stridhan property from her husband she should be driven to the dilatory process of a civil court and her husband would be debarred from being prosecuted by a criminal court.
By a strange and ingenious process of holding that such an act of a husband does not attract the provisions of the 196 Penal Code, as the property being joint there is no question of the husband being a trustee or holding the same in a fiduciary capacity.
Such a view is not only contradictory but what the High Court has said before regarding the applicability of section 27 of the and the nature of stridhan is also neither in consonance with logic and reason nor with the express provisions of the Penal Code and seems to be inspired by a spirit of male chauvinism so as to exclude the husband from criminal liability merely because his wife has refused to live in her matrimonial home.
The High Court, functioning in a civilised and socialistic society such as ours cannot play such a havoc with judicial interpretation of an important branch of law.
The High Court cannot make a complete volte face by holding that these very properties after marriage become joint property of both the spouses.
The High Court has not realised that the theory or philosophy of matrimonial home propounded by it stands directly contradicted by its own observations.
[212D H; 213A; H; 214A] 4.3 The fundamental core of the offence of criminal breach of trust is that a property must be entrusted and the dominion of the property should be given to the trustee.
In the present case, all these conditions, even according to the findings of the High Court though not its conclusions are clearly established.
[217C] Chelloor Manaklal Narayan Ittiravi Nambudiri vs State of Travancore; AIR 1953 SC478; Jaswantrai Manilal Akhaney vs State of Bombay; , ; State of Gujarat vs Jaswantlal Nathalal ; ; Sushil Kumar Gupta vs Joy Shankar Bhattacharjee; , ; Superintendent [4] SCC 230 referred to.
Harihar Prasad Dubey v Tulsi Das Mundhra & Ors.
AIR 1949 Calcutta 207; Akharbhai Nasarali vs Md. Hussain Bhai AIR 1961 MP 37; Basudeb Patra vs Kana.
Lal Haldar, AIR 1949 Calcutta 207, Bhai Sher Jang Singh and Anr.
vs Smt.
Virinder Kaur, 1979 Crl.
L J. 493; Avtar Singh and Anr vs Kirpal Kaur, Crl.
No. 2144 of 1979 and Cr l Misc.
No. 2145 of 1979 approved.
Vinod Kumar Sethi & Ors.
v State of Punjab and Anr.
ATR 1982 Punjab 372; Surinder Mohan etc.
vs Smt.
Kiran Saini, 1977 Chandigarh Law Reporter 212; Kailash Nath Agarwal & Ors vs Prem Pal Agarwal & Anr.
Case No. 676 of 1981 connected with Crl.
case No. 2753 of 1981, Allahabad High Court: Kailash Vati vs Ayodhya Parkash, ILR (1977) 1 Punjab d: Haryana 642 overruled.
For the purpose of exercising its power under section 482 Cr. PC to quash a First Information Report or a complaint the High Court would have to proceed entirely on the basis of the allegations made in the complaint or the documents accompanying the same per se.
It has no jurisdiction to examine the correctness or otherwise of the allegations.
In case no offence is committed on the allegation and the ingredients of section 405 and 406 IPC are not made out, the High Court would be justified in quashing the proceedings.
In the present case, the allegations are both clear, specific and unambiguous and 197 therefore, the complaint should have been given a chance to prove her case.
It is, of course open to the accused at the trial to take whatever defences that were open to him or her but that stage had not yet come and therefore, the High Court was totally ill advised to speculate on the merits of the case at that stage and quash the proceedings.
Since all the facts stated in the complaint constituted an offence under section 406 IPC, the appellant cannot be denied the right to prove her case at the trial by pre empting it the very behest by the order passed by the High Court.
[223D H; 224D E ] Vinod Kumar Sethi & Ors.
vs State of Punjab & Anr, , over led.
L.V. Jadhav vs Shakarrao Abasaheb Pawar & Ors.
AIR 1983 SC 1219; Smt.
Nagawa vs Veeranna Shivalingappa Konjalgi & ors.
[1976] Supp.
SCR 123 applied.
OBSERVATION (It is surprising to find that so deeply drowned and inherently engrossed are some of the High Courts in the concept of matrimonial home qua the stridhan property of a married woman that they simply refuse to believe that such properties are meant for the exclusive use of the wife and could also be legally entrusted to the husband or his relations.
Thus, if the husband or his relations misappropriate the same and refuse to hand it over to the wife and convert them to their own use and even though these facts arc clearly alleged in a complaint for an offence under section 405/406 IPC, some courts take the view that the complaint is not maintainable.
Thus even when clear and specific allegations are made in the complaint that such properties were entrusted to the husband, they refuse to believe these hard facts and brush them aside on the ground that they are vague, and completely shut their eyes to the fact that the husband could also be guilty under section 405/406 IPC in view of the clear allegations made in the complaint.
In other words, the High Courts simply refuse to believe that there can be any such entrustment and even if it is so, no offence is committed.
Such an approach amounts to a serious distortion of the criminal law, resulting in perpetrating grave and substantial miscarriage of justice to the wife at the hands of the High Courts.
The Supreme Court cannot continuance such a wrong and perverse approach.) [224G H, 225A C] Per A. Varadarajan, J. (dissenting) 1.1 In the absence of a separate agreement and specific entrustment by the wife to the husband and or his relations and vice versa of the property of the husband to the wife and or her relation, it would not be possible to draw an inference of entrustment of custody or dominion over the property of one spouse to the other and his or her relations so as to attract the stringent provisions of section 406 IPC.
The offence of criminal break of trust is cognizable and non bailable and punishable with imprisonment for a term of three years or with fine or with both.
In the absence of such a separate agreement for specific entrustment of the property of either spouse the appropriate remedy would appear to be by way of a civil suit where there is scope for the parties to the marriage coming together at the instance of relations, elders and well wishers and patching up their differences.
[241G H; 242A] 198 1.2 Entertaining complaints of the irate wife or husband against the husband or wife without even an allegation of a specific and separate agreement constituting entrustment of the property of the wife of the husband would have disastrous effects and consequences on the peace and harmony which ought to prevail in matrimonial homes.
[242B]
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4961.txt
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tition Nos.
5669 of 1980 and 1345 of 1981 (Under Article 32 of the Constitution of India) G. L. Sanghi, section K. Dholakia, section C. Gupta, D. section Gupta, P. Narashiman and R. C. Bhatia for the Petitioners in WP.
No. 1345 of 1981.
A. K. Sen, Anil Kumer Gupta, Brij Bhushan and Mrs. Renu Gupta for the Petitioners in WP.
No. 5669 of 1980.
V. C. Mahajan, N. C. Talukdar, V. B. Saharya and R. N. Poddar for Respondents Nos. 1 & 2.
P. P. Rao, Girish Chandra, A. Mariarputham, Miss A. Subhashini and Miss Aruna Mathur for Respondent.
(Delhi High Court) K. K. Venugopal, Mrs. Urmila Kapoor and K. Lakshmi Venugopal for Respondent No. 4.
(G.S. Dakha) Dr. L. M. Singhvi, A. M. Singhvi, K. Lakshmi Venugopal and Mrs. Shobha Dikshit for Respondents 5 & 6.
360 M. C. Bhandare and section section Srivastava for Respondent No. 7.
M. C. Bhandare for the Intervener (Delhi High Court Bar Association) A. K. Ganguli for the intervener (Delhi High Court & Delhi Bar Associations) B.P. Maheshwari (Delhi Bar Council) The following Judgments were delivered CHANDRCHUD, C. J.
Once again, we are back to the irksome question of inter se seniority between promotees and direct recruits.
The contestants, this time, are judicial officers of Delhi.
Our familiarity, generally, with the difficulties in the way of judicial officers and our awareness of their just aspirations make our task difficult and sensitive.
The conclusion to which we have come in this judgment is not different from the one reached by our learned Brother Sabyasachi Mukharji.
In this Judgment, Brother Mukharji has discused, more fully, the various aspects of this matter as also the decisions which were cited before us.
Our reasons for writing this separate opinion are, the general importance of this case.
the fact that it concerns the higher judiciary and our respectful disagreement with Brother Mukharji on the interpretation of some of the provisions with which we are concerned in these Writ Petitions.
There are many decisions bearing upon the familiar controversy between promotees and direct recruits and this will be one more.
Perhaps, just another.
Since those various decisions have not succeeded in finding a satisfactory solution to the controversy, we would do well by confining our attention to the language and scheme of the rules which are under scrutiny herein, instead of seeking to derive a principle of universal application to the cases like those before us.
Previous judgments of this Court are, of course, binding to the extent that they are relevant and they cannot be ignored.
But, if they turn upon their own facts, the general set up of the particular service, its historical development and the words of the impugned provisions, no useful purpose will be served by discussing those cases at length, merely to justify an observation at the end that they have no application and are distinguishable.
361 We have two writ Petitions before us which are filed under Article 32 of the Constitution by promotee Additional District and Sessions judges of Delhi.
We will not describe them as `Members of the Delhi Higher Judicial Service ' because, that precisely is the question to be decided.
If they are members of that service they shall have won their point.
They were working at the relevant time in temporary posts which were created by the Delhi Administration in the cadre of Additional District and Sessions Judges.
In that capacity, some of them are working on deputation as members of one or the other of the Tribunals in Delhi, like the Industrial Tribunal or the Sales Tax Tribunal.
The Union of India, the Delhi Administration, the High Court of Delhi and direct recruits to the Delhi Higher Judicial Service are impleaded as respondents to the petitions.
The Delhi Higher Judicial Service was constituted on May 15, 1971 with a complement of 12 posts.
The Delhi Higher Judicial Service Rules, 1970 which were framed by the Lieutenant Governor of Delhi in consultation with the Delhi High Court, were published in the Delhi Gazette on August 27, 1970.
Those Rules were framed under Article 309 of the Constitution.
Rule 2(b) provides that `Cadre Post ' means any post specified in the Schedule and includes a temporary post carrying the same designation as that of any of the posts specified in the Schedule any other temporary post declared as cadre post by Administrator.
Rule 2(d) provides that a `Member of the Service ' means a person appointed in substantive capacity to the Service under the provisions of the Rules.
`Service ' is defined by the Rule 2(e) to mean the Delhi Higher Judicial Service.
A person who is appointed to the Delhi Higher Judicial Service by promotion from the Delhi Judicial Service is called the `Promoted Officer ', while a person who is appointed to that Service from the Bar is called the `Direct recruit '.
By Rule 4, the authorised permanent strength of the Service and the posts included therein shall be as specified in the Schedule.
Part III of the aforesaid Rules deals with the method of recruitment to the Service.
Recruitment of promotees is dealt with by Rule 5(1), according to which, recruitment of persons to the service from the Delhi Judicial Service shall be made by the administrator in consultation with the High Court.
`Administrator ' means the 362 Administrator appointed under Article 239 of the Constitution for the Union Territory of Delhi.
Appointment of direct recruits is dealt with by Rule 5(2), according to which, in regard to the persons not already in the Delhi Judicial Service, appointment to service shall be made by the Administrator on the recommendation of the High Court.
In other words, promotees are appointed to the Service in consultation with the High Court while direct recruits are appointed to the service on the recommendation of the High Court.
Rules 7 and 8 which are crucial to the controversy between the promotees and direct recruits read thus : "Rule 7 REGULAR RECRUITMENT : Recruitment after the initial recruitment shall be made : (a) by promotion on the basis of selection from members of the Delhi Judicial Service, who have completed not less than 10 years of Service in the Delhi Judicial Service.
(b) by direct recruitment from the Bar.
Provided that not more than 1/3rd of the substantive posts in the Service shall be held by direct recruits." "Rule 8 (1) The inter se seniority of members of the Delhi Judicial Service promoted to the Service shall be the same as in the Delhi Judicial Service.
(2) The seniority of direct recruits vis a vis promotees shall be determined in the order of rotation of vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by 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.
" Rule 9 lays down the qualifications for direct recruits by providing that they should be citizens of India, that they must have practised as advocates for not less than 7 years and that they must have attained the age of 35 years but not attained the age of 45 years on January 1 of the year in which they are appointed.
363 The initial recruitment to the Service was made by the Administrator in consultation with the High Court in accordance with Rule 6, from amongst the District Judges and Additional District Judges who were functioning in the Union Territory of Delhi on deputation from other States and those whose names were recommended by the respective States for such appointment.
Those persons who were appointed to the Service as part of the initial recruitment stood confirmed with effect from the very date of their appointment.
That is provided by Rule 12(1).
Sub rule (2) of Rule 12 provides that all other candidates who are appointed to the service shall be on probation for a period of two years.
Rule 13 requires that all persons appointed to the Service on probation shall be confirmed at the end of the said period of two years: provided that the Administrator may, on the recommendation of the High Court extend the period of probation but not so as to exceed three years on the whole.
After the successful completion of probation, the officer is confirmed in the service by the Administrator in consultation with the High Court as provided in Rule 15.
Rules 16 and 17, which occur in part V of the Rules called `Temporary Appointments ', are also important for our purpose though they fall in a category distinct and separate from the one in which Rules 7 and 8 fall.
They read thus: "Rule 16(1) The Administrator may create temporary posts in the service.
(2) Such posts shall be filled, in consultation with the High Court, from amongst the members of the Delhi Judicial Service." "Rule 17 Notwithstanding anything contained in these rules, the Administrator may, in consultation with the High Court, fill substantive vacancies in the Service by making temporary appointments thereto from amongst members of the Delhi Judicial Service.
" The Schedule to the Rules shows that the initial authorised permanent strength of the Delhi Higher Judicial Service was 16, out of which one was to be a District and Sessions Judge and 12 were to be Additional District and Sessions Judges.
The remaining 3 were appointed in Leave Deputation reserve vacancies.
Out of these 16 364 posts, one was a super time scale post, three were selection grade posts and twelve were time scale posts.
The contention of the petitioners is that seniority between promotees and direct recruits must be determined in accordance with the respective dates of their continuous officiation as Additional District and Sessions Judges and that, direct recruits who are appointed as Additional District and Sessions Judges after the promotees are so appointed, cannot rank higher in seniority over the promotees.
It is urged that promotees discharge identical functions and bear the same responsibilities as direct recruits and upon their appointments, they constitute one common class.
Therefore, to give seniority to the direct recruits who are appointed later in point of time is violative of Articles 14 and 15 of the Constitution.
In support of these contentions, the promotees have filed charts showing what, according to them, is a grave and glaring act of injustice done to them in the matter of seniority.
These charts show, indisputably, that promotees who have been functioning as temporary Additional District and Sessions Judges for an unbroken period of anything between 8 to 12 years are regarded as juniors to the direct recruits who have been appointed as Additional District and Sessions Judges much later.
A few illustrations will help appreciate the grievance of the promotees.
Shri G.S. Dakha, who is one of the respondents to these writ petitions, was appointed directly to the Service on September 27, 1978.
However, he ranks higher in seniority over Shri C.D. Vasishta and Shri O.P. Singla who were appointed as temporary Additional District and Sessions Judges on June 7, 1977 and April 1, 1978 respectively.
Miss Usha Mehra, who was appointed directly as an Additional District and Sessions Judge on April 22, 1980, is regarded as senior to several promotees who were appointed as temporary Additional District and Sessions Judges long before her.
Shri D.C. Aggarwal, Shri B.K, Agnihotri, Shri Mahesh Chandra, Shri S.R. Goel and Shri P.L. Singla were all appointed as temporary Additional District and Sessions Judges on March 24, 1972, which was 8 years before Miss Usha Mehra was appointed as a direct recruit from the Bar.
Twenty five other members of the Delhi Judicial Service were appointed as temporary Additional District and Sessions Judges on various dates between August 31, 1973 and December 11, 1979.
All these have been shown as junior to Miss Usha Mehra.
365 The answer to the question as regards the infringement of the constitutional protection of equality and equal opportunity will depend upon the meaning which can reasonably be given to the rules which we have cited above.
Therefore, in the first place, we shall have to decide whether the rules justify the rankings in the seniority list.
It is only if the language of the rules justifies those rankings that the question will arise whether the rules violate the provisions of Articles 14 and 16.
Logically, we must begin this inquiry with the question as to the interpretation of the proviso to Rule 7.
Does that proviso prescribe a quota or does it merely provide for a ceiling ? In other words, does the proviso require that, at any given point of time, 1/3rd of the substantive posts in the Service shall be reserved for direct recruits or does it only stipulate that the posts held by direct recruits shall not be more than 1/3rd of the total number of substantive posts in the Service ? The proviso reads thus: "Provided that not more than 1/3rd of the substantive posts in the Service shall be held by direct recruits.
" This language is more consistent with the contention of the promotees that the proviso merely prescribes, by way of imposing a ceiling, that the direct recruits shall not hold more than 1/3rd of the substantive posts.
Experience shows that any provision which is intended to prescribe a quota, generally provides that, for example, "1/3rd of the substantive posts shall be filled in by direct recruitment." A quota provision does not use the negative language, as the proviso in the instant case does, that "not more than" one third of the substantive posts in the Service shall be held by direct recruits.
If the matter were to rest with the proviso, its interpretation would have to be that it does not prescribe a quota for direct recruits : it only enables the appointment of direct recruits to substantive posts so that, they shall not hold more than 1/3rd of the total number of substantive posts in the Service.
However, it is well recognised that, when a rule or a section is a part of an integral scheme, it should not be considered or construed in isolation.
One must have regard to the scheme of the fasciculus of the relevant rules or sections in order to determine the true meaning of any one or more of them.
An isolated consideration of a provision leads to 366 the risk of some other inter related provision becoming otiose or devoid of meaning.
That makes it necessary to call attention to the very next rule, namely, rule 8.
It provides by clause 2 that : "The seniority of direct recruits vis a vis promotees shall be determined in the order of rotation of vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by 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." (emphasis supplied) This provision leaves no doubt that the overall scheme of the rules and the true intendment of the proviso to Rule 7 is that 1/3rd of the substantive posts in the Service must be reserved for direct recruits.
Otherwise, there would neither be any occasion nor any justification for rotating vacancies between direct recruits and promotees.
Rule 8 (2), which deals with fixation of seniority amongst the members of the Service, provides, as it were, a key to the interpretation of the proviso to Rule 7 by saying that the proviso prescribes "quotas" and reserves vacancies for both categories.
The language of the proviso to Rule 7 is certainly not felicitous and is unconventional if its intention was to prescribe a quota for direct recruits.
But the proviso, as I have stated earlier, must be read along with Rule 8 (2) since the two provisions are inter related.
Their combined reading yields but one result, that the proviso prescribes a quota of 1/3rd for direct recruits.
The process of reading the Rules as parts of a connected whole does not end with Rules 7 and 8.
Rules 16 and 17 are also relevant for the present purpose and have, indeed, an important bearing on the question of reservation of vacancies for direct recruits to the extent of one third of the substantive posts in the Service.
Clause (1) of Rule 16 confers power upon the Administrator to create temporary posts in the Service.
By clause (2) of Rule 16, such posts are required to be filled, in consultation with the High Court, from amongst the members of the Delhi Judicial Service, that is to say, the promotees.
Rule 17, which is in the nature of a non obstante provision, provides that not withstanding anything contained in the Rules, the, Administrator may, in consultation with the High Court, fill substantive vacancies in the Service by making temporary appointments thereto from amongst the members of the Delhi 367 Judicial Service.
The position which emerges from the provisions contained in Rules 16 and 17 is that it is permissible to create temporary posts in the Service and, even substantive vacancies in the Service can be filled by making temporary appointments.
The twofold restriction on this dual power is that the High Court must be consulted and such appointments must be made from amongst the promotees only.
If temporary appointment to the Service, either in temporary posts or in substantive vacancies, can be made within the framework of the Rules and have to be made, if at all, from amongst the promotees and promotees only, the quota rule contained in the proviso to Rule 7 must inevitably break down when such appointments are made.
The simple reason leading to that consequence is that direct recruits cannot be appointed either to temporary posts in the Service or to substantive vacancies in the Service which are filled in by making temporary appointments.
Thus, even though the proviso to Rule 7 prescribes a quota of one third for direct recruits, Rules 16 and 17 permit the non observance of the quota rule in the circumstances stated in those rules.
At this stage, it is necessary to call attention to the definition of `Cadre Post ' in Rule 2 (b) and to clear the misunderstanding which is likely to arise on account of that definition.
Rule 2 (b) provides that `Cadre Post ' means any post specified in the Schedule and includes a temporary post carrying the same designation as that of any of the posts specified in the Schedule.
This definition may, at first sight, create an impression that every temporary post of an Additional District and Sessions Judge is a Cadre Post, whether or not that post is included in the Service.
That is not so.
The first part of the definition says that `Cadre Post ' means a post specified in the Schedule.
Posts which are specified in the Schedule are posts in the Service.
Therefore, by reason of the first part of the definition, posts in the Service are Cadre Posts.
It is the second part of the definition which is likely to create a misunderstanding of the true position.
That part of the definition says that Cadre Post includes a temporary post carrying the same designation as that of any of the posts specified in the Schedule.
This provision is consequential to and in consonance with Rule 16.
Since it is permissible under that rule to create temporary posts in the Service, such posts are also regarded as Cadre Posts.
It would have been anomalous to treat a post in the Service as an ex cadre post merely for the reason that the post is temporary.
Normally, an ex cadre post means a post outside the cadre of posts comprised in a Service.
368 Therefore all posts in the Service, whether permanent or temporary, are generally regarded as Cadre Posts, But, regardless of the normal pattern of service rules, what is necessary to appreciate is that Rule 2 (b) has the limited effect of making every post in the Service a Cadre Post, whether the post is permanent or temporary.
The inclusive clause contained in the second part of Rule 2 (b) has to be read in the context of the first part of that Rule and must take its meaning from what precedes it.
Therefore, every promotee who holds the post of an Additional District and Sessions Judge in the Service is the holder of a Cadre Post, whether the post is permanent or temporary.
Direct recruits hold cadre posts in all events because, they can only be appointed to substantive posts in the Service on a permanent basis.
Rules 16 and 17 forbid their appointments to temporary posts in the Service or to substantive vacancies in the Service on a temporary basis.
Though this is the true scope and meaning of Rule 2 (b), it is unnecessary to be dogmatic about it.
As will appear presently, even if it is assumed for the purposes of argument that temporary posts not included in the Service are also Cadre Posts, that will not make any difference to the principle on the basis of which the Seniority List of the Service will have to be drawn.
But, before adverting to that principle, it would be useful to draw attention to Rule 2 (d) which provides that a Member of the Service ' means a person appointed in substantive capacity to the Service under the provisions of the Rules.
This Rule shows that two conditions must co exist in order that a person can become a `Member of Service '.
Firstly, his appointment has to be in a substantive capacity and secondly, the appointment has to be to the Service, that is, to a post in the Service.
Persons who hold posts bearing designations similar to the designations of posts comprised in the Service cannot, for that reason alone, become members of the Service.
It is only when they are appointed in a substantive capacity to a post in the Service, that they became members of the Service.
The acceptance of the alternative hypothesis, that temporary posts bearing the same designation as that of the posts specified in the Schedule are Cadre posts whether such posts are comprised in the Service or not, will, at any rate, justify the proposition that, accor 369 ding to the scheme of the rules in this case, `Service '.
is a narrower body than the `Cadre '.
By the definition contained in Rule 2 (d), membership of the Service is limited to persons who are appointed in a substantive capacity to the Service.
By the second part of Rule 2 (b), if read in an extended sense, which is what the alternative hypothesis requires, every temporary post which carries the same designation as that of any of the posts specified in the Schedule is a Cadre Post, whether such post is comprised in the Service or not.
Such posts and the posts specified in the Schedule will together constitute the Cadre under Rule 2 (b), if an extended meaning is given to the second part of that rule.
In this background and with this understanding of the interpretation and effect of Rules 2(b), 2(d), 7, 8, 16 and 17, it will be easier to deal with the question of seniority between direct recruits and promotees.
The contention of the petitioners which we have to examine is that the rule of seniority provided in Rule 8 is constitutionally invalid.
We are not concerned in this case with the provision contained in Rule 8 (1) which governs the inter se seniority of members of the Delhi Judicial Service who are promoted to the Delhi Higher Judicial Service.
Members of the subordinate judicial service promoted to the Delhi Higher Judicial Service retain their former seniority.
We are concerned with clause (2) of Rule 8, which provides, in so far as relevant, that the seniority of direct recruits vis a vis the promotees shall be determined in the order of rotation of vacancies between the direct recruits and promotees based on the quota of vacancies reserved for both the categories by Rule 7, provided that the first available vacancy will be filled by a direct recruit, the next two vacancies by promotees and so on.
This Court has taken the view in many cases that whenever the rules provide for recruitment to a Service from different sources, there is no inherent infirmity in prescribing a quota for appointment of persons drawn from those sources and in working out the rule of quota by rotating the vacancies as between them in a stated proportion.
(See, for example, Mervyn Coutinho vs Collector of Customs, Bombay,(1) section C. Jaisinghani vs Union of Indiu,(2) Bishan Sarup 370 Gupta vs Union of India, (1) A.K. Subraman vs Union of India,(2) V. B. Badami vs State of Mysore(3) and Paramjit Singh Sandhu vs Ram Rakha.(4) Therefore, Rule 8 (2) cannot be held to be unconstitutional merely because, it reserves one third of the vacancies in the Service for direct recruits and provides that the first available vacancy in the Service will be filled in by a direct recruit, the next two by promotees and so on.
However, instances are not unknown wherein, though the provision of a rule or a section is not invalid, the manner in which that provision is implemented in practice leads to the creation of disparities between persons who, being similarly circumstanced, are entitled to equal treatment.
Care has therefore to be taken to apply the provisions of Rule 8(2) in such a manner as not to lead to the violation of the guarantee of equality and equal opportunity contained in Articles 14 and 16 of the Constitution.
For that purpose.
it is necessary to ascertain as to which of the promotees can be regarded as belonging to the same class as the direct recruits.
The pre requisite of the right to inclusion in a common list of seniority is that all those who claim that right must, broadly.
bear the same characteristics.
The mere circumstance that they hold posts which carry the same designation will not justify the conclusion that they belong to the same class.
Persons who are appointed or promoted on an ad hoc 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 or posts are permanent or temporary.
The rules in the instant case do not require that person belonging to the former category have to satisfy any particular prescription like consultation with the High Court.
We are informed that in practice, persons who are promoted to the Delhi Higher Judicial Service on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement are appointed only after their names are cleared or approved by the High Court.
That may or may not be so.
The point of the matter is that there is no provision in the Rules which requires that such appointments must also be made in accor 371 dance with any set formula.
The courtesy shown by the authorities to the High Court when certain appointments are made, is one thing; The obligation imposed by the Rules on the authorities that the High Court shall be consulted when certain other appointments are made is quite another.
Indeed, there is a distinction between the process of consultation with the High Court and the screening of the promotees done by the High Court, may be at the instance of the authorities, when their names are considered for appointment as Additional District and Sessions Judges on an ad hoc, fortuitous or stop gap basis.
Thus, 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 distinct 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 of promotees cannot be included in the list of seniority of officers belonging to the Service.
It is however difficult to appreciate how, in the matter of seniority, any distinction can be made between direct recruits who are appointed to substantive vacancies in the Service on the recommendation of the High Court under Rule 5(2) and the promotees who are appointed in consultation with the High Court to posts in the Service under Rules 16 and 17.
Rule 16 provides for the appointment of promotees to temporary posts in the Service, while Rule 17 provides for appointment of promotees to substantive vacancies in the Service on a temporary basis.
Promotees who are appointed to the Service under either of these two rules must be considered as belonging to the same class as direct recruits appointed under Rule 5(2).
They perform similar functions, discharge identical duties and bear the same responsibilities as direct recruits.
They are appointed on a regular basis to posts in the Service in the same manner as direct recruits are appointed, the only distinction being that whereas the latter are appointed on the recommendation of the High Court promotees are appointed in consultation with the High Court.
There fore, no distinction can be made between direct recruits on one hand and promotees appointed to the Service on the other, in the matter of their placement in the seniority list.
Exclusion from the seniority list of those promotees who are appointed to posts in the Service, 372 whether such appointment is to temporary posts or to substantive vacancies in a temporary capacity, will amount to a violation of the equality rule since, thereby, persons who are situated similarly shall have been treated dissimilarly in a matter which constitutes an important facet of their career.
A representative order of appointment under Rule 16, which is annexed to one of the writ petitions, shows why promotees appointed under that rule (and for similar reasons, those appointed under Rule 17) cannot be discriminated against in the matter of seniority in comparision with direct recruits.
That order reads thus: "DELHI ADMINISTRATION DELHI NOTIFICATION Dated the 22 March 1972 No. F. 1(76)/70 Judl.(i) In pursuance to the provisions of sub rule (2) of rule 16 of the Delhi Higher Judicial Service Rules, the Administrator of Delhi, is pleased to appoint in consultation with the High Court, the following members of the Delhi Judicial Services, temporarily to the Delhi Higher Judicial Service, till further orders, with effect from the date they take over charge of their offices, against the four posts of Additional District and Sessions Judges, created vide his notification No.
F1(13)/ 72 Judl.
dated the 13th March, 1972.
Shri Dalip Chand Aggarwal 2.
Shri Bishma Kumar Agnihotri 3.
Shri Sadhu Ram Goel 4.
Shri Pyare Lal Singla.
By Order.
(Desh Deepak) Secretary (Law & Judicial) Delhi Administration, Delhi.
" This order shows that, firstly, by a notification dated March 13, 1972, the Administrator created temporary posts in the Service under Rule 16(1); secondly, four promotees were appointed to those posts in the Delhi Higher Judicial Service; and thirdly, that they were appointed `till further orders '.
The appointments were neither ad 373 hoc, nor fortuitous, nor in the nature of stop gap arrangement.
Indeed, no further orders have ever been passed recalling the four promotees and, others similarly situated, to their original posts in the subordinate Delhi Judicial Service.
Promotees who were appointed under Rule 16 have been officiating continuously, without a break, as Additional District and Sessions Judges for a long number of years.
It is both unrealistic and unjust to treat them as aliens to the Service merely because the authorities did not take up to the necessity of converting the temporary posts into permanent ones, even after some of the promotees had worked in those posts from five to twelve years.
Considering the history of the Delhi Higher Judicial Service, it is clear that the phrase `till further orders, is only a familiar official device to create and perpetuate temporary posts in the Service when the creation of permanent posts is a crying necessity.
The fact that temporary posts created in the Service under Rule 16(1) had to be continued for years on end shows that the work assigned to the holders of those posts was, at least at some later stage, no longer of a temporary nature.
And yet, instead of converting the temporary posts into permanent ones, the authorities slurred over the matter and imperilled, though unwittingly, the reasonable expectations of the promotees.
Unwittingly ' because, no one appears to have been interested in belittling the contribution of the promotees who held temporary posts in the Service or in consciously jeopardising their prospectus.
The tragedy is that no one was interested in anything at all.
Or else, why was direct recruitment not made from time to time, at regular intervals? If that were done, the undesirable situation which confronts us to day could have been easily avoided.
The proviso to Rule 7 prescribes a system of quota and rota.
why was that rule put in cold storage by creating temporary posts in the Service when permanent posts were clearly called for? Permanent posts could have been allocated to direct recruits and promotees in the ratio of one to two.
In these circumstances, it will be wholly unjust to penalise the promotees for the dilatory and unmindful attitude of the authorities.
It is not fair to tell the promotees that they will rank as juniors to direct recruits who were appointed five to ten years after they have officiated continuously in the posts created in the Service and held by them, though such posts may be temporary.
This Court, at least, must fail them not.
From an earlier part of this judgment it would appear how, though the proviso to Rule 7 prescribes a quota of one third for 374 direct recruits and provides for rotation of vacancies between them and the promotees who are appointed to the Service, that rule must inevitably break down when appointments to promotees are made to the Service under Rules 16 and 17.
Appointments under these two Rules have to be made from amongst the promotees only.
Whenever appointments are made to the Service under either of these Rules, neither the quota reserved for direct recruits nor the rule of rotation of vacancies between them and the promotees can have any application.
The question then is, in situations resulting in the suspension of the rule of `quota and rota ', which its the equitable rule for determining seniority between direct recruits on the one hand and promotees who are appointed under Rules 16 and 17 on the other ? It is difficult to evolve a rule which will cause no hardship of any kind to any member of the Service.
Therefore, the attempt has to be to minimise, as far as possible, the inequities and disparities which are inherent in a system which provides for recruitment to the Service from more than one source.
While doing this, the one guiding principle which must be kept in mind is that classification is a gloss on the right to equality.
It is but a step in the process of working out the equities between persons who are entitled to equal treatment.
It is therefore necessary to ensure that classification is made on a broad, though rational, basis so as not to produce the self defeating result of denying equality to those who in substance, are situated similarly.
That is why, it would be hyper technical to make a sub classification between promotess appointed under rule 16 and those appointed under Rule 17, with the object of denying to the latter the equality of status and opportunity with the former and with direct recruits.
It is true that under Rule 16, promotees are appointed to temporary posts in the Service while, under Rule 17 they are appointed in a temporary capacity to substantive vacancies in the Service.
But this kind of service jargon clouds the real issue as to whether persons appointed under different rules necessarily belong to different classes and tends to produce inequalities by an artful resort, dictated by budgetary expediency, to the familiar device of fixing dissimilar labels on posts which carry the same duties and responsibilities and are subject to similar pre appointment tests.
It may even be that in the process of consultation, the High Court exercises greater vigilance in regard to appointments proposed under Rule 16 than in regard to appointments which are proposed under Rule 17.
375 But, the fact that the High Court chooses to adopt, of its own volition any particular approach in the matter of appointments made under different rules, cannot justify the proposition that persons appointed under different rules necessarily belong to different classes.
The requirement for appointments under both the Rules is, equally, that they must be made in consultation with the High Court.
The High Court is, therefore, expected to apply the same standard and adopt the same approach whether appointments are proposed to be made under Rule 16 or Rule 17.
Any attempt to sub divide the promotees according as to whether they are appointed under Rule 16 or Rule 17 will result in the creation of a distinction where no difference exists.
The object of classification is to find a remedy to such situations, not to create or perpetuate them.
It may bear emphasis that promotees appointed under Rules 16 and 17 to the Higher Judicial Service can rank for seniority along with direct recruits only if they are appointed in consultation with the High Court as required by those Rules and if they satisfy the requirement laid down in Rule 7(a) that they must have completed not less than ten years of service in the Delhi Judicial Service.
The best solution to the situation which confronts us is to apply the rule which was adopted in S.B. Patwardhan vs State of Maharashtra.(1) It was held by this Court in that case that all other factors being equal, continuous officiation in a non fortuitous vacancy ought to receive due recognition in fixing seniority between persons who are recruited from different sources, so long as they belong to the same cadre, discharge similar functions and bear the same responsibilities.
Since the rule of `quota and rota ' ceases to apply when appointments are made under Rules 16 and 17, the seniority of direct recruits and promotees appointed under those Rules must be determined according to the dates on which direct recruits were appointed to their respective posts and the dates from which the promotees have been officiating continuously either in temporary posts created in the Service or in substantive vacancies to which were appointed in a temporary capacity.
Our attention was drawn to several decisions but most of them turn of their own facts.
For example, the promotees placed great reliance on the decision in Baleshwar Dass vs State of U.P.(2) In that 376 case, there was only one rule of recruitment to both the permanent and temporary posts in the cadre.
Besides, no rotation of vacancies was prescribed for the purpose of fixing seniority.
The position which arises in the case before us did not therefore arise in that case.
However, the observations made by Krishna Iyer, J. in that case are not without relevance for the present purpose.
The learned judge observed : "We must emphasis that while temporary and permanent posts have great relevancy in regard to the career of government servants, keeping posts temporary for long, sometimes by annual renewals for several years, and denying the claims of the incumbents on the score that their posts are temporary makes no sense and strikes us as arbitrary, especially when both temporary and permanent appointees are functionally identified.
If, in the normal course, a post is temporary in the real sense and the appointee knows that his tenure cannot exceed the post in longevity, there cannot be anything unfair or capricious in clothing him with no rights.
Not so, if the post is, for certain departmental or like purposes, declared temporary, but it is within the ken of both the government and the appointee that the temporary posts are virtually long lives.
It is irrational to reject the claim of the `temporary ' appointee on nominal score of the terminology of the post.
We must also express emphatically that the principle which has received the sanction of this Court 's pronouncements is that officiating service in a post is for all practical purposes of seniority as good as service on a regular basis.
It may be permissible, within limits, for government to ignore officiating service and count only regular service when claims of seniority come before it provided the rules in that regard are clear and categorical and do not admit of any ambiguity and cruelly arbitrary cut off of long years of service does not take place or there is functionally and qualitatively, substantial difference in the service rendered in the two types of posts.
While rules regulating conditions of service are within the executive power of the State or its legislative power under proviso to Article 309, even so, such rules have to be reasonable, fair and not grossly unjust if they are to survive the test of Articles 14 and 16." 377 In A. Janardhana vs Union of India,(1) the Court had to consider the validity of rules of seniority which were applicable to the Military Engineering Service.
The recruitment to the Service was made from two sources, directly and by promotion.
The appellant was a promotee of 1962 who, it was argued in that case, could find a place in the seniority list in 1989, when it would be time for him to retire.
D.A. Desai, J. observed in that case : ".
In other words, after having rendered service in a post included in the service, he is hanging outside the service without finding a berth in service, whereas direct recruits of 1976 have found their place and berth in the service.
This is the situation that stares into one 's face while interpreting the quota rota rule and its impact on the service of an individual.
But avoiding any humanitarian approach to the problem, we shall strictly go by the relevant Rules and precedents and the impact of the Rules on the members of the service and determine whether the impugned seniority list is valid or not.
But, having done that we de propose to examine and expose an extremely undesirable, unjust and inequitable situation emerging in service jurisprudence from the precedents namely, that a person already rendering service as a promotee has to go down below a person who comes into service decades after the promotee enters the service and who may be a schoolian, if not in embryo, when the promotee on being promoted on account of the exigencies of service as required by the Government started rendering service.
A time has come to recast service jurisprudence on more just and equitable foundation by examining all precedents on the subject to retrieve this situation.
" No two cases are alike and.
therefore an attempt has been made in this judgment to consider the language and implication of the Rules which govern appointments to the Delhi Higher Judicial Service.
But, the observations which we have extracted above are not without relevance to the decision of the case before us.
They lend considerable support to the conclusion which has been recorded in this judgment.
378 The decision of this Court in Joginder Nath vs Union of India(1), does not afford any assistance on the question which is in issue before us.
That case arose out of a controversy between the promotees inter se and not between promotees and direct recruits.
The seniority list which is impugned in this case has been prepared on the basis that the rule of `quota and rota ' will continue to apply notwithstanding the fact that appointments are made to the Service under Rule 16 and 17.
As pointed out earlier, the rule of `quota and rota ' which is prescribed by the proviso to Rule 7 would cease to apply when appointments are made to the Service under Rules 16 and 17.
The seniority list has therefore to be quashed.
A new seniority list shall have to be prepared by the authorities on the basis of the view taken in this judgment.
The new seniority list will include (i) direct recruits and (ii) promotees appointed under Rules 16 and 17.
They will rank for seniority as explained above.
The question of the seniority of respondent 4, Shri G.S. Dakha has to be dealt with on a different basis.
He was appointed as an Additional District and Sessions Judge in a vacancy reserved for members of the scheduled castes.
He will retain his position in the seniority list since that position is due to him as a member of a scheduled caste.
The case of Miss Usha Mehra has caused us some anguish.
She was appointed as a direct recruit on April 22, 1980.
The rule of `quota and rota ' was in operation since the inception of the Delhi Higher Judicial Service and she must have joined the Service on the basis of certain reasonable expectations flowing out of a senior position.
Though comparatively young, she had a fairly large practice at the Bar when she was appointed as an Additional District and Sessions Judge.
A strong plea has been made on her behalf that her place in the seniority list should not disturbed.
We wish that were possible.
It would be incongruous to do so because, if the rule of `quota and rota ' ceased to apply when appointments were made to the Service under Rules 16 and 17, her present position in the seniority list which has been accorded to her on the basis of that rule cannot be maintained.
For this 379 consequence the promotees are not to blame, and certainly, not any of the direct recruits.
The promotees had made a representation to the High Court as long back as in the year 1977 but, for a reason not easy to understand, the High Court did not dispose of that representation for over three years, Indeed, one of the contentions of the High Court before us is that those writ petitions are premature because the representation of the promotees is still pending before it.
Miss Mehra was appointed three years after the promotees had made their representation to the High Court, which was the most appropriate authority for them to approach.
A timely disposal of the representation by the High Court would have saved the predicament in which some of the direct recruits like Miss Mehra will now find themselves.
It was urged that the promotees ought not to grudge one little exception in favour of Miss Mehra since they have derived quite some benefits from the operation of Rules 16 and 17.
It is true that the promotees have derived a substantial benefit by the operation of Rules 16 and 17.
They monopolised all the appointments to temporary posts as also temporary appointments to substantive vacancies in the Service.
Simultaneously, they also derived benefit from the rule of `quota and rota '.
For example, though N.L. Kakkar and Shri R.K. Sinha were promoted to the Service in 1972, they were placed in the seniority list above Shri N.C. Kochar who was recruited directly in 1971.
That was done in conformity with the quota and rota rule of 1 : 2.
If, at least some of the temporary posts had been converted into permanent ones as they ought to have been, one out of every three posts would have gone to a direct recruit.
But as pointed out by us, the difficulty in the way of maintaining Miss Mehra 's present position in the seniority list is that doing so would be inconsistent with the view which we have taken in this judgment.
We cannot, therefore, make an exception in the case of any particular direct recruit.
It is patent that this judgment will upset the balance between direct recruits and promotees in the Delhi Higher Judicial Service.
If the authorities desire to restore that balance, appropriate rules shall have to be framed for future application.
But, more than merely framing the rules, care shall have to be taken to implement the rules both in letter and in spirit.
That will call for greater concern and understanding on the part of the authorities for the future of a system, which one believes, has stood the people well.
380 In the result, the proviso to Rule 7 and Rule 8(2) bear the meaning and interpretation which is given to them in this judgment, those provisions do not by themselves suffer from any constitutional infirmity.
But, the seniority list which is challenged by the promotees in these Writ Petitions is violative of the provisions of Articles 14 and 16 of the Constitution.
That list is quashed and the Writ Petitions are allowed to the extent indicated above.
There will be no order as to costs.
SABYASACHI MUKHARJI, J.
With great respect I find myself unable to agree with the learned Chief Justice on certain aspects of the relevant rules in this case.
I would, therefore, like to state my reasons with such relevant rules as are necessary.
These two Writ petitions under article 32 of the Constitution question the validity of Rule 8(2) of Delhi Higher Judicial Service Rules, 1970 hereinafter referred to as the said rules and the fixation of inter se seniority of the promotees and direct recruits of Delhi Higher Judicial Service.
In the first one, namely Writ Petition No. 5669 of 1980, the petitioners are, one Shri O.P. Singla, who was at the relevant time working as an Additional District & Sessions Judge and at the time of the institution of the petition working as the Presiding Officer, Industrial Tribunal in Tis Hazari Court, Delhi alongwith Shri D.C. Aggarwal, Additional District and Sessions Judge, Delhi.
The respondents to this application are the Union of India, Delhi Administration, Delhi High Court, respondent No. 4, Shri G.S. Dakha, Additional District and Sessions Judge, Tis Hazari, Delhi and respondent No. 5 Miss Usha Mehra, Additional District and Sessions Judge, Tis Hazari, Delhi.
In the second petition there are 32 petitioners who are Additional District and Sessions Judges in the Delhi Higher Judicial Service alongwith Delhi Judicial Service Association.
The respondents to the said petition are apart from the Union of India, Delhi Administration, Delhi High Court, Shri G.S, Dakha, who is a respondent to the other petition also, Miss Usha Mehra (who is also a respondent in other petition) and two other respondents, namely, Shri C.D. Vashist, Additional District and Sessions Judge, Tis Hazari, Delhi and one Shri S.P. Singh Chowdhary, Additional District and Sessions Judge, Tis Hazari, Delhi.
381 The immediate cause which prompted the filing of the second petition, according to the petitioners, was the advertisement published in the 'Indian Express ' dated 30th January, 1981 which invited applications for filling three permanent posts in the cadre of Delhi Higher Judicial Service.
The case of the petitioners is that petitioners in both these petitions are promotee Additional District and Sessions Judges in the Delhi Higher Judicial Service and they had joined the service long time back.
The petitioners in the first petition namely, Writ Petition No. 5669 of 1980 had joined the Delhi Higher Judicial Service in the beginning of 1972 and have been serving since then with ability.
The other relevant facts have been stated in the judgment of my brother, the learned Chief Justice.
It is, therefore, not necessary for me to state these again.
The controversy in these two writ petitions is inter se seniority between the promotees and the direct recruits and for this, one must refer to some other relevant provisions of the said rules and mainly to rules 7 and 8 alongwith Rules 16 and 17 of the said rules.
The rules are as follows: "Rule 7.
REGULAR RECRUITMENT: Recruitment after the initial recruitment shall be made: (b) by promotion on the basis of selection from members of Delhi Judicial Service, who have completed not less than 10 years of service in the Delhi Judicial Service: (b) by direct recruitment from the Bar.
Provided that not more than 1/3rd of the substantive posts in the service shall be held by direct recruits.
" There is a further proviso which is not really relevant for the present controversy and which provides that where a member of the Delhi Judicial Service is considered for such appointment under Clause (a), all persons senior to him in the Service shall also be considered, irrespective of the fact whether or not they fulfil the requirements as to the minimum of 10 years service.
There is an 382 Explanation for calculation of period of 10 years which again is not relevant for the present purpose.
Rule 8 is as follows: "8.
(1) The inter se seniority of members of Delhi Judicial Service promoted to the service shall be the same as in the Delhi Judicial Service.
(2) The seniority of direct recruits vis a vis promotees shall be determined in the order of rotation vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by rule 7 provided that the first available vacancy will be filled by direct recruitment and the next two vacancies by promotees so on.
" Rule 9 deals with the qualifications for direct recruits and provides that they (1) should be citizen of India, (2) must have practised as an advocate for not less than seven years, (3) must have attained the age of 35 years and not attained the age of 45 years on 1st January of the year in which his appointment is made.
The submission of the petitioners is that the officers intended to hold the posts of District Judges cannot artificially be prevented from holding such posts substantively, either because of delay in making posts permanent or by being discriminated against in the fixation of seniority in the cadre vis a vis direct recruits to the service, who have lesser years of practice at the Bar as compared to the period of promotee officers ' judicial service period and period of practice at the Bar, if any, put together.
The petitioners have given instances of the incongruities, according to them, that will result if the present system is allowed to continue.
The petitioners themselves and through their association had made several representations in January, 1978, July, 1978 and December, 1978 and also sought remedy against what they call injustice and they also submitted that direct recruitment from the Bar might not be made by the High Court to the Delhi Higher Judicial Service until the question was resolved.
The petitioners contend that the present interpretation and the present seniority list create anomalous positions.
383 After the petitions were filed, rules nisi were issued and certain interim orders were passed.
It is not necessary to set out the details of the said orders made by this Court from time to time.
It may be mentioned, however, that on the 29th September, 1981 this Court issued rules nisi in both these matters and further ordered that there would be no reversion either from the category of promotees who were working as District and Sessions Judges or from the category of direct recruits who were also working in the same capacity.
Several intervention applications were allowed.
On 27th April, 1982 this Court further directed that if any officer who was then working on deputation returns to the parent cadre, it might become necessary to revert the junior most officer who is at present holding the post of Additional District and Sessions Judge, but this Court noted that even then such a reversion should as far as possible, be avoided.
In these petitions, charts of the gradation list have been annexed.
According to the list, Shri Dakha, respondent No. 4 has been shown as number 6 and Miss Usha Mehra, respondent No.5 as number 9.
This is so because of artificial reading of Rule 7 and Rule 8 of the said rules, according to the petitioners By the same process, it is indicated that Miss Usha Mehr who had joined as Additional District and Sessions Judge on probation on 24th April 1980 supersedes by the working of Rule 7 and Rule 8 in improper and illegal way, 22 officers, including Shri Mahesh Chandra, whose date of birth was 12th October, 1928 and whose date of appointment as Additional District and Sessions Judge was 8 years before Miss Mehra.
She also supersedes Shri S.R. Goel who was born on 12th October, 1929 and who had joined the service on 24th March, 1972 8 years before Miss Mehra had joined as Additional District and Sessions Judge; more or less similar is the position in case of Shir Y.B. Gupta, Shri P.K. Bahri, Shri H.P. Bagchi and Mrs. Santosh Duggal who was born on 21st March, 1931 and had joined the service as Additional District and Sessions Judge on 29th September, 1975 and numerous other officers last of whom had joined on 23rd August, 1979 and most of whom were at least 10 years older than respondent No. 5, Miss Mehra.
Similarly Shri Dakha supersedes 16 officers by joining as Additional District and Sessions Judge in 1978 and is superseding officers who had joined in 1972, 1973, 1974, 1975 and some of whom were much 384 older than him in age.
Shri J.B. Goel will also be superseding some of the officers who have been indicated in the chart.
This anomaly has been caused by the operation of Rule 7(b) of the said rules read with sub rule (2) of Rule 8.
Rule 7 which deals with regular recruitment provides two modes of recruitment, namely (1) by promotion on the basis of selection and (2) by direct recruitment from the Bar.
So far as direct recruitment from the Bar is concerned, it clearly states that "not more than 1/3rd of the substantive ports in the Service shall be held by direct recruits".
Reading it simply without anything else and unaided or uninfluenced by service parlance and without being inhibited by any a interpretation of other statutes in the context of some other Rules, it appears that it merely provides that in case a year there is vacancy for recruitments from the Bar as well as by promotion, more than 1/3rd of substantive posts should not be filled in by direct recruitment.
It says this and no more.
It is difficult to contend that there is any quota of Bar recruits of 1/3rd The Rule does not say that 1/3rd of direct recruits must for each year be 1/3rd of the recruitments made.
It puts a ceiling on number of Bar recruits in a year where Bar recruits are available and willing to be appointed.
It does not fix any quota far them.
As the working of the rule would, indicate, it was for unnecessary and hypothetical situation which never arose in years subsequent to the framing of the rules.
The framers of the Rules perhaps thought and assumed that many Bar recruits would be willing to join the service and selections would be made from Bar regularly and timely eliminating thereby the chances of the promotees whose knowledge and experience were also necessary to be retained for the better administration of the judicial service.
Many factors have worked otherwise and the assumption upon which this rule had been framed has not proved to be correct.
If Rule 7 was standing itself simpliciter, no problem would have arisen.
The problem, however, arises by virtue of sub rule (2) of Rule 8.
Sub rule (1) of Rule 8 stipulates that inter se seniority of the members of Delhi Judicial Service promoted to the service shall be the same as in the Delhi Judicial Service.
This creates no problem for the present controversy.
Sub rule (2) of Rule 8, however, stipulates that seniority of direct recruits vis a vis promotees shall be determined in the order of rotation of vacancies between direct recruits and promotees based on quotas of vacancies reserved for both categories by Rule 7 provided that first available vacancy shall be by direct recruitment and the next two vacancies by promotees.
385 and so on.
Sub rule (2) or the makers of sub rule (2) of Rule 8 presumed and assumed a factual position that quotas of vacancies have been reserved for both categories by Rule 7 which is really not a fact.
Rule 7 does not reserve any quota for either of the categories.
Rule 7 only provides for ceiling of direct recruits by providing that in case there were recruitment from Bar as well as by promotions, in such a case Bar recruits would not be more than 1/3rd of the substantive posts in the Service.
This brings the problem of so interpreting the rules as to avoid any possible injustice to any section, if possible.
In this task in the instant case there is one advantage that though there are numerous decisions, dealing with rights and privileges of promotees vis a vis direct recruits, there is no case, at least none to which attention was drawn in this case, where the rule dealing with position between direct recruits and promotees in a service composed of two different types of recruits, is worded in the manner as provided in the rules in the instant case.
It is well settled that bereft of anything where a service consists of recruitments made from two different sources and the rules and regulations provide for their recruitment and their rights inter se, primarily and essentially those rights have to be adjusted within the scheme of the rules though it might in some cases lead to certain amount of imbalances or injustices because a service is built on various considerations and various factors induce the legislature or the rule making authority to induce different and diverse knowledge, diverse aptitudes and requirements needed for running of the service.
The legislature or the rule making authorities have better knowledge and better capacities to adjust those factors.
It is common knowledge that administration of justice in this vast land of ours, where there are growing expectations with the explosion of ideas with new problems, call for fusion of different calibres, talents and aptitudes.
Administration of justice calls for independence of mind, freshness of outlook, uninhibited by normal service life and routine.
It also calls for experience in writing judgments and knowledge gathered in conducting cases from lower rank and gaining experience thereby and any ideal system would be where there is complete fusion between these two sources and streams of knowledge to enrich the machinery of the administration of justice.
But the machinery of the administration of justice fused in that manner must work with a sense of justice within itself but if, as very often is the case in this country, where there are recruitments from different sources instead of creating harmony and that harmony utilised with dedication for the purpose of the institution, creates disharmony and discontent amongst the various segments of that 386 institution generating amongst many a brooding sense of injustice, real or imaginary.
Justice should be the end of all law.
But then what is justice? Is it merely creating situations for the realisations of one 's just expectations or is it adjustment of the rights and expectations of many in the administration with sense of justice within the machinery administering justice in accordance with the rules designed to attract talents? Independence, experience and knowledge must be the aim and purpose of these rules intended to regulate their conditions and if these rules are not clear, these should be so interpreted, where the courts are not fettered or bound by precedents, to ensure that justice flows, such justice is essential for society to survive.
It is important because it enables the individuals in the administration of justice to serve justice and to identify themselves with the process.
But by rules, we cannot make justice certain in this uncertain age but all we can ensure is, attempt to prevent injustice.
Most of the problems as are apparent in working out these types of schemes and rules have been due to the failure to see the reality and the desire to proceed on adhocism.
The rules in question have been noted in the instant case in detail.
There is no quota as such.
Rule 8(2) proceeds on the misconception that there is quota fixed for direct recruits, which rule 7 does not.
Rule 8(2) cannot on plain literal meaning also be construed or interpreted to mean that it was deemed by the legislature and the rule making body to engraft any quota.
There is no deemed quota, if that was the intention then the rule would have said so.
It has not.
Rule 8(2) proceeds on wrong assumption.
Therefore, it should be given effect to in so far as it can be without reading any quota for the subsequent years.
How it should be so read would be presently indicated.
There is another aspect of the matter.
Rule 16 permits making additional appointments.
Before the actual situation, where Rule 7 and Rule 8(2) can be adjusted is dealt with, it would be relevant to note some of the decisions cited at the Bar though, most of these are not relevant.
On the wording of rule 7 read in conjunction with rule 8(2) one is on virgin ground In the case of Mervyn Coutinho & Ors vs Collector of Customs Bombay & Ors.
, this Court noted that there was no inherent vice in the principle of f fixing seniority by the rotation in a case where a service is composed of fixed proportion of direct recruits and promotions (emphasis supplied).
There as indicated by the emphasis supplied that the rule proceeded on different basis than the present one.
In 387 the instant case in view of the specific and clear language of proviso to rule 7 read with rule 8 it cannot be said that recruitment to the service was "in fixed proportion".
In that view of the matter, the observations of this Court in the said decision would dot throw much light in resolving the present controversy.
In the case of S.G. Jaisinghani vs Union of India &.
Ors., this Court was concerned with the Seniority Rules of the Income tax Service.
There the context in which controversy arose must be considered in the context of the rules.
This Court noted that in order to improve the Income tax administration, the Government of India on 29.9.1944 reconstituted and classified the prevailing Income tax Service as Class I and Class II.
The reorganisational system provided for recruitment of Income tax officer Class I, Grade II service partly by promotion and partly by direct recruitment.
The reorganisational system was set out in certain Government communication.
Reading of the rules would indicate that there was a fixed proportion, in the instant case there is none.
In the light of this, it is not necessary to deal with the observations made by this Court in the context of the said rules, In the case of Chandramouleshwar Prasad vs Patna High Court & Ors.
this Court was concerned with a situation and rules entirely different from the terminology of proviso to rule 7 of the present rules.
It, is therefore, also not necessary to persue the said decision any further.
Some reliance was placed on the decision of this Court in the case of V.B. Badami Etc.
vs State of Mysore & Ors.
The Court observed in the context of the rules before this Court in that case that as long as the quota rule remained neither promotees could be allotted any of the substantive vacancies of the quota of direct recruits nor could direct recruits be allotted promotional vacancies.
Two more principles were settled; one was that quotas which were fixed were unalterable.
Quotas which were fixed could only be altered by fresh determination of quotas under the relevant rule.
The other was that one group could not claim the quota fixed for the other group either on the ground that the quotas were not filled up or on the ground that because there had been a number in excess of quota the same should be absorbed depriving the other group of quota.
388 The observations made in that decision would have been very apposite and might have helped the present respondents if it was possible to find that there was any fixed or unalterable quota so far as direct recruits are concerned in this case as in that case and further that ad hoc arrangements or promotions meeting the exigencies of the service had not been made in accordance with the procedure envisaged by the rules itself, namely rule 16 in the instant case.
The case of Bishan Sarup Gupta vs Union of India & Ors.
also deals with quota rule in connection with Income tax officers.
In view of the present rules in the instant case, it is also not necessary to deal with the said decision.
The facts of this case and the rule under which the problem has to be adjusted have been set out hereinbefore.
Some of the general principles enunciated in some decisions of this Court might be noted in resolving the unfortunate controversy that has arisen in this case.
In the case of Joginder Nath and Ors.
vs Union of India & Ors this Court had to construe the Delhi Judicial Service Rules, 1970 in the context of seniority and confirmation.
But this was not in the context of inter se seniority between promotees and direct recruits.
The question was the seniority amongst the members of the promotees who were members of the Delhi Judicial Service Rules who became absorbed in Delhi Higher Judicial Service.
In view of the main controversy in this case that is only an incidental point but so far as that controversy i.e. the question of seniority amongst the promotee officers of the Delhi Higher Judicial Service, it would suffice to say that in so far as that controversy affects any position whereas in the instant case, the same will be guided by the ratio of the decision in Joginder Nath & ors.
case (supra).
But so far as the controversy regarding the fixation of the seniority list between promotees and direct recruits which is the main point here, the same will be dealt with separately.
In approaching the present controversy.
it is necessary to keep certain basic fundamental principles in mind which are of importance in service jurisprudence.
Service Jurisprudence in this country has developed in a peculiar way.
It has sought to infuse both fresh blood and old experience but somehow our administrators did 389 not foresee the need for expanding administration and the personnel necessary for this expansion, as a result in making appointments and even in granting promotions, there has been a good deal of ad hoc arrangements with the result that it has created in practically every branch of our administration feeling of discontent and misunderstanding between promotees and direct recruits.
This has, to a very large extent, damaged the friendly atmosphere which should prevail among the members of the administration, if the administration has to remain a vehicle of social progress and transformation which the Indian administration must, in view of the very great possibility and the transitory nature through which it is passing in spite of the severe personal and economic hardships that the members of the administration go through.
The decision in the case of S.B. Patwardhan & Ors.
vs State of Maharashtra & Others may be noted, in resolving the present controversy though the decision in that case was rendered in the context of the controversy of the Engineering Service.
Rule 8 (1) of the relevant rules in that case before this Court dealt with the various categories which manned the Class II sub divisional posts which were compiled in two lists, one list of Bombay Service of Engineers, Class II cadre of permanent Deputy Engineers and the other list of officiating Deputy Engineers.
It is not necessary for the present controversy to set out the details of the same.
The controversial provision was rule 8 (iii) which was as follows: "The probationers recruited directly to the Bombay Service of Engineers, Class II cadre in any year shall, in a bunch, be placed senior to promotees confirmed during that year.
" Learned Chief Justice observed that this rule was highly discriminatory against the promotees and gave preferential treatment to direct recruits.
Its main justification was said to be that persons who were promoted as officiating Deputy Engineers did not belong to cadre so long as they were not confirmed as Deputy Engineers whereas direct recruits appointed on probation as Deputy Engineers either from that class or cadre on the very date of their appointment since after a satisfactory completion of probation, confirmation was guaranteed to them.
Learned Chief Justice felt that this needed careful examination.
More or less similar submissions were made in the present writ petitions.
This Court further noted that there was no universal rule, either that a cadre consisted of both per 390 manent or temporary employees or that it must consist of both.
That is primarily a matter of rules and regulations governing the particular service in relation to which the question regarding the composition of the cadre arises.
The Court noted several decisions on this point.
At page 800 of the report, learned Chief Justice observed as follows: "We are not unmindful of the administrative difficulties in evolving a code of seniority which will satisfy all conflicting claims.
But care ought to be taken to avoid a clear transgression of the equality clauses of the Constitution.
The rules framed by the State Governments were constitutionally so vulnerable that the administration was compelled to adopt inconsistent postures from time to time leaving the employees no option save to resort to courts for vindication of their rights.
In this process, courts, high and low, had to discharge functions which are best left to the expertise of the appropriate departments of the Government.
Having struck down certain rules, we do not want to take upon ourselves the task of framing rules of seniority.
That is not the function of this Court and frankly it lacks the expertise and the data to do so.
We however hope that the Government will bear in mind the basic principles that if a cadre consists of both permanent and temporary employees, the accident of confirmation cannot be an intelligible criterion for determining seniority as between direct recruits and promotees.
All other Sectors being equal continuous officiation in a non fortuitous vacancy ought to receive due recognition in determining rules of seniority as between persons recruited from different sources so long as they belong to the same cadre dissimilar functions and bear similar responsibilities.
Saying anything beyond this will be trespassing on a field which does not belong to the courts." (Emphasis supplied) The aforesaid observations have to be borne in mind in deciding the present controversy.
In the case of Rajendra Narain Singh and others vs State of Bihar and Others the question was about the interpretation of the Bihar Police Service (Recruitment) Rules 1953.
In that case Rule 3 of the relevant rules was thus: 391 "The Governor shall decide in each year to number of vacancies to be filled in that year.
Provided that the number of vacancies to be filled by promotion in the service in any one year shall not, unless the Governor is satisfied that there is not a sufficient number of officers fit for promotion, be less than half the total number of vacancies to be filed in any such year.
" The Court further observed that Rule 3 of Bihar Police Service (Recruitment) Rules was not really a quota rule and it did not lay down any proportion, all it did was to insist that the number of vacancies to be filled in by promotion should not be less than half of the total number of vacancies to be filled in any year.
Adding to the number of vacancies and filling them by promotion did not certainly violate the rule requiring, that no less than half of the vacancies must be filled by promotees.
The observations of this Court in the case of A. Janardhana vs Union of India and Others may be referred to.
This Court said thus after pointing out anomalies similar to the facts of the instant case "It is therefore, time to clearly.
initiate a proposition that a direct recruit who comes into service after the promotee was already unconditionally and without reservation promoted and whose promotion is not shown to be invalid or illegal according to relevant statutory or non statutory rules should not be permitted by any principle of seniority to score a march over a promotee because that itself being arbitrary would be violative of Articles 14 and 16.
Mr. Ramamurthi, learned counsel for some of the direct recruits, in this connection urged that if at the time when the promotee was recruited by promotion his appointment/promotion was irregular or illegal and which is required to be regularised, any subsequent direct recruit coming in at a later date can seek relief and score a march over such irregular or illegal entrant.
We find it difficult to subscribe to this view.
Though we have dwelt at some length on this aspect any enunciation of general principle on the lines indicated by us would require a reconsideration of some of the decisions of this court.
We say no more save that we have solved the riddle in this case in accordance 392 with the decisions of this court and interpretation of relevant rules.
" The decision in the case of Baleshwar Dass & Ors.
Etc vs State of U. P. & Ors.
was also referred to.
There in the context of different rules namely U.P. Service of Engineers (Junior and Senior Scales) Irrigation Branch Rules, this Court observed that officiating service in a post is for all practical purposes of seniority as good as service on a regular basis.
It may be permissible within limits, for government to ignore officiating service and count only regular service when claims of seniority arise before it, provided the rules in that regard are clear and categoric and do not admit of any ambiguity and an arbitrary cut of long years of service does not take place.
While rules regulating conditions of service are within the executive power of the State or its legislative power under proviso to Article 309, such rules have to be reasonable, fair and not grossly unjust if they are to survive the test of articles 14 and 16 of the Constitution.
This Court further noted that for purposes of seniority, one has to go normally by the order of appointment to the Service in a substantive capacity.
But no fixed connotations can be attributed to expressions like `substantive capacity ', `service ', `cadre ' and the like because probation even for temporary appointments is provided for in the rules may mean that even temporary appointments can be substantive For there cannot be probation for government servant who is not be absorbed substantively in the service on completion thereof.
Permanency carries with it other rights than mere seniority and promotion.
Permanent posts and temporary posts are in official terminology sharply different, but in that case the Court further noted that from this alone, there was no difference, in the historical context of U.P. Service of Engineers.
The Court noted in that even the case of temporary engineers required consultation with the Public Service Commission.
In the context Rule 16 of the Rules in the instant case requiring consultation with the High Court may be noted.
In the aforesaid decision this Court noted that a person is said to hold a post in a substantive capacity when he holds it for an indefinite period, especially of long duration in contradistinction to a person who holds it for a definite or a temporary period or holds it on probation subject to confirmation.
If the appointment was to a post and capacity in which the appointment was to be made was of indefinite duration, if the proper authority had been consul 393 ted and had approved, if the tests prescribed have been taken and passed, if probation has been prescribed and has been approved, one may well say that the post was held by the incumbent in a substantive capacity.
applying these tests to the facts and circumstances of this case dealing with the officers holding the post for a long time, there is no doubt that the petitioners officers have held the positions in substantive capacities.
This can be looked at from another point of view.
Most of the petitioners are holders of temporary posts in substantive capacities.
These posts have been created by the Administrator under rule 16.
See also rule 17 which begins with the non obstante clause.
By reason of rule 2(b) and rule 2(d), the petitioners being holders of temporary posts in substantive capacities are holding `cadre posts ' and are also a members of the service.
Appointment in a substantive capacity is different from appointment to a substantive post.
This has been held in the case of Baleshwar Dass (supra) (pages 449, 467 469)= ; at paragraph 23, page 779, though, as was contended on behalf of the High Court the context of the relevant rule was somewhat different from the present one but that difference is not of much significant distinction in principle.
It is, therefore, erroneous to contend that the holders of substantive posts, i.e. the 12 posts originally at the inception of the service, and 22 posts now, alone are members of the service.
All incumbents holding either substantive posts or temporary posts in substantive capacities are members of the service, in the context of the present rule.
That actual terms of rule 7 have been noted but is manifest that in the context of the present circumstances, Rule 7 can have only application to recruitments to the substantive posts in the service.
It provides two different sources of recruitment.
and without fixing any actual quota, but a ceiling of not more than 1/3 of the substantive posts to be held by direct recruitments.
Rules 7 and 8 do not exist in isolation.
These have to be read with the other rules, particularly Rule 16.
The principles of harmonious construction must be accepted so that all the rules are rendered operative and one does not make the other nugatory.
Rule 16 is a rule of relaxation or an additional rule of recruitment providing for temporary posts being filled up in addition to the substantive posts.
The effect of the creation of temporary posts is to expand the area of membership of the service '.
As the filling up of the temporary posts under Rule 16 is confined to recruitment from the members of Delhi Judicial Service, Rule 7 cannot be made applicable for the 394 recruitment to temporary posts.
Therefore, there is no quota rule applicable with regard to temporary posts.
In the aforesaid view of the matter, it appears that by definition, temporary posts of District and Sessions Judges are `cadre posts '.
See in this connection Rule 2(b) of the said rules.
Holders of such temporary posts become members of the Delhi Higher Judicial Service if they are appointed to such posts in substantive capacity under rule 2(d) and rule 2(e) of the said rules.
A person can be said to hold a post, permanent or temporary, in a substantive capacity only if his appointment to that post is not fortuitous or adhoc.
A person appointed to a post as a stop gap arrangement cannot be said to hold that post in substantive capacity.
In addition to the requirement that the appointment should not be fortuitous stop gap or ad hoc nature, no appointment to a temporary post can be regarded as substantive unless it is made in compliance with the rules and regulations which have to be complied with while making appointments to permanent posts.
In the instant case for example, an appointee to a temporary post of Additional District and Sessions Judge can only hold that post in a substantive capacity if he has completed not less than ten years of service in the Delhi Judicial Service as required by Rule 7(a) and if he was appointed on the basis of selection from amongst the members of the Delhi Judicial Service in consultation with the High Court as enjoined by Rule 5(1) of the said rules.
The proviso to Rule 7(b) does not prescribe any quota of 1/3rd for direct recruits.
As has been noted, it merely indicates a ceiling i.e. that not more than 1/3rd of the substantive posts of service shall be held by direct recruits.
Even if one assumes that proviso to rule 7(b) provides for a quota of 1/3rd for direct recruits, rule 16(1) which empower the Administrator to create temporary posts in the service, read with rule 16(2) which provides that temporary posts shall be filled in, in consultation with the High Court from amongst the members of the Delhi Judicial Service either constitutes an exception to the quota rule or in the alternative proceeds on the basis of relaxation or abrogation of quota rule.
By rule 16(2) a direct recruit cannot be appointed to a temporary posts.
In other words, only promotees can be appointed posts.
If the source of recruitment to temporary posts is one and one only namely, the members of the Delhi Judicial Service, no question of applying the quota rule can possibly arise.
The quota rule can have application only if there is more than one.
source of recruitment.
If temporary posts in the service 395 are created as has been done in this case by the Administrator as envisaged by rule 16(1) and if such posts have been filled in as it appears to have been done here in consultation with the High Court from amongst members of Delhi Judicial Service as required under Rule 16(2) of the Rules, quota rule assuming that there is any, cannot apply to such appointments.
The validity of such appointments is not open to the exception that these violate the quota rule, if any.
As has been mentioned hereinbefore it is impossible to find in Rule 7 any quota rule simply because Rule 8 assumes, that quota rule is there in Rule 7, and then proceeds to make a rotational system.
It would not be proper to accept the position that there is any quota rule specially in view of the fact that working of the said rules over all these years indicate that the rule was not adhered to and the fulfilment of the rule cannot be adhered to if the appointments under Rule 16 is given effect to and also in view of the fact that if the quota rule is adhered to in conjunction with rule 8(2), it will result in manifest injustice.
As between direct recruits, on the one hand, and the members of the Delhi Judicial Service who were appointed in substantive capacity to temporary posts of Additional District & Sessions Judges on the other hand, the seniority must be governed by the rules of continuous officiation in the cadre post i.e. a direct recruit who is appointed after a member of the Delhi Judicial Service is appointed in a substantive capacity to a temporary post of Additional District & Sessions Judge, cannot and should not rank higher than the latter in the list of seniority; if a direct recruit is appointed after a member of the Delhi Judicial Service thus promoted, he would rank lower in seniority than the latter.
The following conclusions follow: (1) Rule 7(b) is not in the nature of a quota rule; (2) The temporary posts can be held in substantive capacity; (3) The holders of such temporary posts are members of the Delhi Higher Judicial Service.
(4) Rule 8(2) which provides for a rotation of vacancies between direct recruits and promotees "based on the quota of vacancies reserved for both categories by Rule 7", must be read so as to restrict its application to simultaneous appointments of direct recruits and promotees or in the case of first and initial appointment.
Any other construction will make the rule incongruous as well as invalid offending articles 14 and 16 of the Constitution.
396 The history of Delhi Judicial Service shows that placement of the promotees on probation is a matter of idle curiosity.
Promotees were placed on probation retrospectively as is shown by the recent instances which occurred during the pendency of these writ petitions.
By an order dated 6th September, 1983, the Secretary (Law and Judicial), Delhi Administration, notified that five promotees were placed on probation with effect from various dates ranging from 1.10.1981 to 10.5.83.
The promotee at Serial No. 1, Smt.
Santosh Duggal was placed on probation retrospectively from 1st October, 1981, that means her probationary period of 2 years would be over within three weeks of the letter dated 6th September, 1983, it is also interesting to note that Shrimati Duggal had been working as a Judicial member of the Customs and Excise Gold Control Appellate Board since October, 1982.
Such probations are meaningless formalities.
Therefore, promotees who were appointed in substantive capacities in the sense indicated above can be placed on probation now if that has not been done so far.
As has been noted in the decision of A. Janardhana vs Union of India and ors.
at 608 of the Report, if proviso to rule 7(b) is read with rule 8(2) and in the manner contended by the respondents, it might so happen that a candidate 's position may be placed in such a way that by legal fiction, he will be placed as senior to a person as a District and Sessions Judge by national placement at a time when he did not even reach the age at which he or she would have become eligible for appointment.
That would be unfortunate and would produce incongruous result.
Indeed such a result had happened in A. Janardhana 's case (supra).
An argument was advanced on behalf of the respondents that there is no provision for probation for the appointments under rules 16 & 17 of the said rules, but sub rule (2) of rule 12 required that all candidates shall be on probation for a period of two years.
An appointment on probation is not a jurisprudential sine qua non for absorption into the services, though normally and generally various rules of different services make such provisions as rule 12(2) here.
But as has been noted in the working out the practice of Delhi Judicial Service placement of promotees on probation has not been very strictly followed.
The promotees cannot suffer for this.
It was, then, urged that there was no process of selection.
It may be mentioned that Rule 7(a) provides for recruitment to the Delhi Higher Judicial Service alia inter by promotion on the basis 397 of selection from the members of Delhi Judicial Service, who have completed not less than ten years of Service in the Judicial Service.
It may be mentioned that in actual practice all appointments have been made by selecting people from Delhi Judicial Service and sometimes officers have been passed over on the basis of assessment of comparative merits.
It may be appropriate here to note on the question whether the petitioners were appointed regularly that all the promotees were appointed to temporary posts in accordance with qualifications laid down under Rule 7(a), namely, by selection and after completion of a minimum of ten years judicial service, The selections were made by the Full Court of the High Court and appointments were made on merit cum seniority basis so much so that persons found not fit for promotions were ignored as in the case of Shri C.D. Vashist and Shri S.P. Singh Chowdhary.
On behalf of the respondents attention was drawn to the decisions of this Court in the case of M. Veeraian Chowdhary & 42 ors vs The Government of A.P. & 87 Ors.
(Civil Appeal No. 2030 of 1981) as well as the decision of this court in this case of S.P. Gupta etc.
vs Union of India and Ors.
Inasmuch as the context of the provisions involved in those two decisions are entirely different from the context of the rules in the instant case, the respondents cannot have any support from the aforesaid two decisions.
Another argument canvassed was that Bar recruits had joined the services and some of them with a very good practice about which we have no doubt that they had and they had joined the service at great sacrifice, would suffer if any alteration of the gradation list was now made.
It was submitted that if necessary at all the same should be done prospectively, if the seniority list is revised, it should be done prospectively without affecting the positions of these Bar recruits where seniority on the old basis in the light of the High Court 's understanding before these petitions were filed had been existing.
One should give anxious considerations to this aspect of the matter.
One should be hesitant and loath to upset the just expec 398 tations of the members of the legal profession who have joined the service and one would be very sorry to do that.
Judicial appointments are no longer attractive for any lawyer of any kind of success.
One would be hesitant to put further disincentives for those with professional experience to join Judicial service, and therefore be reluctant to interfere with the just expectations of professional entrants who had entered Judicial service at sacrifice of considerable money and position.
But the provisions of the rule as well as of the Constitution must be given effect to.
In the instant case members of the Judicial service, the petitioners had made representations to the High Court in 1977.
The two entrants who would a be vitally affected by the re adjustment of the list would be Shri G.S. Dakha who joined the service on 27th of September, 1973 and Miss Usha Mehra who joined the service on probation on 24th of April, 1980.
At that time challenge in the form of representation to existing seniority before the High Court was there.
Shri J.B. Goel had joined the service on 10th November, 1980 and Shri B.S. Chaudhary had joined the service on 10th November, 1982.
So far as Shri Dakha as a member of Scheduled Caste and Tribe, his position may not be affected on other grounds.
We say no more on this aspect.
So far as Miss Mehra is concerned, she was appointed on probation in April, 1980 and got her confirmation during the pendency of the present petitions.
Miss Mehra is still young and has a long tenure.
It is hoped that she will overcome any temporary or momentary loss of seniority and would continue to render her valuable service to the administration of justice.
In judicial careers many just expectations get upset as experiences of recent times would indicate.
The interpretation indicated above and the principles mentioned herein before in adjusting the rights between the promotees and direct recruits in the background of the rules prevailing in the instant case are appropriate and rational.
One should insist that government must abolish this system of making appointments from two different sources in ad hoc manner.
If appointments have to be made from two different sources, then the authorities should so plan that the recruits come from two different sources in time and officers from one source are not required to function substantively and effectively in the jobs which are intended to be performed by recruits of other source and face the prospect of being either pushed back or thrown out.
Nothing more need to be said.
399 The rules nisi are made absolute.
Current gradation list of the Judicial Department of the Delhi Administration specially with reference to respondents Nos. 4 and 5 is quashed with a direction to the respondents Nos. 1 to 3 prepare the gradation list of the Delhi Higher Judicial Service on the basis of the principles indicated in this judgment.
This, however, will not in any way prejudice the claim of seniority of respondent No. 4, Shri G.S. Dakha on the ground of his being member of Scheduled Caste or Scheduled Tribe.
This direction will also not in any way affect the seniority of the promotee officers of the Delhi Higher Judicial Service amongst themselves.
That position would be guided by the principles laid down by this Court in Joginder Nath and Ors. ' case (supra) (indicated hereinbefore).
In the fact and circumstances of the case, parties will bear their own costs.
|
Regular recruitment after the initial recruitment to the Delhi Higher Judicial Service under Rule 7 of the Delhi Judicial Service Rules, 1970 is made by promotion on the basis of selection from members of the Delhi Judicial Service who have completed not less than 10 years of service and by direct recruitment from the Bar subject to the provision that not more than one third of the substantive posts in the service shall be held by direct recruits.
In the case of promoted officers, the appointment to the service shall be made by the Administrator in consultation with the High Court while the appointment of direct recruits shall be made on the recommendations of the High Court.
Rule 2(b) provides that cadre post means any post specified in the Schedule and includes a temporary post carrying the same designation as that of any of the post specified in the Schedule and any other temporary post declared as cadre post by the Administrator.
Under rule 16 the Administrator is empowered to create temporary post in the service and such temporary post shall be filled in consultation with the High Court from amongst the members of the Delhi Judicial Service.
Under rule 17 the Administrator may in consultation with the High Court fill substantive vacancies in the service by making temporary appointments thereto from amongst members of the Delhi Judicial Service.
Rule 8 speaks of seniority while the inter se seniority of members of the Delhi Judicial Service promoted to the service shall be the same as in the Delhi Judicial Service, the seniority of direct recruits vis a vis promotees shall be determined in the order or rotation of vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by 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.
352 The Administrator have appointed the writ petitioners and also the defendants by resorting to Rule 16 and Rule 7 respectively.
But when the seniority list was prepared some of the defendants who are direct recruits were ranked higher than the promoted officers who have been appointed several years earlier under Rule 16.
Hence the two writ petitions by the promoted officers contending that seniority between promotees and direct recruits must be determined in accordance with the respective dates of their continuous officiation as Additional District and Sessions Judges and that direct recruits who are appointed as Additional District and Sessions Judges after the promotees are so appointed cannot rank higher in seniority over the promotees and that promotees discharge identical functions and bear the same responsibilities as direct recruits and upon their appointments they constitute only common class and hence to give seniority to the direct recruits who are appointed later in point of time is violative of articles 14 and 16 of the Constitution.
Allowing the petitions in part, the Court ^ HELD : (Per majority) Per Chandrachud, C. J. 1:1.
The impugned seniority list, which is challenged by the promoted officers has been prepared on the basis that the rule of quota and rota will continue to apply notwithstanding the fact that appointments are made to the service under rules 16 and 17 of the Delhi Judicial Service Rules and is violative of articles 14 and 16 of the Constitution since the rule of quota and rota prescribed by the proviso to rule 7 would cease to apply when appointments are made to service under rules 16 and 17.
[378B C] 1:2.
But the provisions contained in proviso to rule 7 and rule 8(2) of the Delhi Judicial Service Rules 1970 do not by themselves suffer from any infirmity and therefore constitutionally valid.
[380A] 2:1.
When a rule or a section is part of an integral scheme it should not be considered or construed in isolation.
One must have regard to the scheme of the fasciculus of the relevant rules or sections in order to determine the true meaning of any one or more of them.
An isolated consideration of the provision leads to the risk of some other inter related provisions becoming otiose or devoid of meaning [365H: 366A] 2:2.
The negative language of the proviso to rule 7 makes it clear that it merely prescribes, by way of imposing a ceiling that the direct recruits shall not hold more than one third of the substantive posts.
The language of the proviso to rule 7 is certainly not felicitous and is unconventional if its intention was to prescribe a quota for direct recruits.
But the proviso must be read along with rule 8(2) since the two provisions are inter related.
Their combined reading yields but one result, that the proviso prescribes a quota of one third for direct recruits.
Otherwise there would neither be any occasion nor any justification for rotating vacancies between direct recruits and promotees [366C E] 2:3.
In the process of reading the rules as parts of a connected whole, rules 16 and 17 are equally relevant.
The position which emerges from the provisions contained in rules 16 and 17 is that it is permissible to create 353 temporary posts in the service and, even substantive vacancies in the service can be filled by making temporary appointments.
The two fold restriction on this dual power is that the High Court must be consulted and such appointments must be made from amongst the promotees only.
If temporary appointments to the service either in temporary posts or in substantive vacancies can be made within the framework of the rules and have to be made, if at all from amongst the promotees and promotees only, the quota rule contained in the proviso to rule 7 must inevitably breakdown when such appointments are made, the simple reason being that direct recruits cannot be appointed either to temporary post in the service to substantive vacancies in the service which are filled in by making temporary appointments.
Thus even though the proviso to rule 7 prescribes a quota of one third for direct recruits, rules 16 and 17 permit the non observance of the quota rule in the circumstances stated in those rules.
[366F; 367A D] 3 : 1.
Normally, an ex cadre post means a post outside the cadre of posts comprised in a service.
Therefore all posts in the service whether permanent or temporary, are generally regarded as cadre posts.
But, regardless of the normal pattern of service rule rule 2 (b) has the limited effect of making every post in the service a cadre post, whether the post is permanent or temporary.
The inclusive clause contained in the second part of rule 2 (b) has to be read in the context of the first part of that rule and must take its meaning from what precedes it.
This provision is consequential to and in consonance with Rule 16.
Since it is permissible under Rule 16 to create temporary posts in the service, such posts are also regarded as cadre posts.
It would have been anomalous to treat a post in the service as an ex cadre post merely for the reason that the post is temporary.
[367H; 368A B; 367G] Therefore, every promotee who holds the post of an Additional District and Sessions Judge in the service is the holder of a cadre post, whether the post is permanent or temporary direct recruits hold cadre post in all events because, they can only be appointed to substantive post in the service on a permanent basis.
Rules 16 and 17 forbid their appointments to temporary post in the service or to substantive vacancies in the service on a temporary basis.
[368C D] 3 : 2.
Rule 2 (d) which provides that a member of the service means a person appointed in substantive capacity to the service under the provisions of the rules shows that two conditions must co exist in order that a person can become a member of the service.
Firstly, his appointment has to be in a substantive capacity and secondly, the appointment has to be to the service, that is to a post in the service.
Persons who hold appointments bearing designations similar to the designations of the posts comprised in the service cannot, for that reason alone become members of the service.
It is only when they are appointed in a substantive capacity to a post in the service, that they become members of the service.
[368E G] 3 : 3.
By the definition contained in rule 2 (d), the membership of the service is limited to persons who are appointed in a substantive capacity to the service.
By the second part of rule 2 (b), if read in an extended sense every temporary post which carries the same designation as that of any of the post 354 specified in the schedule is a cadre post whether such post is comprised in the service or not.
Such posts and the posts specified in the Schedule will together constitute the cadre under rule 2 (b).
[369B C] 4 : 1.
Whenever the rules provide for recruitment to a service from different sources, there is no inherent infirmity in prescribing a quota for appointment of persons drawn from those sources and in working out the rule of quota by rotating the vacancies as between them in a stated proportion.
Therefore rule 8 (2) cannot be held to be unconstitutional merely because it reserves one third of the vacancies in the service for direct recruits and provides that the first available vacancy in the service will be filled in by a direct recruit, the next two by promotees and so on.
[369G; 370B] Mervyan Coutinho vs Collector of Customs, Bombay, ; ; S.C. Jaisinghani vs Union of India, ; , Bishan Sarup Gupta vs Union of India, ; ; A.K. Subraman vs Union of India, [1975] 2 SCR 979 V.B. Badami vs State of Mysore, [1976] 2 SCC 901 and Paramjit Singh Sandhu vs Ram Rakha, ; ; referred to.
4 : 2.
However, there being instances wherein though the provision of rule or a section is not invalid, the manner in which that provision is implemented in practice leads to the creation of disparities between persons who, being similarly circumstanced are entitled to equal treatment.
The provisions of rule 8 (2) must therefore be applied carefully and in such a manner as not to lead to the violation of the guarantee of equality and equal opportunity contained in articles 14 and 16 of the Constitution by ascertaining as to which of the promotees can be regarded as belonging to the same class as the direct recruits.
[370C D] 4 : 3.
The pre requisite of the right to inclusion in a common list of seniority is that all those who claim that right must, broadly, bear the same characteristics.
The mere circumstance that they hold posts which carry the same designation will not justify the conclusion that they belong to the same class.
Persons who are appointed or promoted on an ad hoc 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 later class posts are permanent or temporary.
The rules in the instant case do not require that persons belonging to former category have to satisfy any particular prescription like consultation with the High Court.
[370E F] 5 : 1.
There is no provision in the Rules which requires that ad hoc appointments must also be made in accordance with any set formula.
The courtesy shown by the authorities to the High Court when certain appointments are made is one thing and the obligation imposed by the rules on the authorities that the High Court shall be consulted when certain appointments are made is another.
Indeed, there is a distinction between the process of consultation with the High Court and the screening of the promotees done by the High Court, may be at the instance of the authorities, when their names are considered for appointment as Additional District and Sessions Judge on an ad hoc, fortuitous 355 or stop gap basis.
Thus, persons belonging to the Delhi Judicial Service who are appointed to temporary posts of Additional District and Sessions Judge on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement constitute a class which is separate and distinct 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 of promotees cannot be included in the list of seniority of officers belonging to the service.
[370H; 371A D] 5:2.
However, in the matter of seniority no distinction can be made between direct recruits who are appointed to substantive vacancies in the service on the recommendation of the High Court under rule 5 (2) and the promotees who are appointed in consultation with the High Court to posts in the service under rules 16 and 17.
Promotees who are appointed to the service under either of these two rules must be considered as belonging to the same class as direct recruits appointed under rule 5 (2).
They perform similar functions, discharge identical duties and bear the same responsibilities as direct recruits.
They are appointed on a regular basis to posts in the service in the same manner as direct recruit are appointed, the only distinction being that whereas the latter are appointed on the recommendation of the High Court, promotees are appointed in consultation with the High Court Exclusion from the seniority list of those promotees who are appointed to posts in the service, whether such appointment is to temporary posts or to substantive vacancies in a temporary capacity will amount to a violation of the equality rule since, thereby, persons who are situated similarly shall have been treated dissimilarly in a matter which constitutes an important facet of their career.
[371E H; 372A] 5:3.
In situations resulting in the suspension of the rule of 'quota and rota ', it is difficult to evolve an equitable rule for determining seniority between direct recruits on the one hand and promotees who are appointed under rules 16 and 17 on the other which will cause no hardship of any kind to any member of the service.
Therefore, the attempt has to be made to minimise, as far as possible, the inequities and disparities which are inherent in a system which provides for recruitment to the service from more than one source by keeping in mind one guiding principle, namely that the classification is gloss on the right to equality and to ensure that classification is made on a broad, though rational, basis so as not to produce the self defeating result of denying equality to those, who in substance, are situated similarly.[374C E] 6 Since the rule of quota and rota ceases to apply when appointments are made under rules 16 and 17, the seniority of direct recruits and promotees appointed under those rules must be determined according to the dates on which direct recruits are appointed to their respective posts and the dates from which the promotees have been officiating continuously either in a temporary post created in the service or in substantive vacancies to which they were appointed in a temporary capacity.
[375F G] S.B. Patwardhan vs State of Maharashtra, ; ; applied; Baleshwar Dass vs State of U.P., [1981] 1 SCR 449 distinguished; A. Janardhana vs Union of India, ; ; followed Joginder Nath vs Union of India, ; ; held inapplicable.
356 Per Sabyasachi Mukharji, J. 1:1.
The proviso to rule 7 merely provides that in case in an year there is vacancy for recruitments from the Bar as well as by promotion more than one third of substantive posts should not be filled in by direct recruitment, and nothing more and therefore it cannot be said that there is any quota of Bar recruits of one third.
The rule does not say that one third of direct recruits must for each year be one third of the recruitments made.
It puts a ceiling on number of Bar recruits in an year where Bar recruits are available and willing to be appointed.[384C E] 1:2.
Sub rule (2) or the makers of Sub rule (2) of Rule 8 presumed and assumed a factual position that quotas of vacancies have been reserved for both categories by Rule 7 which is really not a fact Rule 7 does not reserve any quota for either of the categories Rule 7, 0.4 provides for ceiling of direct recruits by providing that in case there were recruitments from the Bar as well as by promotions in such a case Bar recruits would not be more than one third of the substantive posts in the service.
[384H: 385A B] 2:1.
It is well settled that breft of anything where a service consists of recruitments made from two different sources and the rules and regulations provide for their recruitment and their rights, inter se, primarily and essentially those rights have to be adjusted within the scheme of the rules though it might in some cases lead to certain amount of imbalances or injustices because a service is built on various considerations and various factors induce the legislature or the rule making authority to induce different and diverse knowledge, diverse aptitudes and requirements needed for running of the service.
The legislature or the rule making authorities have better knowledge and better capacities to adjust those factors.[385D F] 2:2.
Rule 8 (2) proceeds on the misconception that there is quota fixed for direct recruits, which rule 7 does not.
Rule 8 (2) cannot on plain literal meaning also be construed or interpreted to mean that it was deemed by the legislature and the rule making body to engraft any quota.
There is no deemed quota, if that was the intention then the rule would have said so.
The rule is silent and proceeds on wrong assumption Therefore, the rule should be given effect to in so far as it can be without reading any quota for the subsequent years.[384E F] Mervyn Coutinho & Ors.
vs Collector of Customs Bombay & Ors ; ; S.C. Jaisinghani vs Union of India & Ors., [1967] 2 SCR p. 703, Chandra mouleshwar Prasad vs Patna High Court & Ors., ; ; V.B. Badamai Etc.
vs State of Mysore & Ors.
, [1976] 1 SCR 815=2 SCC 901; and Bishab Sarup Gupta vs Union of India & Ors., [1975] Suppl.
SCR 491; held inapplicable.
357 Joginder Nath and Ors.
vs Union of India & Ors.
,[1975] 2 SCR 553 referred to.
Service jurisprudence in India has developed in a peculiar way.
It has sought to infuse both fresh blood and old experience but somehow our administrators did not for a see the need for expanding administration and the personal necessary for this expansion, as a result in making appointments and even granting promotions, there has been a good deal of ad hoc arrangements crating in practically every branch of administration feeling of discontent and misunderstanding between promotees and direct recruits, and damaging the friendly atmosphere which should prevail among the members of the administration, if administration has to remain a vehicle of social progress and transformation which the Indian administration must, in view of the very great possibility and the transitory nature through which it is passing in spite of the severe personal and economic hardships that the member of the administration go through.
[388H; 389A C] 3:2.
In Baleshwar Dass & Ors.
vs State of U.P. & Ors.
[1981]1.
SCR. 449, the Supreme Court noted that a person is said to hold a post in a substantive capacity when he holds it for an indefinite period, especially of long duration in contradistinction to a person who holds it for a definite or a temporary period or holds that on probation and subject to confirmation.
If the appointment was to post and the capacity in which the appointment was to be made was of indefinite duration, if the proper authority had been consulted and had approved, if the tests prescribed have been taken and passed, if probation has been prescribed, and has been approved it can be said that the post was held by the incumbent in a substantive capacity.
Applying these tests to the facts and circumstances of this case dealing with the officers holding the post for a long time there is no doubt that the petitioners officers have held the positions in substantive capacities [392G H; 393A B] Further by reason of rule 2 (b) and rule 2 (d) the petitioners being holders of temporary post in substantive capacities are holding 'cadre posts ' and are also members of the Service.
Appointment in a substantive capacity is certainly different from appointment to a substantive post.
Therefore the holders of substantive posts i.e. the 12 posts originally at the inception of service and 22 posts now, alone are not members of the service.
All incumbents holding either substantive posts or temporary post in substantive capacities are members of the service in the context of the present rule.
[393C E] S.B. Patwardhan & Ors.
vs State of Maharashtra & Ors., [1977] 3 SCR p. 775; Rajendra Narain Singh & Ors.
vs State of Bihar & Ors,.[1980] 3 SCR 450; A. Janardhana vs Union of India & Ors.
, ; at 627; and Baleshawr Dass & Ors.
vs State of U.P. & Ors.
[1981] 1 SCR 449; referred to.
The principles of harmonious construction must be accepted so that all the rules are rendered operative and one does not make the other rule nuga 358 tory.
In the context of the present circumstances rule 7 can have only application to recruitments to the substantive posts in the service.
Rule 7 provides two different sources of recruitment and without fixing any actual quota.
but a ceiling that not more than one third of the substantive posts be held by direct recruitments.
Rule 7 and 8 does not exist in isolation and must be read with the other particularly rule 16.
Rule 16 is a rule of relaxation or an additional rule of recruitment providing for temporary posts being filled up in addition to the substantive posts.
The effect of the creation of temporary posts is to expand the area of membership of the service.
As the filling of the temporary posts under rule 16 is confined to recruitment from the members of Delhi Judicial Service Rule 7 cannot be made applicable for the recruitment to temporary posts.
Therefore, there is no quota rule applicable with regard to temporary posts.
[393F H] 4:1.
Assuming that proviso to rule 7 (b) provides for a quota of one third for direct recruits, rule 16 (1) which empowers the administrator to create temporary posts in the service read with rule 16 (2) which provides that temporary posts shall be filled in, in consultation with the High Court from amongst the members of the Delhi Judicial Service either constitutes an exception to the quota rule or in the alternative proceeds on the basis of realization or abrogation of quota rule.
By Rule 16 (2) a direct recruit cannot be appointed to a temporary post.
In other words, only promotees can be appointed to temporary post.
If the source of recruitment to temporary posts is one and one only namely, the members of the Delhi Judicial Service, no question of applying the quota rule can possibly arise.
The quota rule can have application only if there is more than one source of recruitment as envisaged by rule 16 (1) and if such posts have been filled in as it appears to have been done here in consultation with the High Court from amongst members of Delhi Judicial Service as required under rule 16 (2) of the rules, quota rule assuming that there is any, cannot apply to such appointments.
The validity of such appointments is not open to the exception that these violate the quota rule, if any.
[394F H; 395A B] 4:2.
As between direct recruits on the one hand and the members of the Delhi Judicial Service who were appointed in substantive capacity to temporary posts of Additional District and Sessions Judge on the other hand, the seniority must be governed by the rules of continuous officiation in the cadre post i.e. a direct recruit who is appointed in a substantive capacity to a temporary post of Additional District and Sessions Judge cannot and should not rank higher than the latter in the list of seniority, if a direct recruit is appointed after a member of the Delhi Judicial Service thus promoted he would rank lower in seniority than the latter.
[395D E] 4:3.
An appointment on probation is not a jurisprudential sine qua non for absorption into the services, though normally and generally various rules of different services make such provisions as rule 12 (2) here.
During the pendency of the Writ Petitions some of the promotees were placed on probation retrospectively by different orders.
Such probations are meaningless formalities.
In the 359 instant case, the placement of promotees on probation has not been very strictly followed for which the promotees cannot suffer.
[396G H] 4:4.
It cannot be said that the petitioners were not appointed regularly in accordance with the qualifications laid down under rule 7 (a).
In fact the selections were made by the full court of the High Court and appointments were made on merit cum seniority basis.
[397B C] M. Verraian Chowdhary & 42 Ors.
vs The Government of A.P. & 87 Ors.
C. A. No. 2030 of 1981; S.P. Gupta etc.
vs Union of India & Ors.
, [1981] Supp.
SCC 87, held inapplicable.
OBSERVATION [One should insist that Government must abolish this system of making appointments from two different sources in ad hoc manner.
If appointments have to be made from two different sources then the authorities should so plan that recruits come from two different sources in time and officers from one source are not required to function substantively and effectively in the jobs which are intended to be performed by recruits of other source and face the prospect of being either pushed back or thrown out.] [398G H]
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4835.txt
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Appeal No. 25 of 1952.
Appeals from the Judgment and Order dated the 10th day of January, 1952, of the High Court of Judicature of Travancore Cochin at Ernakulam (Kunhiraman C.J. and Subra mania Iyer J.) in Original Petitions Nos. 4, 23and 24 of 1951 respectively.
T.N. Subramania Iyer, Advocate General of Travancore Cochin, (T.R. Balakrishna lyer and M.R. Krishna Pillai, with him) for the State of Travancore Cochin.
N.C. Chatterjee (C.R. Pattabhirarnan, with him) for the respondent in Civil Appeal No. 25 of 1952.
C. R. Pattabhiraman for the respondent in Civil Appeal No. 28 of 1952.
N.C. Chatterjee '(Thomas Vellappally, with him) for the respondent in Civil Appeal No. 29 of 1952.
M. C. Setalvad, Attorney General for India, and C.K. Daphtary, Solicitor General of India (G.N. Joshi, with them) for the Union of India.
October 16.
The Judgment of the Court was delivered by PATANJALI SASTRI C.J.
These are connected appeals from the judgment and order of the High Court of Travancore Cochin quashing the assessments under the United State of Travancore and Cochin Sales Tax Act (No. 11 of 1125 M.E.) (hereinafter referred to as "the Act") on the respond ents on the turnover of the sales of the commodities (coif products in C.A. 25, lemon grass oil in C.A. 28 and tea in C.A. 29) in which they respectively deal.
The dealings followed more or less the same pattern in all the cases and consisted of export sales of the respec tive commodities to foreign buyers on c.i.f. or f.o.b. terms as the case may be.
The respondents in each case claimed exemption from assessment in respect of the sales effected by them on the ground, inter alia, that such sales took place "in the 'course of the export of the goods out of the territory of India" within the meaning of article 1115 286(1) (b) of the Constitution.
The Sales Tax Authorities rejected the contention as, in their view, the sales were completed before the goods were shipped and could not, therefore, be considered to have taken place in the course of the export.
Thereupon the respondents by separate petitions applied to the High Court of the United State of Travancore and Cochin (hereinafter referred to as the State) under article 226 of the Constitution for issue of writs of certiorari and prohibition quashing the assessments made On them and pro hibiting such assessment in future.
The applications were heard, along with nine other applications for similar re liefs by dealers in cashew nuts, by a Division Bench (Kunhi raman C.J. and Subramania Iyer J.) who upheld the claim of exemption and quashed the assessment orders in respect of the transactions subsequent to the commencement of the Constitution.
From that decision the State has preferred appeals in all the cases on a certificate granted by the High Court under article 132 (1) of the Constitution.
As the appeals involved important questions of law which may have a bearing on the sales tax legislation of the various States in India, this Court directed notice of these proceedings to the Attorney General for India and the Advo cates General of those States, and they have intervened and participated in the debate at the hearing of these appeals.
When the argument had proceeded for some time, it was discovered that the material facts relating to the course of dealings in cashew nuts, which were more complex in charac ter, had not been clearly ascertained and consequently the relative appeals were remitted to the High Court for find ings on certain points agreed upon by the parties.
These three appeals were, however, fully heard as they were found to admit of disposal on the materials on record.
Article 286(1), on which the respondents found their claim to exemption, runs thus: 1116 No law of a State shall impose, or authorise the imposi tion of, a tax on the sale or purchase of goods where such sale or purchase takes place.
(a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
Explanation.
For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consump tion in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
On the scope and meaning of clause (b), the learned Judges expressed their view as follows : "The words 'in the course of ' make the scope of this clause very wide.
It is not restricted to the point of time at which goods are imported into or exported from India.
The series of transactions which necessarily precede export or import of goods will come within the purview of this clause.
Therefore, while in the course of that series of transactions, the sale has taken place, such a sale is exempted from the levy of sales tax.
The sale may have taken place within the boundaries of the State.
Even then sales tax cannot be levied if the sale had taken place while the goods were in the course of import into India or in the course of export out of India.
We are stressing this point because both parties in what we may describe as the cashew nut cases entered into a lengthy discussion as to the exact point of time when the sale became completed and as to the exact place where the goods were when the sale became a completed transaction.
" On this interpretation, local purchases "made for the purpose of export" were held by the learned Judges to be "integral parts of the process of exporting".
In support of this construction the learned Judges referred 1117 to the debates in the Constituent Assembly on clause 264 A of the draft Constitution which corresponded to article 286 and quoted from the speech of one of the members who unsuc cessfully moved an amendment defining export as meaning the last transaction and import as meaning the first transac tion.
In view of the wide construction thus placed upon clause (b) of article 286 (1), the arguments before us ranged over a large field, and as many as four different views as to its scope and meaning were pressed upon us for our acceptance : (1) The exemption is limited to sales by export and purchases by import, that is to say, those sales and pur chases which occasion the export or import as the case may be, and extends to no other transactions however directly or immediately connected, in intention or purpose, with such sales or purchases, and wheresoever the property in the goods may pass to the buyer.
This is the view put forward on behalf of the State of Madras.
The Advocate General thought that a State could not impose sales tax though title passed within State limits while the goods were still under trans port on the high seas and no question of exemption could therefore arise.
He said, however, that no such ease had actually arisen.
(2) In addition to the sales and purchases of the kind described above, the exemption covers the last purchase by the exporter and the first sale by the importer, if any, so directly and proximately connected with the export sale or import purchase as to form part of the same transaction.
This view was sponsored ' by the Attorney General who was also inclined to think, as advised at the moment, that sales or purchases made while the goods were on the high seas would be exempt, but he would prefer not to go into the wider question, because, whatever view was taken, sales such as those involved in the present cases must, in any event, be exempt.
(3) The exemption covers only those sales and purchases under which the property in the goods 1118 concerned is transferred from the seller to the buyer during the course of the transit, that is, after the goods begin to move and before they reach their foreign destination.
This view is supported by the State of Bombay and certain other States.
(4) The view which found favour with the learned Judges of the High Court in the passage already extracted.
It will be seen that the construction first mentioned is the narrowest and the last mentioned the widest.
We are clearly of opinion that the sales here in ques tion, which occasioned the export in each case, fall within the scope of the exemption under article 286(1)(b).
Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export.
A sale by export thus involves a series of integrated activi ties 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.
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 constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other.
Assuming without deciding that the property in 'the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the Sales Tax Authorities, the sales must, never theless, be regarded as having taken place in the course of the export and are, therefore, exempt under article 286(1)(b).
That clause, indeed, assumes that the sale had taken place within the limits of the State and exempts it if it took place in the course of the export of the goods concerned.
In the foregoing discussion we have assumed that the word "sale" used in the Constitution has the same 1119 meaning as in the law relating to the sale of goods, but it has been suggested in the course of the argument that it imports a wider concept than the passing of title from the seller to the buyer which under that law is determined by highly technical rules based upon the presumed intention of the parties and liable to be displaced by their expressed intention.
We leave the point open as it is unnecessary for the purpose of these appeals to pronounce any opinion upon it.
It was said that, on the construction we have indicated above, a "sale in the course of export" would become practi cally synonymous with "export", and would reduce clause (b) to a mere redundancy, because article 246 (1), read with entry 83 of List I of the Seventh Schedule, vests legisla tive power with respect to "duties of customs including export duties" exclusively in Parliament, and that would be sufficient to preclude State taxation of such transactions.
We see no force in this suggestion.
It might well be argued, in the absence of a provision like clause (b) prohibiting in terms the levy of tax on the sale or purchase of goods where such sales and purchases are effected through the machinery of export and import, that both the powers of taxation, though exclusively vested in the Union and the States re spectively, could be exercised in respect of the same sale by export or purchase by import, the sales tax and the export duty being regarded as essentially of a different character.
A similar argument induced the Federal Court to hold in Province of Madras vs Boddu Paidanna and Sons(1) that both central excise duty and provincial sales tax could be validly imposed on the first sale of groundnut oil and cake by the manufacturer or producer as "the two taxes are economically two separate and distinct imposts".
Lest similar reasoning should lead to the imposition of such cumulative burden on the export import trade of this country which is of great importance to the nation 's economy, the Constituent Assembly may well have thought it necessary to exempt (1) 1120 in terms sales by export and purchases by import from sales tax by inserting article 286 (1) (b) in the Constitution.
We are not much impressed with the contention that no sale or purchase can be said to take place "in the course of" export or import unless the property in the goods is transferred to the buyer during their actual movement, as for instance, where the shipping documents are indorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped, or where such documents are cleared on payment, or on acceptance, by the Indian buyer 'before the arrival of the goods within the State.
This view, which lays undue stress on the etymology of the word "course" and formulates a mechanical test for the application of clause(b), places, in our opinion, too narrow a construction upon that clause, in so far as it seeks to limit its operation only to sales and purchases effected during the transit of the goods, and would, if accepted, rob the exemption of much of its useful ness.
We accordingly hold that whatever else may or may not fall within article 286 (1) (b), sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption and that is enough to dispose of these appeals.
Our attention was called, in the course of the debate, to various American decisions which hold that the power "to regulate" inter State commerce vested exclusively in the Congress by article 1 section 8(3) of the American Constitu tion (the Commerce clause) excludes by implication the States ' power of taxation only when the goods enter "the export.
stream", and until then such goods form part of "the general mass of property in the State" subject, as such, to its jurisdiction to tax, and that this principle was also applicable to cases arising under article 1 section 9(5) and section 10(2) (the Import Export clause), [see e.g., Empresa Siderurgica vs Merced Co.(1)].
These clauses (1) ; 1121 are widely different in language, scope and purpose, and a varying body of doctrines and tests have grown around them interpreting, extending or restricting, from time to time, their operation and application in the context of the ex panding American commerce and industry, and we are of opin ion that not much help can be derived from them in the solution oil the problems arising under article 286 of the Indian Constitution.
It remains only to point out that the use made by the learned Judges below of the speeches made by the members of the Constituent Assembly in the course of the debates on the draft Constitution is unwarranted.
That this form of ex trinsic aid to the interpretation of statutes is not admis sible has been generally accepted in England, and the same rule has been observed in the construction of Indian stat utes see Administrator General of Bengal vs Prem Nath Mallick(1).
The reason behind the rule was explained by one of us in Gopalan 's case(2) thus : "A speech made in the course of the debate on a bill could at best be indicative of the subjective intent of the speaker, but it could not reflect the inarticulate mental process lying behind the majority vote which carried the bill.
Nor is it reasonable to assume that the minds of all those legislators were in accord," or, as it is more tersely put in an American case "Those who did not speak may not have agreed with those who did; and those who spoke might differ from each other United States vs Trans Missouri Freight Association(3). ' ' This rule of exclusion has not always been adhered to in America, and sometimes distinction is made between using such material to ascertain the purpose of a statute and using it for ascertaining its meaning.
It would seem that the rule is adopted in Canada and Australia see Craies on Statute Law, 5th Ed., p. 122.
(1) (895) 22 I.A. Io7,118.
(2)[1950] S.C.R.88.
(3) 169 U.S.290,318.
144 1122 In the result, agreeing with the conclusion of the High Court, though on different grounds, we dismiss the appeals with costs.
Appeals dismissed.
Agent for the respondent in C.A. No. 25 of 52: M.S.K. Sastri.
Agent for the respondent in C.A. No. 28 of 52: Sardar Bahadur.
Agent for the respondent in C.A. No. 29 of 52: V.P.K. Nambiyar.
Agent for the Interveners (Union of India, State of Bombay, State of Madras, State of Hyderabad, State of Punjab, State of MysOre, and State of Orissa): P.A. Mehta.
Agent for the State of Uttar Pradesh: C.P. Lal.
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Whatever else may or may not fall within article 286 (1) (b) of the Constitution, sales and purchases which themselves occasion the export or the import of the goods as the case may be, out of or into, the territory of India come within the exemption.
The view that no sale or purchase can be said to take place in the course of export or import unless the property in the goods is transferred to the buyer during their actual move ment, as instance, where the shipping documents ,are in dorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped or where such documents are cleared on payment, or on acceptance, by the Indian buyer before the arrival of the goods within the State, puts too narrow a construction upon article 286 (1)(b) and is not correct.
A sale by export involves a series of integrated activi ties 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.
Such a sale cannot be dissociated from the export without which it cannot be effectuated and the sale and 'the result ant export form parts of a single transaction.
Of these two integrated activities which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other.
Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed, within the State before the goods commenced their journey from the State, the sales must be regarded as having taken place in the course of the export and therefore exempt under article 286 (1) (b).
The Commerce clause (article 1, section 8 (3)) and the Import Export clauses [article I, sections9 (5) and 10 (2)] of the American Constitution are widely different in lan guage, scope and purpose, and a varying body of doctrines and tests have grown around them interpreting, extending or restricting from time to time, their operation and applica tion in the context of the expanding American commerce and industry and much help cannot be derived from them in the solution of the problems arising under article 286 of the Indian Constitution.
Speeches made by the members of the Constituent Assembly in the course of the debates on the draft Constitution cannot be used 'as aids for interpreting the Constitution.
Administrator General of Bengal vs Prem Nath Mullick [22 I.A. 107 at 118], A.K. Gopalan vs The State [(1950) S.C.R. 88], United States vs Trans Missouri Freight Association at 318] referred to.
143 1114
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Appeal No. 650 of 1957.
Appeal from the judgment dated July 13, 1956, of the Patna High Court in Miscellaneous Judicial Case No. 665 of 1954.
R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
A. V. Viswanatha Sastri and R. C. Prasad, for the respondent.
November 29.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal by the Commissioner of Income tax with a certificate against the judgment and order of the High Court at Patna answering two questions of law referred to it under section 66(1) of the Income tax Act by the Tribunal, in the negative.
Those questions were: "(1) Whether in the circumstances of the case assessment proceedings were validly initiated under section 34 of the Indian Income tax Act? (2) If so, whether in the circumstances of the case the amount received from interest on arrears of agricultural rent was rightly included in the income of the assessee ?" The assessee, the Maharaja Pratapsingh Bahadur of Gidhaur, had agricultural income from his zamindari for the four assessment years 1944 45 to 1947 48.
In assessing his income to income tax, the authorities did not include in his assessable income interest received by him on arrears of rent.
This was presumably so in view of the decision of the Patna High Court.
When the Privy Council reversed the view of law taken by the Patna High Court in Commissioner of Income tax vs Kamakhya Narayan Singh (1), the Income tax Officer issued notices under section 34 of the (1) 762 Indian Income tax Act for assessing the escaped income.
These notices were issued on August 8, 1948.
The assessments after the returns were filed, were completed on August 26, 1948.
Before the notices were issued, the Income tax Officer had not put the matter before the Commissioner for his approval, as the section then did not require it, and the assessments were completed on those notices.
Section 34 was amended by the Income tax and Business Profits Tax (Amendment) Act, 1948 (No. 48 of 1948), which received the assent of the Governor General on Sep tember 8, 1948.
The appeals filed by the assessee were disposed of on September 14 and 15, 1951, by the Appellate Assistant Commissioner, before whom no question as regards the validity of the notices under section 34 was raised.
The question of the validity of the notices without the approval of the Commissioner appears to have been raised before the Tribunal for the first time.
In that appeal, the Accountant Member and the Judicial Member differed, one holding that the notices were invalid and the other, to the contrary.
The President agreed with the Accountant 'Member that the notices were invalid, and the assessments were ordered to be set aside.
The Tribunal then stated a case and raised and referred the two questions, which have been quoted above.
The High Court agreed with the conclusions of the majority, and the present appeal has been filed on a certificate granted by the High Court.
Section 34, as it stood prior to the amendment Act No. 48 of 1948, did not lay any duty upon the Income tax Officer to seek the approval of the Commissioner before issuing a notice under section 34.
The amending Act by its first section made sections 3 to 12 of the amending Act retrospective by providing "sections 3 to 12 shall be deemed to have come into force on the 30th day of March, 1948. .
Section 8 of the amending Act substituted a new section in place of section 34, and in addition to textual changes with which we are not concerned, also added a proviso to the following effect : "Provided that 763 (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 that it is a fit case for the issue of such notice.
" The question is whether the notices which were issued were rendered void by the operation of this proviso. ' The Commissioner contends that section 6 of the , particularly cls.
(b) and (c) saved the assessments as well as the notices.
He relies upon a decision of the Privy Council in Lemm vs Mitchell (1), Eyre vs Wynn Mackenzie (2) and Butcher vs Henderson (3) in support of his proposition.
The last two cases have no bearing upon this matter; but strong reliance is placed upon the Privy Council case.
In that case, the earlier, action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation, had already ended in favour of the defendant and no appeal therefrom was pending, and it was held that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the same act, unless the statute expressly and by definite words gave him that right.
The Privy Council case is thus entirely different.
No doubt, under section 6 of the it is provided that where any Act repeals any enactment, then unless a different intention appears, the repeal shall not affect the previous operation of any enactment so repealed or anything duly done thereunder or affect any right, obligation or liability acquired, accrued or incurred under any enactment so repealed.
It further provides that any legal proceedings may be continued or enforced as if the repealing Act had not been passed.
Now, if the amending Act had repealed the original section 34, and merely enacted a new section in its place, the repeal might not have affected the operation of the original section by virtue of section 6.
But the amending Act goes further than this.
It (1) ; (2) (3) 764 repeals the original section 34, not from the day on which the Act received the assent of the Governor General but from a stated day, viz., March 30, 1948, and substitutes in its place another section containing the proviso above mentioned.
The amending Act provides that the amending section shall be deemed to have come into force on March 30, 1948, and thus by this retrospectivity, indicates a different intention which excludes the application of section 6.
It is to be noticed that the notices were all issued on August 8, 1948, when on the statute book must be deemed to be existing an enactment enjoining a duty upon the Income tax Officer to obtain prior approval of the Commissioner, and unless that approval was obstained, the notices could not be issued The notice were thus invalid.
, The principle which was applied by this Court in Venkatachalam vs Bombay Dyeing & Mfg. Co. Ltd. (1) is equally applicable here.
No question of law was raised before us, as it could not be in view of the decision of this Court in Narayana Chetty vs Income tax Officer (2), that the proviso was not mandatory in character.
Indeed, there was time enough for fresh notices to have been issued, and we fail to see why the old notices were not recalled and fresh ones issued.
For these reasons, we are in agreement with the High, Court in the answers given, and dismiss this appeal with costs.
A appeal dismissed.
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The appellant who had agricultural income from his Zamindari was assessed to income tax for the four assessment years, 1944 45, to 1947 48.
The income tax authorities did not include in his assessable income, interest received by him on arrears of rent, in view of a decision of the Patna High Court, but subsequently this view of law was reversed by the Privy Council.
On August 8, 1948, the Income tax Officer issued notices under section 34of the Indian Income tax Act, 1922, for assessing the escaped income.
Before the notices were issued the Income tax Officer had not put the matter before the Commissioner for his approval as the section then did not require it and the assessments were completed on those notices.
In the meantime, certain amendments were made to the Indian Income tax Act by Act 48 of 1948, which received the assent of the Governor General on September 8, 1948.
The Amending Act substituted a new section in place of section 34, which among other changes, added a proviso to the effect that "the Income tax Officer shall not issue a notice. unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice", and also made it retrospective by providing that the new section "shall be deemed to have come into force on the 30th day of March, 1948".
The question was whether the notices issued by the Income tax Officer on August 8, 1948, without the approval of the Commissioner, were rendered void by reason of the operation of the amended section 34.
The Commissioner claimed that section 6 of the , saved the assessments as well as the notices.
Held, that section 6 of the , was in applicable as the Amending Act of 1948 indicated a different intention within the meaning of that section, inasmuch as the amended section 34 of the Indian Income tax Act, 1922, provided that it shall be deemed to have come into force on March 30, 1948.
Lemm vs Mitchell, ; , distinguished, 761 Held, further, that the notices issued by the Income tax Officer on August 8, 1948, and the assessments based on them were invalid.
Venkatachalam vs Bombay Dyeing & Mfg. Co., Ltd., ; , applied.
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1031.txt
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Appeal No. 2203 of 1966.
Appeal by special leave from the judgment and order dated November 8, 1965 of the Judicial Commissioner 's Court, Tripura in Writ Petition No. 27 of 1961.
M. K. Ramamurthi and Shyamala Pappu, for the appellant.
V. A Seyid Muhammad, section P. Nayar and B. D. Sharma, for the,respondents.
640 The Judgment of the Court was delivered by Shah, J.
The appellant joined the Tripura Civil Service on October 30, 1949, and was posted as a probationer Divisional Purchasing Officer, Dharmnagar.
In 1953 the Tripura Civil Service was split into two cadres senior officers being absorbed as Sub Divisional Officers and junior officers as Sub Treasury Officers.
The appellant was absorbed as Sub Treasury Officer with effect from April 1, 1950.
On May 10, 1954, the appellant was appointed officiating Sub Divisional Officer with effect from September 10, 1953.
By order dated May 12, 1954, the appellant was reverted to the post of Sub Treasury Officer with effect from May 6, 1954.
The appellant made several representations to the Chief Commissioner but without success.
The appellant was suspended by order dated May 6, 1957, for failure to obey the orders of the Additional District Magistrate and he was dismissed with effect from July 3, 1958, by the order of the Chief Commissioner.
The appellant moved a petition in the Court of the Judicial Commissioner at Tripura challenging the orders of suspension and dismissal.
On February 19, 1960 the Court set aside the impugned orders.
By order dated November 7, 1960 the Chief Commissioner reinstated the appellant to the post of Superintendent of Surveys and by the same order reverted him to his substantive post of Sub Treasury Officer with retrospective effect, from June 7, 1957.
The appeal of the appellant to the President having been rejected, he moved a petition in the Court of the Judicial Commissioner for a writ quashing the orders dated May 12, 1954 and November 7, 1960.
The appellant contended that in order of reversion cannot be made to have retrospective operation.
The petition insofar as it relates to the first order was belated.
Again there is no ground for holding that retrospective operation was in fact given to that order of reversion.
By the order dated May 12, 1954 the appellant was reverted to the post of SubTreasury Officer, but the order did not state the date from which the order was to be effective.
In summarising the averments made in the petition, the Judicial Commissioner stated that the petitioner had alleged that the order dated May 12, 1954, was to have effect from May 6, 1954.
A copy of that petition is not filed in this Court and we are unable to accept, especially having regard to the terms of the order, that any retrospective operation was sought to be given.
In any event the Judicial Commissioner was justified in refusing to entertain any contention as to the validity of the order of reversion made nearly seven years before the date on which the petition was filed, 641 The second order dated November 7, 1960, passed by the Chief Commissioner consists of two parts (i) that the appellant be reinstated in the post of the Superintendent of Surveys with effect from the afternoon of May 7, 1957; and (ii) that the appellant be reverted to the substantive post of Sub Treasury Officer with retrospective effect from June 7, 1957.
The appellant, as already stated, was suspended on May 6, 1957.
The order of suspension and the order of dismissal which followed it were set aside by the Judicial Commissioner, and the Chief Commissioner therefore reinstated the appellant with effect from the afternoon of May 7, 1957 to the post occupied by the appellant on the date on which he was suspended.
But the appellant was not holding the post of Superintendent of Surveys substantively : he was merely officiating in that post.
He was therefore reverted with effect from June 7, 1957 to his substantive post.
The order was passed because the post was filled by another officer approved by the U.P.S.C. Counsel for the appellant relied upon the observations made by section R. Das, C.J., in Parshotam Lal Dhingra vs Union of India(1) : "But the mere fact that the servant has no title to the post or the rank and the Government has, by contract, express or implied, or under the rules, the right to reduce him to a lower post does not mean that an order of reduction of a servant to a lower post or rank cannot in any circumstances be a punishment.
The real test for determining whether the reduction in such cases is or is not by way of punishment is to find out if the order for the reduction also visits the servant with any penal consequences.
Thus if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or the stoppage or postponment of his future chances of promotion.
then that circumstance may indicate that although in form the Government had purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government has terminated the employment as and by way of penalty." These observations.
in our judgment, do not assist the appellant.
The order reverting the appellant from June 7, 1957, to his substantive post does not entail forfeiture of his pay or allowances or loss of seniority in his substantive rank or stoppage or postponement of his future chances of promotion, (1) , 863.
642 Counsel for the appellant urged that whenever a person is reinstated as from the date on which his services were terminated he must be restored to the same office which he was holding at the date of the termination of employment or suspension and must receive salary upto the date of reinstatement which that office carried.
We find no warrant for the submission.
If the appellant had not been suspended, it was open to the Chief Commissioner still to revert him to his substantive post.
We see no reason for holding that the Chief Commissioner could not do so when he reinstated the appellant.
There is no ground for thinking that the order was made maliciously.
The reason for reversion was that since June 7, 1957 another officer was occupying the post of the Superintendent of Surveys.
The post having been already filled, the appellant cannot claim that when he was reinstated lie should have been paid emoluments attached to the office of Sub Divisional Officer on the footing that he continued to occupy that office which he was holding in an officiating capacity.
The appeal therefore fails and is dismissed.
Having regard to the circumstances of the case there will be no order as to costs.
V.P.s.
Appeal dismissed.
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The appellant, who was a junior officer in the State service, was appointed as an officiating senior officer on May 10, 1954.
On May 12, 1954, an order was passed reverting him to the, post of junior officer.
On the ground that he refused to obey the order of reversion, on May 6, 1957 he was suspended, and ultimately dismissed.
The orders of the suspension and dismissal were set aside by the Court of Judicial Commissioner.
By order dated November 7.
1960, he was reinstated in the post of the senior officer which he was holding on the date of his suspension.
with effect from the afternoon of May 7, 1957.
By the same order, he was reverted to his substantive post of junior officer with retrospective effect from June, 7, 1957, as another officer was already occupying the post.
The appellant, thereupon, challenged both the orders dated May 12, 1954, and November 7, 1960, but the Judicial Commissioner dismissed the petition.
In appeal to this Court, HELD : (1) The order dated November 7, 1960 reverting the appellant to his substantive post did not entail forfeiture of the appellant 's pay or allowances, or loss of seniority in his substantive rank, or stoppage or postponement of his future chances of promotion.
The appellant could not claim the salary of the senior post from the date of suspension or dismissal till date of reinstatement, because, the appropriate authority, when reinstating the appellant could revert him, as from an earlier date, to his substantive post from the officiating post, provided the order was not passed mala fide.
[641 H; 642 B C] Parshotam Lal Dhingra vs Union of India, ; , referred to.
(2) There is nothing to show that any retrospective operation was given to the order dated May 12, 1954 In any event, the Judicial Commissioner was justified in refusing to entertain any contention as to its validity seven years after the order was passed.
[640 H]
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2754.txt
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Criminal Appeal No. 88 of 1954.
Appeal by Special Leave from the Judgment and Order dated the 7th January, 1954 of the Allahabad High Court in Criminal Appeal No. 377 of 1953 connected with Criminal Revision No. 461 of 1953 arising out of the Judgment and Order dated the, 17th November, 1952 of the Court of Additional Sessions Judge at Meerut in Session Trial No. 113 of 1952.
B.B. Tawakley, (K. P. Gupta, with him), for the appellant.
K.B. Asthana and C. P. Lal, for the respondent.
September 28.
The Judgment of the Court was delivered by BOSE J.
The only.
question here is about sen. tence.
74 584 The appellant Bed Raj and another, Sri Chand, were jointly charged with the murder of one Pheru.
The Sessions Judge convicted Bed Raj under section 304, Indian Penal Code, and sentenced him to three years ' rigorous imprisonment.
He acquitted Sri Chand.
I Bed Raj appealed to the High, Court and that Court, on admitting the appeal for hearing, issued notice to the appellant to show cause why the sentence should not be enhanced.
The appeal and the revision were heard together.
The appeal was dismissed and the High Court enhanced the sentence to ten years.
Now, though no limitation has been placed on the High Court 's power to enhance it is nevertheless a judicial act and, like all judicial acts involving an exercise of discretion, must be exercised along, well known judicial lines.
The only question before us is whether those lines have been observed in the present case.
The facts that have been found by the Sessions Judge and accepted by the High Court are to be found in the opening paragraph of the learned Sessions Judge 's judgment.
They are as follows: "Roop Chand, the son of Bed Raj accused, was removing the dung.
of the bullocks of Pheru deceased from an open space near his cattle shed.
Pheru protested to, the boy and turned down the basket in which the boy had put the dung.
The two accused who are brothers then came to the scene from their own cattle shed which was near by and there was an exchange of abuses between them and Pheru.
The accused Sri Chand then caught hold of Pheru by the waist and Bed Raj accused took out a knife and stabbed him in 3 or 4 places.
The knife was then left sticking in the neck of the deceased and the accused ran away".
The assault occurred about 8 o 'clock on the morning of the 23rd February 1952.
Pheru was removed to the hospital and the Medical Officer Dr. Fateh Singh examined him and found that he was suffering from shock.
He found three injuries on his person: 585 all "simple".
He gave the following description of them: right side lower part.
(2) Incised wound: 1 " x 1/3" X1/3" right deltoid region frontal and lower part above downward.
(3) Incised wound 1/2" X 1/6" X 1/4"Epigastric region".
He said "When Pheru was admitted in the hospital he was under shock but his condition was not dangerous.
When Pheru came he could speak.
He was not unconscious.
As he was under shock no report was made for recording his dying declaration.
I cannot give the definite cause of death.
I cannot tell if sucH an InjurY can cause death.
There was no Haemorrhage from Pheru 's neck after his arrival in my hospital.
Speaking:of the inJurieis, the doctor said "Injuries 2 and 3 on the person of Pheru which were incised wounds were not punctured.
It was not possible to inflict them from a sharp pointed weapon".
The appellant was also examined by the doctor and a slight simple injury, which could have; been caused by a simple blunt weapon, was discovered.
This indicates that there was a scuffle between the appellant and the deceased, in which the appellant was hit over the nose and, up to a point, bears out what the appellant says in his defence, namely that Pheru was beating the appellant 's son Rup Chand; he went there and tried to extricate Rup Chand; Pheru started beating him (the appellant) and he, the appellant, received a flat blow on the nose.
The depth of the injury on Pheru 's neck was I of an inch.
In this connection the doctor says "A knife can penetrate 1 1/2 or 2 inches in a case of deliberate stabbing".
Pheru died about 12 45 A.M. on the 24th February 1952, that is to say, about 16 or 17 hours after the assault.
The post mortem was conducted by another doctor, Dr. J. K. Dwivedi.
Describing the injury on the neck the only one we need consider as the other two were slight he said that clotted blood was present all round injury No, 1, and, that 586 "the:right side dome of pleura is punctured under injury No. 1 and clotted blood present all round it.
Upper lobe of right lung (appex) is punctured for 1/4" X 1/4" X 1/2".
Clotted blood present over the lung surface all round the punctured area.
A branch of the external jugular vein was divided in right side neck under injury No. I. Death was due to shock, and haemorrhage as a result of injury to neck".
In cross examination he said "It was possible and impossible also that the bleeding could be stopped.
Such injury as injury No. I are more likely to cause death".
After reviewing the evidence 'the learned Sessions Judge held "It is evident that the whole scene took just a few moments.
Both of the accused must have been in a moment of heat and before either of them could think of doing any act, the whole thing was over. .
That the injuries with the knife were likely to cause death is clear but they were caused at a time when the parties were in a heat and there was a sudden fight and no room for premeditation".
Because of this, and seeing that there was no reason to infer pre concert, he acquitted the other accused, and by reason of those circumstances he considered that three years would be sufficient punishment and sentenced the appellant accordingly.
This was on 17 11 1952.
The appellant filed an appeal to the High Court on 1.8 12 1952 and that Court thereupon issued notice to him to show cause why the sentence I should not be enhanced.
The High Court directed enhancement on 7 1 1954.
On the same day the State Government ordered the release of the appellant on probation, under section 2 of the U.P. Prisoners ' Release on Probation Act, 1938, for the full term of the sentence imposed by the Sessions Court.
We are not concerned with the State Government 's order except in so far ' as it indicates the view that that Government took of the antecedents and conduct in prison of the appellant, matters that are also relevant for consideration by a Court 587 when determining a, question of sentence ' a prisoner can only be released on probation under that Act if the State Government is satisfied "from his antecedents and his conduct in the prison that he is likely to abstain from crime and lead a peaceable life, if he is released from prison".
These facts were not known to the High Court when it made its order of enhancement ' but it is a matter relevant for our consideration now that the appeal is before us.
Now the High Court accept the findings of the Sessions Judge about the circumstances in which the offence took place.
They agree that the attack was not premeditated and that there was a sudden quarrel and that the blows were inflicted in the heat of passion,.
They also say that there was counter abuse and they notice the abrasion on the appellant 's nose.
Despite this they hold that ' "it is possible that this injury was received by the appellant in the attempt of the deceased to resist the attack made by the appellant.
There was therefore no fight '.
This is a very half hearted finding and ignores the fact that the benefit of all doubts must be given to the accused.
If it was only "possible" that the injury was due to Pheru 's attempt to ward off an attack by the appellant, then it must be equally "possible" that it was received in the course of a, scuffle.
The appellant very definitely says in his examination that there was a fight and the abrasion on his nose which the doctor says was caused by a blunt weapon, bears out his version that Pheru struck him with his fist.
The circumstances also indicate that there must have been a scuffle.
Why else should it be necessary for the second accused to come and hold him down by the waist? When villagers or any man for that matter, come to blows after hot words and an interchange of abuse, there is nearly always resistance to the initial attack.
Very rarely does a man "turn the other cheek".
It must also be remembered that the incident started with the use of force by Pheru.
It was he who took hold of the basket of cow dung and 588 overturned it.
That occasioned the quarrel, and the finding is that there was abuse and counter abuse.
It was then that the second accused rushed in and caught Pheru by the waist.
That accused was acquitted because there was nothing to suggest that that was done in aid of the appellant 's intention to assault Pheru and he was absolved of all intention to assault on his own account; and the finding is that even the appellant had no such intention till the last moment.
If that was the case, then why should the second accused rush in and hold Pheru by the waist? If he had no intention to assault on his own account and none to assist the appellant in his assault, the only other reasonable conclusion is that he tried to stop a fight.
It would be fair in the circumstances to reach that conclusion, for the accused is as much entitled to the benefit of any doubt when a co accused is acquitted as in any other case.
In any case, it was incumbent on the High Court to reach a more definite finding than the one given before deciding to enhance the sentence.
The only reason that the learned Judges give is that Pheru was unarmed and as the attack was made with a knife it cannot be said that the appellant did not act in a cruel or unusual manner.
Nevertheless, they uphold the finding that the offence falls under section 304, Indian Penal Code, and not under section 302.
A question of a sentence is a matter of discretion and it is well settled that when discretion has been properly exercised along accepted judicial lines, an appellate court should not interfere to the detriment of an accused person except for very strong reasons which must be disclosed on the face of the judgment; see for example the observations in Dalip Singh vs State of Punjab(1) and Nar Singh vs State of Uttar Pradesh (2).
In a matter of enhancement there should not be interference when the sentence passed imposes substantial punishment.
Interference is only called for when it is manifestly inadequate.
In our opinion, these principles have not been observed.
It is (1) ; , 156.
(2) ; , 241, 589 impossible to hold in 'the circumstances described that the Sessions Judge did not impose a substantial, sentence, and no adequate reason has been assigned by the learned High Court Judges for considering the sentence, manifestly inadequate.
In the circumstances, bearing all the considerations of this case in mind, we are of opinion that the appeal (which is limited to the question of sentence) should be allowed and that the sentence imposed by the High Court should be set aside and that of the Sessions Court restored.
Ordered accordingly.
|
A question of sentence is a matter of discretion and it is well settled that when discretion has been properly exercised along accepted judicial lines, an appellate court should not interfere to the detriment of an accused person except for very strong reasons which must be disclosed on the face of the judgment.
In a matter of enhancement there should not be interference when the sentence passed imposes substantial punishment.
Interference is only called for when it is manifestly inadequate.
In the circumstances and bearing all the considerations of the present case in mind it was impossible to hold that the Sessions Judge did not impose a substantial sentence.
The Supreme Court set aside the sentence imposed by the Court and restored that of the Sessions Judge as no adequate reason bad been assigned by the High Court for considering the sentence passed by the Sessions Judge as manifestly inadequate.
Dalip Singh vs State of Punjab ([1954] S.C.R. 145) and Nar Singh vs State of Uttar Pradesh ([1956] 1 S.C.R. 238), referred to.
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348.txt
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Civil Appeal No. 1 of 1954, and Civil Appeal No. 7 of 1954.
Appeals under article 132(1) of the Constitution of India from the Judgment and Order dated the 12th September, 1952, of the High Court of Judicature at Bombay in Civil Application No. 880 of 1952 and Miscellaneous Application No. 212 of 1952 respectively.
N.C. Chatterjee and U. M. Trivedi (H. H. Dalal and I. N. Shroff with them) for the appellants in Appeal No., I of 1954.
Rajinder Narain for the appellants in Civil Appeal.
No. 7 of 1954.
M. C. Setalvad and C.K. Daphtary (G. N. Joshi and Porus A. Mehta, with them) for the respondents in both the appeals.
Mach 18.
The Judgment of the Court was delivered by MUKHERJEA J.
These two connected appeals are directed against a common judgment of a division Bench of the Bombay High Court, dated the 12th of September, 1952, by which the learned Judges dismissed two petitions under article 226 of the Constitution presented respectively by the appellants in the two appeals.
1057 The petitioners in both the cases assailed the consti tutional validity of the Act, known as the Bombay Public Trusts Act, 1950 (Act XXIX of 1950), which was passed by the Bombay Legislature with a view to regulate and make better provisions for the administration of the public and religious trusts in the State of Bombay.
By a notification, dated the 30th of January, 1951, the Act was brought into force on and from the 1st of March, 1951, and its provisions were made applicable to temples, maths and all other trusts, express or constructive, for either a public, religious or charitable purpose or both.
The State of Bombay figures as the first respondent in both the appeals and the second respondent is the Charity Commissioner, appointed by the first respondent under section 3 of the impugned Act to carry out the provisions of the Act throughout the State of Bombay.
In one of the appeals, namely, Appeal No. 1 of 1954, the Assistant Charity Commissioner for the region of Baroda has been impleaded as the third respondent.
The appellant in Appeal No. I of 1954 is a Swetamber Murtipujak Jain and a resident of Vejalpar in the district of Punchmahals within the State of Bombay.
He is a Vahivatdar or manager of a Jain public temple or Derasar situated in the same village and the endowed properties appertaining to the temple are said to be of the value of Rs. 5 lakhs.
The petition, out of which this appeal arises, was filed by the appellant on the 29th of May, 1952, before the High Court of Bombay, in its Appellate Side, against the three respondents mentioned above, praying for the issue of a writ in the nature of mandamus or direction ordering and directing the respondents to forbear from enforcing or taking any steps for the enforcement of the Bombay Public Trusts Act, 1950,,or of any of its provisions and parti cularly the provisions relating to registration of public and religious trusts managed by the appellant and payment of contributions levied in respect the same.
The grounds urged in support of the petition were that a number of provisions of the Act convicted with the fundamental rights of the petitioner guaranteed under articles 25 and 26 of the Constitution and that the 1058 contribution levied on the trust was a tax which it was beyond the competence of the State Legislature to impose.
A similar application under article 226 of the Consti tution and Praying for almost the identical relief was filed by the appellants, in the other appeal, namely, Appeal No. 7 of 1954 before the High Court in its Original Side on the 4th of August, 1952.
The petitioners in this case purport to be the present trustees of the Parsi Punchayet Funds and Properties in Bombay registered under the Parsi Public Trusts Registration Act of 1936.
These properties constitute one consolidated fund and they are administered by the trustees for the benefit of the entire Parsi community and the income is spent for specified religious and charitable purposes of a public character as indicated by the various donors.
The petitioners, challenged the validity of the Bombay Public Trusts Act, 1950, substantially on the grounds that they interfered with the freedom of conscience of the petitioners and with their right freely to profess, practise and propagate religion and also with their right to manage their own affairs in matters of religion and thereby contravened the provisions of articles 25 and 26 of the Constitution.
The levy of contribution under section 58 of the Act was also alleged in substance and effect to be a tax on public, religious and charitable trusts, a legislation upon which it was beyond the competency of the State Legislature to enact.
As practically the same questions were involved in both the petitions, the learned Chief Justice of Bombay directed the transfer of the later petition from the Original Side to the Appellate Side of the High Court and both of them were heard together by a Division Bench consisting of the Chief Justice himself and Shah J.
Both the petitions were disposed of by one and the same judgment delivered on the 12th of September, 1952, and the learned Judges rejected all the contentions put forward on behalf of the respective applicants and dismissed the petitions.
The petitioners in both the cases have now come before us in appeal on the strength of certificates granted 1059 by the High Court under article 132(1) of the Constitution.
To appreciate the points that have been canvassed before us by the parties to these appeals, it may be convenient to refer briefly to the scheme and salient features of the impugned Act.
The object of the Act, as stated in the preamble, is to regulate and make better provisions for the administration of public, religious and charitable trusts within the State of Bombay.
It includes, within its scope, all public trusts created not merely for religious but for purely charitable purposes as well and extends to people of all classes and denominations in the State.
The power of superintendence and administration of public trusts is vested, under the Act, in the Charity Commissioner, who is to be appointed by the State Government in the manner laid down in Chapter II.
The State Government may also appoint such number of Deputy and Assistant Charity Commissioners as.
it thinks fit and these officers would be placed in charge of particular regions or particular trusts or classes of trusts as may be considered necessary.
Section 9, with which Chapter III of the Act beigins, defines what 'charitable purposes ' are, and sections 10 and 11 lay down that a public trust shall not be void on the ground of uncertainty, nor shall it fail so far as a religious and charitable purpose is concerned, even if a non charitable or non religious purpose, which is includ ed in it,.
cannot be given effect to.
Chapter IV provides for registration of public trusts.
Section 18 makes it obligatory upon the trustee of every public trust to which the Act applies, to make an application for the registration of the trust, of which he is the trustee.
In case of omission on the part of a trustee to comply with this provision, he is debarred under section 31 of the Act from instituting a suit to enforce any right on behalf of such trust in a court of law.
Chapter V deals with accounts and audit.
Section 32 imposes a duty upon every trustee of a public trust, which has been registered under the Act, to keep regular accounts.
Under section 33, these accounts are to be audited annually, in such manner as may be prescribed.
1060 Section 34 proscribes it to be the duty of the auditor to prepare balance sheets and to report all irregularities in the accounts.
Section 35 lays down how trust money has to be invested, and section 36 prohibits alienation of immovable trust property except by way of leases for specified periods, Without the previous sanction of the Charity Commissioner.
Section 37 authorises the Charity Commissioner and his subordinate officers to enter on and inspect or cause to be entered on and inspected any property belonging to a public trust.
A proviso is added to the section laying down that in entering upon any such property, the officers making the entry shall give reasonable notice to the trustee and shall have due regard to the religious practices and usages of the trust.
Among other powers and functions of the Charity Commissioner, which are detailed in Chapter VII, section 44 enables a Charity Commissioner to be appointed to act as a trustee of a public trust by a court of competent jurisdiction or by the author of the trust.
Section 47 deals with the powers of the court to appoint new trustee or trustees and under clause (3) of this section, the court, after making enquiry, may appoint the Charity Commissioner or any other person as a trustee to fill up the vacancy.
Section 48 provides for the levy of administrative charges in cases where the Charity Commissioner is appointed a trustee.
Section 50 appears to be a substitute for section 92 of the Civil Procedure Code and contains provisions of almost the same character in respect to suits regarding public trusts.
One of the reliefs that can be claimed in such a suit is a declaration as to what proportion of the trust property or interest therein shall be allocated to any particular object of the trust.
Section 55 purports to lay down the rule of cy pres in relation to the administration of religious and charitable trusts; but it extends that doctrine much further than is warranted by the principles laid down by the Chancery Courts in England or recognised by judicial pronouncements in this country.
Section 56 deals with the powers of the courts in relation to the application of the cy pres doctrine.
Section 57 provides for the establishment of a fund to be called "The 1061 Public Trusts Administration Fund which shall vest in the Charity Commissioner and clause (2) lays down what sums shall be credited to this fund.
Section 58 makes it obligatory on every public trust to pay to this fund a contribution at such time and in such manner as may be Prescribed.
Under the, rules prescribed by the Government on this subject, the contribution has been fixed at the rate of 2 per cent.
per annum upon the gross annual income of every public trust.
Failure .to pay this contribution will make the trustee liable to the penalties provided for in section 66 of the Act.
Section 60 provides that the Public Trusts Administration Fund shall, subject to the provisions of the Act and subject to the general and special orders of the State Government, be applicable to the.
payment of charges for expenses incidental to the regulation of public trusts and generally for carrying out the provisions of the Act.
Sections 62 to 66, which are comprised in Chapter IX of the Act, deal with the appointment and qualifications of assessors.
The function of the assessors is to assist and advise the Charity Commissioner or his subordinate officers in the matter of making enquiries which may be necessary under the provisions of the Act.
Chapter X prescribes the penalties that will be inflicted on trustees in case of their violating any of the pro visions of the Act.
Chapter XI deals with procedural matters in connection with jurisdiction of courts and rights of appeal, and the twelfth or the last chapter deals with certain miscellaneous matters.
These, in brief, are the provisions of the Act which are material for our present purpose.
The contentions that have been raised by the learned counsel, who appeared in support of the appeals, may be considered under two heads.
In the first place, a number of provisions of the Act have been challenged as invalid on the ground that they conflict with freedom of religion and the right of the religious denominations or sects, represented by the appellants in each case, to manage their own, affairs in matter of religion guaranteed under articles 25 and 26 of the Constitution.
The sections of the Act, the validity of which has been challenged on this ground are sections 18, 31 to 37, 44, 1062 47, 48 50, clauses (e) and (g), 55, 58 and 66.
The second head of the appellants argument relates to the levy of contribution as laid down in sections 57 and 58 of the Act and the argument is that this being in substance the levy of a tax, it was beyond the competence of the State Legislature to enact such a provision.
As regards the first branch of the contention, a good deal of argument has been advanced before us relating to the measure and extent of the fundamental rights guaranteed under articles 25 and 26 of the Constitution.
It will be necessary to address ourselves to this question at the outset, because without a clear appreciation of the scope and am bit of the fundamental rights embodied in the two articles of the Constitution, it would not be possible to decide whether there has been a transgression of these rights by any of the provisions of the Act.
This identical question came up for consideration before this court in Civil Appeal No. 38 of 1953 (The commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Tirtha Swamiar(1) and it was discussed at some length in our judgment in that case.
It will be sufficient for our present purpose to refer succinctly to the main principles that this court enunciated in that judgment.
Article 25 of the Constitution guarantees to every person and not merely to the citizens of India the freedom of conscience and the right freely to profess practise and propagate religion.
This is subject, in every case, to public order, health and morality.
Further exceptions are engrafted upon this right by clause (2) of the article.
Sub clause (a) of clause (2) saves the power of the State to make laws regulating or restricting any economic financial, political or other secular activity which may be associated with religious practice; and sub clause (b) reserves the State 's power to make laws providing for social reform and social welfare even though they might interfere with religious practices.
Thus, subject to the restrictions which this article imposes, every person has a fundamental right under our Constitution not merely to entertain such religious belief as may be approved of by his judgment or conscience but to exhibit his belief and ideas in such (1) ; 1063 overt acts as are enjoined or sanctioned by his religion and further to propagate his religious views for the edification of others.
It is immaterial also whether the propagation is made by a person in his individual capacity or on behalf of any church or institution.
The free exercise of religion by which is meant the performance of outward acts in pursuance of religious belief, is, as stated above, subject to State regulation imposed to secure order, public health and morals of the people.
What sub clause (a) of clause (2) of article 25 contemplates is not State regulation of the religious practices as such which are protected unless they run counter to public health or morality but of activities which are really of an economic, commercial or political character though they are associated with religious practices.
So far as article 26 is concerned, it deals with a particular aspect of the subject of religious freedom.
Under this article, any religious denomination or a section of it has the guaranteed right to establish and maintain institutions for religious and charitable purposes and to manage in its own way all affairs in matters of religion.
Rights are also given to such denomination or a section of it to acquire and own movable and immovable properties and to administer such properties in accordance with law.
The language of the two clauses (b) and (d) of article 26 would at once bring out the difference between the two.
In regard to affairs in matters of religion, the right of management given to a religious body is a guaranteed fundamental right which no legislation can take away.
On the other hand, as regards administration of property which a religious denomination is entitled to own and acquire, it has undoubtedly the right to administer such property but only in accordance with law.
This means that the State can regulate the administration of trust properties by means of laws validly enacted but here again it should be remembered that under article 26 (d), it is the religious denomination itself which has been given the right to administer its pro perty in accordance with any law which the State may validly impose.
A law, which takes away the right of 138 1064 administration altogether from the religious denomination and vests it in any other or secular authority, would amount to violation of the right which is guaranteed by article 26 (d) of the Constitution.
The moot point for consideration, therefore, is where is the line to be drawn between what are matters of religion and what are not ? Our Constitution makers have made no attempt to define what 'religion ' is and it is certainly not possible to frame an exhaustive definition of the word 'religion ' which would be applicable to all classes of persons.
As has been indicated in the Madras case referred to above, the definition of religion given by Fields J. in the American case of Davis vs Beason(1), does not seem to us adequate or precise.
"The term 'religion" ', thus observed the learned Judge in the case mentioned above, "has refer ence to one 's views of his relations to his Creator and to the obligations they impose of reverence for His Being and character and of obedience to His Will.
It is often confounded with cultus or form of worship of a particular sect, but is distinguishable from the latter".
it may be noted that 'religion ' is not necessarily theistic and in fact there are well known religions in India like Buddhism and Jainism which do nor believe in the existence of God or of any Intelligent First Cause.
A religion undoubtedly has its basis in a system of beliefs and doctrines which are regarded by those who profess that religion to be conducive to their spiritual well being, but it would not be correct to say, as seems to have been suggested by one of the learned Judges of the Bombay High Court, that matters of religion are nothing but matters of religious faith and religious belief.
A religion is not merely an opinion, doctrine or belief.
It has its outward expression in acts as well.
We may quote in this connection the observations of Latham C. J. of the High Court of Australia in the case of Adelaide Company vs The Commonwealth(2), where the extent of protection given to religious freedom by section 116 of the Australian Constitution came up for consideration.
(1)133 U.S. 33 (2) ; , 124.
1065 "It is sometimes suggested in discussions on the subject of freedom of religion.
that, though the civil Government should not interfere with religious opinions, it nevertheless may deal as it pleases with any acts which are done in pursuance of religious belief without infringing the principle of freedom of religion.
It appears to me to be difficult to maintain this distinction as relevant to the interpretation of section 116.
The section refers in express terms to the exercise of religion, and therefore it is intended to protect from the operation of any Commonwealth laws acts which are done in the exercise of religion.
Thus the section goes far beyond protecting liberty of opinion.
It protects also acts done in pursuance of religious belief as part of religion.
, In our opinion, as we have already said in the Madras case, these observations apply fully to the provision regarding religious freedom that is embodied in our Constitution.
Religious practices or performances of acts, in pursuance of religious belief are as much apart of religion as faith or belief in particular doctrines.
Thus if the tenets of the Jain or the Parsi religion lay down that certain rites and ceremonies are to be performed at certain times and in a particular manner, it cannot be said that these are secular activities partaking of commercial or economic character simply because the involve expenditure of money or employment of priests or the use of marketable commodities.
No outside authority has any right to say that these are not essential parts of religion and it.
is not open to the secular authority of the State to restrict or prohibit them in any manner they like under the guise of administering the trust estate.
Of course, the scale of expenses to, be incurred in connection with these religious observances may be and is a matter of administration of property belonging to religious institutions; and if the expenses on these heads are likely to deplete the endowed properties or affect the stability of the institution,, proper control can certainly be exercised by State agencies as the law provides.
We may refer in this connection to the observation of 1066 Davar J. in the case of Jamshedji vs Soonabai(1), and although they were made in a case where the question was whether the bequest of property by a Parsi testator for the purpose of perpetual celebration of ceremonies like Muktad baj, Vyezashni, etc., which are sanctioned by the Zoroastrian religion were valid charitable gifts, the observations, we think, are quite appropriate for our present purpose.
"If this is the belief of the community" thus observed the learned Judge, "and it is proved undoubtedly to be the belief of the Zoroastrian community, a secular Judge is bound to accept that belief it is not for him to sit in judument on that belief, he has no right to interfere with the conscience of a donor who makes a gift in favour of what he believes to be the advancement of his religion and the ,Welfare of his community or mankind".
These observations do, in our opinion, afford an indication of the measure of protection that is given by article 26(b) of our Constitution.
The distinction between matters of religion and those of secular administration of religious properties may, at times, appear to be a thin one.
But in cases of doubt, as Chief Justice Latham pointed out in the case(2) referred to above, the court should take a common sense view and be actuated by considerations of practical necessity.
It is in the light of these principles that we will proceed to examine the different provisions of the Bombay Public Trusts Act, the validity of which has been challenged on behalf of the appellants.
We will first turn to the provisions of the Act which relate to registration of trusts.
Under section 18, it is incumbent on the trustee of every public, religious or charitable trust to get the same registered.
Section 66 of the Act makes it an offence for a trustee not to comply with this provision and prescribes punishment for such offence.
Section 31 provides for further compulsion by laying down that no suit shall lie on behalf of a public trust to enforce its right in any court of law unless the trust is registered.
A compulsory payment (1) (2) Vide Adelaide Company vs The commonwealth, 67 C.L.R. 116, i29. 1067 of a fee of Rs. 25 has also been prescribed by the rules framed by the Government for registration of a trust.
The provisions of registration undoubtedly have been made with a view to ensure due supervision of the trust properties and the exercise of proper control over them.
These are matters relating to administration of trust property as contemplated by article 26(d) of the Constitution and cannot, by any stretch of imagination be held to be an attempt at interference with the rights of religious institutions to manage their religious affairs.
The fees leviable under section 18 are credited to the Public Trust Administration Fund constituted under section 57 and are to be spent for meeting the charges incurred in the regulation of public trusts and for carrying into effect the provisions of the Act.
The penalties provided are mere consequential provisions and involve no infraction of any fundamental right.
It has been argued by the learned counsel for the appellants that according to the tenets of the Jain religion the property of the temple and its income exist for one purpose only, viz., the religious purpose, and a direction to spend money for purposes other than those which are considered sacred in the Jain scriptures would constitute interference with the freedom of religion.
This contention does not appear to us to be sound.
These expenses are incidental to proper management and administration of the trust estate like payment of municipal rates and taxes, etc., and cannot amount to diversion of trust property for purposes other than those which are prescribed by any religion.
The next group of sections to which objections have been taken comprises sections 32 to 37.
Section 32 compels a trustee of a public trust to keep accounts in such form as may be prescribed by the Charity Commissioner.
Section 33 provides for the auditing of such accounts and section 34 makes it the duty of the auditor to prepare balance sheets and to report irregularities, if any, that are found in the accounts.
These are certainly not matters of religion and the objection raised with regard to the validity of these provisions seem to be altogether baseless Section 35 relates to investment of money belonging to trusts.
It is a well 1068 settled principle of law that trustees in charge of trust properties should not keep cash money in their hands which are not necessary for immediate expenses; and a list of approved securities upon which trust money could be invested is invariably laid down in every legislation on the subject of trust.
There is nothing wrong in section 36 of the Act.
Immovable trust properties are inalienable by their very nature and a provision that they could be alienated only with the previous sanction of the Charity Commissioner seems to us to be a perfectly salutary provision.
Section 37 has been objected to on the ground that an unrestricted right of entry in any religious premises might offend the sentiments of the followers of that religion; but the section has expressly provided that the officers making the entry shall give reasonable notice of their intended entry to the trustees and shall have due regard to the religious practice and usages of the trust.
Objection has next been taken to sections 44 and 47 of the Act.
Section 44 lays down that the Charity Commissioner can be appointed to act as trustee of a public trust by a court of competent jurisdiction or by the author of the trust.
If the author of the trust chooses to appoint the Charity Commissioner a trustee, no objection can possibly be taken to such action; but if the court is authorised to make such appointment, the provisions of this section in the general form as it stands appear to us to be open to serious objection.
If we take for example the case of a religious institution like a Math at the head of which stands the Mathadhipati or spiritual superior.
The Mathadhipati is a trustee according to the provisions of the.
Act and if the court is competent to appoint the Charity Commissioner as a superior of a Math,.
the result would be disastrous and it would amount to a flagrant violation of the constitutional guarantee which religions institutions have under the@ Constitution in regard to the management of its religious affairs.
This is not a secular affair at all relating to the administration of the trust property.
The very object of a Math is to maintain a competent line of religious teachers for propagating and strengthening the religious 1069 doctrines of a particular order or sect and as there could be no Math without a Mathadhipati as its spiritual head, the substitution of the Charity Commissioner for the superior would mean a destruction of the institution altogether.
The evil is further aggravated by the provision of clause (4) of the section which says that the Charity Commissioner shall be the sole trustee and it shall not be lawful to appoint him as a truste along with other persons.
In our opinion, the provision of section 44 relating to the appointment of the Charity Commissioner as a trustee of any public trust by the court without any reservation in regard to religious institutions like temples and Maths is unconstitutional and must be held to be void.
The very same objections will apply to the provisions of clauses (3) to (6) of section 47.
The court can certainly be empowered to appoint a trustee to fill up a vacancy caused by any of the reasons mentioned in section 47(1), and it is quite a salutary principle that in making the appointment the court should have regard to matters specified in clause (4) of section 47 ; but the provision of clause (3) to the extent that it authorises the court to appoint .the
Charity Commissioner as the trustee and who according to the provisions of clause (5) is to be the sole trustee cannot be regarded as valid in regard to religious institutions of the type we have just indicated.
To allow the Charity Commissioner to function as the Shebait of a temple or the superior of a Math would certainly amount to interference with the religious affairs of this institution.
We hold accordingly that the provisions of clauses (3) to (6) of section 47 to the extent that they relate to the appointment of the Charity Commissioner as a trustee of a religious trust like temple and Math, are invalid.
If these provisions of section 47 are eliminated, no objection can be taken to the provision of section 48 as it stands.
This section will in that event be confined only to cases where the Charity Commissioner has been appointed a trustee by the author of the trust himself and the administrative charges provided by this section can certainly be levied on the trust.
1070 We now come to section 50 and exception has been taken to clauses (e) and (g) of that section.
It is difficult to see how these provisions can at all be objected to.
Section 50, as has been said above, is really a substitute for section 92 of the Civil Procedure Code and relates to suits in connection with public trusts Clause (e) of section 50 is an exact reproduction of clause (e) of section 92 of the Civil Procedure Code and clause (g) also reproduces substantially the provision of clause (g) of section 92 of the Civil Procedure Code.
There is no question of infraction of any fundamental right by reason of these provisions.
A more serious objection has been taken by the learned counsel for the appellants to the provisions of sections 55 and 56 of the impugned Act and it appears to us that the objections are to a great extent well founded.
These sections purport to lay down how the doctrine of cy pres is to be applied in regard to the administration of public trust of a religious or charitable character.
The doctrine of cy pres as developed by the Equity Courts in England, has been adopted by out Indian courts since a long time past.
The provisions of sections 55 and 56, however, have extended the doctrine much beyond its recognised limits and have further ,introduced certain principles which run counter to well established rules of law regarding the administration of charitable trusts.
When the particular purpose for which a charitable trust is created fails or by reason of certain circumstances the trust cannot be carried into effect either in whole or in part, or where there is a surplus left after exhausting the purposes specified by the settlor, the court would not, when there is a general charitable intention expressed by the settlor, allow the trust to fail but would execute it cy pres, that is to say, in some way as nearly as possible to that which the author of the trust intended.
In such cases, it cannot be disputed that the court can frame a scheme and give suitable directions regarding the objects upon which the trust money can be spent.
It is we 11 established, however, that where the donors intention can be given effect to, the court has no authority to sanction any deviation from the intentions expressed 1071 by the settlor on the grounds of expediency and the court cannot exercise the power of applying the trust property or its income to other purposes simply because it considers them to be more expedient or more beneficial than what the settlor had directed(1).
But this is exactly what has been done by the provision of section 55(c) read with section 56 of the Act.
These provisions allow a diversion of property belonging to a public trust or the income thereof to objects other than those intended by the donors if the Charity Commissioner is of opinion, and the court confirms its opinion and decides, that carrying out wholly or partially the original intentions of the author of the trust or the object for which the trust was created is not wholly or partially expedient, practicable, desirable or necessary; and that the property or income of the public trust or any portion thereof should be applied to any other charitable or religious object.
Whether a provision like this is reasonable or not is not pertinent to our enquiry and we may assume that the legislature, which is competent to legislate on the subject of charitable and religious trust, is at liberty to make any provision which may not be in consonance with the existing law; but the question before us is, whether such provision invades any fundamental right guaranteed by our Constitution, and we have no hesitation in holding that it does so in the case of religious trusts.
A religious sect or denomination has the undoubted right guaranteed by the Constitution to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for the religious purposes and objects indicated by the founder of the trust or established by usage obtaining in a particular institution.
To divert the trust property or funds for purposes which the Charity Commissioner or the court considers expedient or proper, although the original objects of the founder can still be carried out, is to our minds an unwarrantable encroachment on the freedom of religious institutions in regard to the management of their religious affairs.
It is perfectly true, as has been stated (1) Vide Halsbury, 2nd Edn., VOl.
IV, P. 228, 139 1072 by the learned counsel for the appellants, that it is an established maxim of the Jain religion that Divadraya or religious property cannot be diverted to purposes other than those which are considered sacred in the Jain scriptures.
But apart from the tenets of the Jain religion, we consider it to be a violation of the freedom of religion and of the right which a religious denomination has under our Constitution to manage its own affairs in matters of religion, to allow any secular authority to divert the trust money for purposes other than those for which the trust was created.
The State can step in only when the trust fails or is incapable of being carried out either in whole or in part.
We hold, therefore, that clause (3) of section 55, which contains the offending provision and the corresponding provision relating to the powers of the court occurring in the latter part of section 56(1), must be, held to be void.
The only other section of the Act to which objection has been taken is section 58 and it deals with the levy of contribution upon each public trust, at certain rates to be fixed by the rules, in proportion to the gross annual income of such trust.
This together with the other sums specified in clause (2) of section 57 makes up the Public Trusts Administration Fund, which is to be applied for payment of charges incidental to the regulation of public trusts and for carrying into effect the provisions of this Act.
As this contribution is levied purely for purposes of due administration of the trust property and for defraying the expenses incurred in connection with the same, no objection could be taken to the provision of the section on the ground of its infringing any fundamental rights of the appellants.
The substantial, contention that has been raised in regard to the validity of this provision comes, however, under the second head of the appellants ' arguments indicated above.
The contention is that the contribution which is made payable under this section is in substance a tax and the Bombay State Legislature was not competent to enact such provision within the limits of the authority exercisable by it under the Constitution.
This raises a point of some importance which requires to be examined carefully.
1073 It is not disputed before us that if the contribution that is levied under section 58 is a tax, a legislation regarding it would be beyond the competence of the State Legislature.
Entries 46 to 62 of List II in Schedule VII of the Constitution specify the different kinds of taxes and duties in regard to which the State Legislature is empowered to legislate and a tax of the particular type that we have here is not covered by any one of them.
It does not come also under any specific entry in List III or even of List I. The position, therefore, is that if the imposition is held to be a tax, it could come either under entry 97 of List I, which includes taxes not mentioned in Lists II and III or under article 248 (1) of the Constitution and in either case it is Parliament alone that has the competency to legislate upon the subject.
If, on the other hand, the imposition could be regarded as "fees", it can be brought under entry 47 of the Concurrent List, the Act itself being a legislation under entries 10 and 28 of that List.
The whole controversy thus centers round a point as to whether the contribution leviable under section 50 is a fee or tax and what in fact are the indicia and characteristics of a fee which distinguish it from a tax.
This identical question came up for consideration before this court in Civil Appeal No. 38 of 1953 referred to above, in, connection with the provision of section 76 of the Madras Religious and Charitable Endowments Act, and the view which we have taken in that case regarding the proper criterion for determining whether an imposition is a fee or tax is in substantial agreement with the view taken by the Bombay High Court in the present case.
As the matter has been discussed at some length in the Madras case, it will not be necessary to repeat the same discussions 'over again.
It will be enough if we indicate the salient principles that were enunciated by this court in its judgment in the Madras case mentioned above.
We may start by saying that although there is no generic difference between a tax and a fee and in fact they are only different forms in which the taxing power of a State manifests itself, our Constitution has, in fact, made a distinction between a tax and a fee for, 1074 legislative purposes.
While there are various entries in the three legislative lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees ' which could be levied in respect of every one of the matters that are included therein .This distinction is further evidenced by the provisions of the Constitution relating to Money Bills which areembodied in articles 110 and 199.
Both these articles provide that a bill should not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or for the demand or payment of fees for licences or fees for services rendered, whereas a bill relating to imposition, abolition or regulation of a tax would always be recckoned as a Money Bill.
There is no doubt that a fee resembles a tax in many respects and the question which presents difficulty is, what is the proper test by which the one could be distinguished from the other? A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law.
But the other and equally important characteristic of a tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax.
It follows, therefore, that although a tax may be levied upon particular classes of persons or particular kinds of property, it is imposed not to confer any special benefit upon individual persons and the collections are all merged in the general revenue of the State to be applied for general public purposes.
Tax is a common burden and the only return which the taxpayer gets is participation in the common benefits of the State.
Feees on the other hand, are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded.
Thus in fees there is always an element of quid pro quo which is absent in a tax.
It may not be possible to prove in every case that the fees that are collected by the Government approximate to the expenses that are incurred by it in rendering any particular kind of services or in 1075 performing any particular work for the benefit of certain individuals.
But in order that the collections made by the Government can rank as fees, there must be co relation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services.
This can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services.
Thus two elements are essential in order that a payment may be regarded as a fee.
In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly and in the second place, the amount collected must be ear marked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes.
As has been pointed out in the Madras case mentioned above, too much stress should not be laid on the presence or absence of what has been called the Coercive element.
It is not correct to say that as distinguished from taxation which is compuslory payment, the payment of fees is always voluntary, it being a matter of choice with individuals either to accept the service or not for which fees are to be paid.
We may cite for example the case of a licence fee for a motor car.
It is argued that this would be a fee and not a tax, as it is optional with a person either to own a motor car or not and in case be does not choose to have a motor car, he need not pay any fees at all.
But the same argument can be applied in the case of a house tax or land tax.
Such taxes are levied only on those people who own lands or houses and it could be said with equal propriety that a man need not own any house or land and in that event he could avoid the payment of these taxes.
In the second place, even if the payment of a motor licence fee is a voluntary payment, it can still be regarded as a tax if the fees that are realised on motor licences have no relation to the expenses that the Government incurs in keeping an office or bureau for the granting of licences and the collections are not appropriated for that purpose but 1076 go to the general revenue.
Judging by this test, it appears to us that the High Court was perfectly right in holding that the contributions imposed under section 58 of the Bombay Public Trusts Act are really feEs and not taxes.
In the first place, the contributions, which are collected under section 58, are to be credited to the Public Trusts Administration Fund as constituted under section 57.
This is a special fund which is to be applied exclusively for payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act.
It vests in the Charity Commissioner and the custody and investments of the moneY belonging to the funD and the disbursement and pAyment therefrom are to be effected not in the manner in which general revenues are disbursed, but in the way prescribed by the rules made under the Act.
The collections, therefore, are not merged in the general revenue, but they axe earmarked and set apart for this particular purpose.
it is true that under section 6A of the Act, the officers and servants appointed under the Act are to draw their pay and allowances from the Consolidated Fund of the State but we agree with what has been said by Mr. Justice Shah of the Bombay High Court that this provision is made only for the purpose of facilitating the administration and not with a view to mix up the fund with the general revenue, collected for Government purposes.
This would be clear from the provision of section 6B which provides that out of.
the Public Trusts Administration Fund all the costs, which the State Government may determine on account of pay, pension, leave and other allowances of all.
the officers appointed under this Act, shall ' be paid.
It is the Public Trusts Administration Fund, therefore, which meets all the expenses of the administration of trust property within the scheme of the Act, and it is to meet the expenses of this administration that these collections are levied.
As has been said by the learned Judges of the High Court, according to the concept of a modern State, it is not necessary that services should be rendered only at the request of particular people, it is enough that payments are demanded for 1077 rendering services which the State considers beneficial in the public interests and which the people have to accept whether they are willing or not.
Our conclusion, therefore, is that section 58 is not ultra vires of the State Legislature by reason of the fact that it is not a tax but a fee which comes within the purview of entry 47 of List III in Schedule VII of the Constitution.
The result, therefore, is that in our opinion the appeals are allowed only in part and a mandamus will issue in each of these cases restraining the State Government and the Charity Commissioner from enforcing against the appellants the following provisions of the Act to wit : (i) Section 44 of the Act to the extent that it relates to the appointment of the Charity Commissioner as a trustee of religious public trust by the court, (ii) the provisions of clauses (3) to (6) of section 47, and (iii) clause (c) of section 55 and the part of clause (1) of section 56 corresponding thereto.
The other prayers of the appellants stand dismissed.
Each party will bear hi own costs in both the appeals.
|
Held, that the provision of a. 44 of the Bombay Public Trust Act, 1950, relating to the appointment of the Charity Commissioner as a trustee of any public trust by the court without any reservation in regard to religious institutions like temples and Maths is unconstitutional and must be held to be void.
The provisions of el.
(3) to (6) of a. 47 of the Act to the extent that they relate to the appointment of the Charity Commissioner as a trustee of a religious trust like temple and Math are unconstitutional and must be held to be void.
A religious sect or denomination has.
the undoubted right guaranteed by the Constitution to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for religion and for religious purposes and objects indicated by the founder of the trust or established by ussage 137 1056 obtaining in a particular institution.
To divert the trust property or funds for purposes which the Charity commissioner or the court considers expedient or proper, although the original objectes of the founder can still be carried out, is an unwarrantable encroachment on the freedom of religious institutions in regard to the management of their religious affairs.
Therefore cl.
(3) of section 55, which contains the offending provision and the corresponding provision relating to the powers of the court occurring in the latter part of section 56(1), must be held to be void.
Section 58 of the Act is not ultra vires of the State Legislature because the contribution imposed under the section is not a tax but a fee which comes within the purview of entry 47 of List III in Schedule VII of the Constitution.
Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar, ( ; Davis vs Beason ; , Adelaide Company vs The Commonwealth ; , 124) and Tamshed Ji vs Soonabai [1919] (I.L.R referred to.
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236.txt
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Appeal No. 194 of 1967.
Appeal from the judgment and order dated April 27, 1964 of the Madhya Pradesh High Court in Misc.
(First Appeal No.60 of 1960.
section N. Anand and Kailash Mehta, for the appellant.
section section Khanduja and K. C. Dua, for respondent No. 1.
The Judgment of the Court was delivered by Khanna, J.
This is an appeal on a certificate of fitness granted by the Madhya Pradesh High Court against the judgment of that Court whereby that Court in appeal set aside the order of the Additional District Judge, Jabalpur, dismissed the objections against an award and directed that the award be made a rule of the Court.
Naraindas, appellant is the brother of Vallabhdas and Durga prasad, respondents 1 and 2 and son of Smt.
Sukhrani, respondent No. 3.
There were, some arbitration proceedings in 1932 between the appellant and respondents 1 to 3 on one side and Pannalal and Smt.
Dulari Bahu on the other side.
Those proceedings related to partition of property and a claim for maintenance allowance by Dulari Bahu.
An award was given in those proceedings and was made a rule of the Court on 13 12 1933.
According to the award, Dulari Bahu was to get a maintenance allowance of Rs. 12/ per mensem from the appellant and his brothers .
A charge was created of the maintenance allowance on the house which fell as a result of partition to the 30 share of the appellant and respondents 1 to 3.
It was also provided that if the appellant and his brothers failed to pay the monthly allowance, Dulari Bahu would, be entitled to get the house sold.
Out of the sale proceeds, Rs. 3,000/ were to be deposited in a bank on the condition that the, amount of interest would be paid to Dulari Bahu but she would not be entitled to draw the principal amount.
On Dulari Bahu 's death, Rs. 2,000/ out of Rs. 3,000/ would be paid to the appellant and his brothers and Rs. 1,000/ to Pannalal.
The amount of maintenance payable to Dulari Bahu was increased to Rs. 30/ per mensem in a suit brought by her and decided on 8 10 1949.
As the appellant and his brothers did not pay the maintenance allowance to Dulari Bahu, she, in execution of her claim for maintenance allowance, got their houses situated at Jabalpur sold by Court auction.
The houses were purchased for Rs. 22,000/ by Sitaram and Laxminarain, respondents 4 and 5.
After obtaining the sale certificate, respondents 4 and 5 took proceedings for obtaining possession of the houses but they were resisted by respondent No. 1.
The appellant and his brothers further claimed that they had deposited some amount with respondents 4 and 5.
The appellant and his brothers and mother on one side and respondents 4 and 5 on the other side thereupon appointed four arbitrators, as per agreement dated 8th April, 1955.
According to the agreement, respondents 4 and 5 would have no claim in the houses purchased by them in Court auction and the arbitrators would make award in respect of the amounts to be paid by either of the parties as well as regarding the maintenance allowance payable to Durga Bahu and Sukhrani Bahu.
The arbitrators thereafter gave their award dated 20th October, 1956 wherein they made provision for the amounts payable to different parties.
Regarding the amount of maintenance allowance payable to Dulari Bahu, the award provided that Rs. 3,000/ out of the sale proceeds would be withdrawn from the Court and be deposited with Durgaprasad, respondent.
Durgaprasad was made liable to pay the amount of Rs. 30/ per mensem as maintenance allowance to Dulari Bahu.
The award further provided 'that out of the amount of Rs. 3,000/ , Rs. 1,000/ would be paid, to Pannalal and Rs. 2,000/ to Durgaprasad on the death of Dulari Bahu.
Dulari Bahu was also given a right of residence in a room and maintenance allowance of Rs. 30/ payable to her was made, a charge on the house allotted to Durgaprasad.
After the award had been put in Court, objections were filed against the award.
Learned Additional District Judge set aside the award on the ground that the award affected the, rights of 31 Dulari Bahu and she had not been made a party to the arbitration agreement.
The reference to arbitration as well as the award, according to the Additional District Judge did not amount to an adjustment and were,, therefore, invalid.
It was also held that the award was in excess of the arbitration agreement.
Some other grounds were also given but we are not concerned with them.
On appeal, the High Court reversed the decision of the Additional District Judge and held that there was no infirmity in the arbitration proceedings or the award.
In the result, the award was made a rule of the Court.
Mr. Anand, on behalf of the appellant, has argued that Dulari Bahu was an interested party in the dispute relating to arbitration and as she did not join the arbitration agreement, the reference to arbitration and the subsequent award should be held to be invalid.
There is, in our opinion, no force in this contention.
The dispute which was referred to the arbitrators related to the houses in question which had been sold in Court auction.
The, interest of Dulari Bahu pertained only to the recovery of her maintenance allowance.
According to the earlier award which Dulari Bahu sought to enforce, she was to get the maintenance allowance from an amount of Rs. 3,000/ which was to be kept in deposit.
The rights of Dulari Bahu in this respect remained in tact and were in no way affected by the award dated 20th October, 1956.
The maintenance allowance payable to her was also kept as a charge over the immovable property.
The fact that Dulari Bahu did not sign the arbitration agreement as such would not vitiate the arbitration proceedings.
The present is not a case wherein the arbitration proceedings are sought to be assailed by Dulari Bahu.
On the contrary, it is the admitted case of the parties that Dulari Bahu did not raise any objection to the arbitration proceedings or the subsequent award on the ground that her rights had been prejudicially affected.
This apart, we find that Dulari Bahu, according to the learned counsel, died about three years ago.
In the circumstances, it would be purely academic to dilate upon the question as to whether the rights of Dulari Bahu were prejudicially affected by the award in question.
It is next argued by Mr. Anand that as the reference to arbitrators was made out of Court and as all the parties to the arbitration agreement did not sign the award in token of their acceptance, the same could not be made a rule of the Court.
There is no substance, in our opinion, in the above contention.
It is always open to parties to refer a dispute to arbitration without the intervention of the Court.
In case, a suit is pending in respect of the subject matter of the dispute, there can be no valid reference during the pendency of the suit, to arbitration without 32 the order of the Court.
The underlying reason for that is to avoid conflict of jurisdiction by both the Court and the arbitrator dealing concurrently with the same dispute.
An award given or a reference during the pendency of a suit relating to dispute which is the subject matter of reference without obtaining the order of the Court cannot be enforced.
The only exception to this rule is provided by the proviso to section 47 of the (Act 10 of 1940) according to which "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".
In such an event, the award is enforced as a compromise or adjsutment of the suit because all the interested parties give their consent to the award.
Where,, however, as in the present case, no suit is pending with respect to the subject matter of dispute and the parties choose to refer a dispute to arbitrators, it is not essential that the parties should signify their consent to the award before the same can be enforced.
Any other view would run counter to the entire scheme and object of arbitration for the settlement of disputes according to which, agreement and consent are imperative only at the stage of referring the dispute to arbitrators but not at the stage of the award.
The decision of Bachawat, J. (as he then was) in Jugaldas Demodar Modi & Co. vs Pursottam Umedbhai & Co.(1) relied upon by the appel lant has no bearing as the said case dealt with an arbitration reference during the pendency of a suit.
We are also not impressed by the contention raised on behalf of the appellant that because there had been earlier litigation about the house allotted to the appellant and his brothers, the same could not be, the subject matter of arbitration dispute.
A dispute is referred to arbitration because the parties agreed to such a reference and the mere fact that the property which is the subject matter of dispute was also the subject matter of an earlier litigation, cannot prevent the parties to refer the dispute about that property to arbitration.
What is referred to arbitrators in such a case is the fresh dispute and although the finding of the Court in the previous litigation may have a bearing on the dispute referred to the arbitrators, it would not stand in the way of reference of the fresh dispute to the arbitrators.
It is not the case of the appellant before us that the precise dispute which was the subject matter of the award dated 20th October, 1956 had been adjudicated upon earlier in a civil Court.
The appeal consequently fails and is dismissed with costs.
G.C. Appeal dismissed.
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By an arbitration award given in 1933 D was given a maintenance allowance enforceable against property allotted to the appellant and his brothers and mother.
Since the allowance was not paid D secured a decree for the sale of houses belonging to the appellant and his brothers.
The property was purchased by respondents 4 and 5 who after obtaining sale certificate from the court sought to obtain possession of the same.
On, 8th April 1955 the appellant his brothers and mother entered into an arbitration agreement with respondents 4 and 5.
According to, the agreement respondents 4 and 5 gave up their claim to the houses purchased by them in court auction and the arbitrators were to make award in respect of the amounts to be paid by either of the parties as well as the maintenance allowance payable to D and to the appellant 's mother.
The arbitrators by their award dated 20th October 1956 made provision for the amounts payable to different parties.
The also made on for the payment of allowance to D as well as for her residence.
provision the award had been put in court objections were filed against it.
The Additional District Judge, set aside the award inter alia on the ground that the award affected the rights of D and she had not been made a party to the agreement.
The High Court reversed the judgment of the Additional District Judge.
In appeal by certificate the appellant contended; (i) that the award was invalid because D was an interested party in the dispute relating to arbitration and she had not joined the arbitration agreement; (ii) that the reference to arbitrators was made out of court and as all the parties to the arbitration agreement did not sign the award in token of their acceptance, the same could not be made a rule of court; (iii) that because there had been earlier litigation about the house allotted to the appellant and his brothers, the same could not be the subject matter of arbitration dispute, HELD : (i) The rights of D remained intact and were in no way affected by the award dated 20th October 1956.
The maintenance allowance payable to her was also kept as a charge over the immovable property.
The fact that D did not sign the arbitration agreement as such would not vitiate the arbitration proceedings. 'She did not raise any objection to the arbitration proceedings or the subsequent award.
Ac cording to counsel she died three years ago.
In the circumstances the question whether her rights were prejudicially affected by the award was purely academic [31 E] (ii) An award given on a reference during the pendency of a suit relating to a dispute which is the subject matter of reference without obtaining the order of the Court cannot be enforced.
The underlying reason for the same is to avoid conflict of jurisdiction.
However according to section 47 of the , an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration 29 as a compromise or adjustment of a suit by any court before which the suit is pending. ' In such an event, the Award is enforced as a compromise or adjustment of the suit because all the interested parties give their consent to the award.
When however, as in the present case, no suit is pending with respect to the subject matter of dispute and the parties choose to refer a dispute to the arbitrators, it is not essential that the parties should signify their consent to the award before the same can be enforced.
Agreement and consent are imperative only at the stage of referring the dispute to arbitrators but not at the stage of the award.
[31H 32D].
Jagaldas Damodar Modi & Co. vs Pursottam Umedbhai & Co., A.I.R. 1953 690, held in applicable.
(iii) A dispute is referred to arbitration because the parties agree to such a reference and the mere fact that the property which is the subject matter of dispute was also the subject matter of earlier litigation, cannot prevent the parties to refer the dispute about that property to arbitration.
What is.
referred to arbitrators in such a case is the fresh dispute and although the finding of the Court in the previous litigation may have a bearing on the dispute referred to the arbitrators, it would not stand in the way of reference of the fresh dispute to the arbitrators.
[32 F]
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3005.txt
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ppeal No.200 of 1955.
Appeal from the judgment and decree dated January 20, 1943, of the Madras High Court in A. section No. 392 of 1943, arising out of the judgment and decree dated March 30, 1943, of the Sub Judge, Tuticorin in O. section No. 34 of 1939.
section V. Venugopalachariar and section K. Aiyangar, for the appellant No. 2.
A. V. Viswanatha Sastri, R. Ganaapathy Iyer and G. Gopalakrishna, for respondent No. 1. 1960.
January 14.
The judgment of the Court was delivered by HIDAYATULLAH J.
This appeal has been filed on leave granted by the High Court of Madras against its judgment and decree dated January 20, 1947, by which the decree of the Subordinate Judge, Tuticorin, dated March 30, 1943, was substantially modified.
93 730 Before the application for leave to appeal to the Judicial Committee could be filed, the first defendant (Ramasami Pillai) died, and the application for leave was filed by his widow, R. Muthammal, who was the fourth defendant in the suit.
R. Muthammal also died soon afterwards and her place was taken by Parameswari Thayammal (her daughter born of Ramasami Pillai), who was the fifth defendant in this case.
Along with these three defendants, the other members of Ramasami Pillai 's family were also joined as defendants.
The suit was filed by Sri Subramaniaswami Devasthanam, Tiruchendur (hereinafter called for brevity, the Devasthanam), and the Devasthanam is the only contesting respondent in this Court.
One Poosa Pichai Pillai had five sons and three daughters, of whom Meenakshisundaram Pillai died on May 21, 1919.
Before his death Meenakshisundaram Pillai executed a registered will on May 20, 1919, and a registered codicil on May 21, 1919.
By these documents, he left his entire property to his only son, M. Picha Pillai, with the condition that should he die without issue, the property was to go to the Devasthanam.
M. Picha Pillai died a bachelor on December 10, 1927.
Three claimants claimed the property after his death.
The first naturally was the Devasthanam claiming under the gift over to it.
The other two were the heirs of M. Picha Pillai, who asserted that the gift over was void, and Meenakshisundaram 's wife 's brother and sister, Arunachala Irungol Pillai and N.S. Muthammal (third defendant), respectively who claimed under an alleged will of M. Picha Pillai.
The heirs of M. Picha Pillai were defendants 7, 8, 10, 13 and 14, the father of defendants 9, and the first defendant.
These claimants denied the claim of the Devasthanam, contended that the will and the codicil above mentioned gave an absolute estate to M. Picha Pillai, and that the gift over to the Devasthanam was, therefore, void.
The Devasthanam filed O.S.No. 57 of 1932 for declaration and possession of the properties covered by the will, together with other reliefs.
During the pendency of the suit, the heirs of M. Picha 731 Pillai and the present defendants 15 and 16 (two of the three sons of Arunachala Irungol Pillai) assigned their interest in favour of the Devasthanam.
The result of the suit, therefore, was that a decree in favour of the Devasthanam was passed in regard to the interest of the assignors, but it was dismissed as regards the interest of N.S. Muthammal (third defendant) and Pothiadia Irungol Pillai (second defendant) who had not entered into the compromise.
It May be mentioned here that by exhibit D 22, a registered agreement dated May 20, 1928, the heirs had already agreed to give to Arunachala Irungol Pillai and N.S. Muthammal one eighth share each respectively in the properties of M. Picha Pillai.
Thus, by this compromise the Devasthanam received 5/6th share of the properties of M. Picha Pillai, the remaining 1/6th, going to Pothiadia Irungol Pillai (1/24th) and N.S. Muthammal (1/8th).
The Devasthanam filed an appeal in the High Court against the dismissal of the suit in respect of this 1/6th share and failed.
An appeal was then taken to the Judicial Committee, which also failed.
The judgment of the Privy Council is reported in Sri Subramaniaswami Temple vs Rama samia Pillai (1).
Without waiting, however, for the result of the appeal in so far as the 1/6th share was concerned, the Devasthanam filed the present suit joining the two sets of claimants for declaration, ejectment and possession by partition of the properties to which it claimed title and for mesne profits.
The properties were shown in various schedules annexed to the plaint; but it is unnecessary to refer to those schedule except were the needs of the judgment so require.
One of the contentions raised by the plaintiff Devasthanam in this suit was that the first defendant,Ramasami Pillai, was not entitled to a share in the properties as an heir of M. Picha Pillai, being a lunatic when succession to these properties opened.
Onbehalf of the first defendant, Ramasami Pillai, who contested the suit through his wife and guardian, R.Muthammal, it was contended that he was not a (1) 732 lunatic (buddhi swadeenam illadavar) but only a person of weak intellect (buddhi deechanya matra), and thus,he was not excluded from inheritance.
This point was the main argument in this appeal, because the two Courts below reached opposite conclusions.
According to the Subordinate Judge of Tuticorin, Ramasam Pillai 's plea was correct and proved.
The High Court, on the other hand, held that the mental defect in Ramasami Pillai amounted to lunacy, and that it disentitled him to a share.
Connected with this above matter is the second contention raised by Ramasami Pillai that he was entitled to a 1/9th share by virtue of an alleged agreement stated on affidavit in exhibit D 7 by Doraiappa Pillai on April 1, 1931.
We shall give the details of this contention hereafter.
The third contention raised in this appeal and also before the High Court was that the properties described in plaint sch.
4 A were the subject matter of a decree dated September 19, 1927, in favour of M. Picha Pillai in O.S.No. 35 of 1924 filed by him against his cousins.
According to Ramasami Pillai (first defendant), the decree was not executed for a period of 12 years and the claim thereto was, therefore, barred under section 48 of the Code of Civil Procedure, and thus the Devasthanam was not entitled in this suit to claim possession of those properties.
We shall begin with the question whether Ramasami Pillai was excluded from inheritance by reason of his mental condition on December 10, 1927.
The argument of the appellant is two fold.
The first is on the fact whether Ramasami Pillai was a lunatic within the Hindu law texts.
The second is a question of law whether this lunacy was not required to be proved to have been congenital to disentitle Ramasami Pillai to succeed to his father.
We shall deal with these two questions separately.
In view of the fact that the two Courts below had reached opposite conclusions on the fact of lunacy, we have looked into the evidence in the case, and have heared arguments for the appellant.
We are satisfied that the opinion of the High Court is correct in all the circumstances of this case.
The argument on behalf 733 of the appellant was that in judging this issue we should see the evidence regarding the mental condition of Ramasami Pillai antecedent and subsequent to December 10, 1927, the conduct of his father, relatives and the other claimants of the property.
It was contended that Ramasami Pillai was attending school.
though nothing was shown to us from which we infer that he had profited by the attempts to educate him.
The appellant, however, set great store by two documents, Exs.
D 1 and D 2, executed by his father, Perumal Pillai, in January and April 1924.
By the first, Perumal Pillai released his claim to certain properties in favour of his four sons, mentioning therein Ramasami Pillai without adverting to the fact that he was a lunatic and without mentioning a guardian.
By the second, which was a will, Perumal Pillai gave equal shares in his properties to his sons including Ramasami Pillai, and once again without a mention of his mental condition.
It was contended that Perumal Pillai was a Sub Registrar who would know the importance of such a fact and also the law that a lunatic was not entitled to succeed.
The fact that the father in these two documents made no mention of the mental condition of his son does not bear upon the present case for two reasons.
The first is that the case of Ramasami Pillai in this suit was that he was quite sane till 1924, and that his mental condition deteriorated only after that year.
The second is that the omission by the father to mention this fact might be grounded on love and affection in which the claim of a mentally defective child might not have been viewed by him in the same manner as the law does.
It was next contended that the other heirs recognised the right of Ramasami Pillai in April 1928 and agreed to give him a 1/9th share, as has been already stated above.
That too would not prove that Ramaswami Pillai was entitled, in law, to a share.
The compromise (which is also contested) might have been out of motives of charity but might not have been due to the fact that Ramasami Pillai 's right to a share was legally entertainable.
The evidence, however, of Ramasami Pillai 's mental incapacity is really voluminous.
Between 734 June 1924 and till his death, numerous suits were filed by different members of the family, including his wife, his cousins, uncle and aunt, in which Ramasami Pillai was always shown as a lunatic requiring the appointment of a next friend or a guardian ad litem.
In one case only where Ramasami Pillai was the second defendant, an appearance was entered on his behalf by a vakil, who contended that Ramasami Pillai was sane and ought to be represented in person.
The Court on that occasion appointed the Head Clerk of the Court as his guardian, and asked him to report about the condition of Ramasami Pillai.
Ramasami Pillai was also asked to appear in Court in person, so that the Court might form its own opinion by questioning him.
The Head Clerk visited Ramasami Pillai and submitted his report, exhibit P 8, in which lie described his observations.
It appears that Ramasami Pillai did not even give his name when questioned, and appeared to be woody and silent.
The relatives felt that he was hungry and fed him; but even after this, Ramasami Pillai did not give any answers to the questions put to him in the presence of his wife and others.
The Head Clerk therefore reported that the appearance of Ramasami Pillai as a gloomy and sickly person with a vacant look and that his inability to answer even the simple question about his name, clearly showed that he was insane, This report was presented to the Court in the presence of the vakil, who had filed the vakalatnama, and on September 20,1924, an order (G. section No. 35 of 1924) was recorded by the Subordinate Judge (exhibit P 9).
It was mentioned therein that the report was not objected to by the vakil for Ramasami Pillai, and that Ramasami Pillai was treated as a lunatic.
Ramasami Pillai himself did not appear.
It was contended that this enquiry as well as the fact that in numerous litigations Ramasami Pillai had a guardian or next friend to look after his interests did not prove that he was insane within the meaning of the Hindu law texts; it only proved that he was a person incapable of looking after his interests and for the purposes of the conduct of the suits a guardian or next friend, as the case might be, was necessary.
In our opinion, the long and continued course of conduct 735 on the part of the various relatives clearly shows that Ramasami Pillai was, in fact, a lunatic, and the report of the Head Clerk given in a case long before the present one was ever contemplated, shows only too clearly that he was, for all intents and purposes, not only a person who was slightly mentally deranged but one who was regarded and found to be a lunatic.
There being this evidence, the distinction now sought to bemade and which appealed to the Subordinate Judge of Tuticorin, is not borne out by the evidence in the case.
Such a long and continuous course of conduct clearlyproves the contention that Ramasami Pillai was, infact, mad.
Further, in exhibit D 22 dated May 20, 1928, Ramaswami Pillai was not considered as a claimant,and his claims could not have been overlooked by all his relatives simply because they were to get an additional share each in the property by reasonof his exclusion.
Some one of his relatives would havefelt the need for asserting the claim on his behalf, ifhe himself did not do so.
In view of the fact that thepreponderance of probabilities is in favour of thedecision of the High Court, we do not think that theappellant has succeeded in establishing the distinction,which was made in the case, between a lunatic and aperson of weak intellect on the evidence, such as it is.
This brings us to the next contention which is oneof law.
It may be pointed out here that before theSubordinate Judge, Ramasami Pillai did not raise thecontention that as a matter of law insanity must becongenital before a person would be excluded from inheritance.
Learned counsel for the appellant explained that it was futile to raise this contention in view of the decision of the Madras High Court in Muthusami vs Meenammal (1), in which it was ruled that insanity need not be congenital to create the disability, and that insanity at the time succession opened was enough.
The point, however, appears to have been raised in the High Court, but it was decided against Ramasami Pillai.
The soundness of this view is questioned in this appeal.
The argument shortly is this: The text of Manu (ix, 201) mentions many causes of exclusion from (1) 736 inheritance, some of which like blindness, muteness,idiocy and lameness, it is settled, must be congenital to exclude a person from inheritance.
It is argued that the collection of the words in the text suggests that insanity like these other disabilities must also be congenital.
No doubt, the word " Unmatha " comes between the words "Jatyandhabadhirau" and " Jadamukascha "; but the rulings have uniformly held that for the madness, the test, that it should be congenital, does not apply.
The argument now raised has the support of the opinion expressed by Dr. Sarvadhikari in his Principles of Hindu Law Inheritance (2nd Edn.) p. 846,where the author expounded the text according to rules of grammar, though he was doubtful if according to medical science, madness as opposed to idiocy is ever congenital.
The translations of the same text by Setlur, Gharpure and Dr. Ghose do not admit this interpretation.
In Muthusami vs Meenammal (1), it was pointed out also that " Unmatha " was not qualified by the word " Jati ".
Seshagiri Ayyar, J. observed that it according to Mimamsa rules of interpretation, an adjective qualifying one clause should not by implication qualify a different clause ".
The counsel on that occasion agreed that this was the correct approach, but relied upon the opinion of Dr. Sarvadhikari which was not accepted.
Learned counsel for the appellant also referred to the opinion of Colebrooke in his Digest, Vol. 11, p. 432.
Colebrooke 's translation is based upon the commentary of Jagannatha Tarkapanchanana, and it is Jagannatha who made no difference between the various disabilities, and opined that madness like blindness or muteness must be also congenital.
No doubt, much weight must be attached to the opinion of Jagannatha who was " one of the most learned pandits that Bengal had ever produced ".
But this translation of Colebrooke has not been universally accepted, and is not borne out by the original texts and commentaries on the Mitakshara.
Dr. Ghose in his Hindu Law, Vol. 1, p. 224 has expressed his doubts.
The texts of Narada XIII, 21, 22, Yajnavalkya 11, 140 141 and others do not show that the defect of madness must also be (1) Mad. 464.
737 congenital.
In Saraswati Vilasa 148, the emphasis of congenital disability is placed on blindness and deafness.
Similarly, in Smriti Chandrika, Chap.
V , 4, persons born blind and deaf are mentioned apart from madmen and idiots.
That idiots must be congenitally so, is ruled by the Courts.
The cases that have come before the Courts have Devasthanam all been uniform, except Murarji Gokuldas vs Parvatibai (1), where the observation is obiter and Sanku vs Puttamma (2), which was dissented from in later cases.
On the other hand, Wooma Pershad Roy vs Grish Chunder Prochundo (3), Deo Kishen vs Budh Prakash (4) and other decisions have clearly held the contrary.
In two cases before the Privy Council it was assumed that madness need not be congenital.
It may also be noted that when the Legislature passed the Hindu Inheritance (Removal of Disabilities) Act XII of 1928 making the change to madness from birth as a ground of exclusion the law was not made retrospective, thus recognising the correctness of the judicial exposition of the original texts.
In this view of the matter, we do not think that we should unsettle the law on the subject; nor has it been made to appear to us that any different view is open.
We accordingly do not accept the contention.
The result is that Ramasami Pillai was not entitled to succeed to M. Picha Pillai.
We now come to the next contention.
It is that even if this be the position, Ramasami Pillai was entitled to 1/9th share on the basis of an alleged arrangement evidenced by exhibit D 7 dated April 1, 1931.
This document is an affidavit which was filed by Doriappa Pillai (Defendant 8) in a suit (O. section No. 25 of 1930) filed by him for possession after partition of his 1/8th share on the basis of exhibit D 22.
In that suit, Ramasami Pillai was the second defendant.
exhibit P 5 is the written statement filed on his behalf in which he repudiated that he was excluded from inheritance by reason of his insanity.
This suit was withdrawn on April 2, 1931, with the leave of the Court, with liberty to bring a fresh suit (exhibit D 6).
In the affidavit which was filed, it was stated as follows : (1) Bom.
(2) Mad.
(3) Cal.
(4) All. 509 (F.B.).
94 738 5.
Excepting Defendant 9, myself and almost all the Defendants agree to give.
to Defendant 2 an equal share with others and thus come to some amicable arrangement between us.
In view of the ninth Defendant 's contentions in the suit and in view of the fact that I have not prayed in this suit for a declaration of my title to the suit properties as against him, I am advised that I should withdraw the present suit for partition with liberty to institute a fresh suit as I may be advised.
It is therefore just and necessary that I may be permitted to withdraw this suit with liberty to bring a fresh suit properly framed." The Subordinate Judge held on this and the evidence of D.W. 2 that this family arrangement was duly proved, and that Defendant 10 who was present in Court when the above statement was made, did not choose to deny it.
The High Court rightly pointed out that the affidavit did not show the compromise as a completed fact, and also did not accept the word of D.W. 2.
The claimants, who are stated to have given a share to Ramasami Pillai, have not been examined.
The High Court also noticed that no application for transfer of the pattas was made.
In view of these circumstances which are all correct, the appellant cannot be said to have successfully established the family arrangement, and we do not consider it necessary to examine the oral evidence in the case.
This brings us to the last point that Ramasami Pillai was entitled to a share in the properties comprised in Sch.
4 A. M. Picha Pillai had filed O.S. No. 35 of 1924 against his cousins for possession of these properties.
The suit was decreed on September 19, 1927.
On October 30, 1927, P. Picha Pillai (Defendant 7) and Serindia Pillai sent a notice, exhibit P 3, informing M. Picha Pillai that he could take possession of the properties covered by, the decree.
This notice was refused and returned to the senders.
M. Picha Pillai died soon afterwards on December 10, 1927.
It is contended that the properties thus remained in possession of the judgment debtors, and the decree not 739 having been executed, the present suit filed on October 18, 1939, is barred in so far as those properties are concerned, and the Devasthanam cannot get possession of them.
Both the Courts below have concurred in holding that M. Picha Pillai must have got possession otherwise than by execution of the decree, because even D.W. 2 not very friendly to the Devasthanam admitted that M. Picha Pillai was at the time of his death in possession of all the suit properties.
The two Courts below also adverted to the fact that for the years, Faslis 1338 and 1339 the 10th defendant paid the taxes, and this would not happen if the heirs of M. Picha, Pillai were not in enjoyment.
The fact that the patta stood in the names of the original judgment debtors would not indicate anything, because mutations some.
times lag behind change of possession.
In view of the fact that the two Courts below have agreed on the finding and there is evidence to support it, we see no reason to interfere.
The question of mesne profits was not pressed,and no other point having been argued, we hold that the appeal has no merits.
It will, accordingly, be dismissed with costs.
Appeal dismissed.
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A Hindu was found to be a lunatic when succession opened.
It was claimed that under the texts lunacy must be congenital to exclude from inheritance.
Held, under the Hindu law lunacy as distinct from idiocy need not be congenital to exclude from inheritance, if it existed when succession opened.
Muthusami vs Meenammal. , Wooma Parshad Roy vs Grish Chunker Prochundo, Cal.
639 and Deo Kishen vs Budh Prakash, All. 509 (F.B.)approved.
Murarji Gokuldas vs Parvatibai, Bom.
177 and Sanku vs Puttamma, Mad. 289, disapproved.
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830.txt
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Appeal Nos.
2914 16 of 1993 etc.
From the Judgment and Order dated 23.3.1993 and 29 3 93 of the Madras High Court in W.P. Nos 15081/91, 8002/92 and 16068/91.
WITH Civil Appeal Nos.
2937/93 3040 40A B/93 3026 27/93 3025/93 990 3015 24/93 3028/93 3084/93 3002/93 3032/93 2993 94/93 3003 04/93 3086 87/93 2995/93 3005 07/93 2987 89/93 3014/93 3008 10/93 3086 87/93 2940 41/93 3011 301 IA/93 2998 3000/93 2986/93 3101 07/93 2992/93 3108/93 2982 82A/93 2983 85/93 3029 31/93 3093 94/93 2943 44/93 991 2955 57/93 2996 97/03 3042 3080/93 3035/93 3039/93 3041/93 3095/93 3033 34/93 3090 92/93 3096 97/93 2981/93 3088 89/93 2979/93 2976 77/93 2960 61/93 2990/93 2968/93 2958 59/93 2971/93 2978/93 2972/93 2942/93 3082 83/93 2969 70/93 2965 67/93 2991/93 992 2973 75/93 3036 38/93 2962 64/93 3085/93 3127 29/93 3012 13/93 3018/93 2938 39/93 2990/93 2945 54/93 WITH Special Leave Petition (CIVIL) Nos. 7375, 8009 11, 8108, 7416, 7560 62 OF 1993.
Shanti Bhushan, K.K. Venugopal, Soli J. Sorabjee, N. Santosh Hegde, Shivasubramaniam.
K. Parasaran, P. Chidambaram, Mrs. Revathy Raghavan, M.A. Krishna Moorthy, Kailash Vasdev, Pawan Kumar, B. Rabu Manohar, Dr. A. Francis Julian (For M/s. Arputham, Aruna and Co.), P. Chandrasekhran, Aruneshwar Gupta, A. Chandrasekar, Pushpendra Singh Bhati, V. Ramajagadesan, V. Balachandran, V. Krishnamurthy, K.V. Vijaya Kumar, Ajit Kumar Sinha, Selvar thenave, Martin, K.V. Mohan, R. Mohan, R. Nedumaran, and P.D. Dinakaran for the Appellants.
P.R. Seetharaman for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH,J.
These bunch appeals are by the Teachers Training Institutes in the State of Tamil Nadu.
They claim to be the minority educational institutions in terms of Article 30(1) of the Constitution of India.
The State Government has declined to recognise these institutes on (lie ground that they have failed to satisfy the conditions for grant of recognition as provided under the Tamil Nadu Minor 993 ity Schools(Recognition and Payment of Grants) Rules, 1977 as amended by the Government Order No. 536 dated May 17, 1989 and Government Order No. 861 dated June 12, 1991.
(Recognition Rules) The appellants challenged, before the Madras High Court by way of writ petitions under Article 226 of the Constitution, the validity of the Recognition Rules.
inter alia, on the ,rounds that the said Rules are violative of Articles 30(1) and 14 of the Constitution of India.
A Division Bench of the High Court consisting of M. Srinivasan and Thangamani, JJ, dismissed the writ petitions.
M. Srinivasan J., who spoke for the Bench, has given a scholarly judgment.
The case law on the subject has been dealt with in detail and the conclusions culled out succinctly.
The High Court judgment has been of utmost assistance to us.
These appeals via special leave are by the Teachers Training Institutes against the judgment of the Division Bench of the High Court.
We announced our conclusions in these matters dismissing the appeals and special leave petitions on May 25, 1993.
Now we proceed to give our reasoned judgment.
The Recognition Rules provide for instructions and teaching practice to be followed, minimum qualifications for teaching and non teaching staff and the following additional Conditions to be satisfied by a teachers training institute to quality for grant of recognition 1.The Teachers Training Institute should have at least 10 acres of suitable land of its own to he used for construction of Building for Institution and Administration and for Hoste l accommodation and staff quarters and also for Play Ground purposes, 2.The Institution Building must consist of suitable rooms to provide for class rooms with roughly 60 sq.
feet of carpet area per inmate one Auditorium cum projection hall with an area of about 2000 Sq.
Laboratory and Special Rooms.
Library Staff rooms separately for Men and Women staff, Principal 's Room, Off ice Room, Store Room for Craft and Physical Education articles.
Toilet facili ties separately for men and women and women 's Common Room; 3.Bath rooms and toilets should be provided.
if the Institution is meant for both sexes separate Such facilities should be provided for 994 men and women teaching staff non teaching staff and men and women candidates.
As far as bath rooms and toilets are concerned arrangements should he made at the rate of one for ten inmates.
4.(a) Adequate furniture and office equipment including furnitures for class rooms, Library, Laboratory and other rooms should be provided to the value of at least a lakh of rupees, (b)Laboratory equipments worth at least a lakh of rupees should be provided for Science, Geography, Home; (c)Teaching appliances.
audio visual aids, charts, maps etc.
worth about Rs. 50,000 should be provided.
(d)Sports/Games/Arts/Music Equipments worth about Rs. should be provided.
(e)Equipment and Material for work experience worth about Rs. 50,000 should be provided.
5.A room with a space of approximately 1000 sq.
with sufficient storage space to keep the equipment furnishing to organise various learning situations, and provision to observe the trainees at work in the laboratory situations.
without being noticed has to be provided.
Sufficient furnitures such as, working tables and almirahs should be provided.
Each Teacher Training Institution should have a good library with at least 10,000 volumes of back and reference books worth at least a lakh of rupees: 7.
Play ground space for sports, gymnastics and other Physical Education activities with an area about 5 acres should be provided.
If the Institute is meant for both sexes, another 3 acres of and should he provided exclusively for women candidates.
The Play ground should he provided adjacent to the main Institution building within the campus and not in a remote place away from the Institution, 995 8.
At least one full fledged recognised Middle School with Standards I to VIII should be functioning under the same management of every Teacher Training Institute seeking recognition, for the purpose of providing teaching practice to the trainess.
This will be a precondition even at the time of sending in applications for recognition of Teachers Training Institutes.
The practical aspects of the Training will be assessed by a competent board to be constituted by the concerned authority.
(a) The need for the opening of the institution in that area will be assessed by a District Committee with a Joint Director nominated by Director of School Education as Chairman with Chief Educational Officer and District Educational Officer/Inspectors of Girls Schools as members as the case may.
This committee will submit a report about satisfaction of norms based on which the competent authority will consider Recognition for the institution, (b) The Authority competent to grant recognition shall take into account the need for granting such recognition to Teacher Training Institutes taking into consideration the trained teachers already available and waiting for appointment and potential to.
absorb the Teachers to be trained in future in the services of Government and Private Schools.
There should he economic strength as prescribed by the education department.
The teachers training institutes should not admit more than forty students in all for the course and should not exceed this limit either in the first or second year.
It was argued before the High Court that as the minorities have a fundamental right under Article 30(1) of the Constitution to establish and administer educational institutions of their choice, the conditions provided under the Recognition Rules are wholly arbitrary and have been designed to oust the appellants from the educational fieled and the provisions regarding, having a middle school '.
ten acres of land, play grounds, library with 10,000 books, laboratory, hostel, staff quarters, bathrooms for students etc.
are so onerous that it is difficult rather impossible to comply with the same.
996 While dealing with the argument based on Article 30(1) of the Constitution of India the High Court discussed in detail the judgments of this Court in Kerala Education Bill[1959] SCR 995, Rev,.
Sidhajbhai Sabhai & Ors.
vs State of Bombay and Anr [ ; S Azeez Basha vs Union of India ; , State of kerala etc, vs Very.
Rev. Mother Provincial etc, [ ; , Regina vs St. Aloysius Higher Elementary School and Anr, [19711 Supp.
SCR 6.
The Gandhi Faiz e am College, Shahjahanpur vs University of Agra and Anr.
[ 19751 2 SCC 283, Lilly,.
Kurian vs Sr.
Lewina and Ors, [ 1 979] 1 SCR 820,All Saints High School, Hyderabad etc.
vs Government of Andhra Pradesh & Ors.
etc ; ; The Managing Board of the Milli Talimi Mission, Bihar Ranchi & Ors.
vs The State of Bihar & Ors., ; , A.P. Christians Medical Educational Society vs Government ofAndhra Pradesh and Anr ; , Frank Anthony Public School Employees Association vs Union of India and ors,[1986]4 SCC 707,All Bihar Christion Schools Association andAnr.
vs State of Bihar and Ors [ 1 988] 1 SCC 206; St. Stephen 's College vs The University of DelhiJT [1991]4 SC 548; Unni Krishnan andAnr.
vs State ofAndhra Pradesh and Ors.
Writ Petition (C) No. 607/92 decided on February4,1993 and TheAhmedabad St Xaviers College Society & Anr.
vs State of Gujarat and Anr 1 975 ] 1 SCR 173.
On the analysis of the above judgments the High Court culled out the following principles 1)The fundamental right declared by Article 30(1) of the Constitution is absolute in terms, but subject to regulatory measures ', 2)There is no fundamental right under Article 19(1) (g) of the Constitution to establish or administer an educational institution, if recognition is sought therefor; 3) The institutions must be educational institutions of the minorities in truth and reality and not mere masked phantoms, 4) There is no fundamental right to recognition and any institution seeking recognition should abide by the regulations,prescribed by the State as conditions therefor; 5)The minority institutions must be fully equipped with educational excellence to keep in step with other institutions in the State; 6) The regulations framed by the State cannot abridge the fundamental right of the minorities and they should be in the interests of 997 the minority institutions themselves and not based on State necessity or general societal necessities; 7) The regulations should be with a view to promoting excellence of educational standards and ensuring security of the services of teachers and others employees of the institutions and in the true interests of efficiency of institutions, discipline, health, sanitation, morality, public order and the like, 8) Even unaided institutions are not immune from the operations of general laws of the land such as Contract Law, Tax measures, Economic Laws, Social Welfare Legislations Labour and Industrial Laws and similar other laws which are intended to meet the need of the Society, No fault can he found with the above quoted legal principles enunciated by the High Court.
Mrs. Kitty Kumar Manglam.
Mr. Shanti Bhushan, Mr. K.K. Venugopal.
Mr. K. Parasaran, Mr. P. Chindambram and other learned counsel appearing for the appellants fairly conceded that the High Court has correctly summed upthe conclusions arising out of the interpretation of Article 30(1) of the Constitution of India.
Before dealing with the Recognition Rules the High Court referred to the Guidelines framed pursuant to the National Educational Policy introduced in the year 1986, the recommendations of the Education Commission (1964 1966), the role of the National Council for Teacher Education under the National Council of Educational Research and Training, the views of various eminent educationists and came to the conclusion that there is a need for drastic change in the basic concept of teachers training in the country.
Comprehensive overhauling of administrative structure of these institutions was urgently needed.
The High Court dealt with in detail the revised syllabus for the diploma in teacher education course and also the curriculum of the institutes of Education Training set up by the Tamil Nadu Government which shows that the State.of Tamil Nadu is in the process of overhauling the methodology of teaching and administration of the teachers training institutes in the State of Tamil Nadu.
The High Court referred to various judgments of this Court wherein the importance of teacher training and need to uplift the standard of such institutions was repeatedly highlighted.
The High Court rightly emphasised the need for maintaining very high standards of Education, Sports, administration and maintenance of the Teachers 998 Training Institutes.
These Institutions are established with the avowed object of training teachers and educationists who have to shoulder the responsibility of moulding the nation.
This Court in N.M. Nageshwaramma vs State of Andhra Pradesh & Anr.
[1986] Supp SCC 166 observed as under: "The Teachers Training Institutes are meant to teach children of impressionable age and we cannot let loose.
on the innocent and unwary children, teachers who have not received proper and adequate training.
True they will be required to pass the examination but that may not be enough.
Training for a certain minimum period in a properly organised and equipped Training Institute is probably essential before a teacher may be duly launched." Jagannatha Shetty, J. speaking for this Court in Andhra Kesari Education Society vs Director of School Education & Ors. J.T.(1988) 4 S.C. 431 observed as under: "Though teaching is the last choice in the job market, the role of teacher is central to all processes of formal education.
The teacher alone could bring out the skills and intellectual capabilities of students.
He is the 'engine ' of the educational system.
He is a principal instrument in awakening the child to cultural values.
He needs to be endowed and energised with needed potential to deliver enlightened service expected of him.
His quality should be such as would inspire and motivate into action the benefitter.
He must keep himself abreast of ever changing conditions.
He is not to perform in a wooden and unimaginative way.
He must eliminate fissipasrous tendencies and attitudes and infuse nobler and national ideas in younger minds.
His involvement in national integration is more important, indeed indispensable.
It is, therefore.
needless to state that teachers should be subjected to rigorous training with rigid scrutiny of efficiency.
It has greater relevance to the needs of the day.
The ill trained or sub standard teachers would be detrimental to our educational system, if not a punishment on our children.
The Government and the University must, therefore, take care to see that inadequacy in the training of teachers is not compounded by any extraneous consideration.
" In State of Maharashtra vs Vikas.
Sahebrao Roundale & Ors.,.
J.T (1992) 5 999 S.C. 175, K. Ramaswamy, J. speaking for this Court observed as under: "The teacher plays pivotal role in moulding the career,character and moral fibres and aptitude for educational excellence in impressive young children.
The formal education needs proper equipment by the teachers to meet the challenges of the day to impart lessons with latest technics to the students on secular, scientific and rational outlook.
A well equipped teacher could bring the needed skills and intellectual capabilities of the students in their pursuits.
The teacher is adorned as Gurudevobhava, next after parents, as he is a Principal instrument to awakening the child to the cultural ethos, intellectual excellence and discipline.
The teachers, therefore, must keep abreast ever changing technics, the needs of the society and to cope up with the psychological approach to the aptitudes of the children to perform that pivotal role.
In short teachers need to he endowed and energised with needed potential to serve the needs of the society.
The qualitative training in the training colleges or schools would inspire and motivate them into action to the benefit of the students.
For equipping such trainee students in a school or a college all facilities and equipments are absolutely necessary and institutions bereft thereof have no place to exist nor entitled to recognition.
In that behalf compliance of the statutory requirement is insisted upon.
Slackening the standard and judicial fiat to control the mode of education and examining, system are detrimental to the efficient management of the education.
" The teacher education programme has to be redesigned to bring in a system of education which can prepare the student teacher to shoulder the responsibility of imparting, education with a living dynamism.
Education being closely interrelated to life the well trained teacher can instill anesthetic excellence in the life of his pupil.
The traditional, stereotyped.
lifeless and dull pattern of" 'chalk.
talk and teach" method has to be replaced by a more vibrant system with improved methods of teaching.
to achieve qualitative excellence in teacher education.
Keeping in view the National Policy of Education, the Government of Tamil Nadu has published, a revised syllabus for the diploma in teacher education course.
in the Government Gazette of August 15, 1990.
The aims and objectives of the said syallbus and curriculum as given by the State of Tamil Nadu are as under: 1000 .LM15 "A sound Programme of Elementary Teacher Education is inevi table for the qualitative improvement of Education.
Education must become all effective instrument of social change and the part played by the teacher should be suitable and significant for this purpose.
The gap between the Teacher Education curriculum and the school curriculum has to he minimized for enabling the teachers to act as agents of social change which necessitates that the education imparted in schools has relevance to the personal as well as social life of individuals and to "the needs and aspirations of the people.
In order to be a catalyst in the process of developing a citizen who is productive and who believes in social justice and national integration, tile teacher himself needs to become such a citizen through appropriate learning experience.
" The High Court has examined the legality of the impugned Recognition Rules in the above background.
It has discussed in detail the object and utility of laying down the impugned conditions for recognition.
The High Court has found that none of the conditions infract Articles 14 and Article 30(1) of the Constitution of India.
We agree with the reasoning and the conclusions reached by the High Court.
This Court cannot go into the question as to whether a Teachers Training Institute should be set up on a campus consisting of 10 acres or 5 acres.
It is also not for this Court to lay down the sizes of the class rooms.
laboratories, number of ' toilets or the number of books to he kept in the library.
It is entirely for the State Government to lay down tile requirements of a teachers training institute campus.
The learned Advocate General appearing for the State of Tamil Nadu has contended that the Recognition Rules are also applicable to Government run teachers training, institutes and also to the institutes which are Government aided.
According to him the new Recognition Policy of the Government has been designed with the object of closing the "teaching shops" and encouraging the genuine institutions.
According, to him the policy is based on the Guidelines issued by the Central Government from time to time.
He further stated that the condition of having an area of 10 acres for the campus has now been reduced to five acres in case of the institutions which are set up within the area of Municipal Corporation.
He has clarified that the only requirement for setting up the library is that it must have reference books worth at least a lakh of rupees.
According to him the number of toilets.
bathrooms etc.
and other conditions regarding the institute building are in the nature of guidelines and are to he substantially complied with.
On our suggestion the learned Advocate General has agreed to command to the State Government.
not to insist on additional 3 acres of land in case of ' co 1001 educational institutes in case these institutes are having 10 acres/5 acres of area as provided under the Recognition Rules.
Mr. Shanti Bhushan appearing in civil appeals arising out of Special Leave Petitions No. 6762 63/93 has contended that the appellants institutes started functioning in the year 1984.
They were refused recognition and as such they challenged the order by way of a writ petition before the High Court.
The learned counsel has invited our attention to the judgment of the High Court dated November 3, 1987 in the said writ petition wherein it is held as under "Consequently, the orders of the respondents 2 and 3 are set aside a writ of mandamus will issue directing the third respondent to grant recognition to the petitioner institute with effect from 27th September, 1984.
This writ petition is allowed with costs.
" Mr. Shanti Bhushan contended that the impugned Recognition Rules cannot be made applicable to the institutions which have already been established and given recognition by the State Government under directions of the Court.
Relying upon the above quoted judgment of the High Court learned counsel has contended that his clients were given recognition with effect from 1984 under the directions of the High Court and as such the impugned Recognition Rules which came into force in the year 1989 cannot be made applicable to them.
It is not disputed by Mr. Shanti Bhushan, that under the directions of the High Court temporary recognition was given to his clients, though according to him the order of the Government granting temporary recognition was challenged before the High Court and the said petition was also disposed of by the impugned judgment.
We see no force in the contention of the learned counsel.
All those institutes which did not have permanent recognition before the issue of the Recognition Rules are bound to comply with the said conditions before they are entitled to permanent recognition.
The High Court was justified in holding that the institutions which were operating on the basis of temporary recognitions, either under the orders of the Courts or otherwise, shall to comply with the recognition rules to enable them to earn recognition.
Mr. K.K. Venugopal contended that a distinction has to be made between the institutions which are functioning earlier to the coming into force of the recognition rules and those which have applied for recognition for the first time.
According to him change over period should be given to the existing institutes which are functioning on the basis of temporary recognition.
We do not agree with Mr. Venugopal.
The training institutes which are functioning on the basis of 1002 temporary recognitions are neither properly organised nor fully equipped to train the teachers.
These institutes have done more harm than good to the cause of education.
Mr. Venugopal and Mr. K. Parasaran have further argued that the students who have already taken the examinations, their results be directed to be declared and if successful, certificates be awarded to them.
Mr. Chindambram, appearing for some of the appellants, has argued that there are students who have already taken the examination and their results have also been declared but they have not been given certificates on the ground that the institutes which sponsored them have not been recognised.
It is no doubt correct that temporary recognitions have been granted to some of the institutions either under the orders of the Court or otherwise and the students of such institutions were permitted to write the examinations.
In number of cases under orders of the Court permission to the students to write the examinations have been given.
The High Court also directed in some cases to publish the results of the students who wrote the examination in April 1992.
All these situations were brought to the notice of the High Court in Writ Petition No. 3674 of 1992 and Writ Petition No. 5469 of 1993 which were heard together.
The High Court refused to grant relief to the students who had written the examination or who had passed the examination and were being denied the certificates.
The High Court observed as under "Based on the above orders, learned counsel for the petitioner contends that the students of the petitioner Institution have validly written the examination when the order of recognition was in force and the results of the examination have already been published, pursuant to the orders of this Court.
It is contended that the students of the petitioner are certainly entitled to the consequential relief of issue of certificates.
Another interlocutory application is now filed in WMP No. 5469 of, 1993 on 22.2.93 for a direction to the third respondent to publish the results of the students who wrote the examination held in July 1992.
In similar cases, we have given directions to the authorities to publish the results.
But, we have taken care to observe that such publication of results will not confer any right on the students as the Institutions have not complied with the rules framed in GOMS.
No. 536.
They cannot take advantage of the interim orders passed by this court directing the government to grant temporary recognition Orders of such temporary recognition 1003 are expressly made subject to the result of the main writ petitions.
Now, we have held that GO Ms. No. 536 is valid and the orders of temporary recognition will not confer any other remedies on the students of the petitioner.
So far as these institutions are concerned, they should be treated only as non recognised.
Just because the students have written the examinations and results are published, they are not entitled to any further relief.
The writ petition is dismissed with the above observations".
It has come to the notice of this Court that many institutions claiming themselves to be minority institutions within the meaning of Article 30(1) of the Constitution, invoke the jurisdiction of the High Court under Article 226 or of this Court under Article 32 for a writ of mandamus to recognise the institutions in question as minority institutions and pending the final disposal of such applica tions, an interim direction is sought to allow the students of such institutions to appear at the examinations concerned.
In connection with such interim prayer, this Court in the case of A. P. Christians Medical Educational Society vs Government of Andhra Pradesh (supra) said: "Shri K.K. Venugopal, learned counsel for the students who have been admitted into the MBBS course of this institution, pleaded that the interests of the students should not be sacrificed because of the conduct or folly of the management and that they should be permitted to appear at the University examination notwithstanding the circumstance that permission and affiliation had not been granted to the institution.
He invited our attention to the circumstance that students of the Medical college established by the Daru Salam Educational Trust were permitted to appear at the examination not with standing the fact that affiliation had not by then been granted by the University.
Shri Venugopal suggested that we might issue appropriate directions Lo the University to protect the interests of the students.
We do not think that we can possibly accede to the request made by shri Venugopal on behalf of the students.
Any direction of the nature sought by Shri Venugopal would be in clear transgression of the provisions of the University Act and the regulations of the University.
We cannot by our fiat direct the University to disobey the statute to which it owes its existence and the regulations made by the University itself.
We cannot imagine anything more destructive of the rule of law that a direction by the court to disobey the laws.
" 1004 In view of the aforesaid pronouncement of this Court, the High Court should not have passed, interim order directing the respondents to allow the teachers of unrecognised institutions to appear at the examinations in question.
Such teachers cannot derive any benefit on basis of such interim orders, when ultimately the main writ applications have been dismissed by the High Court, which order is being affirmed by this Court.
The same view has been expressed by this Court, in connection with the minority unrecognised teachers training institutions in the State of Tamil Nadu itself, in the case of State of Tamil Nadu and others vs St. Joseph Teachers Training Institute and another [1991] 3 SCC 87.
As such no equity or legal right can be pleaded on behalf of the Teachers admitted for training by such minority institutions, for publication of their results, because they were allowed to appear at the examinations concerned, during the pendency of the writ applications before the High Court, on basis of interim orders passed by the High Court, which were in conflict with the view expressed by this Court in the aforesaid cases.
We see no ground to differ with the view taken by the High Court.
This court in N.M. Nageshramma 's case (supra) has held that training in a properly organised and equipped training institute is essential before a candidate becomes qualified to receive teachers training certificate.
Simply passing the examination is not enough.
The future teachers of the country must pass through the institutions which have maintained standards of excellence at all levels.
We see so ground to interfere with the impugned judgment of the High Court.
We agree with the views expressed by the High Court on various aspects of teachers training institutes.
We also agree with the reasoning and the conclusions reached by the High Court.
Before we part with this judgment we consider it necessary to strike a note of caution in respect of passing of interim orders by Courts directing the students of unrecognised institutions, to appear at the examinations concerned.
In view of ' the series of judgments of this Court, the Courts should not issue fiat to allow the students of unrecognised institutions to appear at the different examinations pending the disposal of the writ applications.
Such interim orders affect the careers of several students and cause unnecessary embarrassment and harassment to the Authorities, who have to comply with such directions of the Court.
It is a matter of common knowledge that as a part of strategy, such writ applications for directions to recognise the institutions in question and in the meantime to allow the students to appear at the examinations are filed only when the dates for examinations are justified.
Many of such institutions are not only "masked phantoms" but are 1005 established as business ventures for admitting sub standard students, without any competitive tests, on basis of considerations which cannot serve even the interest of the minority.
There is no occasion for the Courts to be liberal or generous, while passing interim orders, when the main writ applications have been filed only when the dates for the examination have been announced.
In this process, students without knowing the design of the organisers of such institutions, become victim of their manipulations.
The appeals/special leave petitions are dismissed.
No costs.
R.P. Appeals dismissed.
|
The respondent state, in the process of overhauling the methodology of teaching and administration of teachers training institutes in order to achieve qualitative excellence in teacher education , amended the Tamil Nadu Minority Schools (Recognition and Payment of Grant) Rules 1977 by G.O. No.536 dated 17 5 1989 and No. 661 dated 12 6 1991.
The Rules besides providing for instructions teaching practice to be followed and minimum qualification for the staff prescribed certain other conditions regarding land,building, hotel 986 furniture, library, teaching appliances, sports facilities, recognised middle school for providing teaching practice to trainees, etc.
to be satisfies by a teachers training institute to qualify for grant of recognition.
The appellant/petitioners are various Teachers Training Institute in the State of Tamil Nadu.
claiming to be minority educational institutions in terms of Article 30(1) of the Constitution of India The State Government declined to recognise these institutions on the ground that they failed to sutisfy the conditions for grant of recognition as provided under the Recognition Rules.
The appellants/petitioners filed writ petitions before the High Court challenging the validity of the Recognition Rules on the ground that the same were violative of Articles 30(1) and 14 of the Constitution.
It was contended that as the minorities have a fundamental right under r Article 30(1) of the Constitution to establish and administer educational institutions of their choice, the conditions provided under the recognitions Rules were wholly arbitrary and were designed to oust the appellants from the educational field and the the provisions were so onerous that it was difficult rather impossible to comply with the same.
The High Court dismissed the writ petitions.
The appellants/petitioners filed the appeals and the special leave petitions.
It was contended on behalf of the appellants that the Rules could not be made applicable to the institutions already established and given recognition by the State Government under the directions of the Court; and that the successful students of these institutions who had taken examinations be given certificates.
This Court dismissed the appeals and the special leave petitions by its order dated 25 5 1993 indicating that reasons therefor would follow.
Giving reasons for its order dated 25 5 1993, this Court HELD : 1.
The High Court was right in holding that none of the conditions for grant of recognition to teachers training institutes prescribed under the Tamil Nadu Minority Schools (Recognition and Payment of Grants) Rules, 1977, infracted Articles 14 & 30(1) of the Constitution.
It rightly culled out the following principles (i) The fundamental right declared by Article 30(1) of the Constitution is absolute in terms, but subject to regulatory measures; 987 (ii)There is no fundamental right under Article 19(1) (g)of the Constitution to establish or administer an educational institution, if recognition is sought therefore; (iii) The institutions must he educational institutions of the minorities in truth and reality and not mere masked phantoms; (iv) There is no fundamental right to recognition and an% institution seeking recognition should abide by the regulations prescribed by the State as conditions therefor, (v) The minority institutions must be fully equipped with educational excellence to keep in step with other institutions in the State; (vi) The regulations framed by the State cannot abridge the fundamental right of the minorities and they should be in the interests (if the minority institutions themselves and not based on State necessity or general societal necessities .
(vii) The regulations should be, with a view to promoting excellence (of educational standards and ensuring security of the services of teachers and other employees of the institutions and in the true interests of efficiency (if institutions, discipline, health, sanitation, morality public order and the like; (viii) Even unaided institutions are not immune from the operations of general laws of the land such as Contract Law Tax measures, Economic Laws and, Social Welfare legislations, Labour and Industrial Laws and similar other laws which are intended to meet the need of the Society.
Kerala education bill,[1959] SCR 995; Rev. Sidhajbai Sabhai section vs State of Bombay and Anr[1963] 3 SCR 837; section Azeesh Basha vs Union of India ; ; State o Kerala etc.
vs Very Rev. Mother Provincial etc ; ; Regina vs St. Alosius Higher Elementary School and Anr[1971] Supp.
SCR 6; The Ahmedabad St. Xaviers College Society and Anr etc vs State of Gujarat and Anr[1975] 1 SCR 173; The Gandhi Faiz e am College, Shajahanpur
University of Agra and Anr.[1975] 2 SCC 283; Lilly Kurian vs Sr.
Lewina and 988 Ors.[1979] 1 SCR 320; All Saints High School, Hyderabad etc.
vs Government of Andhra Pradesh & Ors.
etc ; ; The Managing Board of the Milli Talimi Mission, Bihar Ranchi & Ors vs The State of Bihar & Ors ; ; A.P. Christians Medical Educational Society vs Government of Andhra Pradesh and Anr.[1986] 2 SCC 667 Frank Anthony Public School Employees Association vs Union of India and Ors [1986]4 SCC 707 All Bihar Christian Schools Association and Anr.
vs State of Bihar and Ors. ; St. Stephon 's College vs The University of Delhi JT(1991) 4 SCC, 548 and Unni Krishnan and Anr.
vs State of Andhra Pradesh and Ors.
cited.
2.1 The teacher education programme has to he redesigned to bring in a system of education which can prepare the student teacher to shoulder the responsibility of imparting educating with a living dynamism and the traditional pattern of "chalk, talk and teach" method has to be replaced by more vibrant system with improved methods of reaching, to achieve qualitative excellence in teacher education.
N.M. Nageshwaramma vs State of Andhra Pradesh & Anr [1986] Supp SCC 166 Andhra Kesari Education Society vs Director of School Education & Ors and State of Maharashtra vs Vikas Sahebrao Roundale & Ors.
J.T.(1992) 5 SC 175, relied on.
2.2 It is entirely for the State Government and not for this Court, to lay down the requirements of a teachers training institute campus.
All those institutes which did not have permanent recognition before the issue of the Recognition Rules, 1977 are bound to comply with the said conditions before they are entitled to permanent recognition.
The High Court was Justified in holding that the institutions which were operating on the basis of temporary recognitions, either under the orders of the Courts or otherwise, shall have to comply with the recognition rules to enable them to earn recognition.
These institutions are neither properly, organised nor fully, equipped to train the teachers.
and have done more harm than good to the cause of education.
3.1 In view of the series of the judgments of this Court the Courts should not issue fiat to allow the students of unrecognised institutions to appear the different examinations pending the disposal of the writ applications.
Such interim orders affect the career of several students and cause unnecessary embarrassment and harassment to the authorities, who have to comply with such directions of the Courts.
989 A.P. Christians Medical Educational Society vs Government of Andhra Pradesh ; , relied on.
3.2 The High Court should not have passed interim orders directing authorities concerned to allow the teachers of unrecognised institutions to appear at the examinations.
It is a matter of common knowledge that many institutions claiming themselves to be minority institutions within the meaning of Article 30(1) of the Constitution invoke the jurisdiction of the High Court under Article 226 or of this Court under Article 32 for a writ of mandamus to recognise the institutions as minority institutions only when the dates for examinations are notified and, as a part of strategy, seek directions to allow, meanwhile, the students to appear at the examinations.
Many of such institutions are not only "masked phantoms" but are established as business ventures for admitting sub standard students without any competitive tests, on basis of considerations which cannot serve even the interest of the minority.
The teachers of such institutions cannot derive any benefit on basis of interim orders when ultimately the main writ applications have been dismissed.
As such no equity or legal right can be pleaded on behalf of the students admitted for traning by such minority institutions for publication of their results or award of certificates.
A.P. Christians Medical Educational Society vs Government of Andhra Pradesh, ; ; and State of Tamil Nadu and others vs St. Joseph Teachers Training Institute and another; , , relied on.
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Appeal No. 369 of 1957.
Appeal from the judgment and decree dated the January 27, 1956, of the Allahabad High Court (Lucknow Bench) at Lucknow in Civil Misc.
Application No. 17 of 1954 (0. J.).
C. B. Agarwala and C. P. Lal, for the appellant.
V. D. Misra, for the respondent.
February 16.
, J. This is an appeal against the judgment and order of the High Court of Allahabad on a certificate granted by that court.
The respondent filed a 99 petition under article 226 of the Constitution praying that the imposition of stamp duty by the Collector of Sitapur, of Rs. 85,595/7/ and a penalty of Rs 5/ was against law and could not be realized against him and prayed that the order be quashed.
,, On September 12, 1948, the, respondent executed a wakf by oral recitation of Sigha and then it was written on a stamped paper which was signed by the respondent and attested by, Witness.
On September 15, 1948, it was presented to the Collector for his opinion under section 31 as to the duty chargeable.
As the Collector himself was in doubt, he referred the matter to the Board of Revenue which, after a fairly long time, held that the document was liable to duty in accordance with article 58 of the Stamp Act.
On October 29, 1951, the Collector held that Rs. 85,598/7/ were payable as stamp duty and ordered that it be deposited within fifteen days.
Notice to this effect was served on the respondent on November, 10, 1951.
Thereupon the respondent filed a petition in the High Court under article 226 which was dismissed on November 3, 1952 on the ground that it was premature.
On February 2, 1954, a further notice was served upon the respondent to deposit the amount of the stamp duty plus the penalty of Rs. 5/ within a month otherwise proceedings would be taken against him under section 48 of the Stamp Act.
Thereafter on March 1 1944, the respondent filed a petition under article 226 of the Constitution in the Allahabad High Court challenging the legality of the, imposition of the stamp duty and the penalty and prayed for a writ of certiorari.
A full bench of the High Court quashed the order of the Collector and the State of U.P. has come in appeal to this Court.
The decision of this appeal depends upon the interpretation of ss, 31, 32 and 33 of the Stamp Act.
The relevant portion of section 31 provides: , section 31(1) "When any instrument,, whether executed or not and whether previously stamped or not,, is brought to the Collector and.
the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and 100 not less than eight annas) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable.
" It is admitted that the document in dispute was submitted to the Collector for his opinion under a. 31 and the opinion of the Collector was sought as to what the duty should be.
Under section 32 of the Act when such an instrument is brought to the Collector, under a. 31 and he determines that it was already fully stamped or he determines the duty which is payable on such a document and that duty is paid, the Collector shall certify by endorsement on the instrument presented that full duty with which it is chargeable has been paid and upon such endorsement being made, the instrument shall be deemed to be fully stamped or not chargeable to duty as the case may be ' Under the proviso to section 32, the Collector is not authorised to make the endorsement if an instrument is brought to him a month after the date of its execution.
Then follows section 33 which is as follows: section 33 "Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom an instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped impound the same.
(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order t o ascertain whether it is stamped with a stamp of the value and description required by the law in force in British India when such instrument was executed or first executed: Provided that (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding 101 under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898; (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.
(3) For the purposes of this section, in case of a doubt, (a) the collecting Government may determine what offices shall be deemed to be public offices; and (b) the collecting Government may determine who shall be deemed to be persons in charge of public offices.
" The decision of this appeal depends upon the interpretation to be put upon the words "before whom any instrument chargeable. . . . is produced or comes in the performance of his functions".
Dealing with these words the High Court held: " With all respect, therefore, we agree that the learned Judges deciding Chuni Lal Burman 's (1) case took a correct view of the words " is produced or comes in the performance of his functions" used in Section 33 of the Act to mean "that production of the instrument concerned in evidence or for the purpose of placing reliance upon it by one party or the other.
" The High Court was also of the opinion that the object of paying the whole stamp duty was to get the instrument admitted into evidence or its being acted upon or registered or authenticated as provided in sections 32(3), 35, 38(1) and 48(1) of the Stamp Act.
Counsel for the State referred to the various sections of the Act; first to the definition section; Section 2(11) which defines what is "duly stamped"; section 2(14) which defines "instrument" and section 9(12) which defines "executed".
He then referred to section 3 which lays down what "chargeable" means and then to section 17 which provides that all instruments chargeable with duty and executed by any person in British India shall be stamped before or at the time of the execution.
Certain other sections i.e. sections 35 and 38(1) were also (1) A.I.R. 1951 All.
851. 102 referred to and so also sections 40(1)(a), 41, 42 and 48 but in our opinion it is not necessary to refer to these sections.
What has to be seen is what is the consequence of a person applying to a Collector for his determination as to the proper duty on an instrument.
The submission on behalf of the State (appellant) was that if an instrument whether 'stamped or not is submitted for the opinion of the Collector before it is executed, i.e., it is signed, then the Collector is required to give his determination of the duty chargeable and return the document to the person seeking his opinion but if the document is scribed on a stamped paper or unstamped paper and is executed then different consequences follow.
In the latter case it was submitted that under section 33 the Collector is required to impound the document if he finds that it is not duly stamped.
On the other hand it was submitted on behalf of the respondent that on his giving his opinion the Collector becomes functus officio and can take no action under section 33.
It is these two rival contentions of the parties that require to be decided in this case.
After an inordinately long delay, the Collector determined the amount of duty payable and impounded the document.
Power to impound is given in section 33 of the Act.
Under that section any Person who is a Judge or is in charge of a public office before whom an instrument chargeable with duty is produced or comes in the performance of his functions is required to impound the instrument if it appears to him not to be duly stamped.
The question is does this power of impounding arise in the present case?.
The instrument in dispute was not produced as a piece of evidence nor for its being acted upon e.g. registration, nor for endorsement as under section 32 of the Stamp Act but was merely brought before the Collector for seeking his advise as to what the proper duty would be.
The words "every person. . before whom any instrument. . is produced or comes in the performance of his functions" refer firstly to production before judicial or other officers performing judicial functions as evidence of any fact to be proved and secondly refer to other officers who have to perform any 103 function in regard to those instruments when they come before them e.g. registration.
They do not extend to the determination of the question as to what the duty payable is.
They do not cover the acts which fall within the scope of section 31, because that section is complete by itself and it ends by saying that the Collector shall determine the duty with which, in his judgment, the instrument is chargeable, if it is chargeable at all.
Section 31 does not postulate anything further to be done by the Collector.
It was conceded that if the instrument is unexecuted i.e. not signed, and the opinion of the Collector is sought, he has to give his opinion and return it with his opinion to the person seeking his opinion.
The language in regard to exe cuted and unstamped documents is no different and the powers and duties of the Collector in regard to those instruments are the same, that is, when he is asked to give his opinion, he has to determine the duty with which, in his judgment, the instrument is chargeable and there his duties and powers in regard to that matter end.
Then follows section 32.
Under that section the Collector has to certify by endorsement on the instrument brought to him under section 31 that full duty has been paid, if the instrument is duly stamped, or it is unstamped and the duty is made up, or it is not chargeable to duty.
Under that section the endorsement can be made only if the instrument is presented within a month of its execution.
But what happens when the instrument has been executed more than a month before its being brought before the Collector? Section 31 places no limitation in regard to the time and there is no reason why any time limit should be imposed in regard to seeking of opinion as to the duty payable.
Chapter IV of the Act which deals with instruments not duly stamped and which contains as.
33 to 48, provides for impounding of documents, how the impounded documents are to be dealt with, Collector 's powers to stamp instruments impounded and how the duties and penalties are to be recovered.
It would be an extraordinary position if a person seeking the advice of the Collector and not wanting to rely upon 104 an instrument as evidence of any fact to be proved nor wanting to do any further act in regard to the instrument so as to effectuate its operation should also be liable to the penalties which unstamped instruments used as above might involve.
The scheme of the Act shows that where a person is simply seeking the opinion of the Collector as to the proper duty in regard to an instrument, he approaches him under section 31.
If it is properly stamped and the person executing the document wants to proceed with effectuating the document or using it for the purposes of evidence, he is to make up the duty and under section 32 the Collector will then make an endorsement and the instrument will be treated as if it was duly stamped from the very beginning.
But if he does not want to proceed any further than seeking the determination of the duty payable then no consequence will follow and an executed document is in the same position as an instrument which is unexecuted and unstamped and after the determination of the duty the Collector becomes functus officio and the provisions of section 33 have no application.
The provisions of that section are a subsequent stage when something more than mere asking of the opinion of the Collector is to be done.
Our attention was drawn to the observations of Rankin C. J. in Be Cooke and Kelly (1) but those observations are obiter as the High Court held that the reference under section 57 of the Stamp Act was incompetent.
The doctrine of functus officio was applied in several cases: Collector, Ahmednagar vs , Rambhau Tukaram Nirhali (2).
In that case a certificate of sale had been signed but the certificate was not duly stamped which was pointed out when it was sent to the Sub Registrar for registration.
The Sub Registrar informed the Judge about it and the Judge got back the certificate from the purchaser and thinking that he had power to impound the document and to impose a penalty asked for the opinion of the high Court and it was held that after he had signed it he was functus officio and could not act any further and could not impound it.
The same principle was laid down in (1) Cal. 1171.
(2) A.I.R. 1930 Bom.
105 Paiku vs Gaya (1) and in Chunduri Panakala Rao vs Penugonda Kumaraswami (2) and in our opinion as soon as the Collector determined the duty he became functus officio and he, could not impound the instrument under a. 33 and consequential proceedings could not ') therefore, be taken.
The appeal is therefore dismissed with costs.
Appeal dismissed.
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The respondent executed an instrument and presented it to the Collector for his opinion under section 31 Stamp Act as to the duty chargeable.
The Collector,, after a reference to the Board of Revenue, determined the duty payable.
He then impounded the instrument and ordered that the ditty be deposited within 98 fifteen days.
Later, a notice was served upon the respondent to deposit the amount of stamp duty and penalty within one month and threatening that in default proceedings would be taken to recover them as arrears of land revenue.
The respondent challenged the legality of the impounding of the instrument and demand of stamp duty and penalty.
Held, that after determination of the stamp duty the Collector became functus officio and could not impound the instrument or demand duty and penalty.
Under section 31 the Col lector has merely to determine the proper amount of duty.
If the person executing the instrument wants to effectuate the instrument or to use it for purposes of evidence he has to make up the duty and under section 32 the Collector makes the necessary endorsement.
Section 33 empowers every person in charge of a public office before whom an instrument chargeable with duty is produced or comes in the performance of his functions to impound the instrument if it is not duly stamped.
When an instrument is presented to the Collector under section 31 for determination of duty it cannot be said that it "is produced or comes in the performance of his functions" as contemplated by section 33.
These words refer firstly to production before judicial or other officers performing judicial functions as evidence of any fact to be proved, and secondly refer to other officers who have to perform any function in regard to those instruments when they come before them, e.g., registration.
In Re Cooke and Kelly, Cal. 1171, held obiter.
Collector, Ahmednagar vs Rambhau Tukaram Nirhali, A.I.R. , Paiku vs Gaya, I.L.R. and Chunduri Panakala Rao vs Penugonda Kumaraswami, A.1,R. , referred to.
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Appeal No. 677 of 1963.
Appeal from the judgment and order dated March 31, 1961 of the Mysore High Court in Writ Petition No. 283 of 1959.
B. R. L. Iyengar and B. R. G. K. Achar, for the appellant.
section V. Venkataranga Iyengar, M. Rama Jois and A. G. Ratnaparkhi, for the respondent.
March 25, 1964.
The judgment of the Court was delivered by AYYANGAR, J.
A very short question regarding the proper construction of Rule 50(b) of the Bombay Civil Services Rules is involved in this appeal which comes before us by a certificate of fitness granted by the High Court of Mysore under article 133 of the Constitution.
The facts giving rise to this appeal which are necessary to be narrated to appreciate the only point urged before us were these: The respondent was recruited as an Upper Division Clerk by the Government of Bombay in 1931 and was later appointed substantively as a Junior Assistant in the Political Department.
While so, on September 17, 1943 his services were transferred on deputation to the office of the Controller of Rationing, Bombay to work as a Senior Assistant in the newly started Rationing department which was a temporary department.
He obtained successive promo tions in this department and by March, 1954 he was drawing a pay of Rs. 460/ p.m. in the grade Rs. 350 30 650 as Rationing Officer.
That department was abolished in March, 1954 and thereafter he was reverted to his parent depart ment.
Though his parent department was the Political De partment, the respondent was, after he ceased to be a Rationing Officer, posted first to the Labour Department and then to the Public Works Department.
When this reversion took place his pay was fixed at Rs. 120/ p.m.
The petitioner protested against this reversion and this loss of his emoluments on the ground that this fixation of pay was contrary to the Rules framed by Government in regard to the service conditions of a Government servant who was appointed on deputation in another department.
He also pointed out that the officer next below him in his parent department had been appointed as an Assistant Secretary by virtue of normal and regular promotion.
therefore, however, final orders were passed on his representation by the Government of Bombay, the came into force and the respondent was allotted to the State of Mysore.
On November 27, 1958 the Government of Mysore informed the respondent through an official memorandum that in view of 473 certain communications received by that Government from the Government of Bombay in answer to his representations he should be considered to have held the post of Senior Assistant on June 1, 1954 on a salary of Rs. 225/ in the grade Rs. 210 15 300.The petitioner 's complaint,however, was that even this order was in violation of the conditions of his service and he claimed that when he was reverted to the parent department he was entitled to be posted as an Assistant Secretary a post which according to him, he would have held on that date had he not been deputed to the department of Civil Supplies on September 17, 1943.
There was no dispute that subject to an argument to which we shall refer presently, the respondent would have held the post of Assistant Secretary because the person next below him one Nadkarni actually held that post on that day.
The respondent claimed that on the basis of the Service Rules to which we shall immediately make reference he should, on his return to the parent department, have been posted as an Assistant Secretary and been allowed the scale of emoluments applicable to that post.
As the Government of Mysore refused to accede to his demand the respondent filed a petition under article 226 for inter alia a writ of mandamus directing the appellant State to include the petitioner in the grade pay of an Assistant Secretary I and fix him above Nadkarni.
The appellant raised a preliminary objection to the writ petition, the objection being that the complaint of the petitioner was not justiciable.
This was primarily based upon the fact that the respondent relied upon a circular of the Government of Bombay dated October 31, 1950 in support of his plea that he was entitled to the benefit that he claimed on reversion to the parent department from his service on deputation.
The material part of that circular ran: "It has come to the notice of Government that Government servants when deputed to other Departments or offices often draw pay in time scales which are identical with the timescales in their parent Departments.
The question therefore, arises on their reversion to their parent Department whether the service rendered in an identical time scale in the Department to which their service had been lent, should be allowed to count for increments in the parent Department under Note 4 below Bombay Civil Service Rule 41.
Government is pleased to direct that all such cases should be regulated under Bombay Civil Service Rule 51 and that only that portion of service in the foreign Department or office should be allowed to count for increments in the parent Department during which the person concerned would have drawn pay in the time scale applicable to the post he holds on reversion, but for his deputation to another Department or office, i.e., the case should be so regulated as to restore the position the person concerned would have occupied in his parent Department had he not been deputed.
" The question as to whether this circular which was treated as an administrative instruction could confer rights en forceable in a court on a Government servant was referred to a Full Bench for its opinion.
Before the learned Judges of the Full Bench the learned Advocate General, however, brought to the notice of the Court that this circular merely gave effect to a statutory rule framed by the Government of Bombay.
The relevant rule in this respect was rule 50(b) of the Bombay Civil Services Rules which ran: "50(b) Service in another post, other than a post carrying less pay referred to in clause (a) of rule 22 whether in a substantive or officiating capacity, service on deputation and leave other than extraordinary leave counts for increments in the time scale applicable to the post on which the Government servant holds a lien as well as in time scale applicable to the post or posts, if any, on which he would hold a lien had his lien not been suspended: Provided that Government may, in any case in which they are satisfied that the leave was taken on account of illness or for any other cause beyond the Government servant 's control, direct that extraordinary leave shall be counted for increment under this clause.
" The position, therefore, that emerged after this was whether an infraction of a statutory rule could give rise to a cause of action to an aggrieved Government servant.
The learned Judges answered this question in the affirmative and there after the Division Bench which heard the petition allowed the writ and granted the respondent the relief that he sought.
It might be mentioned that even by the date of the pendency of these proceedings in the High Court the respondent had retired on account of superannuation and the only question, therefore, was whether he would be entitled to the remuneration to which he, would have been entitled uader the rule in question.
The appellant State applied to the High Court 475 for a certificate to enable an appeal to be filed to this Court and on this having been granted the appeal is now before us.
in view of the decisions of this Court of which it is sufficient to refer to State of U.P. vs Babu Ram Upadhya(1) it was not disputed that if there was a breach of a statutory rule framed under article 309 or which was continued under article 313 in relation to the conditions of service the aggrieved Government servant could have recourse to the Court for redress.
Learned Counsel for the Appellant, however urged two contentions in support of the stand that the respondent was not entitled to be appointed to any higher post than as a Senior Assistant or to receive a salary higher than Rs. 225/in the scale Rs. 210 15 300 which had been granted to him by the impugned order of November, 1958.
The first was that on a proper construction of Rule 50(b), an officer who after serving on deputation in another department is revert ed to his parent department is entitled to nothing more than the increments allowable in the time scale applicable to the substantive appointment which he held at the time of the transfer.
In this connection stress was laid on the words "increments in the time scale applicable to the post on which the Government servant holds a lien" occurring in the subrule.
We are unable to accept this contention.
In the first place, it is not clear whether the case of the respondent was one where he held a lien or one where the lien was suspended, and no material was placed before the Court in this regard, the point in this form not being urged in the High court.
But even assuming that it was a case where the respondent had a lien and his lien had not been suspended it is difficult to see what logic there could be in interpreting the rule as providing different criteria in the two cases. 'Where the lien is suspended the rule speaks of the "post or posts, if any he would have held if his lien had not been suspended".
By the use of the plural, it is clear that the rule ,contemplated the suspended lien being transferred from one post to another in other words, to a promotion from one post to another during the period of the service in another ,department.
If there was any ambiguity in what the rule meant it is wholly dispelled by reference to the circular which ensures to the officer on deputation in another department that he shall be restored to the position he "would have occupied in his parent department had he not been deputed".
It was not suggested that there was any ambiguity in the wording of this circular which, in our opinion, gives proper effect to the provisions of Rule 50(b). (1) ; 476 The other submission of learned Counsel was that a Government servant though he had a right to increments in a time scale applicable to the post that he held on the date of his transfer on deputation and on which he had a lien, had no legal right to be promoted to a higher post and that the construction adopted by the High Court virtually con ceded or guaranteed to officers on deputation a right to an automatic promotion which they would not have had if they had not been posted on deputation.
We see no force in this contention either.
Learned Counsel is right only in so far as the promotion involved relates to a selection post.
But where it is based on seniority cum merit, those considerations are not relevant.
The service of an officer on deputation in another department is treated by the rule as equivalent to service in the parent department and it is this equation between the services in the two departments that forms the basis of Rule 50(b).
So long therefore as the service of the employee in the new department is satisfactory and he is obtaining the increments and promotions in that department, it stands to reason that that satisfactory service and the manner of its discharge in the post he actually fills, should be deemed to be rendered in the parent department also so as to entitle him to promotions, which are often on seniority cummerit basis.
What is indicated here is precisely what is termed in official language the "next below rule" under which an officer on deputation is given a paper promotion and shown as holding a higher post in the parent department if the officer next below him there is being promoted.
If there are adverse remarks against him in the new department or punishments inflicted on him there, different considerations would arise and these adverse remarks etc.
would and could certainly be taken into account in the parent department also, but that is not the position here.
In view of the facts of the case it is not necessary to discuss this aspect in any detail or any further.
The appeal fails and is dismissed with costs.
Appeal dismissed.
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The respondent was a Government servant in one of the departments of the Bombay Government.
He was sent on deputation to another department and after serving there for a long period and getting a number of promotions he was re verted back to his parent department and ordered to be posted at a considerably lower grade, while another Government servant who was below his rank was promoted as Assistant Secretary.
Thereupon the respondent filed a petition under article 226 of the Constitution challenging the order of his posting.
A preliminary objection was raised by the appellant that the petition was not maintainable.
But the High Court held that the respondent was entitled to invoke the jurisdiction of the Court when there is a violation of a statutory rule and on merits it held that the respondent was entitled to the relief claimed.
The present appeal was filed on a certificate granted by the High Court under article 133 of the Constitution.
Before this Court in view of the decision State of U.P. vs Babu Ram Upadhya. ; it was not disputed that if there was a breach of a statutory rule framed under article 309 or continued under article 313 in relation to the condition of service the aggrieved Government servant could have recourse to the Court.
The main contention on behalf of the appellant was that the respondent was not entitled to be appointed to any higher post than as a Senior Assistant or to receive a salary higher than that which had been granted to him by the im pugned order.
Held: (i) Assuming that this was a case where the respon ,dent had a lien and his lien had not been suspended it was not possible to interpret Rule 50(b) of the Bombay Civil Service Rules as providing different criteria to cases where a Government servant had a lien and where his lien has been suspended.
The Rule and the circular make it abundantly clear that an officer on deputation in another department shall be re stored to the position he would have occupied in his parent department had he not been deputed.
(ii) Where promotions are based on seniority cum merit basis an officer on deputation has a legal right to claim pro motion to a higher post in his parent department provided his service in the department to which he is lent is satisfactory.
This may not be the case in regard to selection posts.
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N: Criminal Appeal No. 313 of 1974.
Appeal by Special Leave from the Judgment and Order dated 23 7 1973 of the Bombay High Court in Crl.
Appeal No. 759/73.
Harjinder Singh for the Appellant.
O.P. Rana and R.N. Podar for the Respondent.
289 The Order of the Court was delivered by FAZAL ALI, J.
In this appeal by special leave the appellant has been convicted under section 302 Indian Penal Code and sentenced to imprisonment for life.
After having gone through the judgment of the Sessions Judge and the grounds taken by the appellant in his appeal by special leave we are satisfied that this case does raise some arguable points which merit serious consideration by the High Court.
We would like to point out that although under section 421 of the Code of Criminal Procedure, 1898 which is section 384 of the Code of Criminal Procedure, 1973 the High Court has the undoubted power to summarily dismiss a first appeal against conviction of an accused yet in very serious cases like those under section 302 Indian Penal Code, or other cases where death or life imprisonment can be awarded, the High Court should consider the appeal on merits instead of dismissing it summarily, unless the evidence is so clear and cogent, reliable and creditworthy that on the face of it no case for the barest consideration is made out.
This Court in Govinda Kadtuji Kadam and Ors.
vs State of Maharastra while laying down the guidelines for dismissing an appeal summarily observed as follows: "The summary decision is accordingly a judicial decision which vitally affects the convicted appellant and in a fit case it is also open to challenge on appeal in this Court.
An order summarily dismissing an appeal by the word 'rejected ', as is the case before us, though not violative of any statutory provision removes nearly every opportunity for detection of errors in the order.
Such an order does not speak and is inscrutable giving no indication of the reasoning underlying it.
It may at times embarrass this Court when the order appealed against prima facie gives rise to arguable points which this Court is required to consider without having the benefit of the views of the High Court on those points.
In our opinion, therefore, when an appeal in the High Court raises a serious and substantial point which is prima facie arguable it is improper for that Court to dismiss it summarily without giving some indication of its view on the points raised.
" To the same effect is the later decision of this Court in Sita Ram and Ors.
vs State of U.P. where this Court reiterated as follows: 290 "The order summarily dismissing an appeal by the High Court by the word 'rejected ' is not violative of any statutory provision.
While holding that a summary rejection of the appeal by the High Court is not violative of any statutory provision, this Court pointed out that it is desirable that reasons are recorded by the High Court when prima facie arguable issues have been raised as that would enable the Supreme Court to appreciate the reasons for rejection of the appeal by the High Court.
" We, therefore, hold that even if the High Court chooses to dismiss the appeal summarily some brief reasons should be given so as to enable this Court to judge whether or not the case requires any further examination.
If no reasons are given then the task of this Court becomes onerous inasmuch as we have to perform the function of the High Court itself by reappraising the entire evidence resulting in serious harassment and expense to the accused.
In these circumstances, we set aside the order of the High Court dismissing the appeal and direct the High Court to re admit the appeal and hear it according to law within three months from today, as far as practicable.
As the case is a very old one the High Court should give top priority to the case.
The entire record and the paper books which have been prepared in this Court should be sent to the High Court which has only to hear the counsel for the parties and decide the case.
V.D.K. Appeal allowed.
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Although under section 421 of the Code of Criminal Procedure, 1898 (which is section 384 of the Code of Criminal Procedure, 1973) the High Court has the undoubted power to summarily dismiss a first appeal against conviction of an accused yet in very serious cases like those under section 302 Indian Penal Code, or other cases where death or life imprisonment can be awarded, the High Court should consider the appeal on merits instead of dismissing it summarily, unless the evidence is so clear and cogent, reliable and creditworthy that on the face of it no case for the barest consideration is made out.
Even if the High Court chooses to dismiss the appeal summarily some brief reasons should be given so as to enable the Supreme Court to judge whether or not the case requires any further examination.
If no reasons are given then the task of the Supreme Court becomes onerous in as much as the Judges have to perform the function of the High Court itself by reappraising the entire evidence resulting in serious harassment and expense to the accused.
[289 C, 290 C] Govinda Kadtuji Kadam and Ors.
vs State of Maharashtra, ; and Sita Ram & Ors.
vs State of U.P. ; , followed.
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4381.txt
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Civil Appeal No. 860 of 1973.
From the judgment and order dated the 1st September, 1972 of the Andhra Pradesh High Court at Hyderabad in R.C. No. 10 of 1971.
AND Civil Appeal No. 1614 (NT) of 1978.
Appeal by Special Leave from the judgment and order dated the 26th July, 1976 of the Calcutta High Court in l.
T. Reference No.454 of 1974.
AND Review Petition No. 57 of 1980.
795 IN Special Leave Petition (Civil) No. 4602 of 1977 From the judgment and order dated the 11th June, 1974 of the Calcutta High Court in I.T. Reference No. 195 of 1969.
AND Tax Reference Case Nos. 2 and 3 of 1977.
Income tax Reference under section 257 of the Income tax Act, 1961 drawn up by the Income tax Appellate Tribunal, Bombay Bench 'B ' in R.A. Nos. 1223 and 1224 (Bom.) of 1972 73 (I.T. A. Nos. 24 and 25 (Bom.) of 1971 72.
AND Tax Reference Case No. S of 1978.
Income Tax Reference under section 257 of the Income Tax Act, 1961 made by the Income Tax Appellate Tribunal, Bombay Bench "D" in R.A. No. 225 (Bom.) of 1977 78 arising out of S.T.A.No. 36 (Bombay) 1 1976 77.
A. Subbarao and Y.V. Anjaneyulu for the appellant in Civil Appeal No. 860/73.
E V.S. Desai, Dr. Debi Pal, Praveen Kumar and Anil Kumar Sharma for the Appellant in C.A. 1614 of 1978 and for the Petitioner in Review Petition No. 57/80.
K.G. Haji and R.J. John for the Appellant in Tax Reference Case Nos. 2 and 3 of 1977.
S.E. Dastur, S.N. Talwar and R.J. John for the Appellant in Tax Reference Case No. 5 of 1978.
S.T. Desai, J. Ramamurthi and Miss A. Subhashini for the Respondent in Civil Appeal No. 860/73.
Miss A. Subhashini for the Respondent in Civil Appeal No.1614 of 1978 S.C. Manehanda and Miss A. Subhashini for the Respondent in Tax Reference Nos. 2 and 3 of 1977.
796 S.C. Manchanda, Anil Dev Singh and Miss A. Subhashini for the Respondent in Tax Reference Case No. 5/1978.
S P. Mehta and K.J. John for the Intervener.
Dr. Debi Paul and K.J. John for the Intervener in Tax Reference Case No. 5/1978.
The following Judgments were delivered: TULZAPUKKAR, J.
In these Civil Appeals and Tax Reference Cases certain common questions of law arise for our determination and hence all these are disposed of by this common judgment.
The common questions raised are whether amounts retained or appropriated or set apart by the concerned assessee company by way of making provision (a) for taxation, (b) for retirement gratuity and (c) for proposed dividends from out of profits and other surpluses could be considered as "other reserves" within the meaning of Rule I of the Second Schedule to the (or Rule 1 of the Second Schedule to the Company 's (Profits) Sur tax Act, 1964) for inclusion in capital computation of the Company for the purpose of levying super profit tax ? The first three matters concerning Vazir Sultan Tobacco Co. Ltd; Hyderabad, Ballarpur lndustries, Ltd; and M/s. Bengal Paper Mills Co. Ltd; Calcutta arise under the while the the Tax Reference Cases concerning M/s. Echjay Industries Pvt. Ltd. and Hyco Products Pvt.
Ltd. Bombay arise under the Companies (Profits) Sur tax Act.1 964.
Since Civil Appeal No. 860 of 1973 (Vazir Sultan Tobacco Company 's case) is comprehensive and comprises all the three items of appropriation it will be sufficient if the facts in this case are set out in detail so as to understand how the questions for determination arise in these matters.
Vazir Sultan Tobacco Co. Ltd. was an assessee under the Super (Profits) Tax Act, 1963.
For the assess ment year 1963 64, for which the relevant accounting period was the year which ended 30th September, 1962, for computing the chargeable profits of that year for the purpose of levy of super profits tax under the Act, the assessee company claimed that the appropriations of a) Rs. 33,68,360 for taxation, (b) Rs. 9,08,106 for retirement gratuity and (c) Rs. 18,41,820 for dividends (all of which items were shown under the heading 'current liabilities and provisions ' in the concerned balance sheet as at 30th Sept. 1962) should be regar 797 ded as "other reserves" within the meaning of Rule 1 of Second A Schedule to the Act and be included while determining its capital.
The Super Profits Tax officer rejected the assessee 's contention as in his opinion all these items were "provisions ' and not "reserves" and as such these had to be ignored or excluded from the capital computation of the assessee company and on that basis he determined the capital, and the standard deduction and levied super profits tax on that portion of the chargeable profits of the previous year which exceeded the standard deduction.
In the appeal preferred by the assessee company against the assessment, the Appellate Commissioner upheld the assessee 's contentions and held that those items were "reserves" and took them into account while computing the capital of the assessee company.
In the further appeal prefer red by the Super Tax officer, the Income Tax Appellate Tribunal accepted the Department 's contention and held that these were not "reserves" within the meaning of Rule I of the Second Schedule to the Act and as such these could not enter into capital computation of the assessee company.
In the Reference that was made under section 256(1) of the Income Tax Act, 1961 read with section 10 of the at the instance of the assessee company the following question of law was referred to the Andhra Pradesh High Court for its opinion: "Whether on the facts and in the circumstances of the case the provisions (a) for taxation Rs. 33,68,360, (b) for retirement gratuity Rs. 9,08,106 and (c) for dividends Rs. 18,41,820, could be treated as 'reserves ' for computing the capital for the purpose of super profits tax under Second Schedule to the for the assessment year 1963 64 ?" F The High Court on a consideration of several authorities answered the question in respect of the three items in favour of the Revenue and against the assessee company and held that the three sums so set apart by the assessee company in its balance sheet were not "reserves" and had to be excluded in the computation of its capital for the purpose of levying super profits tax payable on the chargeable profits tor the relevant accounting year.
It is this view of the High Court that is being challenged by the assessee company in the Civil Appeal No. 86() of 1973 before us.
In Civil Appeal No. 1614/1978 (Ballarpur Industries Ltd ) and Review Petition No. 57 of 1980 (M/s. Bengal Paper Mills Co. Ltd.) 798 We are concerned with only two items of appropriation being (a) provision for taxation and (b) provision for proposed dividend and in each one of these cases the Calcutta High Court had taken the view that these two items do not constitute "reserves" and as such have to be ignored while computing the capital of the assessee company.
In Tax Reference Case Nos. 2 and 3 of 1977 (M/s Echjay Industries Pvt.
Ltd.) a case under , we are concerned with two items of appropriation being (a) provision for taxation (b) provision for proposed dividend for the two assessment years 1969 70 and 1970 71 and in each of the years the Taxing Authorities as also the Income Tax Appellate Tribunal Bombay have taken the view that these appropriations did not constitute "other reserves" within the meaning of Rule I of the Second Schedule to the Companies (Profit) Surtax Act, 1954 and as such were not includible in the capital computation of the assessee company but in view of a divergence of opinion between the different High Courts on the point, the Tribunal has at the instance of the assessee company made a direct Reference to this Court under section 257 of the Income Tax Act, 1961 read with section 18 of the .
In Tax Reference Case No. 5 of 1978 (Hyco Products Pvt.
Ltd.) also a case under the same question pertaining to dividend alone but in a different form arose for consideration before the Taxing Authorities and the Income Tax Appellate Tribunal.
It was not a case of 'proposed dividend ' but the assessee company after transferring Rs. 29,77,000 out of the current year 's profit amounting to Rs. 61,03,382 to General Reserves, paid out of Rs. 3,10,450 as dividend to its share holders from such augmented General Reserves and the question was whether while computing the capital of the assessee company for the purpose of levy of surtax the General Reserves should or should not be reduced by the aforesaid sum of Rs. 3,10,450 ? In other words, the question was whether the amount of Rs. 3,10,450 could not form part of the General Reserves on the relevant date (being 1.1.
1973) for the computation of the capital ? The Taxing Authorities as well as the Appellate Tribunal Bombay held that the said amount of Rs. 3,10,450 had to be ignored for the purpose of computation of capital for surtax purposes because it was not a reserve.
The assessee company has challenged this view of the Tribunal before us in this direct Reference made to this Court under section 257 of the 799 Income Tax Act, 1961 read with section 18 of the Companies ' (Profits) A Surtax Act, 1964.
It may be stated that the scheme and the main provisions of the two concerned enactments are almost identical, the object of both these enactments being the imposition of a special tax on excess profits earned by companies.
Under Section 4 of the 1963 Act, which is the charging provision, there shall be charged on every company for every assessment year commencing on and from 1st April, 1963, a tax, called the super profits tax, in respect of so much of its "chargeable profits" of the previous year as exceed the "standard deduction" at the rate or rates specified in the Third Schedule.
Section 2(5) defines the expression "chargeable profits" to mean the total income of an assessee computed under the Income Tax Act, 1961, for any previous year and adjusted in accordance with the provisions of First Schedule, while Section 2(9) defines the expression "standard deduction" to mean an amount equal to six per cent of the capital of company as computed in accordance with the provisions of the Second Schedule, or an amount of Rs. 50,000 whichever is greater.
In order to D determine "standard deduction" it becomes necessary to compute capital of the company in accordance with the rules laid down in the Second Schedule and rule 1 is relevant for our purposes, the material portion whereof runs as follows: "1.
Subject to the other provisions contained in this Schedule, the capital of a company shall be the sum of the amounts, as on the first day of the previous year relevant to the assessment year, of its paid up share capital and of its reserve, if any, credited under the proviso (b) to Clause (vi b) of sub section (2! of sec.
10 of the Indian Income Tax Act, 1922 or under sub section (3) of sec.
34 of the Income Tax Act, 1961, and of its other reserves in so far as the amounts credited to such other reserves have not been allowed in computing its profits for the purposes of the Indian Income Tax Act, 1922 or the Income Tax Act, 1961 . " It will be clear from the aforesaid provision of rule 1 that before any amount or sum qualifies for inclusion in capital computation of a company two conditions are required to be fulfilled (a) that the amount or sum must be a "reserve" and (b) the same must not have been allowed in computing the company 's profits for the purposes of the 1922 Act or the 1961 Act.
That none of the items 800 of appropriation either for taxation or for retirement gratuity, or for proposed dividend in the concerned assessees ' case had been allowed in computing the assessee 's profits under the 1961 Act has not been disputed; in other words the second condition indicated above has been satisfied.
The question is whether any of these items could be treated as or falls within the expression "other reserves" occurring in the said rule.
The expression 'reserve ' has not been defined in the Act and therefore one would be inclined to resort to its ordinary natural meaning as given in the dictionary but it seems to us that the dictionary meaning, though useful in itself, may not be sufficient, for, the dictionaries do not make any distinction between the two concepts 'reserve ' and 'provision ' while giving their primary meanings whereas in the context of the legislation with which we are concerned in the case a clear distinction between the two is implied.
According to the dictionaries (both oxford and Webster) the applicable primary meaning of the word 'reserve ' is: "tc, keep for future use or enjoyment; to set apart for some purpose or end in view; to keep in store for future or special use; to keep in reserve", while 'provision ' according to Webster means: "something provided for future." In other words according to the dictionary meanings both the words are more or less synonymous and connote the same idea.
Since the rules for computation of capital contained in the Second Schedule to the Act proceed on the basis of the formula of capital plus reserves a formula well known in commercial accountancy, it becomes essential to know the exact connotation of the two concepts 'reserve ' and 'provision ' and the distinction between the two as known in commercial accountancy.
Besides, though the expression 'reserve ' is not defined in the Act, it cannot be forgotten that it occurs in a taxing statute which is applicable to companies only and to no other assessable entities and as such the expression will have to be understood in its ordinary popular sense, that is to say, the sense or meaning that is attributed to it by men of business, trade and commerce and by persons interested in or dealing with companies.
Therefore, the meanings attached to these two words in the provisions of the dealing with preparation of balance sheet and profit and loss account would govern their construction for the purposes of the two taxing enactments.
We might mention here that in C.l.
T. vs Century Spinning and Manufacturing Company (1) this Court after referring to the dictionary 801 meaning of the expression 'reserve ' observed: "what is the true A nature and character of the disputed sum (sum allegedly set apart) must be determined with reference to the substance of the matter" and went on to determine the true nature and character of the disputed sum by relying upon the provisions of the Indian Companies Act 1913, the form and the contents of the balance sheets required to be drawn up and Regulation 99 in Table A of the 1st Schedule.
The distinction between the two concepts of 'reserve ' and 'provision ' is fairly well known in commercial accountancy and the same has been explained by this Court in Metal Box Company of India Ltd. vs Their Workmen (1) thus: "The distinction between a provision and a reserve is in commercial accountancy fairly well known.
Provi sions made against anticipated losses and contingencies are charges against profits and therefore, to be taken into account against gross receipts in the P. and L. account and the balance sheet.
On the other hand, reserves are appropriations of profits, the assets by which they are represented being retained to form part of the capital employed in the business.
Provisions are usually shown in the balance sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietor 's interest.
(See Spicer and Pegler 's Book keeping and Accounts, 15th Edition, page 42)".
In other words the broad distinction between the two is that whereas a provision is a charge against the profits to be taken into account against gross receipts in the P and L account, a reserve is an appropriation of profits, the asset or assets by which it is represented being retained to form part of the capital employed in the business.
Bearing in mind the aforesaid broad distinction we will briefly indicate how the two concepts are defined and dealt with by the .
Under section 210 of the it is incumbent upon the Board of Directors of every company to lay before the annual general meeting of its share holders (a) the annual balancesheet and (b) the profits and loss account pertaining to the previous 802 financial year.
Section 211(1) provides that every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the form set out in of Schedule VI, or near thereto as circumstances admit or in such other from as may be approved by the Central Government either generally or in any particular case, while section 211(2) provides that every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of of r Schedule VI, so far as they are applicable thereto.
In other words the preparation of balance sheet as well as profit and loss account in the prescribed forms and laying the same before the share holders at the annual general meeting are statutory requirements which the company has to observe.
The Form of balance sheet as given in of Schedule VI contains separate heads of 'reserves and Surpluses ' and 'current liabilities and provisions ' and under the sub head 'reserves ' different kinds of reserves are indicated and under sub head 'provisions ' different types of provisions are indicated; is the interpretation clause setting out the definitions of various expressions occurring in and Il and the expressions 'reserve ', 'provision ' and 'liability ' have been defined in cl. 7 thereof.
Material portion of cl.
(7) of runs as under: "(1) For the purposes of and II of this Sche dule, unless the context otherwise requires: (a) the expression "provision" shall, subject to sub.
(2) of this clause mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy: (b) the expression "reserve" shall not, subject as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability; (c) x x x x x x x x x 803 and in this sub clause the expression "liability" shall include A all liabilities in respect of expenditure contracted for and all disputed or contingent liabilities.
(2) Where (a) any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, not being an amount written off in relation to fixed assets before the commencement of this Act; or (b) any amount retained by way of providing for any known liability, is in excess of the amount which, in the opinion of the directors, is reasonably necessary for the purpose, the excess shall be treated for the purposes of this Schedule as a 'reserve ' and not a 'provision '.
" On a plain reading of cl.
7(1) (a) and (b) and cl.
7(2) above it will appear clear that though the term 'provision ' is defined positively by specifying what it means the definition of 'reserve ' is negative in form and not exhaustive in the sense that it only specifies certain amounts which are not to be included in the term 'reserve '.
In other words the effect of reading the two definitions together is that if any retention or appropriation of a sum falls within the definition of 'provision ' it can never be a reserve but it does not follow that if the retention or appropriation is not a provision it is automatically a reserve and the question will have to be decided having regard to the true nature and character of the sum so retained or appropriated depending on several factors including the intention with which and the purpose for which such retention or appropriation has been made because the substance of the matter is to be regarded and in this context the primary dictionary meaning of the term 'reserve ' may have to be availed of.
But it is clear beyond doubt that if any retention or appreciation of a sum is not a provision, that is to say, if it is not designated to meet depreciation, renewals or diminution in value of assets or any known liability the same is not necessarily a reserve.
We are emphasising this aspect of the matter because during the hearing almost all counsel for the assessees strenuously contended before us that once it was shown or became clear that the retention or appreciation of a sum out of 804 profits and surpluses was for an unknown liability or for a liability which did not exist on the relevant date it must be regarded as a reserve.
The fallacy underlying the contention becomes apparent if the negative and non exhaustive aspects of the definition of reserve are borne in mind.
Having regard to type of definitions of the two concepts which are to be found in cl. 7 of Part.
III the proper approach in our view, would be first to ascertain whether the particular retention or appropriation of a sum falls within the expression 'provision ' and if it does then clearly the concerned sum will have to be excluded from the computation of a capital, but in case the retention or appropriation of the sum is not a provision as defined the question will have to be decided by reference to the true nature and character of the sum so retained or appropriated having regard to several factors as mentioned above and if the concerned sum is in fact a reserve then it will be taken into account for the computation of capital.
Having thus indicated the proper approach to be adopted, we shall proceed to deal with the three items of appropriation being (a) provision for taxation, (b) provision for retirement gratuity and (c) provision for proposed dividends in the case of concerned assessee companies in these Appeals and Tax Reference Cases.
Dealing first with the item of appropriation by way of provision for taxation, which arises in Civil Appeal No. 860/1973 (Vazir Sultan Tobacco Company), Civil Appeal No. 1614 (NT)/ 1978 (Ballarpur Industries Ltd;) Review Petition No. 50/1980 (M/s. Bengal Paper Mills Co. Ltd.) and Tax Reference Cases Nos. 2 & 3/1977 (M/s Echjay Industries Pvt.
Ltd;) the common question is whether the concerned amounts appropriated or set apart by these assessee companies from out of the profits and other surpluses by way of making provision for taxation constitute a provision or a reserve on the relevant date, being the first day of the previous year relevant to the assessment year in question ? Taking Vazir Sultan Tobacco Company 's case as an illustration, for the assessment year 1963 64 the relevant accounting period was the year which ended on September 30, 1962; under Rule I of the Second Schedule to the , the first day of the previous year would be october 1, 1961 and.
therefore, the balance sheet of that company as on September 30, 1961 and the profits and loss account which ended on September 30, 1961 would be relevant.
It cannot be disputed that on the expiry of September 30, 1961, the assessee company incurred the taxation liability in respect of the profits 805 which it had earned during that year, though the exact amount of such liability could not be determined with substantial accuracy at that time and the same would have to be ascertained by reference to rate of taxes applicable to that year.
The liability for taxation having thus arisen on the expiry of the last day of the year, the setting apart of the sum of Rs. 33,68,360 by the Board of Directors will have to be regarded as a provision for a known and existing liability, the quantification whereof bad to be done later.
On principle, therefore, it seems to us clear that the item of Rs. 33,68,360 which had been set apart by the Board of Directors for taxation must be regarded as a provision and cannot be regarded as a reserve.
Similar would be the position in regard to the appropriations for taxation made by the other assessee companies mentioned earlier.
In this context a reference to this Court 's decision in the case of Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central) Calcutta( ') would be useful.
In that case the question was whether a certain amount which had been set apart as provision for payment of income tax and super tax was a "debt owed" within the meaning of section 2(m) of the , as on March 31, 1957 which was the valuation date and as such was deductible in computing the net wealth of the appellant company.
In its balance sheet for the year ending March 31, 1957 the appellant company had shown a certain amount as provision for payment of income tax and super tax in respect of that year of account and this Court took the view that the expression "debt owed" within the meaning of section 2(m) of the could be defined as the liability to pay in presenti or in futuro an ascertainable sum of money and that the liability to pay income tax was a present liability though the tax became payable after it was quantified in accordance with ascertainable data; that there was a perfected debt on the last date of the accounting year and not a contingent liability.
The Court further observed that the rate was always easily ascertainable; that if the Finance Act was passed, it was the rate fixed by that Act; if the Finance Act was not yet passed, it was the rate proposed in the Finance Bill pending before the Parliament or the rate in force in the preceding year whichever was more favourable to the assessee and that all the ingredients of a "debt" were present and it was a present liability of an ascertainable amount and that, therefore, the amount of provision for payment of income tax and super tax in respect of the year of account ending March 31, 1957 was a "debt H 806 owed" within the meaning of section 2(m) on the valuation date, namely March 31, 1957 and was as such deductible in computing the net wealth.
The ratio of this decision clearly suggests that the appropriation of the amounts set apart by the assessee companies before us for taxation would constitute a provision made by them to meet a known and existing liability and as such the concerned amounts would not be includible i n capital computation.
Counsel for the assessee company in Vazir Sultan Tobacco Company 's case, however, attempted to raise a further plea that the provision for taxation in the sum of Rs. 33,68,360 was an excess provision in the sense it was in excess of the amount which was reasonably necessary for the purpose of taxation and, there ore, the excess should be treated as a reserve and not a provision and in this behalf reliance was placed on cl.
(7) (2) of Part III of Schedule VT and three decisions of the Madras High Court Commissioner of Income tax Madras vs Indian Steel Rolling Mills Ltd.(l) of the Himachal Pradesh High Court in Hotz Hotels Pvt. Ltd. vs Commissioner of Income Tax, Haryana, H.P. and Delhi(2) and of Allahabad High Court in Commissioner of Income Tax, Delhi vs Modi Spinning and Weaving Mills(3).
There could be no dispute about the principle that if provision for a known or existing liability is made in excess of the amount that would be reasonably necessary for the purpose 13: the excess shall have to be treated as a reserve and, therefore, would be includible in the capital computation but no such case was made out by the assessee company at any stage of the assessment proceedings either before the Taxing Authorities or even before the Tribunal or the High Court and in the absence of any such plea having been raised at any stage of the proceedings it will not be proper for this Court to allow the assessee company to raise such a plea, which will need investigation into facts, for the first time in its appeal before this Court.
The contention is, therefore, rejected.
Dealing next with the item of appropriation made for retirement gratuity, which arises only in Civil Appeal No. 860/1973 (Vazir Sultan Tobacco Co.) the question is whether the sum of Rs. 9,O8,106 appropriated or set apart by the assessee company from out of its profits and other surpluses by way of providing for retirement gratuity is a provision or a reserve on the relevant date, 807 viz. 1.10.1961 ? Counsel for the assessee compaoy vehemently urged before us that this appropriation had not been allowed as a deduction in the income tax assessment proceedings of the company for the relevant assessment year on the ground that it was in the nature of a reserve and the entire sum, minus the actual payments, was added back to the income and profits of the assessee company and if that be so, in the super profit tax assessment it cannot be treated as a provision and excluded from capital computation.
According to him there could not be two different treatments for the same item in income tax assessment and super profit tax assessment.
He pointed out that this contention was specifically urged in the appeal before the Appellate Assistant Commissioner but was wrongly rejected.
He further submitted that no actuarial valuation had been undertaking but ad hoc amount was appropriate or transferred to gratuity reserve and as such the same should have been treated as a reserve and included in capital computation.
On the other hand, counsel for the Revenue seriously disputed the last submission and contended that it was never the case of the assessee company either before the Taxing Authorities or before the Tribunal or before the High Court that the appropriation was or an ad hoc sum without undertaking any actuarial valuation.
It must be observed that whereas the assessee company did urge a contention before the lower authorities that different treatments for the same item could not be given for purpose of income tax assessment and super profit tax assessment, the assessee company did not clarify by placing material on record as to whether the appropriation of the amount was based on any actuarial valuation or whether it was an appropriation of an ad hoc amount an aspect which, as we shall presently point out, has a vital bearing on the question whether the appropriation could be treated as a provision or a reserve.
In the absence of proper material touching this vital aspect, we are afraid, the issue in question will have to be remanded to the Taxing Authorities through the Tribunal for disposal in the light of the well settled principles in that behalf, which we shall presently indicate.
Ordinarily an appropriation to gratuity reserve will have to be regarded as a provision made for a contingent liability, for, under a scheme framed by a company the liability to pay gratuity to its employees on determination of employment arises only when the employment.
Of the employee is determined by death, incapacity, retirement or resignation an event (cessation of employment) Certain to happen in the service career of every employee; moreover, the amount of gratuity payable is usually dependent on the emp 808 loyee 's wages at the time of determination of his employment and the number of years of service put in by him and the liability accrues and enhances with completion of every year of service; but the company can work out on an actuarial valuation its estimated liability (i.e. discounted present value of the liability under the scheme on a scientific basis) and make a provision for such liability not all at once but spread over a number of years.
It is clear that if by adopting such scientific method any appropriation is made such appropriation will constitute a provision representing fairly accurately a known and existing liability for the year in question; if, however, an ad hoc sum is appropriated without resorting to any scientific basis such appropriation would also be a provision intended to meet a known liability, though a contingent one, for, the expression 'liability ' occurring in cl.
(7) (1) (a) of Part III of the Sixth Schedule to the includes any expenditure contracted for and arising under a contingent liability; but if the sum so appropriated is shown to be in excess of the sum required to meet the estimated liability (discounted present value on a scientific basis) it is only the excess that will have to be regarded as a reserve under cl.
(7) (2) of to the Sixth Schedule.
In the above context we might refer to one English case decided by the House of Lords and two or three decisions of this Court, which seem to lead to aforesaid propositions.
In Southern Railway of Peru Ltd. vs Owen(1) an English Company operating a railway in Peru was, under the laws of that country, liable to pay its employees conpensation on the termination of their services either by dismissal or by notice or on such termination by death or efflux of contractual time.
The compensation so paid was an amount equivalent to one month 's salary at the rate in force at the date of determination for every year of service.
In the computation of taxable income under the Income tax Act 1918, the company claimed to be entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be thrown on it, calculating the sum required to be paid to each employee if he retired without forfeiture at the close of the year and (; setting aside the aggregate of what was required in so far as the year had contributed to the aggregate.
The House of Lords rejected the deductions on the ground that in calculating the deductions the company had ignored the factor of discount.
But, their Lordships recognised the principle that the company was entitled to charge, against each year 's receipts, the cost of making the 809 provision for the retirement which would ultimately be payable as the company had the benefit of the employee 's services during that year provided the present value of the future payments could be fairly estimated.
Lord MacDermott observed at page 345 as follows: ". as a general proposition it is, I think right to say that, in computing his taxable profits for a particular year, B a trader, who is under a definite obligation to pay his employees for their services in that year an immediate payment and also a future payment in some subsequent year, may properly deduct, not only the immediate payment but the present value of the future payment, provided such present value can be satisfactorily determined or fairly estimated." In Standard Mills Co. Ltd. vs Commissioner of Wealth Tax, Bombay (1) the question for decision was whether an estimated liability under gratuity schemes framed under industrial awards amounted to 'debts ' and could be deducted while computing the net wealth of the assessee company under the Wealth Tax Act.
This Court held in view of the terms of section 2 (m) of that Act, that as the liability lo pay gratuity was not in praesenti but would arise in future on determination of the service, i. e.
On the retirement, death or termination, the estimated liability under the schemes would not be a 'debt ' and, therefore, could not be deducted while computing the net wealth.
The House of Lords decision in the case of Southern Rly.
Of Peru Ltd. (supra) was distinguished by this Court as having no relevance to the question before it on the ground that the House of Lords in that decision was concerned in determining the deductibility of the present value of a liability which may arise in future in the computation of taxable income for the relevant year under the income tax laws.
It will thus appear that this Court was of the view that though such a liability is a contingent liability and, therefore, not a 'debt ' under section 2(m) of the it would be deductible under the Income Tax Act while computing the taxable profits; in other words different considerations would apply to cases arising under the and the Income Tax Act.
In Matal Box Co 's case (supra) this Court was concerned with the nature of liability under a scheme of gratuity in the context of the and the question related to a sum 810 of Rs. 18.38 lakhs being the estimated liability under the two gratuity schemes framed by the company, which was deducted from the gross receipts in the P & L Account, it being contended on behalf of the workmen that such deduction was not justified while determining the 'available surplus ' and the 'allocable surplus ' for payment of bonus to them under the .
The Court rejected the contention and adverting to the decision of House of Lords in the case of Southern Rly.
Of Peru Ltd. (supra) held that an estimated liability under gratuity schemes even if it amounted to a contingent liability and was not a 'debt ' under the Wealth Tax Act, if properly ascertainable and its present value was fairly discounted was deductible from the gross receipts while preparing the P & L Account.
The material portion of the head note appearing at page 54 of the report runs thus: "Contingent liabilities discounted and valued as necessary, can be taken into account as trading expenses if they are sufficiently certain to be capable of valuation and if profits cannot be properly estimated without taking them into consideration.
An estimated liability under a scheme of gratuity if properly ascertainable and its present value is discounted, is deductible from the gross receipts while pre paring the P & L account.
This is recognised in trade circles and there is nothing in the Bonus Act which prohibits such a practice.
Such a provision provides for a known liability of which the amount can be determined with substantial accuracy.
It cannot, therefore, be termed a "reserve".
Therefore, the estimated liability for the year on account of a scheme of gratuity should be allowed to be deducted from the gross profits.
The allowance is not restricted to the actual payment of gratuity during the year.
" At page 62 of the Report this Court observed thus: "Two questions, therefore, arise: (I) whether it is legitimate in such a scheme of gratuity to estimate the liability on an actuarial valuation and deduct such estimated liability in the P & L Alc while working out its net profits; (2) if it is, b whether such appropriation amounts to a reserve or a provision?.
In the case of an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, re 811 gard being had to the accepted principle of commercial A practice and accountancy .
It is not as if such deduction is permissible only in case of amounts actually expended or paid.
Just as receipts, though not actual receipts but accrued due, are brought in for income tax assessment, so also liabilities accrued due would be taken into account while working out the profits and gains of the business".
Again at page 64 of the Report this Court observed thus: "In the instant case the question is not whether such estimated liability arising under the gratuity schemes amounts to a debt or not.
The question that concerns us is whether while working out the net profits, a trader can pro vide from his gross receipts his liability to pay a certain sum for every additional year of service which he receives from his employees.
This, in our view, he can do if such liability is properly ascertainable and it is possible to arrive at a proper discounted present value.
Even if the n liability is a contingent liability, provided its discounted present value is ascertainable, it can be taken into account.
Contingent liabilities discounted and valued as necessary can be taken into account as trading expenses if they are sufficiently certain to be capable of valuation and if profits cannot be properly estimated without taking them into account.
" In the case of Workmen of William Jacks .
Co. Ltd. vs Management of Jacks & Co. Ltd. Madras (1) another decision under the Payments of Bonus Act, 1965, this Court, after referring to the distinction pointed out in Metal Box Co 's case between the two concepts 'provision ' and 'reserve ' has observed on page 547 as follows: "The provision for gratuity, furlough salary, passage, service and commission, in the present case was all made in respect of existing and known liabilities though in some cases the amount could not be ascertained with accuracy.
It was not a case where it was an anticipated loss or anticipated expenditure which would arise in future.
Such provision is therefore not a reserve at all and cannot be added back under item 2 (c) of the Second Schedule." 812 In the above case also the Court was concerned with the question whether particular provision made for gratuity, furlough salary, passage, etc.
was a reserve or a provision for the purpose of Second Schedule to the .
At page 546 of the report the Court has categorically observed that all these items, namely, gratuity furlough salary, passage, service, commission, etc.
were clearly in respect of liabilities which had already accrued in the years in which the provision was made and were not in respect of anticipated liabilities which might arise in future and, therefore, the Court held that the said provision was not a reserve but a provision.
From the aforesaid discussion of the case law it seems to us clear that the propositions indicated by us earlier clearly emerge.
Since in the instant case sufficient material throwing light on the above aspects of the question has not been made available, we think, it will be in the interest of justice to remand the case through the Tribunal to the taxing authority to decide the issue whether the con cerned amount (Rs. 9,O8,1061 ) set apart and transferred to gratuity reserve by the assessee company was either a provision or a reserve and if the latter to what extent? The taxing authority will decide the issue in light of the above principles after giving an opportunity to the assessee company to place additional relevant materials before Turning to the last item of appropriation by way of provision for proposed dividends, which arises in all these matters (except in Tax Reference Case No. 511978 of Hyco Products Pvt. Ltd.) the common question is whether the concerned amount appropriated or set apart by the assessee companies from out of the profits and other surpluses by way of making provision for 'proposed dividends ' constituted a provision or a reserve on the relevant date ? It is true that under section 27 of the the Directors can merely recommend that a certain sum be paid as dividend but such recommendation does not result in any obligation or liability; the obligation or liability to pay the dividend arises only when the share holders at the annual general meeting of the company decide to accept the recommendation and pass a resolution for declaration of the dividend.
It is therefore open to the directors to withdraw or modify their recommendation at any time before the shareholders accept the same and it is equally open to the shareholders not to accept the recommendation at all or to declare a dividend of an amount lesser than that recommended by directors.
In Kesoram 813 Industries case (supra) this Court has clarified the aforesaid legal A position by observing at page 772 of the report, thus: "The directors cannot distribute dividends but they can only recommend to the general body of the company the quantum of dividend to be distributed.
Under section 217 of the Indian , there shall be attached to every balance sheet laid before a company in general meeting a report by its board of directors with respect to, interalia, the amount, if any, which it recommends to be paid by way of dividend.
Till the company in its general body meeting accepts the recommendation and declares the dividend, the report of the directors in that regard is only a recommendation which may be withdrawn or modified as the case may be.
As on the valuation date (under the Wealth Tax Act) nothing further happened than a mere recommendation by the directors as to the amount that might be distributed as dividend, it is not possible to hold that there was any debt owed by the assessee to the share holders on the valuation date.
" All that follows from above is that in the instant cases the appropriations of the concerned amounts by the Board of Directors by way of providing for proposed dividend would not constitute 'provisions ' for, the appropriations cannot be said to be by way of providing for any known or existing liability, none having arisen on the date when the directors made the recommendation much less on the relevant date being the first day of the previous year relevant to the assessment year in question.
But as stated earlier this by itself would not automatically convert the appropriation into 'reserves ', regard being had to the negative and non exhaustive character of the definition of 'reserve ' given in cl. 7 (I)(b) of Part III of the Sixth Schedule to the Companies A ct.
The question whether the concerned amounts in fact constituted 'reserves ' or not will have to be decided by having regard to the true nature and character of the sums so appropriated depending on the surrounding circumstances particularly the intention with which and the purpose for which such appropriations had been made.
We have already indicated that according to the dictionaries (both oxford and Webster) the applicable meaning of the word 'reserve ' is: "to keep for future use or enjoyment; to set apart for some purpose or end in view; to keep in store for future or special 814 use; to keep in reserve.
" In other words, the word 'reserve ' as a noun in ordinary parlance would mean "something which is kept for future use or stored up for something or set apart for some purpose".
It cannot be disputed that a reserve may be a general reserve or specific reserve and all that is required is that an amount should be kept apart for some purpose, either general or specific.
Eeven so the question is whether the earmarking of a portion of pro fits by the board of directors of a company avowedly for the purpose of distributing dividend would fall within the expression 'reserve ' occurring in rule T of the Second Schedule to the ? For this purpose certain tests indicated in some decisions of this Court will have to be considered: The first decision of this Court in that behalf is the decision in Century Spinning and Manufacturing Company 's ease (supra).
In that case the material facts were these: For the year ending 31st December, 1946, the profit of the assessee company, whose accounting year was the calendar year, was a certain sum according to the profit and loss account.
After making provision for depreciation and taxation, the balance of Rs. 5,08,637 was carried to the balance sheet.
This sum was not allowed in computing the profits of the assessee for the purposes of income tax.
On 28th February, 1946, the Board of directors recommended out of that amount the sum of Rs. 4,92,426 should be distributed as dividend and the balance of Rs. 16,211 was to be carried forward to the next year 's account.
This recommendation was accepted by the share holders in their meeting on 3rd April, 1946, and the amount was shortly afterwards distributed as dividend.
In computing the capital of the assessee company on 1st April, 1946, under the Business Profits Tax Act, 1947, the assessee claimed that the sum of Rs. 5,08,637 and the profit earned by it during the period 1st January, 1946 to 1st April, 1946, should be treated as "reserves" for the purpose of rule 2(1) of Schedule IT.
The High Court held that the sum of Rs. 5,08,637 must be treated as a reserve for the purpose of rule 2, but the profit made by the assessees during the period 1st January, 1946 to 1st April, 1946 could not be included in the reserves.
On appeal to this Court, it was held that the sum of Rs. 5,08,637 as well as the profits earned by the assessee during the period 1st January, 1946 to 1st April, 1946 did not constitute "reserves" within the meaning of rule 2 (1) of Schedule II.
After noting that the expression 'reserve ' had not been defined in the Business Profits Tax Act, 1947 and after noting dictionary meanings of that expression the Court observed: 815 " What is the true nature and character of the disputed A sum must be determined with reference to the substance of the matter and when this is borne in mind, it follows that the 1st of April, 1946 which is the crucial date, the sum of Rs. 5,08,637 could not be called a reserve for nobody possessed of the requisite authority had indicated on that date the manner of disposal or distination.
On the other hand, B on the 28th February, 1946 the directors clearly earmarked it for distribution as dividend and did not make it a reserve.
Nor did the company in its meeting of 3rd April, 1946 decide that it was a reserve.
It remained on the 1st of April, as a mass of undistributed profits which were available for distribution and not earmarked as "reserve".
On the 1st of January, 1946 the amount was simply brought from the profit and loss account to the next year and nobody with any authority on that date made or declared a reserve.
The reserve may be a general reserve or a specific reserve, but there must be a clear indication to show whether it was a reserve either of the one or the other kind.
The fact that it constituted a mass of undistributed profits on the 1st Jan. 1946 cannot automatically make it a reserve.
On the 1st April, 1946 which is the commencement of the chargeable accounting year, there was merely a recommendation by the directors that the amount in question should be distributed as dividend.
Far from showing that the directors have made the amount in question a reserve it shows that they had decided to earmark it for distribution as dividend.
" The decision clearly lays down that the true nature and character of the appropriation must be determined with reference to the substance of the matter; obviously this means that one must have regard to the intention with which and the purpose for which appropriation has been made, such intention and purpose being gathered from the surrounding circumstances.
In that behalf the following aspects mentioned in the judgment provide some guidelines: (a) a mass of undistributed profits cannot automatically become a reserve and that somebody possessing the requisite authority must clearly indicate that a portion thereof has been earmarked or separated from the general mass of profits with a view to constituting it either a general reserve or a specific reserve, (b) the surrounding circumstances should make it apparent that the amount so ear marked or set apart is in fact a reserve to be utilised in future for a specific purpose and on a specific occasion, and (c) a clear conduct on the 816 part of the directors in setting apart a sum from out of the mass of undistributed profits avowedly for the purpose of distribution as dividend in the same year would run counter to any intention of making that amount a reserve.
It was because these aspects obtained in the case that this Court took the view that neither the sum of Rs. 5,08,637 nor the profits earned by the assessee during the period 1st January, 1946 to 1st April 1946 constituted "reserve" within the meaning of Rule 2(1) of Second Schedule of the Business Profits Tax Act, 1947.
Two more decisions of this Court one in First National City Bank vs Commissioner of Income Tax (1) and the other in Commissioner of Income Tax (Central), Calcutta vs Standard Vacuum oil Co.(2) which provide two more guidelines, may now be considered.
In both these cases the Court was concerned with the question whether the amount set apart as "undivided profit" or set apart as "earned surplus" in accordance with the system of accountancy which obtained in the United States amounted to a reserve liable to be included in the capital computation under rule 2 of Schedule II of the Business Profits Tax Act, 1947.
In both the cases the assessees were non resident companies and followed the system of accounting that obtained in the American commercial world.
In the first case Justice Kapur, speaking for the court, pointed out the difference between the two system of accounting at Page 23 of the Report thus: "In India at the end of an year of account the unallocated profit or loss is carried forward to the account of the next year, and such unallocated amount gets merged in the account of that year.
In the system of accounting in the USA each year 's account is self contained and nothing is carried forward.
If afteral locating the profits to diverse heads mentioned above any balance remains, it is credited to the "undivided profits" which become part of the capital fund.
If in any year as a result of the allocation there is loss the accumulated undivided profits of the previous years are drawn upon and if that fund is exhausted the banking company draws upon the surplus.
In its very nature the undivided profits are accumulation of amounts of residue on hand at the end of the year of successive periods of accounting and these amounts are by the prevailing accounting practice and the Treasury directions regarded as a part of the capital fund of the banking company. ' 817 After quoting with approval the above observations, Mr. A Justice Shah in Standard Vacuum Oil Co. 's case went on to observe at page 695 of the report as follows: "It is true that the court in that case was dealing with a case of a banking company but the characteristics noted are not peculiar to the accounts of a banking company; they are applicable with appropriate variations to the accounts of all companies in which different nomenclatures are used in the accounts to designate the residue on hand as 'surplus ', ' undivided profits ' or 'earned surplus '.
Where the balance of net profits after allocation to specific reserves and payment of dividend are entered in the account under the caption 'earned surplus ', it is intended thereby to designate the fund which is to be utilised for the purpose of the business of the assessee.
Such a fund may be regarded according to the Indian practice as 'general reserve") This Court in the first case held that the amount designated as "undivided profits" which was available for continuous future use of the business for the bank was a part of the reserve and had to be taken into account while computing the capital under rule 2(1) of Schedule II of the Business Profits Tax Act; similarly, in the second case the Court held that the amount which had been allocated to "earned surplus" which was intended for the purpose of the business of the assessee company and was used in subsequent years in business, represented ' 'reserves" within the meaning of rule 2 of Schedule II of the Business Profits: Tax.
From these two decisions two aspects emerge very clearly.
In the first place, the nomenclature accorded to any particular fund which is set apart from out of the profits would not be material or decisive of the matter and secondly, having regard to the purpose of rule of 2 of Schedule II of the Business Profits Tax Act, 1947, if any amount set apart from out of the profits is going to make up capital fund of the assessee and would be available to the assessee for its business purposes, it would become a reserve liable to be included in the capital computation of the assessee under that Act.
The provisions of the also lend support to the proposition that an appropriation for proposed dividend would not amount to a reserve.
Section 217(1) runs thus: 818 "217(1) There shall be attached to every balance sheet laid before a company in general meeting, a report by its Board of directors, with respect to (a) the state of the company 's affairs, (b) the amounts, if any which it proposes to carry to any reserves in such balance sheet, (c) the amounts, if any, which it recommends should be paid by way of dividend; (d) . . . . . . " Regulation 87 of Table A in the First Schedule runs thus: "87(1) The Board may, before recommending any dividend, set aside out of the profits of the company such sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the company may be properly applied, including provision for meeting contingencies or for equalising dividends; and pending such application may at the like discretion, either be employed in the business of the company or be invested in such investments (other than shares of the company) as the Board may, from time to time, think fit.
(2) The Board may also carry forward any profits which it may think prudent not to divide, without setting them aside as a reserve.
" The aforesaid provisions read together clearly show that creating re serves out of the profits is a stage distinct in point of fact and anterior in point of time to the stage of making recommendation for payment of dividend and the scheme of the provisions suggests that appropriation made by the Board of Directors by way of recommending a payment of dividend cannot in the nature of things be a reserve.
If regard be had to the guide lines indicated above as well as the provisions of the specified above we are clearly of the opinion that the appropiations made by the directors for proposed dividend in the case of the concerned assessee companies do not constitute 'reserves ' and the concerned amounts so set apart would have to be ignored or excluded from capital computation.
819 Since we have reached the aforesaid conclusion on first principles and on the basis of the guidelines discussed above it is unnecessary for us to go into or discuss the scope and effect of the Explanation to Rule 1 in Second Schedule to The though it seems to us prime facie that the Explanation, being clarifacatory in nature is declaratory of the existing legal position.
Dealing with the last case of Hyco Products Pvt.
Ltd. Bombay (Tax Reference Case No. 5 of 1978), where the question pertaining to dividend but in a different form arises for consideration, the admitted facts may briefly be stated.
The question relates to the Assessment Year 1974 75, the relevant previous year being calendar year 1973 and the material date being 1.1.1973.
After the accounts of the calendar year 1972 were finalised the directors transferred out of the profits of Rs. 61,03,382 of that year a sum of Rs. 29,77,000 to the General Reserve.
With such tranfer the General Reserve of the assessee company as on 1.1.1973 stood at Rs. 86,07,712.
At the end of the calendar year, 1973 admittedly the directors did not make any provision for 'proposed dividend ' in its accounts but there was note on the Balance Sheets to the following effect: "The directors have recommended dividend for the year 1972 at the rate of Rs. 10/ per share free of tax.
The dividend, if approved by the share holders at the forth coming Annual General Meeting, will be paid out of General Reserve and no separate provision has been made therefor in the accounts.
" At the Annual General Meeting held on June 30, 1973 dividend of Rs. 3,10,450 was declared by the share holders and the same was soon thereafter paid out of the said General Reserve.
In the surtax assessment proceedings under the 1964 Act the assessee claimed that the entire general reserve which stood as Rs. 86,07,712 as on 1.1.1973 should be taken into account while computing the capital of the assessee company.
But the taxing officer reduced the general reserves by the aforesaid sum of Rs. 3,10,450 and only the balance of Rs. 82,97,262 was added in computing the capital.
The Appellate Assistant Commissioner as well as the Income Tax Appellate Tribunal, Bombay confirmed the order of the Taxing officer.
The Tribunal took the view that though it was not a case of 'pro posed dividend ' since the amount actually paid out as dividend was a smaller sum than the amount transferred from out of profits to 820 the General Reserve that amount could not form part of the reserve and therefore the General Reserve as reduced by Rs. 3,10,450 was properly taken into account for the purpose of computation of the capital as on the relevant date.
At the instance of the assessee the Tribunal has referred the following question of law directly to this Court for its opinion under section 257 of the Income Tax Act 1961 read with section 18 of the : "Whether on the facts and in the circumstances of the case the Tribunal was justified in excluding a sum of Rs. 3,10,450 representing the dividends declared for the calendar year 1972 from the General Reserves on the opening date of the previous year while computing the capital under the Second Schedule of the for the assessment year 1974 75?" Counsel for the assessee company contended that after con ceding that this was not a case of "proposed dividend" the Tribunal erred in holding that the sum of Rs 3,10,450 representing the dividends paid out from the General Reserve was liable to be excluded while computing the capital of the company as on 1.1.1973 for purposes of sur tax assessment under the 1964 Act.
According to him under section 205(1) of the dividend can be paid from out of the current year 's profits or profits of any previous financial year or years and there is no presumption in law or in commercial accounting that a dividend has to be paid either from the current year 's profits or from the past year ' s profits.
He further urged that once from out of the current year 's profit a certain sum is transferred to the General Reserve it merges into the latter and the General Reserve so augmented becomes a conglomerate fund and if out of such conglomerate fund any sum is recommended or paid out as dividend it will be difficult to say that such payment has come out of the portion of current year 's profits that has been transferred and merged and there is no reason why the principle 'Last in, First out ' should be invoked for drawing the inference that the payment has been made out of the current year 's profits.
He pointed out that such a principle was applied by the Bombay High Court in two decisions, namely, Commissioner of Income Tax, Bombay City l vs Bharat Bijlee Ltd.(1) and Commissioner of Income Tax, Bombay City ll vs Marrior (India) Ltd.(2) but urged that there 821 was no warrant for it.
In support of his contention that the entire A General Reserve of Rs. 86,07,712 without any deduction should have been taken into account while computing the capital of the assessee company, counsel relied upon a decision of the Andhra Pradesh High Court in Super Spinning Mills Ltd. vs Commissioner of Income Tax, Hyderabad(l).
Alternatively counsel pointed out that as far as stock valuation is concerned a question often arises whether the stock on hand at the end of the year is to be valued at the closing price or at the initial purchase price and in 'Advanced Accounting ' by R. Keith Yorston and E. Bryan Smyth (a treatise on the principles and practice of accounting in Australia) three methods of valuing the closing stock have been indicated at pages 441 and 442 of Vol.
II (5th Edn.) of the treatise, namely, (a) First in First out, (b) Last in First out and (c) Average Cost.
In regard to these three methods the authors have stated thus .
(a) First in First out The assumption underlying this method is that the oldest stock is used or issued first or that sales are made in the order in which the goods are purchased or produced.
If there are several lots of goods at different prices, they are regarded as being exhausted in the order of purchase.
On a rising market this would write off the lower priced lots first, and on a falling market the higher priced lots would go first." (b) "Last in First out.
This method assumes that the items of stock purchased are the first to be issued or sold and thus the stock remaining is valued at the cost of the earlier purchase." (c) Average Cost.
On this basis issues of stocks are valued at the weighted average cost of the stock on hand at the beginning and of the purchases, less any issues already made.
" 822 Counsel for the assessee urged that for determining whether the entire General Reserve of Rs. 86,07,712 or reduced General Reserve of Rs. 82,97,262 should be taken into account for capital computation either the 'First in First out ' principle should be adopted; if not, only a proportionate deduction should be made and the balance should be held to be includible in capital computation, particularly because the payment of dividend has been from a conglomerate fund.
It is not possible to accept either of these contentions urged by counsel for the assessee company.
It is true that under section 205(1) a of the it is open to the directors to recommend and the share holders to approve payment of dividends either from the current year 's profits or from the past year 's profits.
It is also true that on transfer of a portion of current year 's profits to the General Reserve the augmented General Reserve becomes a conglomerate fund but having regard to the natural course of human conduct of hard headed men of business and commerce it is not difficult to predicate that the dividends would ordinarily be paid out from the current income rather than from the past savings unless the directors in their report expressly or specifically state that payment of dividends would be made from the past savings.
From the commercial point of view if any amount is required for incurring any expenditure or making any disbursement like distribution of dividends in a current year, then ordinarily the same will come out of the current income of the company if it is available and only if the same is insufficient then the past savings will be resorted to for the purpose of incurring that expenditure or making that disbursement; such a course would be in accord with the common sense point of view.
We may point out that this aspect of the matter was not considered by the Andhra Pradesh High Court in Super Spinning Mills Ltd. case (supra) and the view of the Bombay High Court in the case of Bharat Bijlee Ltd. (supra) and Marrior (India) Ltd. (supra) commends itself to us.
Even in regard to the question of valuing the closing stock the learned authors of the treatise referred to by the counsel for the assessee company merely indicate three methods for such valuation and it will be open to a commercial concern to avail of any one method.
In our view in the context of the question whether while incurring any expenditure or making any disbursement a commercial concern will resort to current income or past savings, the normal rule, in the absence of express indication to the contrary, would be to resort to the current income rather than past savings.
823 In our view, therefore, the Tribunal was right in excluding the sum of Rs. 3,10,450 from the General Reserves while computing the capital of the assessee company for the assessment year ]974 75, in the absence of express indication to the contrary.
In the result Civil Appeal No. 1614(NT) of 1978 and Review Petition No. 57 of 1980 are dismissed.
Civil Appeal No. 860 of g 1973 is partly allowed and the issue whether the appropriation for retirement gratuity is a reserve or not is remanded to the Taxing Authority and the rest of the appeal is dismissed.
In Tax Reference Cases Nos. 2 and 3 of 1977 and No. S of 1978 the questions referred to us are answered in favour of the Department and against the assessee companies.
Each party will bear its own costs in all the matters.
AMARENDRA NATH SEN, J.
At the outset I wish to observe that I have been somewhat diffident in hearing these matters.
I felt a little embarrassed as I found that as a Judge of the High Court at Calcutta, I had an occasion to consider some of the questions in the case of Braithwaite and Co. (India) Ltd. vs Commissioner of.
Income Tax, West Bengal, (I) (Income Tax Reference No. 262 of 1969).
As I have already considered some of the questions and have expressed my views on the same in the judgment delivered by me in the said reference, I was wondering whether I should hear these appeals.
The members of the Bar, however, represented to me that they had not only no objection to my hearing these appeals but they also wanted me to hear these appeals.
They further represented that most of the Judges of this Court had on some occasion or other considered these questions.
They further stated that if I would decline to take up these matters not only the members of the Bar who had come from various parts of the country for these appeals would be seriously inconvenienced; but also the litigant public who had been waiting for years for the hearing of these matters would be prejudiced.
It was further pointed out to me that the judgment which was delivered by me was not under appeal and further it would appear from the judgment which I had earlier delivered in Braithwaite matter, there was in fact a concession made by the learned counsel appearing on behalf of the assessee that the said case was covered by the decision of the Supreme Court in the case of Commissioner of Income tax Bombay City vs Century Spinning and Manufacturing Co. Ltd. ( ') The learned counsel appearing on behalf 824 of the parties further represented to me that the earlier judgment was delivered by me as a Judge of the High Court and it was always open to me to reconsider ' my view, particularly as a Judge of this Court after hearing the submissions to be made by the learned counsel appearing on behalf of the parties.
In view of the aforesaid representations and submissions made by the learned lawyers, I was persuaded to hear these appeals with my learned brothers to avoid inconvenience not only to the lawyers but to the litigant public.
I have also had no doubt in my mind that if I felt after hearing the submissions made by the learned counsel appearing on behalf of the parties in these appeals, that the earlier judgment delivered by me was wrong and incorrect, I would have no hesitation in reconsidering my earlier decision.
I do not propose to set out the facts of this case at any length in this judgment.
The facts have been fully and correctly set out in the judgment of my learned brother Tulzapurkar, J. My learned brother in his judgment has also dealt with the various arguments which were advanced from the Bar and has also considered the decisions which were cited.
I propose to notice only some of the decisions which, to my mind, are particularly important for decision of the question whether the provision made in the balance sheet for payment of dividend to the share holders recommended by the Board of Directors constituted a 'reserve ' and the amount, so set apart, should be taken into account, in computing the capital of the company for the purpose of Super Profits Tax Act, 1963.
It may be noted that in the Act itself the expression 'reserve ' has not been defined.
In the case of Commissioner of Income tax, Bombay City vs Century Spinning and Manufacturing Co. Ltd. (supra), this Court had the occasion to consider the meaning of the word 'reserve ' while dealing with a case under Business Profits Tax Act (XXI of 1947).
In this Act also, there were similar provisions with regard to computation of the capital of the Company and the assessee had claimed that the amount recommended by the Board of Directors and earmarked for payment of the dividend to the share holders should be treated as 'reserve ' and should be taken into consideration in computing the capital of the assessee.
The Supreme Court observed at pp.
503 504 as follows : "The term 'reserve ' is not defined in the Act and we must resort to the ordinary natural meaning as understood 825 in common parlance.
The dictionary meaning of the word 'reserve ' is : "1 (a) To keep for future use or enjoyment; to store up for some time or occasion; to refrain from using or for enjoying at once.
(b) To keep back or hold over to a later time or place or for further treatment.
To set apart for some purpose or with some end in view; to keep for some use.
To retain or preserve for certain purposes (oxford Dictionary, Vol .
VIII, P. 513.) In Webster 's New International Dictionary Second Edition, page 2118 'reserve ' is defined as follows: 1.
To keep in store for future or special use; to keep in reserve; to retain, to keep, as for oneself.
To keep back; to retain or hold over to a future time or place.
To preserve.
" The Supreme Court further observed at p. 504: "What is the true nature and character of the disputed sum, must be determined, with reference to the substance of the matter?" The Supreme Court held at p. 504 505 as follows : "A reserve in the sense in which it is used in rule 2 can only mean profit earned by a company and not distributed as dividend to the shareholders but kept back by the directors for any purpose to which it may be put in future.
Therefore, giving to the 'reserve ' its plain natural meaning it is clear that the sum of Rs. 5,08,637 was kept in reserve by the company and not distributed as profits and subjected to taxation.
Therefore, it satisfied all the requirements of rule 2.
The Directors had no power to distribute the sum as dividend.
They could only recommend as indeed they did, and it was upto the shareholders of the company to accept that recommendation in which case alone the 826 distribution could take place.
The recommendation was accepted and the dividend was actually distributed.
It is, therefore, not correct to say that the amount was kept back.
The nature of the amount which was nothing more than the undistributed profits of the Company, remained unaltered.
Thus the profits Lying unutilised and not specially set apart for any purpose on the crucial date did not constitute reserves within the meaning of Schedule II, rule 2(1).
" The Supreme Court also referred to S.l31 (a) and 132 of the Indian .
Referring to these sections the Supreme Court observed at p. 505 as follows: "Section 131 (a) enjoins upon the directors to attach to every balance sheet a report with respect to the state of company 's affairs and the amount if any which they recommend to be paid by way of dividend and the amount, if any, which they propose to carry to the reserve fund, general reserve or reserve account.
The latter section refers to the contents of the balance sheet which is to be drawn up in the Form marked in Schedule III.
This Form contains a separate head of reserves.
Regulation 99 of the Ist Schedule.
Table A, lays down 'that the directors may, before recommending any dividend set aside out of the profits of the company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for equalising dividends, or for any other purpose to which the profits of the company may be properly applied. ' The Regulation suggests that any sum out of the profits of the company which is to be made asa reserve or reserves must be set aside before the directors recommend any dividend.
In this case the directors while recommending dividend took no action to set aside any portion of this sum as a reserve or reserves.
Indeed, they never applied their mind to this aspect of the matter.
The balance sheet drawn up by the assessee as showing the profits was prepared in accordance with the provisions of the Indian .
These provisions also support the conclusion as to what is the true nature of a reserve shown in a balance sheet.
" In the case of Commissioner of Income Tax vs Standard Vacuum oil Co. (1) this Court had occasion to consider the decision in 827 the case of Commissioner of Income tax vs Century Spinning and A Manufacturing Co. Ltd. (supra).
Dealing with the said decision of this Court held at p. 697 98 as follows : "The Court was dealing in this case with the accounts of an Indian Company, the balance sheet of which was prepared according to the provisions of the Indian Companies Act, 1913.
Regulation 99 of the First Schedule, Table A, required that reserves must be set apart before the directors recommended any dividend but out of the profits of the company no amount was set apart towards reserves before the directors recommended payment of dividend to the shareholders.
The identity of the amount remaining on hand at the foot of the profit and loss account was not preserved.
rt is on these facts that the court held that there was no allocation of the amount to reserve and from the mere fact that it was carried forward in the account of the next year and ultimately applied in payment of dividend, it could not be said to be specifically set apart for any purpose at the relevant date, i. e. the end of the year of account." This Court then proceeded to hold at p. 697 98 as follows : "We are in this case dealing with a foreign company and the system of accounting followed by the company is different in important respects from the system which obtains in India.
Companies in India maintain diverse types of reserves: such as capital reserve, reserve for redemption of debentures, reserve for replacement of plant and machinery, reserve for buying new plant to be added to the existing ones, reserve for bad and doubtful debts? reserve for payment of dividend and general reserve.
Depreciation reserves within the limit prescribed by the Income tax Act or the Rules thereunder is the only reserve which is a permissible allowance in the computation of taxable profits.
In its ordinary meaning the expression 'reserve ' means something specifically kept apart for future use or for a specific occasion.
" In the case of Metal Box Company of India Ltd. vs Their Workmen, (1) this Court while dealing with a case under the pay 828 ment of Bonus Act, 1965 had occasion to consider the expression 'reserve ' and its meaning for the purpose of the said Act.
This Court held at p. 67 68 as follows : " The next question is whether the amount so provided is a provision or a reserve.
This distinction between a provision and a reserve is in commercial accountancy fairly well known.
Provisions made against anticipated losses and contingencies are charges against profits and therefore, to be taken into account against gross receipts in the P & L account and the balance sheet.
On the other hand reserves are appropriations of profits, the asset by which they are represented being retained in form part of the capital employed in the business.
Provisions are usually shown in the balance sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietor 's interest (see Spicer and Pegler 's Book keeping and Accounts, 15th Edn. page 42).
An amount set aside out of profits and other surpluses, not designed to meet a liability, contingency, commitment or diminution in value of assets known to exist at the date of the balance sheet is a reserve but an amount set aside out of profits and other surpluses to provide for any known liability of which the amount cannot be determined with substantial accuracy is a provision; (see William Pickles Accountancy, Second Edn.
p. 192; Part III, clause 7, Schedule VI to the Companies Act, 1958, which derives provision and reserve." In the case of Commissioner of Income tax vs Mysore Electrical Industries Ltd.(1) the facts were briefly as follows: Out of the profits of the company for the accounting period ending March 31, 1963.
the Directors of the company appropriated the following amounts towards reserves on August 8, 1963: (i) Rs. 2,56,000 as plant modernisation and rehabilitation reserve: (ii) Rs. 89,557 as development rebate reserve.
The question was whether these amounts could be included in computing the capital of the respondent as on April 1, 1963 under rule 1 of Schedule II to the .
for the purpose of the statutory deduction for the assessment year 1961 65, The contention of the department was that since the appropriations were made on 8th August, 1963 they could not be treated as components of capital as on the first day of the previous year i.e. 1st April, 1963.
Negativ 829 ing the contention of the department, this Court held that the determination of the Directors to appropriate the amounts of the three items of reserve on 8th August, 1963 had to be related to first April, 1963, viz., the beginning of the accounts for the new year, and had to be treated as effective from that day and the said three items had to be added to the other items for computation of the capital of the company as on first April, 1963 under rule 1 of Schedule II to the .
It may be noted that in this case before the trial court a claim had been made by the company that a sum of Rs. 3,15,000 representing dividend reserve was to be considered in computing the assessee 's capital for the purpose of and the High Court had rejected this claim.
As against the rejection of this claim by the High Court, no appeal had been preferred by the assessee to the Supreme Court.
The Supreme Court while considering the three items which came up for consideration before it held, as already noted, that the decision of the directors to appropriate the amounts to these three items of reserve on 8th August, 1963 had to be related to 1st April, 1963 and this Court observed at pp.
560 570 as follows: "It is well known that the accounts of the company have to be made up for a year up to a particular day.
In this case that day was the 31st March, 1963.
If it was reasonably practicable to make up the accounts up to the 31st March, 1963, and present the same to the directors of the respondent on April 1, 1963, they could have made up their minds on that day and declared their intention of appropriating the said and other sums to reserves of different kinds.
But the fact that they could not do so for the simple reason that the calculation and collection of figures of all the items of income and expenditure of the company for the year ending March 31, 1962, was bound to take some time cannot make any difference to the nature or quality of the appropriation of the profits to reserves as determined by the directors after the first of April, 1963.
Their determination to appropriate the sums mentioned to the three separate classes of reserves on the 8th August, 1963, must be related to the 1st of April, 1963, i.e., the beginning of the accounts for the new year and must be treated as effective from that day".
830 Relying on the aforesaid decisions and also many other decisions of the various High Courts which have been considered by my learned brother Tulzapurkar, J. in his judgment, the learned counsel for the assessee has argued that the word 'reserve ' which has not been defined in the Act, has to be understood in its ordinary meaning as laid down by the Supreme Court in the case of Century Spinning Mills Ltd. The further argument is that the recommendation for dividend by the directors of the Company does not create any kind of liability, immediate or future.
It is argued that the obligation to pay the dividend only arises when the shareholders at the Annual General Meeting of the Company decided to accept the recommendation of the Directors and pass a resolution for declaration of dividend.
It is submitted that it is open to the Directors to withdraw or modify the recommendations made by them any time before the shareholders accept the recommendations and in support of this contention reference is made to the decision of this Court in the case of Keshoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central), Calcutta (I) and n reliance is placed on the following observations at p. 772 : "The directors cannot distribute dividends but they can only recommend to the general body of the company the quantum of dividend to be distributed.
Under section 217 of the Indian Companies Act, there shall be attached to every balance sheet laid before a company in general meeting a report by its board of directors with respect to, inter alia, the amount.
if any, which it recommends to be paid by way of dividend.
Till the company in its general body meeting accepts the recommendations and declares the dividend, the report of the directors in that regard is only a recommendation which may be withdrawn or modified as the case may be.
As on the valuation date nothing further happened than a mere recommendation by the directors as to the amount that might be distributed as dividend, it is not possible to hold that there was any debt owed by the assessee to the share holders on the valuation date.
" It is further argued that it is open to the share holders to accept the i recommendations in its entirety or to modify the same by 831 deciding to declare dividend at a rate lower than the one recommended by the directors.
It is, therefore, contended that the recommendation of the directors for payment of dividend does not have the effect of creating any kind of liability and there is no debt owed by the company by virtue of the said recommendations.
It has been submitted that the decision of this Court in the case of Mysore Electrical Industries Ltd. (supra) is of no assistance and the said decision does not lay down that in the event of the share holders ' acceptance of recommendation made by the directors for the distribution of dividend to the share holders of the company, the liability for payment of the dividend will also relate back; and the doctrine of relation back applies only in respect of items which the directors are competent to decide for themselves, in view of the process involved in the preparation of accounts of the company.
The main argument advanced on behalf of the Revenue is that any amount which may be set apart for payment of dividend r recommended to be paid by the Directors cannot constitute 'reserve ' within the meaning of the Act.
The argument advanced on behalf of the assessee appears to be sound; but to my mind the said arguments are not sufficiently convincing to lead the Court to the conclusion that the amount set apart for payment of dividend recommended by the Board of Directors can constitute 'reserve ' within the meaning of the Act for the purpose of computation of the capital of the Company.
The word 'reserve ' has not been defined in the ACT.
In the absence of any such definition the word has to be understood in its ordinary sense.
It is, however, to be remembered that the word 'reserve ' in the instant case occurs in a taxing statute specially applicable to Companies only.
The word 'reserve ' should be so construed as to give the said word the meaning in which it is ordinarily understood by persons interested in Companies or in dealing with Companies.
In other words, the word 'reserve ' for the purpose of this Act should be understood in the sense in which it is understood in company circles and by persons interested in Companies and in dealing with Companies.
It may be noticed that while considering the true meaning and true nature of 'reserve ', the Supreme Court in the case of Commissioner of Income Tax vs Century Spinning and Manufacturing Co. Ltd. (supra) has referred 832 to section 131 (a) and 132 of the Indian Companies Act, to the Form marked in Schedule III in which balance sheet of the Company has to be prepared and also to Regulation 99 of the First Schedule, Table A. I have earlier quoted the relevant observations of the Supreme Court.
It is, no doubt, true that the re commendations of the Directors for payment of any dividend does not create any kind of liability for the payment of the said amount.
The liability for payment of any amount by way of dividend only arises when the share holders accept the recommendations and a dividend is declared at the annual general meeting of the Company.
It is open to the Directors to modify or withdraw the recommendation with regard to the payment of dividend before the said recommendation is accepted by the share holders.
It is also open to the share holders not to accept the recommendation of the Directors in its entirety and to modify the same.
The legal liability for the payment of any dividend only arises after the share holders at the annual general meeting have decided to declare a dividend on the basis of the recommendations of the Directors or on the basis of any modification thereof.
The liability for the payment of dividend only arises after the dividend has been declared by the share holders at the annual general meeting and this liability does not relate back to 3 any earlier date on the basis of the recommendations of the directors.
as the directors do not enjoy any power of declaring the b dividend.
The amount that may be set apart for payment of any dividend on the basis of the recommendations made by the Directors, cannot be considered to be an amount set apart for meeting a known or existing liability.
Though the amount which is set apart for payment of any dividend recommended by the Board of Directors is not an amount set apart for meeting any known or existing liability, yet the said amount so set apart cannot be considered to be a 'reserve ' within the meaning of the Act for the purpose of computation of the capital of the Company.
section 210 of the specifically provides that at every annual general meeting of a Company the Board of Directors of a Company shall lay before the Company the balance sheet of the Company and also the Profits and Loss account.
section 211 833 further provides that every balance sheet of a Company shall give a A true and fair view of the state of affairs of the Company as at the end of the Financial Year and shall, subject to the provisions of the section, be in the form set out in of Schedule VI, or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in a parti cular case.
The preparation of a balance sheet in the prescribed form and laying the same before the share holders at the annual meeting are statutory requirements which the Company has to observe.
Regulation 87 of Table A in Schedule I provides: "(1) The Board may, before recommending any dividend, set aside out of the profits of the Company such sums as it thinks proper as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied, including provisions for meeting contingencies or for equalising dividends; and pending such application, may at the like discretion, either be employed in the business of the company or be invested in such investments (other than shares of the Company) as the Board may from time to time, think fit.
(2) The Board may also carry forward any profits which it may think prudent not to divide.
without setting them aside as a reserve".
This Regulation contemplates that the Board may set aside out of the profits of the Company such sums, as it thinks proper, as a reserve or reserves which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may be properly applied including the provisions for meeting contingencies or for equalising the dividends, before recommending any dividend.
In other words, the sums out of the profits of the Company have to be set apart as reserve before any dividend is recommended by the Board; and the recommendation of the Board for payment of dividend comes only after the creation of reserve.
The amount that may, therefore, be set apart for payment of dividend recommended by the Board is an amount which is set apart 834 after the Board had created the reserve.
The form of balance sheet referred to in section 211 of the is appended in of Schedule VI of the Statute.
In the statutory form there are various heads including heads of various kinds of reserves and also of provisions.
In the balance sheet of the Company which has necessarily been prepared in accordance with the provisions of the statute and in the form prescribed, the amount recommended by the Board for payment of dividend has been shown under the head provisions and not under any head of reserves.
It is, no doubt, true that the true nature and character of the sum so set apart must be determined with regard lo the substance of the matter.
The substance of the matter clearly appears to be that the amount is set apart for payment of dividend recommended by the Board to be paid to the share holders and the said amount is never intended to constitute a reserve of the Company.
Indeed a provision is made for payment of the said amount to the share holders by way of dividend on the basis of the recommendation made by the Directors.
Though in law the recommendation made by the Directors for payment of dividend to share holders does not create any liability for the payment of dividend and liability only arises when the shareholders accept the said recommendation, and though in law it may be open to the Board to modify or withdraw the recommendation with regard to the payment of dividend before the acceptance by the share holders and it may also be open to the share holders not to accept the said recommendation in its entirety and to modify the same, yet, for business purposes, when the directors make any recommendation for payment of dividend and set apart any amount for the payment of dividend so recommended, the directors intended to make a provision for the payment of dividend recommended by them and not to create any reserve, as the Directors very well know that the recommendation made by them with regard to the payment of dividend is not normally up set by the share holders and it is generally accepted by the share holders, as a matter of course.
Any amount set apart by the Directors for payment of dividend to the share holders recommended by them, is understood by persons interested in company and in dealing with companies to mean a provision for the payment of dividend to the share holders and is not understood to constitute a reserve.
In my opinion, this true nature and character of the sum so set apart are reflected in the provisions of the and more particularly in the manner of preparation of the balance sheet of the Company.
I am, therefore, of the opinion that the amount set apart for the payment 835 of any proposed dividend on the basis of the recommendation of A the Directors cannot constitute reserve for the purpose of computation of the capital of the Company.
The view that I have taken, to my mind, appears to be in accord with the view earlier expressed by this Court in the decisions to which I have already referred.
On the other questions, I entirely agree with the view expressed by my learned brother Tulzapurkar, J. and I agree with the order proposed by him.
C.A. No. 1614(NT)/78, Review Petition No. 57180 and Tax Reference Cases Nos 2&3/77 and 5/1978 dismissed.
P.B.R. C.A. No. 860/73 partly allowed.
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The Super (Profits Tax) Act, 1963 and the Company 's (Profits) Sur tax Act, 1964 (the scheme and main provisions of both of which are almost identical) impose a special tax on excess profits earned by companies.
The special tax is imposed in respect of so much of a company 's "chargeable profits" of the previous year as exceeded the "standard deduction" The term "chargeable profit" is defined to mean the total income of an assessee computed under the Income Tax Act, 1961 for any previous year and adjusted in accordance with the provisions of that Act.
"Standard deduction" is determined by computing the capital of a company in accordance with the rules laid down in the schedule.
The material part of rule I provides that before any amount or sum qualifies for inclusion in capital computation of a company two conditions are required to be fulfilled namely: (i) that the amount or sum must be a "reserve" and (b) that it must not have been allowed in computing the company 's profit for the purposes of Income Tax Acts, 1922 or 1961.
ln their respective balance sheets, the assessees had shown under the heading "current liabilities and provisions" appropriations of large sums of money for taxation, retirement gratuity and dividends and claimed that for the purposes of super profits tax these sums should be regarded as "other reserves" within the meaning of Rule 1 of Second Schedule to the Act and that for the computation of capital they should be taken into account.
Treating these sums as "provisions" and not as "reserves", the Super Profits Tax officer determined the capital and the standard deduction by excluding them from the computation of the capital.
He then levied super profits tax on that portion of the chargeable profits of the previous year as exceeded the standard deduction.
While the Appellate Assistant Commissioner upheld the assessee 's contention that these sums were "reserves" which should be taken into account for computing their capital, the Appellate Tribunal held that these were not "reserves" within 790 the meaning of Rule l of the Second Schedule to the Act and as such could not enter into capital computation.
On reference the High Court held that the sums set apart were not "reserves and so should be excluded in the computation of the capital for the purposes of levying the super profits tax.
In Tax Reference No. 5 (a case under the ) the assessee transferred from out of its current profits a large sum of money to the general reserves and paid dividend to its shareholders from out of the augmented general reserves.
On the question whether for computing the capital for the purpose of sur tax the general reserves should or should not be reduced by the sum of dividend paid, the taxing authorities and the appellate tribunal ignored this amount holding that it was not a "reserve".
None of the items of appropriation either for taxation or for retirement gratuity or for proposed dividend in the assessees ' cases had been allowed in computing their profits under the Income Tax Act, 1961.
^ HELD: [per Tulzapurkar & Venkataramiah, JJ] The expressions "reserve" and "provision" have not been defined in the Act.
Standard dictionaries, without making any distinction between the two concepts, use them more or less synonymously connoting the same idea.
But since in the context of the legislation a clear distinction between the two is implied it is essential to know the exact connotation of the two concepts and the distinction as known in commercial accountancy.
The rules for computation of capital contained in the Second Schedule to the Act proceed on the basis of the formula of capital plus reserve, a formula well known in commercial accountancy.
But since they occur in a taxing statute applicable to companies only these expressions will have to be understood in the sense or meaning attributed to them by men of business, trade and commerce and by persons interested in or dealing with companies.
Therefore, the meaning attached to these words in the would govern their construction for the purpose of these two enactments [800 C H] The broad distinction between the two expressions as judicially evolved by this Court is that, while a "provision" is a charge against the profits to be taken into account against gross receipts in the profit and loss account, a "reserve" is an appropriation of profits, the asset or assets by which it is represented being retained to form part of the capital employed in the business.
[801 F] C.l.
T. vs Ccntury Spinning & Manufacturiag Co., and Metal Box Company of India Ltd. vs Their Workmen, 73 lTR 67 followed.
The , which enjoins upon the Board of Directors of every company to lay before the annual general meeting of its shareholders an annual balance sheet and a profit and loss account, enumerates the separate heads that should be shown in the balance sheet, two of these items being "reserve ' and "provision".
The definitions of these two expressions given in the Act show 791 that if any retention or appropriation of a sum falls within the definition of A "provision" it can never be a "reserve".
But the converse is not true.
If the retention or appropriation is not a "provision" that is, if it is not designated to meet depreciation, renewals or diminution in value of assets or any known liability it is not automatically a "reserve" and the question will have to be decided having regard to the true nature and character of the sum so retained or appropriated depending on several factors, including the intention with which and the purposes for which such retention or appropriation had been made.
[803 E Fl Having regard to the type of definitions of the two concepts, if a particular retention or appropriation of a sum falls within the expression "provision" then that sum will have to be excluded from the computation of capital.
If the sum is in fact a "reserve" then it would be taken into account for the computation of capital.
[804 B C] Where the assessee had set apart a sum of money to meet tax liability in respect of profits earned during an accounting year, which liability was not quantified, such setting apart for a known and existing liability, would be a "provision" and could not be regarded as a "reserve".
[806 A C] Kesoram Industries and Cotton Mills Ltd.v.
Commissioner of Wealth Tax (central) Calcutta, ; followed.
But if provision for a known or existing liability is made in excess of the amount reasonably necessary for the purpose, such excess should be treated as reserve" and, therefore, would be includible in capital computation.
[806 E] Since the assessee (in C.A. No. 860/73) had at no stage of the proceedings before the Taxing Authorities or Appellate Tribunal or the High Court raised a plea that the provision made by it for taxation was in excess of the amount reasonably necesssary for the purpose and that such excess should be treated as a "reserve", the plea which needs investigation into facts, could not be allowed to be raised for the first time in appeal before this Court.
[807 F] Ordinarily an appropriation to gratuity reserve will have to be regarded as a provision made for a contingent liability, for, under a scheme framed by a company the liability to pay gratuity to its employee on determination of employment arises only when the employment of the employee is determined by death, incapacity, retirement or resignation an event (cessation of employment) certain to happen in the service career of every employee.
Moreover, the amount of gratuity payable is usually dependent on the employee 's wages at the time of G, determination of his employment and the number of years of service put in by him and the liability accrues and enhances with completion of every year of service; but the company can work out on an acturial valuation its estimated liability (i.e. discounted present value of the liability under the scheme on a scientific basis) and make a provision for such liability not all at once but spread over a number of years.
If by adopting such scientific method any appropriation is made such appropriation will constitute a provision representing fairly accurately a known and existing liability for the year in question; if however, an ad hoc sum 792 is appropriated without resorting to any scientific basis such appropriation would also be a provision intended to meet a known liability, though a contingent one, for, the expression 'liability ' occurring in cl.
(7)(1)(a) of Part III of Sixth Schedule to the includes any expenditure contracted for and arising under a contingent liability: but if the sum so appropriated is shown to be in excess of the sum required to meet the estimated liability (discounted present value on a scientific basis) it is only the excess that will have to be regarded as a reserve under clause (7) (2) of to the Sixth Schedule.
[807 G.H; 808 A D] In the instant case although the assessee had urged before the authorities below that different treatment for the same item could not be given for purposes of income tax assessment and super profits tax assessment the assessee did not clarify by placing material on record as to whether appropriation was based on any acturial valuation or whether it was an appropriation of an ad hoc amount a which has a vital bearing on the question, whether the appropriation could be treated as a provision or reserve.
In the absence of proper material the question should be decided by the taxing authorities whether the amount set apart and transferred to gratuity reserve by the assessee company was either a provision or a reserve and if the latter to what extent.
[812 C E] Standard Mills Co. Ltd. vs Commissioner of Wealth Tax, Bombay, 63, I.T.R.470 & Workmen of William Jacks & Co. Ltd. vs Management of Jacks & Co.Ltd; Madras.
[1971] Supp.
S.C.R. 450 followed.
Southern Railway of Peru Ltd. vs Owen ; referred to.
The appropriations of an amount by the Board of Directors by way of providing for proposed dividend would not constitute 'provision ', for, the appropriations cannot be said to be by way of providing for any known or existing liability, none having arisen on the date when the Directors made recommendation much less on the relevant date after the first day of the previous year relevant to the assessment year in question.
This by itself would not convert the appropriations into "reserves".
[813 E F] The tests and guidelines laid down by this Court in this respect are: (1) the true nature and character of the appropriation must be determined with reference to the substance in the matter, which means that one must have regard to the intention with which and the purpose for which appropriation has been made such intention and purpose being gathered from the surrounding circumstances.
A mass of undistributed profits cannot automatically become a reserve.
Some body possessing the requisite authority must clearly indicate that a portion thereof has been earmarked or separated from the general mass of profits with a view to constituting it either a general reserve or a specific reserve; (2) the surrounding circumstances should make it apparent that the amount so earmark ed or set apart is in fact a reserve to be utilised in future for a specific purpose on a specific occasion; (3) a clear conduct on the part of the Directors in setting apart a sum from out of the mass of undistributed profits avowedly for the purpose of distribution of dividend in the same year would run counter to any intention of making that amount a reserve, (4) the nomenclature accorded to any particular fund which is set apart from out of the profits would not be material 793 Or decisive of the matter; and (5) if any amount set apart from out of the profits A is going to make up capital fund of the assessee and would be available to the assessee for its business purposes it would become a reserve liable to be included in the capital computation of the assessee under that Act.
[815 F H, 817 G] The relevant provisions of the clearly show that creating reserves out of the profits is a stage distinct in point of fact and anterior in point of time to the stage of making recommendation for payment of dividend and the scheme of the provisions suggests that appropriation made by the Board of Directors by way of recommending a payment of dividend cannot in the nature of things be a reserve.
[818 F G] Judged in the light of the above guidelines the appropriations made by the Directors for proposed dividend in the case of the concerned assessee companies did not constitute 'reserves ' and the concerned amounts so set apart would have to be ignored or excluded from capital computation.
[818 H] Standard Mills Co. Ltd. vs Commissioner of Wealth tax Bombay, 63 I.T.R.470, Metal Box Co.
Of India Ltd. vs Their Workmen, , First National City Bank vs Commissioner of Income Tax, & Commissioner of Income tax (Central), Calcutta vs Standard Vacuum oil Co., followed.
Although under the it is open to the Directors to recommend and the share holders to approve payment of dividend from the current year 's profits or from the past year 's profits and on transfer of a portion of the current year 's profit to the general reserve the augmented general reserve becomes a congolmerate fund, having regard to the natural course of human conduct it is not difficult to predicate that dividends would ordinarily be paid out from the current income rather than from the past savings, unless the directors in their report expressly or specifically state that payment of dividends would be made from the past savings.
From the commercial point of view, if any amount is required for incurring any expenditure or making any disbursement like distribution of dividends in a current year, ordinarily the same will come out of the current income of the company if it is available and only if the sum is insufficient then the past savings will be resorted to for the purpose of incurring that expenditure or making that disbursement.
Such a course would be in accord with the common sense point of view.
[822 C F] In the absense of express indication to the contrary the normal rule for a commercial concern would be to resort to current income rather than past savings while incurring any expenditure or making any disbursement.
[822 H] Commissioner of Income Tax, Bombay City l vs Bharat Bijlee Ltd. ; & Commissioner of Income Tax, Bombay City ll vs Marrior (India) Ltd. 120 ITR Sl 2 approved.
[per A.N. Sen, J.] The amount set apart for payment of any dividend recommended by the Board of Directors is not an amount set apart for meeting a known or existing 794 liability and cannot be considered to be a "reserve" within the meaning of the Act for the purposes of computation of the capital of the company.
[832 F] The provides for the preparation of annual balance sheet in the prescribed form and laying it before the shareholders at the annual general meeting.
Regulation 87, Table A in Schedule I contemplates that the Board may set aside out of the profits of the company certain sum as "reserve" before dividend is recommended by it.
The amount recommended by the Board for payment of dividend is shown in the balance sheet under the head "provision" and not under any head of "reserve".
The true nature and character of the sum so set apart must be determined with regard to the substance of the matter which in this case is that the sum set apart was never intended to constitute a "reserve ' of the company.
In law the liability for payment of dividend arises only when the share holders accept the recommendations made by the Directors.
Till then it is open to the Directors to modify or withdraw their recommendation before it is accepted by the shareholders and it is equally open to the share holders not to accept the recommendation in its entirety.
Even so, for business purposes when the Directors make any recommendation for payment of dividend and set apart any amount for this purpose the Directors intend to make a provision and do not create any reserve, as Directors know that their recomendation is generally accepted by the shareholders as a matter of course.
Therefore any amount set apart for this purpose is understood by persons interested in company matters and in dealing with companies to mean a provision for the payment of dividend to the shareholders and is not understood to constitute a "reserve".
[832 C F] Commissioner of lncome tax Bombay City vs Century Spinning and Manufacturing Co. Ltd. , Commissioner of Income Tax vs Standard Vaccum oil Co., , Metal Box Co. Of Ltd. vs Their Workmen, , Commissioner of Income tax vs Mysore Electrical Industries Ltd., [1971] 80 l.
T.R. 567 and Kesho Ram Industries and Cotton Mills Ltd vs
Commissioner of Wealth Tax (Central), Calcutta; , referred to.
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4466.txt
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N: Criminal Appeal No. 483 of 1979.
Appeal by Special Leave from the Judgment and Order dated 22 3 1979 of the Patna High Court in Crl.
A. No. 356 and 407/73.
B. P. Singh and L. R. Singh for the Appellants.
section N. Jha and U. P. Singh for the Respondent.
The Order of the Court was delivered by KRISHNA IYER, J.
We have heard the arguments of appellants ' counsel with specific reference to Munni Marandi and Babua Marandi the appellants herein.
We have also read through the evidence relating to these accused persons aided by counsel for the State.
The role attributed to Munni Marandi is that he was a member of the crowd which chased the deceased and in that sense was liable under Section 149 read with 326 I.P.C.
We cannot fault the High Court for the conviction rendered, but having due regard to the age of the accused and to the absence of any overt act on his part, we consider that a sentence of two years ' R.I. will, in the circumstances of this case, meet the ends of justice.
588 Babua Marandi, a boy aged 15, was also in the crowd.
In the excited chase of the deceased, this boy also followed and when the actual sword thrust was made by Ranjit Chaudhry, this boy held the deceased.
In this sense, his part is different from that of Munni Marandi.
We are not, therefore, disposed to interfere with his conviction or the sentence.
Nevertheless, it is important to remember that Babua Marandi was aged 15 years at time of the offence.
It is regrettable and this Court has pointed this out more than once that there is no Children Act in Bihar, and in this International Year of the Child we have to emphasize that the Legislature is expected to do its duty by the children of Bihar by considering the passing of a measure like the Children Act which long ago had been circulated by the Central Government and which exists in some other states in the country.
Be that as it may, we are unable to deal with Babua Marandi as a child for the simple reason that absence of legislation cannot be made up for by Judicial legislation.
All that we can do, in the hapless circumstances of the case and in the helpless situation of legislative vacuum, is to direct that Babua Marandi be placed either in an open prison or in a model prison or any other prison available in the State where young offenders are kept apart from the adult offenders.
The special reason which induces us to make this direction is that, as is well known, adolescents should be separated from adults in prison campuses.
The vices are obvious and we, therefore, direct accordingly.
V.D.K. Appeal dismissed.
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Dismissing the appeal by special leave, the Court ^ HELD: 1.
Having due regard to the age of the accused Munni Marandi and to the absence of any overt act, a sentence of two years R.I. would, in the circumstances of his case meet the ends of justice for the offence u/s 149 read with Section 326 I.P.C. [587 G H] 2.
Absence of legislation cannot be made up for by judicial legislation, Babua Marandi was aged 15 years at the time of the offence and there is no Children Act in Bihar.
Though the conviction or sentence cannot be interfered with, in the hapless circumstances of the case and in the helpless situation of legislative vacuum all that this Court can do is to direct that Babua Marandi be placed either in an open prison or in a model prison or any other prison available in the State where young offenders are kept apart from the adult offenders.
The special directions for doing so is that adolescents should be separated from adults in prison campuses for obvious reasons.
[588C E]
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4069.txt
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Appeal No. 771 of 1964.
Appeal by special leave from the judgment and order dated H May 29, 1964, of the Mysore High Court in Civil Petition No. 90 of 1964.
801 section section Khanduja and Ganpat Rai, for the appellants.
B. R. L. Iyengar, section K. Mehta and K. L. Mehta, for respondents Nos. 1 to 7.
The Judgment of the Court was delivered by Shah J.
On May 5, 1964 the respondents hereinafter called 'the plaintiffs ' instituted in the High Court of Mysore an action in the nature of a passing off action against the appellants hereinafter called 'the defendants for a declaration that they "are exclusive owners of the trade mark consisting of the letters R.S.F. and No. 806", for a permanent injunction restraining the defendants from passing off their washing soap as the goods of the plaintiffs and for incidental reliefs.
By section 105 of the Trade and Merchandise Marks Act 43 of 1958 a passing off action whether the trade mark is registered or unregistered may be instituted in any court not inferior to a District Court having jurisdiction to try the suit.
It appears that on May 5, 1964 the District Court of Mysore, within the territorial limits of which the cause of action was alleged to have arisen, was closed for the summer vacation, and it is common ground that on that day there was no Judge functioning in the District Court who was on duty and competent to exercise the powers of the District Court.
At the request of the plaintiffs the High Court entertained the plaint and also an application for interim injunction restraining "the defendants their agents or servants from using the trade mark R.S.F. on washing soap manufactured by them and from selling washing soap bearing the said offending mark pending disposal of the case.
" By order dated May 29, 1964 the High Court granted the temporary injunction in terms of the prayer in the application.
In this appeal with special leave, counsel for the defendants argues that the High Court had no jurisdiction to entertain the action instituted by the plaintiffs and had no power to make an order issuing a temporary injunction.
The action, as framed, could properly be instituted in the District Court.
The expression "District Court" has by virtue of section 2(e) of Act 43 of 1958 the meaning assigned to that expression in the Code of Civil Procedure, 1908.
Section 2(4) of the Code defines a "district" as meaning the local limits of the jurisdiction of a principal civil court called the District Court and includes the local limits of the ordinary original civil jurisdiction of a High Court.
If therefore a High Court is 802 possessed of ordinary original civil jurisdiction, it would, when exercising that jurisdiction be included, for the purpose of Act 43 of 1958, in the expression "District Court".
Exercise of jurisdiction by the High Court of Mysore is governed by Mysore Act 5 of 1962.
The Act is purely a regulatory Act enacted for regulating the business and exercise of the powers of the High Court in relation to the administration of justice : it does not purport to confer upon the High Court any jurisdiction original or appellate.
It is true that by section 12 of the Mysore High Court Act 1 of 1884 enacted by the Maharaja of Mysore to amend the constitution of the High Court of Mysore, and to provide for the administration of justice by that Court, the Government of Mysore was authorised by notification to invest the High Court with ordinary original civil jurisdiction of a District Court in all suits of a civil nature exercisable within such local limits as the Government may from time to time declare and appoint in that behalf.
But section 12 of the Mysore Act 1 of 1884 has been repealed by section 14 of Mysore Act 5 of 1962.
The High Court of Mysore is by its constitution primarily a court exercising appellate jurisdiction : it is competent to exercise original jurisdiction only in those matters in respect of which by special Acts it has been specifically invested with jurisdiction.
The High Court is competent to exercise original jurisdiction under section 105 of the Trade and Merchandise Marks Act 43 of 1958 if it is invested with the ordinary original civil jurisdiction of a District Court, and not otherwise, and the High Court of Mysore not being invested by any statute of under its constitution with that jurisdiction was incompetent to entertain a passing off action.
But it was urged that in a State the High Court is at the apex of the hierarchy of civil courts and has all the powers which the subordinate courts may exercise, and it is competent to entertain all actions as a court of original jurisdiction which may lie in any court in the State.
For this exalted claim, there is no warrant in our jurisprudence.
Jurisdiction of a Court means the extent of the authority of a Court to administer justice prescribed with reference to the subject matter, pecuniary value and local limits.
Barring cases in which jurisdiction is expressly conferred upon it by special statutes, e.g. the Companies Act; the Banking Companies Act, the High Court of Mysore exercises appellate jurisdiction alone.
As a Court of Appeal it undoubtedly stands at the apex within the State, but on that account it does not stand invested with original jurisdiction in matters not expressly declared within its cognizance.
803 Section 24 of the Code of Civil Procedure on which counsel for the plaintiffs relied lends no assistance to his argument.
Among the powers conferred upon a High Court by section 24 Code of Civil Procedure, there is enumerated the power to withdraw any suit, appeal or other proceeding in any Court subordinate to it, and to try or dispose of the same : [section 24(1) (b) (i)].
But jurisdiction to try a suit, appeal or proceeding by a High Court under the power reserved by section 24(1) (b) (i) arises only if the suit, appeal or proceeding is properly instituted in a court subordinate to the High Court, and the suit, appeal or proceeding is in exercise of the power of the High Court transferred to it.
Exercise of this jurisdiction is conditioned by the lawful institution of the proceeding in a subordinate court of competent jurisdiction, and transfer thereof to the High Court.
Power to try and dispose of a proceeding after transfer from a court lawfully seized of it does not involve a power to entertain a proceeding which is not otherwise within the cognizance of the High Court.
Section 151 of the Code of Civil Procedure preserves the in herent power of the Court as may be necessary for the ends of justice or to prevent abuse of the process of the Court.
That power may be exercised where there is a proceeding lawfully before the High Court : it does not however authorise the High Court to invest itself with jurisdiction where it is not conferred by law.
Reliance was sought to be placed upon the summary of a judgment dated June 6, 1962 in a case decided by Narayana Pai, J : Kaverappa vs Narayanaswamy, which is found printed under the heading "Short Notes of Recent Decision" in the Mysore Law Journal (1962) at p. 1.
The learned Judge is reported to have observed that section 24 of the Code of Civil Procedure "read along with section 151 which preserves to the High Court all inherent powers to make such orders as may be necessary for ends of justice necessarily implies that whenever an extraordinary situation so requires, a High Court may confer original jurisdiction upon itself to do or protect ends of justice".
It does not appear that the judgment is reported in any series of reports authorised or unauthorised, and we have not been supplied with a copy of the original judgment.
But if the learned Judge, as reported in the summary of the judgment, was of the opinion that the High Court is competent to assume to itself jurisdiction Which it does not otherwise possess, merely because an "extraordinary situation" has arisen, with respect to the learned Judge, we are unable to approve of that view.
By "jurisdiction" is meant the extent of the power Which is conferred upon the Court by its constitution to try a proceeding; its exercise 804 cannot be enlarged because what the learned Judge calls an extraordinary situation "requires" the Court to exercise it.
The appeal must therefore be allowed.
Temporary injunction granted by the High Court is vacated and the plaint is ordered to be returned for presentation to the proper Court.
As before the High Court, no objection was raised about the maintainability of the suit or the application for injunction, we direct the parties to bear their own costs.
Appeal allowed.
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The respondents instituted a passing off action in the High Court of Mysore for a declaration that they were exclusive owners of a certain trade mark and for a permanent injunction restraining the appellants from passing off their goods as that of respondents.
By section 105 of the Trade and Merchandise Mark Act such an action may be instituted in any court not inferior to a District Court having jurisdiction to try the suit.
It appears that on the day the suit was instituted the District Court was closed and there was no Judge functioning in the District Court who was on duty and competent to exercise the powers of the District Court.
The High Court entertained the plaint and granted temporary injunction.
In appeal by special leave : HELD:(i) The High Court of Mysore is by its constitution primarily a court exercising appellate jurisdiction; it is competent to exercise original jurisdiction only in those matters in respect of which by special Acts it has been specifically invested with jurisdiction.
It would be competent to exercise original jurisdiction under section 105 of the Act if it was invested with ordinary original jurisdiction of a District Court and not otherwise.
[802 D F] As a Court of appeal it undoubtedly stands at the apex within the State, but on that account it does not stand invested with original jurisdiction in matters not expressly declared within its cognizance.
[802 H] (ii) Power under section 24 of the Code of Civil Procedure to try and dispose of a proceeding after transfer from a court lawfully seized of it does not involve a power to entertain a proceeding which is not otherwise within the cognizance of the High Court.
[803 C D] (iii) Section 151 of the Code of Civil Procedure preserves the inherent powers of the Court, but it does not authorise the High Court to invest itself with jurisdiction where the jurisdiction is not conferred by law.
[803 D E] (iv) By "jurisdiction" is meant the extent of the power which is conferred upon the court by its constitution to try a proceeding : its exercise cannot be enlarged because an extraordinary situation "requires" the court to exercise it.
[803 H 804 A]
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1890.txt
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: Criminal Appeal Nos 485 & 486 of 1991.
From the Judgment and Order dated 31.8.
1990 of the Bombay High Court in Crl.
W.P. Nos. 530 and 53 1 of the 1990.
R.K. Jain and V.V. Vaze (For the State), Maqsood Khan, R.S.M. Verma, S.A. Syed, M.T. Khan and A.S. Bhasme (For the State) for the Appellants.
A. Subba Rao, A.D.N. Rao and Ms. Sushma Suri for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
The events leading to the filing of these two appeals, briefly stated, are that on the afternoon of March 25, 1990, the officers of the Directorate of Revenue Intelligence being in possession of information intercepted a motor car at about 3.45 p.m. driven by the appellant Amir Shad Khan with the appellant Aziz Ahmad Khan as his compa 448 nion.
On search of the vehicle 1400 gold bars were recov ered.
The statements of the two appellants were recorded and thereafter they were formally arrested on March 28, 1990 and produced before the Chief Metropolitan Magistrate, Bombay.
The Chief Metropolitan Magistrate granted remand.
While the matter was under investigation a proposal was made to the first respondent.
Secretary (Preventive Detention), Govern ment of Maharashtra for invoking the powers conferred on him by Section 3 of the (hereinafter called 'the Act ').
On the very next day after the receipt of the proposal the first respondent passed the impugned orders of detention against the two appellants.
These orders were passed under sub section (1) of section 3 of the Act with a view to preventing the appellants from smuggling goods and engaging in transporting, keeping and concealing the same.
After these detention orders were passed on April 24, 1990 they were served on the appellants along with the grounds of detention and basic documents on which reliance was placed.
By clauses (iii), (iv) and (v) of paragraph 43 of the grounds of detention the appellants were informed that they had a right to make a representation to (i) the State Gov ernment; (ii) the Central Government; and (iii) the Advisory Board against the detention orders, if they so desired.
It was further stated that the representation to the State Government should be addressed to the Minister of State for Home Mantralaya, Bombay.
They were informed that to facili tate expeditious consideration thereof the Superintendent of Jails may be requested to forward the same to the detaining authority so that the Home Department can put up the case to the Minister for consideration.
It was further stated that ' the representation to the Central Government may be ad dressed to the Secretary, Government of India, Ministry of Finance (Department of Revenue), New Delhi through the Superintendent of Jail.
In the case of the Advisory Board the appellants were informed that the representation may be addressed to the Chairman, Advisory Board constituted under the Act and may be forwarded through the Superintendent of Jail.
On the basis of this advice contained in the grounds of detention the appellants preferred a representation addressed to the Detaining Authority and forwarded it through the Superintendent of Jail, Arther Road Central Prison, Bombay.
It is not necessary to state the various grounds made out in the representation for the revocation of the detention orders but it would suffice to reproduce the last paragraph of the representation.
That paragraph reads as under: "I would also like to request you that the copies of these representations be sent to the State and Central Govern 449 ment for their kind consideration in view of the above facts so as to revoke and/or set aside my order of detention and order my release forth with.
" It is not disputed that the representation was considered and rejected by the State GoVernment.
It was, however, not forwarded to the Central Government and hence the Central Government had no occasion to consider the representation of the appellants for the revocation of the detention orders.
As the detention orders were not revoked the appellants preferred separate habeas corpus writ petitions which were numbered Criminal Writ Petitions Nos.
530 31 of 1991 in the High Court of Bombay under Article 226 of the Constitution.
The High Court on a detailed consideration of the various contentions raised by the appellants dismissed both the writ petitions.
On the question whether the detention orders were vitiated as the Detaining Authority as well as the State Government had failed to forward their representations to the Central Government, the High Court answered in the negative for the reason that the detenus who had failed to follow the clear and specific instructions given in the grounds of detention regarding the manner and mode of ad dress to various authorities could not be allowed to reap the benefit of their own default.
On the question whether the fundamental right guaranteed by Article 22(5) of the Constitution was violated, the High Court observed as under: "So far we have not come across any authority of this court or of the Supreme Court wherein it has been ruled that despite this express communication to the detenu, if the detenu makes any representation, the Detaining Authority is under obligation under Article 22(5) of the Constitution to take out xerox copies of the same and forward to the State Government or the Central Government.
We are afraid, we cannot infer such obligation on the Detaining Authority or the State Govern ment under Article 22(5) of the Constitution.
But, however, it is advisable that upon re ceipt of such representation from the detenu, the Detaining Authority may immediately inform the detenu about the procedure that he has to follow in forwarding representations to the State Government, the Central Government or the Advisory Board against the order of deten tion.
" It is this view of the High Court which was vehemently challenged before us by learned counsel for the appellants.
In support of his contention counsel placed strong reliance on four decisions of this 450 Court reported in (i) Razia Umar Bakshi vs Union of India & Ors., ; (ii) Rattan Singh vs State of Punjab & Ors.
, ; (iii) Sat Pal vs State of Punjab & Ors., and (iv) Smt.
Gracy vs State of Kerala & Anr., JT On the other hand counsel for the State Government as well as the Central Government supported the view taken by the High Court and contended that the appellants cannot make a grievance if they have despite a clear direction in the grounds of deten tion chosen to deviate therefrom.
Once the procedure estab lished by law is followed by the respondents the failure on the part of the Detaining Authority or the State Government to accede to the request made by the appellants in the last paragraph of their representation to take out copies thereof and forward the same to the Central Government cannot viti ate the detention order.
It was further pointed out that a subsequent representation dated June 5, 1990 made to the Central Government was considered with despatch and was rejected on June 12, 1990.
We may at this stage state that we are not concerned with the subsequent representation.
The point which we have been called upon to consider is whether failure on the part of the Detaining Authority as well as the State Government to accede to the request of the appel lants to take out copies of the representations and forward the same to the Central Government for consideration has resulted in violation of their constitutional/statutory right to have their representation considered by the Central Government, and if yes, whether the detention orders are liable to be quashed on that ground.
The law of preventive detention is harsh to the person detained and, therefore, there can be no doubt that it must be strictly construed.
Article 22(3)(b) denies to a person who is arrested or detained under any law providing for preventive detention the protection of clauses (1) and (2) of the said Article.
Clause (4) thereof enjoins that the preventive detention law must conform to the limitations set out thereunder.
Clause (5) of Article 22 reads as under: "When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order.
" This clause casts a dual obligation on the Detaining Author ity, namely, (i) to communicate to the detenu the grounds on which the 451 detention order has been made; and (ii) to afford to the detenu the earliest opportunity of making a representation against the detention order.
Consequently the failure to communicate the grounds promptly or to afford the detenu an opportunity of making a representation against the order would clearly violate the constitutional guarantee afforded to the detenu by clause (5) of Article 22 of the Constitu tion.
It is by virtue of this right conferred on the detenu that the Detaining Authority considers it a duty to inform the appellant detenu of his right to make a representation to the State Government, the Central Government and the Advisory Board.
The right to make a representation against the detention order thus flows from the constitutional guarantee enshrined in Article 22(5) which casts an obliga tion on the authority to ensure that the detenu is afforded an earliest opportunity to exercise that right, if he so desires.
The necessity of casting a dual obligation on the authority making the detention order is obviously to ac quaint the detenu of what had weighed with the Detaining Authority for exercising the extraordinary powers of deten tion without trial conferred by section 3(1) of the Act and to give the detenu an opportunity to point out any error in the exercise of that power so that the said authority gets an opportunity to undo the harm done by it, if at all, by correcting the error at the earliest point of time.
Once it is realised that Article 22(5) confers a right of represen tation, the next question is to whom must the representation be made.
The grounds of detention clearly inform the detenu that he can make a representation to the State Government, the Central Government as well as the Advisory Board.
There can be no doubt that the representation must be made to the authority which has the power to rescind or revoke the decision, if need be.
Our search for the authority must, therefore, take us to the statute since the answer cannot be found from Article 22(5) of the Constitution read in isola tion.
As pointed out earlier that clause casts an obligation on the authority making the detention order to afford to the detenu an earliest opportunity to make a representation against the detention order.
If we are to go by the state ment in the grounds of detention our search for that author ity would end since the grounds of detention themselves state the authorities to which the representation must be made.
The question must be answered in the context of the relevant provisions of the law.
Now as stated earlier by clause (5) of Article 22 a dual obligation is cast on the authority making the detention order one on which is to afford to the detenu an earliest opportunity of making a representation against the order which obligation has been met by informing the detenu in the grounds of detention to whom his representation should be addressed.
But the author ity to which the representation is addressed must have statutory backing.
In 452 order to trace the source for the statutory backing it would be advantageous to notice the scheme of the Act providing for preventive detention.
Section 2(b) defines a detention order to mean an order made under section 3.
Sub section (1) of section 3 empowers the Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially empowered for the purposes of this section by that Government, or any officer of a State Government, not below the rank of a Secretary to that Government, specially empow ered for the purposes of this section by that Government, to make an order of detention with respect to any person with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from doing any one of the five prejudicial acts enumerated thereunder.
Subsection (2) of that section provides that when any order of detention is made by a State Government or by an officer empowered by a State Government, the State Government shall, within ten days, forward to the Central Government a report in respect of the order.
It is evident from this provision that whenev er a detention order is made by the State Government or its officer specially empowered for that purpose an obligation is cast on the State Government to forward a report to the Central Government in respect of that order within ten days.
The purpose of this provision is clearly to enable the Central Government to keep an eye on the exercise of power under section 3(1) by the State Government or its officer.
Then comes sub section (3) which reads as under: "For the purposes of clause (5) of Article 22 of the Constitution, the communication to a person detained in pursuance of a detention order of the grounds on which the order has been made shall be made as soon as may be after the detention, but ordinarily not later than five days, and in exceptional circum stances and for reasons to be recorded in writing, not later than fifteen days, from the date of detention.
" This provision is clearly intended to meet the obligation cast by Article 22(5) that the grounds of detention shall be communicated 'as soon as may be '.
The legislation has, therefore, fixed the outer limit within which the grounds of detention must be communicated to the detenu.
Thus the first part of the obligation cast by Article 22(5) is met by section 3(3) of the Act.
Section 8 provides for the Consti tution of Advisory Boards.
This section is clearly to meet the obligation of 453 sub clause (a) of clause 4 and sub clause (c) of clause 7 of Article 22 of the Constitution.
Section 8(f) which has some relevance provides that in every case where the Advisory Board has reported that there is in its opinion sufficient cause for the detention of a person, the appropriate Govern ment may confirm the detention order and continue the deten tion of the person concerned for such period as it thinks fit and in every case where the Advisory Board has reported that there is in its opinion no sufficient cause for the detention of the person concerned, the appropriate Govern ment shall revoke the detention order and cause the person to be released forthwith.
This provision clearly obliges the appropriate Government to order revocation of the detention order if the Advisory Board reports want of sufficient cause for detention of that person.
Then comes section 11 which reads as under: "Revocation of detention orders (1) Without prejudice to the provisions of section 21 of the , a detention order may, at any time, be revoked or modified (a) notwithstanding that the order has been made by an officer of a State Government, by that State Government or by the Central Gov ernment.
(b) notwithstanding that the order has been made by an officer of the Central Government or by a State Government, by the Central Government.
" Sub section (2) is not relevant for our purpose.
It is obvious from a plain reading of the two clauses of sub section (1) of section 11 that where an order is made by an officer of the State Government, the State Government as well as the Central Government are empowered to revoke the detention order.
Where, however, the detention order is passed by an officer of the Central Government or a State Government, the Central Government is empowered to revoke the detention order.
Now this provision is clearly without prejudice to section 21 of the which lays down that where by any Central Act a power to issue orders is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions, if any, to rescind any order so issued.
Plainly the authority which has passed the order under any Central Act is empowered by this provision to rescind the order in like manner.
This provision when read in the context of section 11 of the Act makes it 454 clear that the power to rescind conferred on the authority making the detention order by section 21 of the is saved and is not taken away.
Under section 11 an officer of the State Government or that of the Central Government specially empowered under section 3(1) of the Act to make a detention order is not conferred the power to revoke it; that power for those officers has to be traced to section 21 of the .
Therefore, where an officer of the State Government or the Central Government has passed any detention order and on receipt of a represen tation he is convinced that the detention order needs to be revoked he can do so by virtue of section 21 of the since section 11 of the Act does not entitle him to do so.
If the State Government passes an order of deten tion and later desires to revoke it, whether upon receipt of a representation from the detenu or otherwise, it would be entitled to do so under section 21 of the but if the Central Government desires to revoke any order passed by the State Government or its officer it can do so only under clause (b) of Section 11(1) of the Act and not under section 21 of the .
This clari fies why the power under section 11 is conferred without prejudice to the provisions of section 21 of the .
Thus on a conjoint reading of section 21 of the and section 11 of the Act it becomes clear that the power of revocation can be exercised by three authorities, namely, the officer of the State Government or the Central Government, the State Government as well as the Central Government.
The power of revocation conferred by section 8(f) on the appropriate Government is clearly inde pendent of this power.
It is thus clear that section 8(f) of the Act satisfies the requirement of Article 22(4) whereas section 11 of the Act satisfies the requirement of the latter part of Article 22(5) of the Constitution.
The statu tory provisions, therefore, when read in the context of the relevant clauses of Article 22, make it clear that they are intended to satisfy the constitutional requirements and provide for enforcement of the right conferred on the detenu to represent against his detention order.
Viewed in this perspective it cannot be said that the power conferred by section 11 of the Act has no relation whatsoever with the constitutional obligation cast by Article 22(5).
We may now turn to the case law on which reliance was placed.
In Razia Umar 's case, section Murtaza Fazal Ali, J. sitting singly during vacation was concerned with a more or less similar situation.
In that case a detention order was passed by the State Government against which the detenu had made a representation to the said Government.
By that repre sentation he also prayed that his representation may be 455 forwarded to the Central Government for being considered.
That representation was disposed of by the State Government but it was not forwarded to the Central Government, notwith standing the specific prayer of the detenu.
The defence taken was that the detenu had himself sent a copy of his representation to the Central Government and, therefore, the Detaining Authority did not consider it necessary to forward the representation to the Central Government.
The defence of the State Government was held to be wholly unacceptable on the following line of reasoning: "Section 11 of the Act confers a constitution al right on the detenu to have his representa tion considered by the Central Government.
It is true that the Central Government has a discretion to revoke or confirm the detention but the detenu has undoubtedly a right that his representation should be considered by the Central Government for whatever worth it is.
The mere fact that the detenu had sent a copy to the Central Government does not absolve the detaining authority from the statutory duty of forwarding the representation to the Central Government." (Emphasis supplied) This observation would show that the power of revocation conferred by section 11 of the Act has a nexus with the fight of representation conferred on the detenu by Article 22(5) and, therefore, the State Government when requested to forward a copy of the representation to the Central Govern ment is under an obligation to do so.
The learned counsel for the appellant further pointed out that our case stands on a stronger footing because, admittedly, the appellants had not forwarded a copy of their representation to the Central Government as in Razia Umar 's case.
The High Court distinguished this decision on the ground that the facts of Razia Umar 's case reveal that the detenu had sent a separate representation to the Detaining Authori ty with a request to forward the same to the State Govern ment and the Central Government whereas in our case only one representation was sent to the Detaining Authority with a request that copies thereof be taken out and sent to the State Government as well as the Central Government for their consideration.
With respect, this distinction has nothing to do with the ratio of the decision; if at all, as rightly pointed out counsel for the appellants, the facts of this case are stronger than those of Razia Umar 's case.
456 In Rattan Singh 's case the facts reveal that the detenu had written a letter to the Superintendent of Central Jail, Amritsar, enclosing therewith two representations one of which was addressed to the Joint Secretary, Department of Home, Government of Punjab, Chandigarh, and the other to the Secretary, Union Ministry of Finance, Department of Revenue, New Delhi.
The Jail Superintendent was requested to forward the representations to the State Government as well as the Central Government.
In the counter filed on behalf of the Central Government it was stated that no representation by or on behalf of the detenu had been received by the Central Government.
It was contended that failure to forward the representation to the Central Government and the consequent failure of the Central Government to apply its mind to the representation vitiated the detention order.
This Court held that the detenu was unaccountably deprived of a valuable right to defend and assert his fundamental right to personal liberty.
Chandrachud.
who spoke for the three Judge Bench, observed as under: "But the laws of preventive detention afford only a modicum of safeguards to persons de tained under them and if freedom and liberty are to have any meaning in our democratic set up, it is essential that at least those safe guards are not denied to the detenus.
Section 11(1) of COFEPOSA confers upon the Central Government the power to revoke an order of detention even if it is made by the State Government or its officer.
That power, in order to be real and effective, must imply the right in a detenu to make a representation to the Central Government against the order of detention.
The failure in this case on the part either of the Jail Superintendent or the State Government to forward the detenu 's representation to the Central Government has deprived the detenu of the valuable right to have his detention revoked by that Government.
The continued detention of the detenu must, therefore, be held illegal and the detenu set free.
" In taking this view reliance was placed on an earlier deci sion of this Court in Tara Chand vs State of Rajasthan, In Sat Pal 's case also counsel for the detenu had for warded two representations one meant for the Central Govern ment and other for the State Government for exercise of power under section 11 of the Act.
The Jail Superintendent who was requested by a forwarding letter 457 to sent the representations to the appropriate Governments after obtaining the signatures of the detenu thereon for warded them to the Joint Secretary in the State Government with an endorsement that one of them may be forwarded to the Central Government.
The representation of the detenu to the Central Government was not forwarded to that Government by the State Government promptly.
It was; therefore, contended that the detention order was rendered illegal and liable to be quashed.
Dealing with this contention this Court observed that the making of an application for revocation of the order of detention by the Central Government under section 11 of the Act is part of the constitutional right a citizen has against his detention under a law relating to preventive detention.
It was, therefore, observed: "It is, therefore, idle to contend that this State Government had no duty to forward the representation made by the detenu to the Central Government for revocation of his order of detention under section 11 of the Act." In taking this view the Court placed reliance on Rattan Singh 's case Gracy 's case may not be entirely apposite because the question which the court was required to consider in that case was that the representation made to the Advisory Board was not taken into consideration by the Central Government after the papers were laid before it with the opinion of the Advisory Board that there was sufficient cause to justify the preventive detention.
That was, therefore, a case in which the representation was very much before the Central Government and it failed to consider the same before con firming and fixing the duration of the detention order.
In that case, therefore, the question for consideration was whether it was incumbent on the part of the Central Govern ment to consider a representation addressed to the Advisory Board notwithstanding its rejection by the Advisory Board.
Such is not the question before us but counsel for the appellants invited our attention to certain observations made in paragraphs 8 and 9 which indicate that the detenu 's right for consideration of his representation by the Central Government flows from Article 22(5), irrespective of the fact whether the representation is addressed to the Detain ing Authority or to the Advisory Board or both.
These obser vations though made in a different fact situation do support the submission made on behalf of the appellants.
But counsel for the respondents argued that the observations were too broadly stated.
It is not necessary for us to examine this contention as the earlier decisions are sufficient to uphold the appellants ' contention.
458 In the case before us the facts.clearly show that the appellants had made a request to the Detaining Authority to take out copies of his representation and forward them to the State Government as well as the Central Government for consideration.
Counsel for the Detaining Authority as well as the State Government contended that no such duty was cast on the said respondents to take out copies and forward them to the Central Government for consideration.
Counsel for the Union of India contended that since no such representation had reached the Central Government there was no question of the Central Government applying its mind thereto and taking a decision thereon.
In support, reliance was placed on Phil lippa Anne Duke vs The State of Tamil Nadu & Ors., ; a judgment rendered by O. Chinnappa Reddy, J. sit ting singly.
In that case the two petitioners who were British nationals were detained for smuggling electric equipments and goods secreted in specially made compart ments/cavities of their Mercedez Benz Van.
Representations were presented on their behalf to the Prime Minister of India during her visit to England.
No decision was taken on those representations and hence it was contended that the detention orders deserved to be quashed.
This Court held that representation from whatever source addressed to whoso ever officer of one or other department of the Government cannot be treated as representations under the Act.
It was further held that the Bout De Papier presented to the Prime Minister of India during her visit to Britain and the subse quent reminder addressed to the External Affairs Ministry could not be treated as representations to the Central Government.
It is, therefore, obvious that this decision turned on its special facts and is no authority for the proposition that the Detaining Authority or the State Gov ernment was under no obligation to forward the representa tions to the Central Government.
It must be realised that when a person is placed under detention he has certain handicaps and if he makes a request that a representation prepared by him may be forwarded to the Central Government as well as the State Government for consideration after taking out copies thereof it would be a denial of his right to represent to the Central Government if the Detaining Authority as well as the State Government refuse to accede to his request and omit to forward his representation to the Central Government for consideration.
It is difficult to understand why such a technical and rigid view should be taken by the concerned authorities in matters of personal liberty where a person is kept in preventive detention without trial.
Detenus may be literate or illiter ate, they may have access to legal advice or otherwise, they may or may not be in a position to prepare more than one copy of the 459 representation and if they make a request to the authorities which have the facilities to take out copies to do so and forward them for consideration to the Central Government, would it be just and fair to refuse to do so? In such cir cumstances refusal to accede to their request would be wholly unreasonable and in total disregard of the right conferred on the detenu by Article 22(5) of the Constitution read with section 11 of the Act.
We are, therefore, of the opinion that the Detaining Authority as well as the State Government were not justified in taking a hyper technical stand that they were under no obligation to take out copies of the representations and forward them to the Central Government.
We think that this approach on the part of the Detaining Authority and the State Government has robbed the appellants of their constitutional right under Article 22(5) read with section 11 of the Act to have their representation considered by the Central Government.
The request of the detenus was not unreasonable On the contrary the action of the Detaining Authority and the State Government was unrea sonable and resulted in a denial of the appellants ' consti tutional right.
The impugned detention orders are, there fore, liable to be quashed.
In the result we allow these appeals, set aside the order of the High Court and quash the detention orders on this single ground.
We direct that both the appellants who are in detention shall be set free at once unless they are required in any other pending matter.
PUNCHHI, J.
I agree to the release of the detenus, but in the facts and circumstances of the case.
I have reserva tions to section 11 of the being treated part of the constitutional guarantee under Article 22(5) of the Constitution of India.
Section 11 of the Act does not confer any constitutional right on the detenu to have his representation thereunder considered as if under Article 22(5), but merely a provision enabling the State Government or the Central Government, as the case may be, to revoke or modify detention orders.
Have section 11 of the Act repealed, it causes no affectation to the constitutional guarantee under Article 22(5) of the Constitution.
Corre spondingly, section 11 of the Act derives no sustenance from the said Article.
Both operate in mutually exclusive fields, though not as combatants.
Both the detenus may be set free as proposed by my learned brother, A.M. Ahmadi, J. V.P.R. Appeals allowed.
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On March 25, 1990, the officers of the Directorate of Revenue Intelligence intercepted a motor car driven by the appellant No. 1 with the other appellant as his companion and recovered 1400 gold bars.
The statements of the two appellants were recorded and they were formally arrested on March 28, 1990 and produced before the Chief Metropolitan Magistrate, who granted re mand.
While the matter was under investigation, a proposal was made to the first respondent Secretary (Preventive Deten tion), Government of Maharashtra for invoking the powers conferred on him by Section 3 of the .
On the very next day after the receipt of the proposal the first respondent passed the orders of detention against the two appellants under sub section (1) of section 3 of the Act.
After these detention orders were passed on April 24, 1990 they were served on the appellants along with the grounds of detention and basic documents on which reliance was placed.
The appellants were informed that they had a right to make a representation to (i) the State 444 Government; (ii) the Central Government; and (iii) the Advisory Board against the detention order, if they so desired.
They were informed that to facilitate expeditious consideration thereof, 'the Superintendent of Jails may be requested to forward the same to the detaining authority.
The appellants preferred a representation addressed to the Detaining Authority and forwarded it through the Superin tendent of Jail.
In the last paragraph of that representa tion a request was made that copies of the representation may be taken out and the same may be forwarded to the State Govt.
and the Central Govt.
The representation was considered and rejected by the State Government.
It was, however, not forwarded to the Central Government and hence the Central Government had no occasion to consider the representation of the appellants for the revocation of the detention orders.
As the detention orders were not revoked the appellants preferred separate habeas corpus writ petitions in the High Court which dismissed both the writ petitions, answering in negative on the question whether the detention orders were vitiated as the Detaining Authority as well as the State Government had failed to forward their representations to the Central Government for the reason that the detenus who had failed to follow the clear and specific instructions given in the grounds of detention regarding the manner and mode of address to various authorities, could not be allowed to reap the benefit of their own default.
This view of the High Court was challenged before this Court by the appellants.
The State Government as well as the Central Government supported the view taken by the High Court contending that the appellants cannot make a grievance if they have despite a clear direction in the grounds of detention chosen to deviate therefrom.
Once the procedure established by law is followed by the respondents the failure on the part of the Detaining Authority or the State Government to accede to the request made by the appellants in the last paragraph of their representations to take out copies thereof and forward the same to the Central Government cannot vitiate the deten tion order.
The Union of India contended that since no representa tion had reached the Central Government there was no ques tion of the Central Government applying its mind thereto and taking a decision thereon.
445 On the question whether failure on the part of the Detaining Authority as well as the State Government to accede to the request of the appellants to take out copies of the representations and forward the same to the Central Government for consideration has resulted in violation of their considerational/statutory right to have their repre sentation considered by the Central Government, and if yes, whether the detention orders are liable to be quashed on that ground, allowing the appeals, this Court, HELD: 1.
The Detaining Authority as well as the State Government were not justified in taking a hypertechnical stand that they were under no obligation to take out copies of the representations and forward them to the Central Government.
Such action of the Detaining Authority and the State Government was unreasonable and resulted in a denial of the appellants ' constitutional right.
The impugned deten tion orders are liable to be quashed and directed that the appellants, who were in detention, to be set free.
[459B E] Per A.M. Ahmadi, J. on his behalf himself and V. Ramas wami, J. 1.
Article 22(3)(b) (5) casts a dual obligation on the Detaining Authority, namely, (i) to communicate to the detenu the grounds on which the detention order has been made; and (ii) to afford to the detenu the earliest opportu nity of making a representation against the detention order.
Consequently the failure to communicate the grounds promptly or to afford the detenu an opportunity of making a represen tation against the order would clearly violate the constitu tional guarantee afforded to the detenu by clause (5) of Article 22 of the Constitution.
It ' is by virtue of this right conferred on the detenu that the Detaining Authority considers it a duty to inform the appellant detenu of his right to make a representation to the State Government, the Central Government and the Advisory Board.
The right to make a representation against the detention order thus flows from the constitutional guarantee enshrined in Article 22(5) which casts an obligation on the authority to ensure that the detenu is afforded an earliest opportunity to exercise that right, if he so desires.
[450H 451C] 2.
The necessity of casting a dual obligation on the authority making the detention order is obviously to ac quaint the detenu of what had weighed with the Detaining Authority for exercising the extraordinary powers of deten tion without trial conferred by section 3(1) of the Act and to give the detenu an opportunity to point out any error in the exercise of that power so that the said authority gets an opportunity to undo the harm done by it, if at all, by correcting the error at the earliest point of time.
[451C D] 446 3.
Under section 11 an officer of the State Government or that of the Central Government specially empowered under section 3(1) of the Act to make a detention order is not conferred the power to revoke it; that power for those officers has to be traced to section 21 of the General Clauses Act.
Therefore, where an officer of the State Gov ernment or the Central Government has passed any detention order and on receipt of a representation he is convinced that the detention order needs to be revoked he can do so by virtue of section 21 of the General Clauses Act since sec tion 11 of the Act does not entitle him to do so.
[454A C] 4.
If the State Government passes an order of detention and later desires to revoke it, whether upon receipt of a representation from the detenu or otherwise, it would be entitled to do so under section 21 of the General Clauses Act but if the Central Government desires to revoke any order passed by the State Government or its officer it can do so only under clause (b) of Section 11(1) of the Act and not under section 21 of the General Clauses Act.
[454C D] 5.
On a conjoint reading of section 21 of the General Clauses Act and section 11 of the Act it becomes clear that the power of revocation can be exercised by three authori ties, namely, the officer of the State Government or the Central Government, the State Government as well as the Central Government.
The power of revocation conferred by section 8(f) on the appropriate Government is clearly inde pendent of this power.
It is thus clear that section 8(f) of the Act satisfies the requirement of Article 22(4) whereas section 11 of the Act satisfies the requirement of the latter part of Article 22(5) of the Constitution.
The statu tory provisions, therefore, when read in the context of the relevant clauses of Article 22, make it clear that they are intended to satisfy the constitutional requirements and provide for enforcement of the right conferred on the detenu to represent against his detention order.
Viewed in this perspective it cannot be said that the power conferred by section 11 of the Act has no relation whatsoever with the constitutional obligation cast by Article 22(5).
[454D G] 6.
It must be realised that when a person is placed under detention he has certain handicaps and if he makes a request that a representation prepared by him may be for warded to the Central Government as well as the State Gov ernment for consideration after taking out copies thereof it would be a denial of his right to represent to the Central Government if the Detaining Authority as well as the State Government refuse to accede to his request and omit to forward his 447 representation to the Central Government for consideration.
In such circumstances refusal to accede to their request would be wholly unreasonable and in total disregard of the right conferred on the detenu by Article 22(5) of the Con stitution read with section 11 of the Act.
[458F G, 459B] Razia Umar Bakshi vs Union of India & Ors., ; Rattan Singh vs State of Punjab & Ors., ; Sat Pal vs State of Punjab & Ors., and Smt.
Gracy vs State of Kerala & Anr., JT ; Tara Chand vs State of Rajasthan, ; referred to.
Per M.M. Punchhi, J. 1.
Section 11 of the Act does not confer any constitutional right on the detenu to have his representation thereunder considered as if under Article 22(5), but merely a provision enabling the State Government or the Central Government, as the case may be, to revoke or modify detention orders.
Have section 11 of the Act re pealed, it causes no affectation to the constitutional guarantee under Article 22(5) of the Constitution.
Corre spondingly, section 11 of the Act derives no sustenance from the said Article.
Both operate in mutually exclusive fields, though not as combatants.
[459F G]
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6786.txt
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Appeal No. 92 of 1966.
, Appeal from the order dated May 30, 1963 of the Punjab High Court in Letters Patent Appeal No. 148 of 1963.
R. V. section Mani and M. L. Agarwal, for the appellants.
Dipak Dutt Chaudhuri and R. N. Sachthey, for the respon dents.
section K. Mehta, and K. L. Mehta, for the interveners.
The Judgment of the Court was delivered by Shelat, J.
The appellants are members of a Hindu undivided family of which the first appellant is the Karta.
Prior to August 21, 1956, the family owned 64.35 standard acres of land in village Kurali, District Patiala.
The land stood in the revenue records in the name of the first appellant.
On December 23, 1957, the first appellant transferred 26 standard acres to one Babu Singh by a registered deed.
According to them, they had Planted an orchard in 10 acres of land.
Their contention was that the said 26 standard acres and the said 10 standard acres could not be taken into account while ascertaining surplus land under the Pepsu Tenancy and Agricultural Lands Act, XIII of 1955.
Both these claims were rejected by the authorities.
By his order dated January 20, 1961 ', respondent 'No. 3 declared 34.35 standard acres out of the said 64.35 standard acres as 'Surplus land.
The appeal filed by the appellants against the said order was rejected.
They then filed a revision application before respondent No. 1.
While that was pending they filed a writ petition in the High Court.
During the pendency of that writ petition.
the Punjab Legislature passed the Amendment Act, XVI of 1962 inserting section 32 KK in the principal Act.
The learned Single Judge,.
who heard the writ petition, held (1) that the finding that the appellants had not planted the said orchard within the statutory period was one of fact and could not be challenged in the writ petition and (2) that the said transfer of 26 standard acres was hit by section 32 FF and therefore was rightly ignored while ascertaining the surplus land.
The main contention urged before the High Court, however, was that each of the three appellants who constituted the said family was entitled to ,retain 30 standard acres, that as the total holding was only 64.35 605 standard acres, there was no surplus land liable to be acquired under the Act and, therefore, the order declaring 34.35 Standard acres, as surplus land was illegal.
The High Court following its earlier decision in Bhagat vs State of Punjab(1) "missed the writ petition.
A Letters Patent Appeal against that judgment was dismissed in limine.
The present appeal by certificate is directed against the dismissal of the said writ petition.
Mr. Mani 's contentions were: (1) that under Hindu Law every coparcener in a Hindu undivided family acquires right in the property of such coparcenery on birth and is entitled to a right of joint possession and enjoyment of its entire property, that section 32KK deprives such a coparcener of his rights of property in that that it takes away the rights of the descendants of the landowner to claim for themselves the permissible area and vest them in the head of the family alone so that there is not only an infringement of the right to hold property under article 19 (1 ) (f ) but also dis crimination in favour of the head of the family infringing thereby article 14; (2) that the effect of section 32 KK is that where an undivided family is possessed of land, instead of each of the descendants getting a ceiling area of 30 standard acres, the head of the family alone gets 30 standard acres and therefore the section is violative of article 31; (3) that the section, being applicable only to Hindu undivided families infringes article 15(1) inasmuch as it discriminates by reason only of religion such families as against other undivided families in Punjab amongst communities other than Hindus and (4) that the section cannot be said to be legislation whose object is agrarian reform and, therefore, is not protected by article 31 A. Section 32 KK, the validity of which is impeached in this appeal, reads as follows : "Notwithstanding anything contained in this Act or in any other law for the time being in force : (a) where, immediately before the commencement of this Act, a landowner and his descendants constitute a Hindu undivided family, the land owned by such family shall, for the purposes of this Act, be deemed to be the land of that landowner and no descendant shall, as member of such family, be entitled to claim that in respect of his share of such land he is a landowner in his own right".
The section first lays down a fiction and then its result.
The fiction is that where a landowner and his descendants form a Hindu undivided family, the land owned by such a family shall be, deemed to be.
the land of that landowner.
The fiction so en (1) I.L.R. (1963) 16 (1) Punjab 5O. 6O6 acted is limited only for the purposes of the Act.
The result of the fiction again for the purposes of the Act is that no descendant shall, as a member of such family, be entitled to claim that in respect of his share of such land he is a landowner in his own right.
There is no doubt that the section has a direct adverse ,effect on the rights of the descendants of a landowner.
It treats such a family as one unit equating the landowner and his descendants with an individual landowner depriving by such equation the descendant of the right to hold a ceiling area for himself.
Prima facie, such a provision would infringe article 19(1) (f) and article 31 and would be hit by article 13.
Article 31 A, however, provides that notwithstanding anything contained in article 13, no law providing for the acquisition by the State of any ,estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by articles 14, 19 or 31.
If, therefore, section 32 KK falls within the scope of article 31 A, it is obviously protected there under and the validity of the section is placed beyond any ,challenge on the ground of its infringing any of the rights under articles 14, 19 or 31.
In K. K. Kochuni vs The State of Madras(1), this Court laid ,down that article 31 A properly construed envisages agrarian reform and provides for the acquisition, extinguishment or modification of proprietary and various other kinds of subordinate rights in a tenure called the 'estate ' solely for that purpose and must be limited to it.
The Court held that the Act impugned there did not ,contemplate any agrarian reform or seek to regulate the rights inter se between the landlords and tenants or modify or extinguish any of the rights appertaining to janmam right leaving all the characteristics intact and, therefore, did not come within the purview of article 31 A. In Ranjit Singh vs The State Punjab (2), this Court considered the scope of that decision and held that the 'Word 'estate ' in article 31 A should be given a liberal meaning and that the changes proposed by the Punjab Consolidation Acts passed since 1948 and onwards were included in the general scheme of planning of rural areas and the productive utilisation of vacant and waste lands, that if agrarian reforms were to succeed, mere distribution of land to the landless was not enough, that there should be a proper planning of rural economy and conditions and that a scheme which makes villages self sufficient cannot but be regarded as part of larger reforms which consolidation ,of holdings, fixing of ceilings on lands, distribution of surplus lands and utilising of vacant and waste lands contemplate.
It is not necessary to refer to other decided cases as this decision clearly points out that the fixing of ceiling on lands and provisions (1) (2) [1965]1 S.C.R. 82.
607 relating to it would form part of and constitute agrarian reform and, therefore, such provisions would have the protection of article 3 1 A. A brief outline of the provisions of the Act will show the objects and the policy the legislature had in mind in passing the Act and while amending it from time to time.
The Act declares that it was passed to amend and consolidate law relating to tenancy and agricultural lands and to provide for certain measures of land reforms.
Section 3 defines " permissible limit" as meaning 30 standard acres of land.
Section 5 entitles ,very landowner owning land exceeding the permissible limit to select for personal cultivation from the land held by him any parcel or parcels of land not exceeding in aggregate the permissible area.
Chapter III provides for the rights of tenants and section 7 therein lays down that no tenancy shall be terminated except in accordance with the provisions of the Act or except on any of the grounds therein set out.
Section 7 A lays down additional grounds for termination of tenancy in cases such as where the land comprising the tenancy has been reserved by the landowner for his personal cultivation or where the landowner owns 30 standard acres or less of land and the land falls within the permissible limit.
Section 9 provides the maximum amount of rent payable by a tenant.
Chapter IV deals with acquisition or proprietary rights by a tenant on such tenant paying compensation determined in accordance with the principles set out in section 26.
Chapter IV A, which was added by Act 15 of 1956, deals with ceiling on lands and acquisition and disposal of surplus land.
Section 32 A provides that no person shall be entitled to own or hold as landowner or tenant land exceeding the permissible limit.
Section 32 B obliges a person owning or holding as landowner or tenant land which exceeds the permissible limit to furnish to the Collector a return giving particulars of all his land and stating therein his selection of land not exceeding the permissible limit which he desires to retain and of lands in respect of which he claims exemption from the ceiling.
Section 32 D directs the Collector to prepare a draft statement on the basis of the information given in the said returns showing the total area of land owned or held by such person and the land selected by him by way of permissible limit the exemption claimed by him and the surplus area.
Section 32 E provides that in the case of surplus area of a landowner or a tenant which is not included within the permissible limit such area shall on the date on which possession thereof is taken by the State Government, be deemed to have been acquired by the State Government for a public purpose.
Section 32 F authorises the Collector to direct the landowner or the tenant in possession of the surplus area to deliver possession thereof within the prescribed time.
Section 32 FF provides that no transfer or 608 other disposition of land made after August 21, 1956 shall affect the right of the State Government to the surplus area to which it would be entitled to but for such transfer or disposition.
Section 32 G lays down principles on which compensation in respect of surplus area is to be determined.
Section 23 J deals with disposal of such surplus area.
Section 32 KK already recited above was inserted in the Act by Punjab Act XVI of 1962.
It is clear from these provisions that the objects of the Act are : (a) to secure the rights of tenants, (b) to provide for acquisition of proprietary rights in the land,to the tenant, (c) to provide for permissible limit of 30 standard acres, (d) to acquire surplus areas and distribute them amongst certain classes of persons including landless persons, and (e) to provide for compensation at prescribed rates payable by tenants and by Government on its acquiring surplus land.
The principle laid down by the, Act is that no person, whether a landowner or tenant, should hold land more than the permissible area so that the surplus land can be distributed amongst the more needy sections of society.
In following this principle the Act lays down two corollaries, namely, (1) not to recognise any transfer or disposition made by a landowner after a certain date as otherwise the scheme of distribution of surplus land would be frustrated, and (ii) to equates an individual landowner and a Hindu undivided family consisting of a landowner and his descendants so that both the units are entitled to hold only the permissible area of 30 standard acres.
In our view, it cannot be gainsaid that section 32 KK deals with an estate within the meaning of article 31 A and is concerned with agrarian reform.
The decision in Kochuni 's case(1) cannot, therefore, avail the appellants.
In Pritam Singh vs The State of Punjab (2) , this Court up held the validity of section, 32 FF and held that that section was protected by article 31 A against any challenge under article 19.
If a transfer or a disposition of land can validly be ignored under section 32FF for the purpose of ascertaining surplus land and acquisition of such surplus land by the State and that section is protected by article 31 A, it is difficult to say why section 32 KK which, as aforesaid, equates a Hindu undivided family with an individual landowner for the limited purpose of the Act without affecting the other rights of its members is not equally protected by that Article.
The object of enacting section 32 KK was to prevent the landowner and his descendants by reason of their constituting a Hindu undivided family from each of them claiming in his own right the permissible area from the joint holding of the family and thus retain for themselves in the aggregate area larger than 30 standard ' acres and preventing thereby distribution of surplus area.
As to (1) (2) ; 609 the pros and cons of such a provision much can be said on either side.
The appellants could have perhaps contended that such a provision amounted to an unreasonable restriction.
But such a contention is debarred by article 31 A an d a challenge to the validity of that Article is no longer possible in view of the recent decision in 1.
C. Golak Nath vs The State of Punjab(1).
The contention that the section is not one relating to agrarian reform is hardly sustainable in view of the above mentioned objects of the Act in general and of section 32 KK in particular.
Similarly, the contention that the section has the affect of defeating the rights of a member of a Hindu undivided family from the family property also cannot be sustained because his rights in the permissible area retained by the landowner and his right to compensation in respect of the surplus area are not touched by the section.
Nor is it possible to say that 'the section results in the transfer of rights of the descendants of a landowner in the permissible or surplus area in favour of such landowner.
The section does not effect any change in the rights of the descendants as members of a Hindu undivided family or the relationship of the family inter se except to the extent of depriving the descendants of their right to claim the ceiling area for each of them.
The contention as to the validity of section 32 KK, therefore, must fail.
The next contention was that the section infringes article 15 inasmuch as by limiting it only to Hindu undivided families it discriminates against descendants forming such families on the ground of religion only.
It was argued that the customary law in Punjab recognises joint and undivided families amongst non Hindu persons also and since the section affects only the Hindu undivided families, it violates article 15.
In support of this contention passages from Rattigan 's Digest of Customary Law, 14th Ed. pp. 35 to 36 were relied on to show that the institution of undivided family exists amongst certain classes of Muslims in certain districts of Punjab.
Support was also sought from the decisions in Banarsi Das vs Wealth Tax Officer.(2) and Mammad Kevi vs Wealth Tax Officer (3).
The former was concerned with the question whether a Hindu undivided family is embraced within the term 'individuals ' in Entry 56 of List 1 of the Seventh Schedule to the Constitution for purposes of the Wealth Tax Act, 1957.
The latter decision does not touch the question under article 15.
Neither of the two decisions, therefore, can assist.
On the other hand, in the case of Bhagat vs State of Punjab(4) the High Court of Punjab has held that section 32 KK does not create any discrimination on the ground of religion.
In 'the present case, it is not possible to give (1) ; (3) L7Sup.
Cl/67 9 (2) (4) I.L.R. [1963] 16 (1) Punj.
610 any concluding answer to the contention raised by Mr. Mani firstly because such a point was not raised in the writ petition and secondly because the appellants have not placed before us sufficient data to enable us to go into the question.
We, therefore, refrain from examining that contention.
The appeal fails and is dismissed with costs.
Y.P. Appeal dismissed.
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While ascertaining the surplus land under the Pepsu Tenancy and Agricultural Lands Act, the excess over 30 acres owned by the appellants, a Hindu undivided family was declared surplus.
In ascertaining the surplus, the authorities ignored the transfer of land by the Karta of the family to an outsider by a registered deed.
The appellants unsuccessfully filed writ petition.
In appeal to this Court, the appellants contended that section 32 KK deprives a coparcener in a Hindu undivided family of his rights of property.
in that it takes away the rights of the descendants of the land owner to claim for themselves the permissible area and vest them in the head of the family alone so that there is not only an infringement of the right to hold property under article 19(1) (f) but also discrimination in favour of the head of the family infringing thereby article 14 and that the section cannot be said to be legislation whose object is agrarian reform and, therefore, is not protected by article 31 A. HELD:The appeal must fail.
In Pritam Singh vs State of Punjab [(1967) 2 S.C.R. 536] this Court upheld the validity of section 32 FF and held that that section was protected by article 31 A against any challenge under article 19.
If a transfer or a disposition of land can validly be ignored under section 32 FF for the purpose of ascertaining surplus land and acquisition of such surplus land bit he State and that section is protected by article 31 A, it is difficult to say why section 32 KK which, equates a Hindu undivided family with an individual landowner for the limited purpose of the Act without affecting the other rights of its members is not equally protected by that Article.
The object of enacting section 32 KK was to prevent the landowner and his descendants by reason of their constituting a Hindu undivided family from each of them claiming in his own right the permissible area from the joint holding of the family and thus retain for themselves in the aggregate area larger than 30 standard acres and preventing thereby distribution of surplus area.
[608 F H] The contention that the section is not one relating to agrarian reform is hardly sustainable in view of the objects of the Act in general and of section 32 KK in particular.
Similarly, the contention that the section has the affect of defeating the rights of a member of a Hindu undivided family from the family property also cannot be sustained because his rights in the permissible area retained by the landowner and his right to compensation in respect of the surplus area are not touched by the section.
Nor is it possible to say that the section results in the transfer of rights of the descendants of a landowner in the permissible or surplus area in favour of such landowner.
The section does not effect any change in the rights of 604 the descendants as members of a Hindu undivided family or the relationship of the family inter se except to the extent of depriving the descendants of their right to claim the ceiling area for each of them.
[609 B E] The decision of Ranjit Singh vs The State of Punjab ([1965] 1 S.C.R. 82) points out that the fixing of ceiling on lands and provisions relating to it would form part of and constitute agrarian reform and, therefore, such provisions would have the protection of article 31 A. [607 H]
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2199.txt
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Appeal No. 210 of 1959.
Appeal by special leave from the judgment and order dated January 16, 1958, of the Patna High Court in Mis.
Judicial case No. 156 of 1957.
B. C. Ghose and P. K. Chatterjee, for the Appellant.
section P. Varma, for Respondents Nos. 1 to 5.
R. C. Dutta, for Respondents Nos.
6 to 20. 1960.
November 7.
The Judgment of Hidayatullah, Das Gupta and Ayyangar, JJ., was delivered by Ayyangar, J., and that of section K. Das and Shah, JJ., was delivered by Shah, J. AYYANGAR.
The sole question which arises in this appeal, which comes by way of special leave is as to whether sales under which goods were delivered outside the State of Bihar for the purpose of consumption but not within the State of first delivery or first destination, are exempt from the levy of sales tax by the Bihar State by virtue of article 286(1)(a) of the Constitution as it stood before the recent amendment.
The India Copper Corporation Ltd. (referred to hereafter as the assessee company) carries on business in copper and various other materials and mineral pro.
ducts and the office of its General Manager is in the district of Singhbhum in Bihar.
The period covered by the assessment now in dispute is January 26, 1950 to March 31, 1950.
The normal practice of the assessee company was to deposit sums of money from time to time provisionally towards payment of sales tax in advance and have the amount finally adjusted after the completion of the assessment of each year.
The assessee company followed this practice in respect of the amount of sales tax due by it for the year 1949 50.
For the financial year April 1, 1949 to March 31, 1950, the Superintendent of Sales tax, Singhbhum, 278 computed the tax liability of the company in the sum of Rs. 3,60,703 4 0 by an order of assessment dated November 13,1950, and the company made payment of the amount due by it beyond the sums already paid.
It would be noticed that this financial year comprised two periods (1) before the Constitution, viz., April 1, 1949 to January 25, 1950, and (2) the post Constitution period from January 26, 1950 to March 31, 1950.
There is now no controversy as regards the sales tax payable in respect of sales effected during the pre Constitution period.
The assessee company however raised a dispute that in respect of the post Constitution period, it was not liable to pay any sales tax in respect of sales to buyers, under which though the property in the goods passed within the State, delivery of the goods was effected outside the State of Bihar for consumption outside that State on the ground that such sales were exempted from tax by article 286(1)(a) of the Constitution as it originally stood.
It addressed a formal letter to the Commissioner of Commercial Taxes, Bihar, on December 30, 1952, making this demand enclosing a statement showing full particulars of the goods sold, the bill numbers, the date and the amount etc., to enable the refund claimed to be calculated.
The assessee company followed it up by a formal petition for review of the assessment order by filing a revised return under section 12(2) of the Bihar Sales tax Act together with an application for refund.
The departmental authorities rejected these applications by order dated July 20, 1953.
Further proceedings before the department by way of revision etc.
failed to secure to the assessee company the relief which it claimed and thereafter it filed an application under articles 226 and 227 of the Constitution before the High Court of Patna praying for the issue of a writ to quash the order of assessment dated November 30, 1950, and the orders rejecting the prayers for review, reassessment and refund and for a direction to the departmental authorities to refund the sum realised by them in so far as the tax related to sales as a result of which goods were delivered outside the State of Bihar.
279 The learned Judges of the High Court held that the order of the Superintendent of Sales tax, Singhbhum, dated November 13, 1950, should be set aside and that the matter should go back to the Superintendent to make a reassessment according to law for the post Constitution period.
A further direction was added requiring the respondent to refund to the assessee so much of the tax as had been paid in excess of the amount of reassessment to be made by the Superinten dent in accordance with the law as laid down by the Court.
In formulating the law applicable, the learned Judges drew a distinction between sales as a direct result of which goods were delivered in a State outside the State of Bihar and consumed in that State and those cases in which the goods thus delivered, were not consumed in the State of first destination but were re exported from the State of first destination to other States.
They held that the first category of sales were covered by the Explanation to article 286 (1)(a) of the Constitution and were " inside " the State of first delivery and consequently " outside " the State of Bihar within the meaning of the Article and therefore exempt from tax by the Bihar State.
In regard, however, to the second category of sales, it was held that they were not within the Explanation and were therefore outside the constitutional exemption under article 286(1)(a).
The assessee company not being satisfied, filed an application to the High Court for a Certificate of fitness under articles 132 and 133 of the Constitution, but this having been rejected, they applied to and obtained special leave from this Court under article 136 of the Constitution and that is how the appeal is now before us.
Three points were urged before us by Mr. B. C. Ghose, learned Counsel for the appellants: (1) that on a proper construction of article 286(1)(a) and the Explanation thereto (as it stood before the Article was amended by the Constitution Sixth Amendment Act, 1956) every sale as a direct result of which goods were delivered for consumption outside the State, was not within the taxing power of the State in which the 280 goods were at the time of the sale, and ,in which property passed as a result thereof, and that it was immaterial whether the delivery was for the purpose of consumption in the State of first destination or whether the delivery in such State was not for the purpose of consumption therein but, for re export to other States, (2) that even if article 286(1)(a) exempted only sales in which as a direct result of the sale the goods were delivered for the purpose of consumption in the State of first destination, on the pleadings and the evidence before the Court the assessee company must be taken to have established that all the sales effected by it and in regard to which exemption from payment of tax was claimed, conformed to this requirement, (3) a narrower submission, that even it be that to fall within the Explanation the delivery has to be for the Purpose of consumption in the State of first destination, the learned Judges of the High Court erred in requiring the assessee company to prove not merely that the goods were delivered for the purpose of consumption but further that the goods so delivered were actually consumed within that State.
We shall now deal with these points in that order.
Article 286(1)(a) together with the Explanation on whose construction the first point depends ran in these terms: " Article 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 (a) outside the State; or (b). . . . . . . . . . . Explanation.
For the purposes of sub clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
" The scope and the purpose of this Explanation was 281 discussed and explained by this Court in The State of Bombay vs Unitea Motors (India) Ltd. (1) and it is the passage in this judgment extracted below on which reliance was placed by the learned Counsel in support of his submission: ". . .
The authors of the Constitution had to devise a formula of restrictions to be imposed on the State power of taxing sales or purchases involving inter State elements which would avoid the doubts and difficulties arising out of the imposition of sales tax on the same transaction by several Provincial Legislatures in the country before the commencement of the Constitution.
This they did by enacting clause (1) (a) with the Explanation and clause (2) of Article 286.
Clause (1)(a) prohibits the taxation of all sales or purchases which take place outside the State but a localised sale is a troublesome concept, for, a sale is a composite transaction involving as it does several elements such as agreement to sell, transfer of ownership, payment of the price, delivery of the goods and so forth, which may take place at different places.
To solve the difficulty an easily applicable test for determining what is an outside sale had to be formulated, and that is what, in our opinion, the Explanation was intended to do.
It provides by means of a legal fiction that the State in which the goods sold or purchased are actually delivered for consumption therein is the State in which the sale or purchase is to be considered to have taken place, notwithstanding the property in such goods passed in another State .
An " outside " sale or purchase is explained by defining what is an inside sale, and why actual delivery and consumption in the State are made the determining factors in locating a sale or purchase will presently appear.
The test of sufficient territorial nexus was thus replaced by a simpler and more easily workable test: Are the goods actually delivered in the taxing State, as a direct result of a sale or purchase, for the purpose of consumption therein ? Then, such sale or purchase shall be deemed to have taken place (1) ; , 1081 36 282 in that State and outside all other States.
The latter States are prohibited from taxing the sale or purchase; the former alone is left free to do go.
Multiple taxation of the same transaction by different States is also thus avoided.
" It might be mentioned that this portion of the judgment is unaffected by the dissent expressed in the later decision in The Bengal Immunity Company Ltd. vs The State of Bihar (1).
The argument based upon this passage was broadly on these lines: Article 286 (1)(a) imposes a ban on the legislative power to levy a tax on sales which are outside " the taxing State.
What sales are " outside is not easy to decide because that depends upon " the situs " of a sale, which cannot, in most cases, be located in any one place with certainty being dependent on a variety of factors which might or might not converge.
The Constitution makers did not directly define what was meant by a ,sale that was " outside the State " but achieved the same purpose by explaining an " inside " sale with the result that what was not an " inside " sale should be held to bean ,outside" sale.
It must however be pointed out that it was not disputed that the terms of the " Explanation " would not be satisfied unless the delivery was for the purpose of consumption therein, i.e. in the State of first destination, If the terms of the Explanation were satisfied, the State of " delivery.
cum consumption ", (to coin a convenient expression to designate the State in which goods are delivered as a direct result of the sale for the purpose of consumption therein), used in the Explanation, would have power to tax the sale as being one fictionally " inside " it.
In such an event all the other States in India, barring that State would be prevented from taxing that sale because the sale would be " outside " those States.
This however, it was urged, would not exhaust the operation of the Explanation, but further that the Explanation was exhaustive of what the Constitution makers conceived to be a sale which alone may be the subject of tax by a State.
The deduction learned Counsel made from these premises was twofold (1) that (1) 283 in cases where goods were as a direct result of the sale delivered outside the State of Bihar for the purpose of consumption in the State of first destination, the conditions of the Explanation were satisfied and the sales being " outside " the State of Bihar could not be taxed by that State.
So far there is no dispute and indeed the learned Judges of the High Court have, subject to a matter of detail to which reference will be made later, accepted the contention of the assessee.
(2) a further consequence, that in cases where goods were delivered as a result of the sale outside the State of Bihar, but not for the purpose of consumption in such State of first destination, the terms of the Explanation were no doubt not satisfied and consequently the, sale was not inside such State of delivery and indeed not " inside " any State in India within the Explanation, but that such sales also must be held to be " outside " every State in India within article 286 (1)(a).
The learned Judges of the High Court repelled this contention and, in our opinion, correctly.
The passage in the judgment of the United Motors case extracted earlier dealt with Explanation sales and with none else.
When the terms of the Explanation were satisfied such sales were by a fiction deemed to be " inside " the State of delivery cum consumption and therefore " outside " all other States.
In such cases therefore, only the State " inside " which the sale is deemed to take place by virtue of the Explanation, is exempt from the ban imposed by article 286(1)(a).
All other States would be subject to that ban in respect of such sales.
The learned Chief Justice however did not, in the passage extracted, deal with the case of sales which did not satisfy the terms of the Explanation.
The situs of what might be termed 1 non Explanation ' sales has therefore to be determined independently of the terms of the Explanation.
Such sales would be exempt from tax only if the sale took place " outside the State but not otherwise.
The next question is, does a sale take place " outside " the State, where as a result of the contract of 284 sale, the property in the goods passes to the purchaser within the State; in other words, is a sale completed by the passing of property within the State not " inside" a State, for the more reason that as a direct result of the sale the goods are delivered outside the State.
The answer depends on the meaning to be attributed to the words " a sale or purchase which has taken place " outside the State occurring in the body of article 286 (1).
The expression " outside the State " is capable of being understood in more senses than one.
It could be understood as comprehending cases where no element or ingredient which constitutes a sale takes place within the State; in other words as applying solely to those cases where there exists no territorial nexus between the State imposing the tax and the sale.
Obviously, this could not have been intended to be incorporated in article 286(1) because the tax in such cases would be beyond the legislative power of the State under Entry 54 of the State List read with article 246 of the Constitution.
The expression " outside " has therefore to be understood not as a sale so " outside " as not to have any territorial connection between the State in question and the sale, but in a somewhat narrower sense.
The real difficulty arises in ascertaining the precise content of the narrower sense in which the word is used as meaning a sale in substance " outside " the State, though there might be some elements of the sale which if the exemption under article 286(1)(a) were not enacted, would enable a State to levy a tax on the sale on the ground that it was within the legislative power of the State under article 246 read with Entry 54.
As already pointed out, the situs of a sale is not easy to determine and several factors which constitute a completed transaction of sale including the delivery of the goods, lay claim to be considered as in themselves constituting sufficient next to justify their being treated as determining the locus of a sale.
Thus, merely by way of illustration, the place where the goods are at the time of the contract of sale, the place where the contract of sale is concluded, the place where the property in the goods passes and that 285 in which the delivery takes place compete for recognition as constituting the locus of a sale.
Before the Constitution, these and other similar factors were treated as affording sufficient territorial connection to endow the State in which any of the events occurred with legislative competence to tax the sale.
This led to a multiplicity of the taxation of the same transaction of sale by a plurality of States, with the result that the consumer was hard hit and trade itself, and national economy suffered in the process.
It has been pointed out that article 286(1)(a) was designed to counteract that state of affairs.
If a single State was designed to have the power to tax any particular transaction of sale, the question that next falls to be considered is the determination of that State in regard to which it could be predicated that the sale in question was not " outside " that State or in other words, the determination of the particular State in regard to which it could be said that the sale was " inside " that State.
The key to the problem is afforded by two indications in the Article itself: (1) the opening words of Article 286(1) which speak of a sale or purchase taking place and (2) the non obstante clause in the Explanation which refers to the general law relating to " sale of goods under which property in the goods has, by reason of such sale or purchase, passed in another State.
" These two together indicate that it is the passing of property within the State that is intended to be fastened on, for the purpose of determining, whether the sale in question is " inside " or " outside " the State, and therefore, subject to the operation of the " Explanation " that State in which property passes would be the only State which would have the power to levy a tax on the sale.
As was explained in the recent decision of this Court in Burmah Shell Oil Storage & Distributing Co., of India, Ltd. vs The Commercial Tax Officer (1) : " By sale here (article 286(1)(a) ) is meant a completed transaction by which property in the goods passes.
Before the property in the goods passes, the contract (1) C.A. 751 of 1957 & C.A. 10 of 1958 (Unreported).
286 of sale is only executory, and the buyer has only a chose in action. . . .
The Constitution thinks in terms of a completed sale by the passing of property and not in terms of an executory contract for the sale of goods.
" Notwithstanding that is not an " outside " sale, the power of the State to tax might be negatived by the operation of the Explanation which by its non obstante clause shifts the situs of the sale and renders the sale transaction one within the delivery cum consumption State, i.e. as the State in which the sale transaction must be deemed to take place.
Where the terms of the Explanation are satisfied, the sale transaction will, by a legal fiction created by it, be deemed to take place "inside" the State of delivery and therefore " outside " the State in which the property passes.
The conclusion reached therefore is that where the property in the goods passes within a State as a direct result of the sale, the sale transaction is not outside the State for the purpose of article 286(1)(a), unless the Explanation operates.
We need also add that the power of the State to impose the tax might still not be available unless the transaction in question is unaffected by the other bans imposed under sub cl.
(1)(b), (2) and (3) of article 286.
The submission therefore of learned Counsel for the appellants, that in respect of non Explanation sales the State of Bihar has no power to levy a tax by reason of such sales being 'outside " the State within article 286(1)(a) must be rejected.
The second contention urged by the learned Counsel for the appellant was that even assuming he was wrong on the first point, all the sales by the assessee company fell within the terms of the Explanation to article 286(1)(a) being sales as a direct result of which the goods were delivered for consumption in the State of first destination, and that the learned Judges of the High Court were in error in considering, that some of the sales did not conform to this requirement.
In support of this submission learned counsel drew our attention to two matters.
He first referred us to the application dated December 30, 1952 made on behalf 287 of the assessee company to the Commissioner of Commercial Taxes, Bihar, Patna in which the claim for refund of the tax paid was rested on the following ground : After getting out that the tax on sales effected between the period January 26, 1950 to March 31, 1950 was not assessable by virtue of article 286 of the Constitution, the application stated: " Total sales of raw materials of copper and brass sheet and circles sold by us and despatched under railway receipts for buyers ' consumption are as follows".
Then followed the sales effected and the tax paid in respect of the sales.
The claim in this form was annexed to and made part of the petition to the High Court under article 226 and 227 of the Constitution and in paragraph 9 of the petition, this letter was referred to and a copy thereof was incorporated and marked as 1A.
In this paragraph which was the other matter relied on the claim for refund was said to be " on sales made to buyers outside Bihar State for consumption ".
Learned Counsel strongly pressed upon us that paragraph 9 and the annexure had clearly asserted that the sales which were the, subject of the claim for refund involved a delivery of the goods outside the State of Bihar for consumption in the State of first destination and the State of Bihar not having filed any counter affidavit challenging the correctness of these allegations, the High Court should have held that the terms of the Explanation were satisfied and should have ordered the refund claimed.
We however consider that this submission is without force.
Neither in the claim put forward in Exh. 'A ' nor in para graph 9 of the petition was any distinction drawn between sales under which deliveries were effected outside the State of Bihar for the purpose of consumption in the State of first destination and those in which the deliveries outside the State were effected for the purpose of consumption not in the State of first destination but in other States.
In fact, this was made clear in the later paragraphs of the petition to the High Court from which it is apparent that the assessee company made a claim for tax exemption in 288 respect of sales in which the delivery took place outside the State of Bihar, whether the delivery was for the purpose of consumption in the State of first destination or otherwise.
In paragraph 17(1) of the petition to the High Court the assessee stated: " (the petitioner was not liable to pay tax on goods delivered outside the State of Bihar which was also for consumption outside the State of Bihar ", and again in clause (iii) of the same paragraph this was repeated: " the goods being outside the State of Bihar, delivered outside the State of Bihar and consumed outside the State of Bihar were not liable to sales tax by the State of Bihar " and similarly in cl.
(v) of the same paragraph a reference was made to " goods delivered outside the State of Bihar for consumption outside the State of Bihar ".
The same idea is emphasized in paragraph 19 also which contained the prayer of the petition.
On these averments it is clear that the claim made by the assessee was that to invoke the exemption contained in article 286(1)(a) it was sufficient that the goods were delivered outside the State of Bihar and that it was immaterial whether the delivery was for the purpose of consumption in the State of first destination or otherwise.
This involved the same argument which was raised by the learned Counsel that we have dealt with earlier.
The learned Judges of the High Court were therefore right in drawing a distinction between the two types of sales which we have already indicated.
The last point that was urged by the learned Counsel was that the learned Judges of the High Court erred in requiring the assessee to prove that the goods delivered outside the State of Bihar were actually consumed in the State of first destination before the exemption from tax could be availed of In their judgment now under appeal the learned Judges have stated: "The petitioner would not be entitled to exemption if the goods were not consumed in the State of first destination but were re exported from the State of first destination to other States) '.
Learned Counsel for the appellant complained that 289 under the Explanation to article 286(1)(a) there need be no proof of actual consumption of the goods delivered in the State of first destination but that the Explanation was satisfied if the purpose of the delivery tinder the sale was for consumption in that State.
If after a sale that satisfied that requirement, viz., for the purpose of consumption in the State of first destination, the buyer under such a sale for his own purposes reexported the goods that was not a matter with which the seller was concerned and would not affect the character of the sale as one falling within the Explanation to article 286(1)(a).
Learned Counsel therefore urged that the learned Judges of the High Court went wrong in requiring proof on the part of the assessee that the goods were actually consumed within the State of first delivery outside Bihar and that this was an unwarranted addition to the requirements of the Explanation.
We consider this submission well founded and indeed the learned Counsel for the respondent did not dispute that the actual order of the High Court went beyond the terms of the Explanation to article 286(1)(a).
The order of the High Court will, therefore, be modified by making it clear that if the goods were as a direct result of the sale delivered outside the State of Bihar for the purpose of consumption in the State of first delivery the assessee would be entitled to exemption of the sales tax imposed and that it would not be necessary for the assessee to prove further that the goods so delivered were actually consumed in the State of first destination.
Subject to this modification, the appeal fails, but in the circumstances of the case there will be no order as to costs.
SHAH J.
We agree with the conclusion of Mr. Justice Rajagopala Ayyangar, J., but because our approach to the question is somewhat different, we propose to record our reasons separately.
The Bihar Sales Tax Act, 1947, was enacted in exercise of legislative authority conferred upon the Provincial Legislatures by entry 42 in List II read 37 290 with section 100(3) of the Government of India Act, 1935.
By section 2(g) of the Act, " sale " was defined (in so far as it is material) as meaning any " transfer of property in goods for cash or deferred payment or other valuable consideration. . provided. . provided further that notwithstanding anything to the contrary in the Indian Sales of Goods Act, 1930, the sale of any goods (i) which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, or (ii) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, be deemed for the purposes of this Act to have taken place in Bihar." Under entry 42 of List II of the Government of India Act, 1935, the Provincial Legislatures could tax sales by selecting some fact or circumstance which provided a territorial nexus with the taxing power of the State even if the property in the goods sold passed outside the Province or the delivery under the contract of sale took place outside the Province.
Legislation taxing sales depending solely upon the existence of a nexus, such as production or manufacture of the goods, or presence of the goods in the Province at the date of the contract of sale, between the sale and the Legislating Province could competently be enacted under the Government of India Act, 1935 see the Tata Iron and Steel Co., Ltd. vs The State of Bihar and Poppatlal Shah vs The State of Madras (2).
By article 286 of the Constitution, certain fetters were placed upon the legislative powers of the States as follows: article 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 (a) outside the State ; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
(1) (2) ; 291 Explanation:For the purposes of sub cl.
(a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce : Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty first day of March, 1951.
(3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
" With a view to impose restrictions on the taxing power of the States under the pre Constitution statutes, amendments were made in these statutes by the Adaptation of Laws Order.
By the Adaptation of Laws Order, 1951, in the Bihar Sales Tax Act was incorporated with retrospective operation from January 26, 1950, section 33, which provided: " ' (1) Notwithstanding anything contained in this Act, (a) a tax on the sale or purchase of goods shall not be imposed under this Act (i) where such sale or purchase takes place outside the State of Bihar ; or 292 (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India ; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide; (2) The Explanation to cl.
(1) of article 286 of the Constitution shall apply for the interpretation of sub cl.
(1) of cl.
(a) of sub section
" By this amendment, on the taxing power of the Bihar State the same restrictions were engrafted on the pre Constitution statute as were imposed by article 286 of the Constitution upon post Constitution statutes.
This court has held in the Bengal Immunity Co., Ltd. vs The State of Bihar (1) that the operative provisions of the several parts of article 286 namely cl.
(1) (a), (1)(b) and (2) and cl.
(3) were intended to deal with different topics and one could not be projected or read into another.
Therefore, by the incorporation of section 33 in the Bihar Sales Tax Act read with article 286, notwithstanding the amplitude of the power otherwise granted by the charging section read with the definition of " sale ", a cumulative fetter of triple dimension was imposed upon the taxing power of the State.
The Legislature of the Bihar State could not since January 26, 1950, levy a tax on sale of goods taking place outside the State or in the course of import of the goods into, or export of the goods out of the territory of India, or on sale of any goods where such sale took place in the course of inter State trade or commerce.
By the Explanation to article 286(1)(a) which is incorporated by sub section
(2) section 33 of the Bihar Sales Tax Act, a sale is deemed to take place in the State in which the goods are actually delivered as a direct result of such sale for the purpose of consumption in that State even though under the law relating to sale of goods the property in the goods has by reason of such sale passed in another State.
In the State of Bombay vs The United Motors (India) Ltd. (2), it was held that (1) (2) ; 293 since the enactment of article 286(1)(a), a sale described in the Explanation which may for convenience be called an " Explanation sale " is taxable by that State alone in which the goods sold are actually delivered as a direct result of sale for the purpose of consumption in that State.
The right to tax arises because the sale is deemed to take place in that State and outside all other States and the latter States are prohibited from taxing the sale ; the former alone is left free to do so.
The Bihar Sales Tax Act enacted in exercise of the power conferred by entry 42 of List II of the Government of India Act, 1935, upon the Provincial Legislatures is saved by article 372 of the Constitution as existing law, but by the combined operation of sub sections
(1) and (2) of section 33, the Bihar State is incompetent to tax sales of goods in the course of imports into and exports out of the territory of India, and after March 31, 1951, sales of goods in the course of inter State trade or commerce.
In view of the exposition of the content of the Explanation to article 286(1)(a) by this court in the United Motors case (1), the Bihar State is also incompetent to tax " Explanation sales " where the goods are delivered in another State as a direct result of the sale for consumption in that State.
By this last ban, to the extent provided by subs.
(1)(a)(i) and sub section
(2) of section 33, the State of Bihar is deprived of its power to tax sales; but the ban does not wholly extinguish the power of the State to tax sales relying upon a real territorial nexus between the sale and the State.
In other words, by enacting that a tax shall not be imposed under the Act when the sale takes place outside the State of Bihar in section 33(1)(a)(i), only the power to tax " Explanation sales " which do not take place within the State of Bihar in taken away, but not the power to tax " non Explanation sales " in which though under the general law of sale of goods the property passes outside the State, there exists between the taxing power of the State and the sale a nexus as contemplated by the definition of sale in section 2(g).
If the sale is one in which the goods have been delivered outside the State of (1) ; 294 Bihar, but not as a direct result of the sale or not for the purpose of consumption in the State of first delivery, the sale will not be covered by the Explanation, and the right to tax the sale, if arising otherwise under the Act relying upon the territorial nexus, will not be impaired by the prohibition imposed by cl.
(1)(a)(i) of section 33.
The right of the State of Bihar to tax a sale relying upon a real territorial nexus not being impaired by section 33 of the Act, all sales as defined by section 2(g) of the Bihar Sales Tax Act are liable to be taxed, except those falling within section 33(1)(a)(ii), section 33(2) and " Explanation sales " outside the State of Bihar.
The appellant company carries on the business of manufacturing copper and other mineral products in the State of Bihar.
It has its registered office and its place of business in the District of Singhbhum in the State of Bihar and is registered as a " dealer " under the Bihar Sales Tax Act, 1947.
The appellant company sent out its products to various places in India in the year of assessment ending on March 31, 1950 and has paid the tax assessed by the Sales Tax Officer.
The appellant is now seeking to obtain a refund of the tax paid for the period between January 26 and March 31, 1950, on the plea that the tax was paid under a misapprehension of the law.
The High Court in an application under article 226 of ' the Constitution directed the Sales Tax authorities to refund so much of the tax as was not proved to have been paid in respect of sales of goods delivered and consumed in the State of first destination.
On the goods delivered and consumed in the State of first destination outside Bihar, the appellant could not be called upon to pay sales tax.
That is undisputed.
The appellant also claimed that on the goods delivered for consumption in the State of first delivery outside Bihar, it was not liable to pay sales tax, even if there was no evidence to prove that the goods were in fact consumed in such State.
In our judgment, the High Court was in error in directing that the exemption provided by article 286(1)(a) read with the Explanation which was at the material time incorporated by section 33 in the Bihar Sales Tax Act by the Adaptation of 295 Laws Order, 1951, only applied to all sales of goods delivered and consumed in the State of first destination.
If the goods were delivered for consumption, it is immaterial whether they were in fact consumed in the State where they were delivered.
The power of the State to levy sales tax relying upon the territorial nexus between the taxing power of the State and the sale, is impaired for reasons already set out to the extent to which it is restricted by the incorporation of article 286(1)(a)(i) and the Explanation thereto, in that Act.
Therefore, sales effected on or after January 26, 1950, where goods are as a direct result of the sale delivered in another State for consumption in that other State, are not liable to be taxed.
The directions issued by the High Court will therefore be modified as follows: The order of the Superintendent of Taxes is set aside.
He is directed to grant refund of tax paid in the light of this judgment.
The appellant will be entitled to exemption from payment of tax if the goods are, as a direct result of the sale, delivered in another State for the purpose of consumption in that State.
Appeal dismissed subject to modification.
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The appellant effected sales during the period 26 1 1950 to 31 3 1950, whereunder the property in the goods passed in the State of Bihar but delivery was effected outside Bihar for consumption outside Bihar.
In some of these sales the goods were delivered in the State of first destination for consumption therein whilst in other cases the goods were not for consumption in the State of first delivery of destination.
The appellant contended that both these categories of sale were exempt from tax under article 286(1)(a) as they were outside sales.
Held (per Hidayatullah, Das Gupta and Rajagopala Ayyangar, JJ.) that the sales where delivery in the State of first destination was for consumption therein, were outside the State of Bihar within the Explanation to article 286(1)(a) and Bihar could not tax them, but the sales where delivery in the State of first destination was not for consumption therein were not " Explanation Sales " and were not " outside " sales and Bihar could tax them.
Where the property in the goods passed within the State as a direct result of the sale the sale was not an " outside " sale for the purpose of article 286(1)(a) unless it fell within the Explanation.
In the first category of sales the appellant was entitled to the.
exemption and it was not necessary for it to prove that the goods delivered for consumption in the State of first destination were actually consumed therein.
The State of Bombay vs United Motors (India) Ltd., and Bengal Immunity Company Ltd. vs The State of Bihar, , referred to.
Burmah Shell Oil Storage & Distributing Co. of India Ltd. vs The Commercial Tax Officer, C. A. No. 751 of 57 and C. A. No. 10 of 1958 (Unreported), relied on.
Per section K. Das and Shah, Jj.
Section 33 introduced in the Bihar Sales Tax Act by the Adaptation of Laws Order, 1951, engrafted the same restrictions on the taxing power of the State on the pre Constitution statutes as were imposed by article 286 upon post Constitution statutes.
Section 33(1)(a)(1) of the Act took away only the power to tax " Explanation Sales " but not the power to tax " non Explanation Sales ".
A sale in which goods had been delivered outside Bihar, but not as a direct result of 277 the sale or not for the purpose of consumption in the State of first delivery was not covered by the Explanation, and the right to tax the sale, if it arose otherwise under the Act, was not impaired by section 33(1)(a)(i).
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ivil Appeal No.309 of 1955.
Appeal from the judgment and order dated October 7, 1953, of the Orissa High Court in O.J.C. No. 37 of 1952.
C.K.Daphtary, Solicitor General of India and B.Sen (B. M. Patnik, Advocate, Orissa High Court with Special Permission of the Court and R. H. Dhebar), for the appellants, Nos. 1, 3 to 9 and 11 to 16 and the intervener.
H. Mahapatra and Gyan Chand Mathur, for the respondent.
December 6.
The following Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate under articles 132 and 133(1)(c) of the Constitution arises out of a writ petition filed by the respondent in the High Court of Orissa under article 226 seeking to quash the proceedings taken by certain tenants of his private lands under the provisions of the Orissa Tenants ' Protection Act, 1948 (Orissa III of 1948), hereinafter referred to as the 1948 Act.
The respondent was the ruler of the erstwhile Khandapara State which merged with the Province of Orissa under the States ' Merger (Governor 's Provinces) Order, 1949 with effect from August 1, 1949.
The respondent had on December 14, 1947 entered into an agreement with the Governor General of India art, 3 Whereof provided that: 1069 " The Raja shall be entitled to full ownership, use, and enjoyment of all private properties (as distinct from State Properties) belonging to him on the date of the agreement.
" That article further provided that if any dispute arose as to whether any item of property was the private property of the Raja or State property, it shall be referred to such officer with judicial experience as the Dominion Government might nominate and the decision of that officer shall be final and binding on both parties.
The respondent claimed a number of properties and the matter was referred to the Adviser for Orissa States for determining whether all the items claimed by him could be regarded as his private pro perties.
On June 10, 1949, the Adviser communicated his decision that the respondent was entitled to 1,643 acres as his Khamar lands and 29 and odd acres as lands settled with his tenants.
The lands comprised in the present proceedings taken under the 1948 Act as aforesaid were declared to be the private properties of the respondent.
On March 3, 1950, the Orissa Legislature passed the Orissa Merged States ' (Laws) Act, 1950 (Orissa IV of 1950) hereinafter referred to as " the 1950 Act ".
Section 4 of that Act extended inter alia the 1948 Act to the areas merged in the absorbing Province of Orissa.
Section 7 provided for the modification of tenancy laws in force in the merged States.
The relevant provisions of that section so far as they are material for the purposes of this appeal may be set out herein: " Notwithstanding anything contained in the tenancy laws of the merged States as continued in force by virtue of article 4 of the States Merger (Governor 's Provinces) Order, 1949: (a)all suits and.
proceedings between landlord and tenant as such shall be instituted and tried in revenue courts.
Explanation:In this clause the expression " landlord" shall mean a person immediately under whom a tenant holds land, and the expression " tenant " shall mean a person who holds land under another 1070 person and is or, but for a special contract, would be liable to pay rent for that land to that person: (h) when a person holds Khamar, nij jote or any other private lands of a Ruler, which has been recognised as such by the Provincial Government, he shall not be liable to ejectment but shall be liable to pay such fair and equitable rent as may be fixed by any competent authority appointed in this behalf by the Revenue Commissioner or the Commissioner, Northern Division, as the case may be and thereupon he shall acquire right of occupancy in respect of such lands: " On April 14, 1951, the State Legislature passed the Orissa Tenants Protection (Amendment) Act, 1951 (Orissa XVII of 1951) whereby the date the " 1st day of September, 1947 " wherever it was used in the 1950 Act, was substituted by the "I st day of August, 1949" for the purposes of the merged States areas and it was further provided that in such areas where neither the Madras Estates Land Act, 1908, nor the Orissa Tenancy Act, 1913 was in force the special laws or customs prevailing therein shall be taken into consideration for the application of that Act.
It appears that certain tenants who were in occupation of the private lands of the respondent were evicted by him during the year 1951 and other tenants were inducted by him and put in possession of the lands.
The tenants who were thus evicted applied to the Revenue Officer some time in 1952 for being restored to possession of their tenancy lands under the provisions of the 1948 Act, alleging that the respondent was their landlord and that he had unlawfully evicted them from their lands.
These were numbered as O.T.P. Act Cases Nos.
21 to 25 of 1952, 26 to 28 of 1952, 29 to 32 of 1952 and 33 to 41 of 1952.
Notice was issued to the respondent but it appears that be did not care to enter appearance before the Revenue Officer or to contest the applications.
On the ex parte evidence of the Applicants the Revenue Officer directed restoration of possession to them holding that they 1071 were in possession of the lands as tenants on the 1st day of August, 1949, and as such were entitled to the benefits conferred by the 1948 Act, as amended in its application to the merged States.
The respondent thereupon filed a writ petition under article 226 of the Constitution in the High Court seeking to quash the entire proceedings on the ground that in respect of the disputed lands he was not a " landlord " within the meaning of the 1948 Act.
The petition as filed averred that the fundamental right conferred upon the respondent by article 19 of the Constitution was infringed, that the provisions of the 1948 Act which were inconsistent with that article were void as being ultra vires the Constitution and the orders passed thereunder by the Revenue Officer were illegal and liable to be set aside.
This petition was filed by the respondent on August 11, 1952, A further petition was thereafter filed on February 26, 1953 invoking article 3 of the said Agreement and it was contended that by the application of the provisions of the 1948 Act, to the said private properties of the respondent, the respondent was deprived of the " full ownership, use and enjoyment " of the properties to which he was entitled under the said Agreement, and that under article 363 of the Constitu tion, no Court had jurisdiction to deal with any dispute arising out of any provisions of the said Agreement.
The decision of the Revenue Officer was thus called in question and it was contended that he had no jurisdiction to decide the dispute as to whether the tenants had any right to the personal properties of the respondent and as such the proceedings were liable to be quashed as being without jurisdiction.
The High Court accepted these contentions of the respondent and allowed the writ petition.
It accordingly directed the issue of a writ declaring that the proceedings under the 1948 Act taken by the Revenue Officer were void as being without jurisdiction and that they should be quashed.
The tenants then filed an application before the High Court asking for a certificate under articles 132 and 1072 133(1)(c) of the Constitution which was granted by the High Court.
The State of Orissa asked for leave to intervene in the appeal which leave was granted by this Court and the learned Solicitor General has appeared before us in support of the appeal, both on behalf of the tenants who are the appellants herein, and the State of Orissa, the Intervener.
It may be noted at the outset that no question has been raised in regard to the vires of the 1950 Act, which extended inter alia the 1948 Act to the areas merged in the absorbing Province of orissa.
That being so, section 7(h) of the 1950 Act in terms would apply to the appellants before us and they would not be liable to ejectment.
The answer of the respondent, however, is that (1) the Revenue Court had by virtue of article 363 of the Constitution no jurisdiction in the disputes between the appellants and him arising out of the provisions of the said Agreement dated December 14, 1947, (2) that the full ownership, use and enjoyment of the properties which was guaranteed to him under article 3 of the said Agreement was affected by the application of the provisions of the 1948 Act, to the said lands and (3) that, he was not a " landlord " and the appellants were not the " tenants " within the meaning of the terms as defined in the 1948 Act, and, that in any event, these lands were not recognised as such by the Provincial Government which recognition was a condition precedent to the application of section 7(h) of the 1950 Act to these lands and that therefore the appellants were not entitled to the protection thereof.
The first two contentions are inter related and can be disposed of together.
The lands in question were declared to be the private properties of the respondent and he was guaranteed under article 3 of the said Agreement full ownership, use and enjoyment thereof.
Article 363 only ousted the jurisdiction of the courts in regard to the disputes arising out of any provisions of the Agreement entered into by the Rulers of Indian States with the Government of India.
The dispute which had arisen between the appellants and the respondent in the present case could hardly be said to 1073 be a dispute arising out of any provisions of the said Agreement.
The full Ownership, use and enjoyment of the properties which were declared to be the private properties of the respondent was not sought to be affected by extending the 1948 Act, to the merged State of Khandapara.
The properties which had been declared to be the private properties of the respondent were not claimed as State properties but the whole legislation proceeded on the basis that the respondent was the owner of these properties wherein he had inducted tenants and what was sought to be done was to enact a measure for the protection of those tenants.
A measure for the protection of the tenants inducted by the respondent could hardly be said to affect the full ownership, use and enjoyment of these properties by the respondent.
It no doubt imposed certain restrictions on the absolute rights which the respondent claimed in regard to the user and enjoyment of the said properties; but these measures were imposed upon him in common with all the citizens of the Union and the justification for the same could be sought under cl. 5 of article 19 of the Constitution.
Similar contentions which had been raised on behalf of the erstwhile Rulers, whose States had merged with the Provinces, were answered by this Court in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1) and in Visweshwar Rao vs The State of Madhya Pradesh (2).
PatanjaliSastri C. J.observed in the former case at page 915: "But a short and obvious answer is that there was no contravention of any guarantee or assurance given by the Government under the covenant of merger, as the estates in question are sought to be acquired only as the " private property " of the Rulers and not otherwise.
The compensation provided for, such as it is, is in recognition of their private proprietorship, as in the case of any other owner.
" Mahajan J. (as he then was) observed in the latter case at page 1041 : " It is true that by the covenant of merger the , 915.
(2) , 1041, I054.
1074 properties of the petitioner became his private properties as distinguished from properties of the State but in respect of them he is in no better position than any other owner possessing private property.
Article 362 does not prohibit the acquisition of properties declared as private properties by the covenant of merger and does not guarantee their perpetual existence.
The guarantee contained in the article is of a limited extent only.
It assures that the Rulers ' properties declared as their private properties will not be claimed as State properties.
The guarantee has no greater scope than this.
That guarantee has been fully respected by the impugned statute, as it treats those properties as their private properties and seeks to acquire them on that assumption.
Moreover, it seems to me that in view of the comprehensive language of article 363 this issue is not justiciable.
" Das J. (as he then was) also observed in that case at page 1054: " The guarantee or assurance to which due regard is to be had is limited to personal rights, privileges and dignities of the Ruler qua a Ruler.
It does not extend to personal property which is different from personal rights.
Further, this article does not import any legal obligation but is an assurance only.
All that the covenant does is to recognise the title of the Ruler as owner of certain properties.
To say that the Ruler is the owner of certain properties is not to say that those properties shall in no circumstances be acquired by the State.
The fact that his personal properties are sought to be acquired on payment of compensation clearly recognises his title just as the titles of other proprietors are recognised.
" It is clear therefore that neither article 363 nor article 362 of the Constitution would avail the respondent and the courts would have jurisdiction to entertain the dispute between the appellants and him which arose out of his action in ejecting them from his private lands.
The provisions of the said Agreement only protected his rights in the properties declared to be his private properties so that they could not be claimed at any time thereafter as State properties.
The did not dispute his ownership over the same but proceeded on the basis that they were his private properties and sought to impose upon him certain obligations in order to protect the rights of the tenants whom he had inducted therein and there was no infringement of the guarantee or assurances which had been given to him under article 3 of the said Agreement.
It could not also be urged that by imposing reasonable restrictions in the interests of the tenants on his right to acquire, hold and dispose of properties under cl. 5 of article 19 of the Constitution, the 1948 Act affected his rights of full ownership, use and enjoyment of those properties.
If anything was done by extending the 1948 Act to the merged State of Khandapara, it was done in the interests of the tenants and it was done for the protection of the tenants who were inducted by him and such restrictions did not affect the full ownership, use and enjoyment of his private properties, any more than they did in the case of other owners of lands.
As a matter of fact, under the terms of the 1950 Act which extended the 1948 Act to the merged State of Khandapara, he was entitled to the payment by "he tenants of such fair and equitable rent as may be fixed by any competent authority appointed in this behalf by the Revenue Commissioner or the Commissioner of the Northern Division as the case may be and so long as the tenants continued to pay such rent he was no worse off than were other proprietors of lands.
The tenants would no doubt acquire rights of occupancy in respect of such lands but the acquisition of the occupancy rights by the tenants would not be calculated to affect his right to full ownership, use and enjoyment of his lands, because he would be entitled to eject the occupancy tenants also if the tenants used the lands comprised in their holdings in any manner which rendered them unfit for the purposes of the tenancy or committed a breach of conditions consistent with the provisions of the tenancy laws in force in the merged State concerned on breach whereof they were under the terms of the contract between themselves and the landlord liable to be ejected.
As already stated I37 1076 these restrictions were for the protection of the tenants who were inducted on the lands by the erstwhile Rulers themselves and by the extension of the 1948 Act to the merged State of Khandapara, the respondent was treated in the same manner as any other citizen of the Union.
If at all there was any infringement of his rights to full ownership, use and enjoyment of his properties that was also in accordance with the provisions of the Constitution itself and whatever may have been the guarantee or assurance given to him under the terms of the said Agreement, it could not be absolute but would only be co extensive with the right to acquire, hold and dispose of property which is guaranteed to all the citizens of the Union under article 19(1)(f) of the Constitution.
These contentions of the respondent therefore are of no avail.
If, then, the provisions of the 1950 Act could be validly applied to the merged State of Khandapara in spite of article 3 of the said Agreement thus attracting the operation of the 1948 Act to his private lands it remains to consider whether the respondent was a landlord and the appellants were his tenants within the meaning of the terms as defined in that Act.
The contention of the respondent, in the first instance, is that under the terms of section 2(ii) of the Orissa Tenants Protection (Amendment) Act, 1951 (Orissa XVII of 1951) which added sub section
5 to section I of the 1948 Act, in such areas where neither the Madras Estates Lands Act, 1908, nor the Orissa Tenancy Act, 1913, was in force and the State of Khandapara was such an area the special laws or customs prevailing therein shall be taken into consideration for the application of that Act.
It is urged that the relationship between the respondent and the tenants whom he had inducted on his private properties was governed by special laws and customs and that therefore the application of the Act was excluded .
It is, however, to be observed that no such contention was ever taken in the proceedings before the Revenue Officer or before the High Court and it was urged for the first time in the course of the arguments before us.
The question is one of fact, 1077 whether any such special laws or customs were prevailing in the merged State of Khandapara, and we cannot allow the respondent to urge this contention for the first time before us.
We shall, therefore, proceed on the basis that the 1948 Act was quite properly extended to the merged State of Khandapara.
It is next contended that the definition of landlord and tenant given in section 2(c) and (g) of the 1948 Act did not apply to the relationship between the parties.
The definitions of these terms are as under: Section 2 (c). "landlord" means a person, whether a proprietor, sub proprietor, tenure holder or raiyat or under raiyat, either in the raiyatwari area or in the zamindari area or land holder or permanent undertenure holder, whose land a person, whether immediately, or mediately cultivates as a tenant; Section 2 (g). "tenant" means a person who, under the system generally known as Bhag, Sanja, Kata or such similar expression, cultivates the land of another person on condition of delivering to that person (i) either a share of the produce of such land, or (ii) the estimated value of a portion of the cropraised on the land, or (iii) a fixed quantity of produce irrespective of the yield from the land, or (iv) produce or its estimated value partly in any one of the ways described above and partly in another; but shall not include. . . . " It is urged that the tenants who were inducted by the respondent on these lands did not fulfil the terms of this definition and they were therefore not tenants and, as a logical corollary to that, the respondent could not be a landlord qua them.
It is also contended that even though these lands were declared to be the private properties of the Respondent under the decision of the Adviser for the Orissa States, that was a recognition of the lands as such by the Dominion Government and not by the Provincial Government; which recognition was a condition precedent of the application of section 7(h) of the 1950 Act to these lands.
Here 1078 also, the respondent is confronted with this difficulty that these questions were not mooted either before the Revenue Officer or the High Court in the manner in which it was sought to be done before us.
It was all along assumed that the appellants had been the tenants of the respondent but had been ejected by him in the year 1951 and other tenants were inducted in their place some time in 1952.
The lands in question were also assumed to have been recognised as the private lands of the respondent by the Government without making any distinction between the Dominion Government and the Provincial Government as was sought to be done before us.
Reliance was mainly placed by the respondent in the High Court on his plea that the jurisdiction of the Revenue Officer was barred under article 363 of the Constitution and it was nowhere urged that the appellants were not the tenants and be was not the landlord within the terms of the definitions contained in the 1948 Act or that in the absence of recognition of these private lands of his as such by the Provincial Government, the condition precedent to the application of section 7(b) of the 1950 Act was not fulfilled and that section has no application at all to these lands.
The determination of these questions also requires evidence in regard to the same and it would not be legitimate to allow these questions to be agitated for the first time at this late stage.
The matter is, however, concluded by the provisions of section 7(a) of the 1950 Act.
That section enacts a statutory extension of the definition of the terms landlord and tenant and provides that the expression 'Jandlord 'shall mean a person immediately under whom a tenant holds land, and the expression 'tenant ' shall mean a person who holds land under another person and is or, but for a special contract, would be liable to pay rent for that land to that person.
Whatever may have been the definitions of the terms landlord and tenant in section 2(c) and (g) of the 1948 Act, this definition contained in the explanation to section 7(a) of the 1950 Act makes the appellants 'the tenants 'and the respondents ' a landlord ' in regard to the lands in question.
This statutory extension of the definition of the terms 1079 'landlord ' and ' tenant ' therefore is sufficient, in our opinion, to repel the last contention urged on behalf of the respondent before us.
The respondent further contends that in spite of section 7 of the 1950 Act, enacting that all suits and proceedings between landlord and tenant as such shall be instituted and tried in revenue courts, the provisions of the 1948 Act in regard to the hierarchy of revenue courts and the procedure and the penalties provided therein are not attracted to the merged State of Khandapara.
The contention is that the provisions contained in the 1950 Act are special provisions which eliminate the operation of the general provisions contained in the 1948 Act, and in so far as nothing more is stated in regard to how the revenue courts are to act in the matter of the institution and trial of all suits and pro ceedings between landlord and tenant, there is a lacuna and the revenue courts as envisaged by the 1948 Act, have no jurisdiction to entertain the proceedings in question.
The simple answer to this contention of the respondent is that both these Acts have to be read together.
The 1950 Act is an Act to extend certain Acts and regulations to certain areas administered as part of the Province of Orissa.
The merged State of Khandapara is one of such areas.
By virtue of section 4 of this Act the 1948 Act is inter alia extended to the merged State of Khandapara and the provisions thereof are made applicable in that area.
The other sections of this Act enact further provisions which are applicable to these merged States including the merged State of Khandapara and section 7, in particular, enacts the modification of the tenancy laws in force in those merged States.
These provisions are therefore supplementary to those contained in the 1948 Act, and it follows that not only the provisions of the 1948 Act but also the provisions of the 1950 Act are applicable to the merged State of Khandapara.
If both these Acts are thus read together, as they should be, there is no inconsistency between the provisions of these Acts and it is clear that the provisions of sub section
(a) and (h) of section 7 of the which applied to the dispute which arose between the appellants and the respondent read together with the relevant provisions in regard to the procedure, penalties, etc., contained in the 1948 Act did give jurisdiction to the Revenue Officer to entertain the dispute between the parties.
This contention of the respondent also therefore fails.
We are therefore, of opinion that the judgment of the High Court was clearly wrong and is liable to be set aside.
We accordingly allow the appeal, set aside the order made by the High Court, and restore the orders passed by the Revenue Officer in the O.T.P. Act Cases Nos.
21 to 25 of 1952, 26 to 28 of 1952, 29 to 32 of 1952 and 33 to 41 of 1952.
The respondent will pay the appellants ' costs of this appeal as also of the writ petition in the High Court.
The State of Orissa will, of course, bear and pay its own costs.
Appeal allowed.
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The respondent was the Ruler of the erstwhile State of Khandapara which merged in the State of Orissa on August 1, 1949.
Article 3 of the Agreement of Merger guaranteed that "the Raja shall be entitled to full ownership, use and enjoyment of all his private properties".
The Orissa Merged States ' (Laws) Act, 1950 extended the Orissa Tenant 's Protection Act, 1948 to the merged areas.
In 1951 the respondents evicted certain tenants.
The tenants applied to the Revenue Officer under the 1948 Act for being restored to possession on the allegations that the respondent was their landlord and that he had unlawfully evicted them.
The Revenue Officer allowed the applications and directed restoration of possession.
The respondent filed a petition under article 226 of the Constitution in the High Court for quashing the orders of the Revenue Officer contending, (1) that the application of the provisions of the 1948 Act to his private properties violated the guarantee given under the Agreement, (2) that article 363 Of the Constitution barred the Court from dealing with any dispute arising out of the Agreement, and (3) that the 1948 Act did not apply to him as he was not a landlord.
The High Court accepted these contentions and quashed the proceedings taken under the 1948 Act: Held, that the extension of the 1948 Act did not affect the full ownership, use and enjoyment of his properties guaranteed to the respondent under the Agreement.
The provisions of the Agreement only protected his rights to the properties declared to be his private properties so that they could not be claimed at anytime thereafter as State properties.
The guarantee given under the Agreement could not be absolute but could only be co extensive with the right to acquire, hold and dispose of property which is guaranteed to all citizens under article 19(1)(f) of the Constitution.
State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of 136 1068 Darbhanga, and Visheshwar Rao vs The State of Madhya Pradesh, , followed.
Held, that the jurisdiction of the Courts to entertain the applications under the 1948 Act, was not barred by article 363 Of the Constitution.
The dispute between the appellants and respondent was not a dispute which arose out of the Agreement of Merger, and so was not covered by article 363.
Held further, that the respondent was a landlord to whom the provisions of the 1948 Act applied.
Whatever may have been the definition of the terms landlord and tenant in SS.
2(C) and (g) of the 1948 Act the definitions contained in section 7(a) of the 1950 Act, made the appellants 'the tenants ' and the respondent 'the landlord ' in regard to the lands in question.
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ivil Appeal Nos.
387390 of 1977.
From the Judgment and Order dated 30.7.1976 of the Madras High Court in C.R.P. Nos. 1288 to 1291 of 1975.
T.S. Krishnamurthy lyer, A.T.M. Sampath and Thirumaran for the Appellants.
G.L. Sanghi, P.S. Poti, A.V. Rangam, M.G. Natarajan and T.V. Ratnam for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
These four appeals are directed against the common judgment of the High Court of Madras dismissing four Civil Revision Petitions filed by the appellants against the order of the appeal court upholding the order of the Trial Court dismissing their applications made under Section 9 of the Tamil Nadu City Tenants Protection Act 1921.
Briefly the facts giving rise to these appeals are: N.V. Abdullah Sahib predecessor in interest of the appellants obtained a lease of about 10 grounds of vacant land situate in the city of Madras from the ancestors of Respondent landlords in 1924, for carrying on business, he constructed super structures on the vacant land and carried on business in timber under a partnership firm along with his brother N.V. Ummer Kutty and two minors.
The super structures which were constructed prior to 1954 on the demised land were treated partner 737 ship assets along with other properties.
After the death of N.V. Abdullah Sahib and N.V. Ummer Kutty the partnership business could not be carried on, as dispute arose between the partners.
A suit being Civil Suit No. 152 of 1960 was filed for partition and in that suit defendant Nos. 2 and 4 were appointed joint receivers, subsequently on 7.9.1966 Sri Ananthakrishnan Nair, Appellant No. 1 was appointed Receiver who was authorised to take custody of the account books and to realise rent from the sub tenants occupying the property which was the subject matter of dispute in the partition suit.
The High Court passed a preliminary decree in the partition suit but before final decree could be prepared or finalised, the Respondent landlords served notices on the heirs of N.V. Abdullah Sahib terminating the lease and demanding surrender of the land.
Since the land was not restored to the landlords inspite of termination of the lease, the landlords, in 1972 instituted four suits being Suit Numbers 33 to 36 in the Court of Small Causes at Madras for ejectment against the heirs of N.V. Abdullah Sahib, which included defendant Nos.
1 to 10 and Sri P. Ananthakr ishnan Nair, Advocate receiver as defendant No. 11.
In the ejectment suits defendant Nos. 1 to 3 and 5 to 10 did not appear or contest the suit, and ex parte proceedings were taken against them but K.K. Kunhammoo, defendant No. 4 (second appellant) and Sri P. Ananthakrishnan Nair, Advo cate receiver defendant No. 11 contested the ejectment suits.
Defendant No. 4, namely, appellant No. 2, filed an application in each of the ejectment suits claiming benefit of Section 9 of the Tamil Nadu City Tenants Protection Act III of 1922 (hereinafter referred to as the Act) with a prayer to the Court for issuing orders directing the land lords to sell the land, to the defendants and to appoint a Commissioner to ascertain the price which the defendants would pay.
The Respondent landlords contested the applica tions.
The Trial Court rejected the application on the findings that the defendants were not in occupation of the property except a small portion where the account books were kept and the defendants did not require any portion of the land for running their business or for the convenient enjoy ment of the super structures.
On appeal by the defendant Nos. 4 and 11 under section 9 A of the Act, the appellate authority held that proceedings for ejectment had been taken ex parte against most of the defendants and persons entitled to the statutory privilege did not exercise their right and further they have not been in possession and occupation of the premises therefore, defendants were not entitled to the benefit of Section 9 of the Act.
The appellate court further held that defendant No. 4 (the receiver) was not entitled to maintain an application under Section 9 of the Act on behalf of other defendants.
Thereafter both the receivers, defend ant Nos. 4 and 11 preferred four 738 petitions in revision before the High Court.
A learned single Judge by his order dated 30.7.1976 affirmed the orders of the Courts below and dismissed the revision peti tions.
Aggrieved defendant No. 4 and P. Ananthakfishnan Nair, Advocate receiver have preferred these appeals against the order of the High Court after obtaining Special Leave.
In the instant case the appellants ' application was rejected firstly on the ground that the application made under Section 9 of the Act had not been signed by all the tenants against whom suit for ejectment had been filed by the respondent landlords.
Secondly all the three courts ejected the appellants ' application on the findings that the defendants have not been in possession or occupation of the superstructure and they have let out the entire building to sub tenants, thereby they are not entitled to claim benefit of Section 9 of the Act.
As regards the first question the learned counsel for the appellants urged that the applica tion made under Section 9 of the Act was signed by the second Appellant who was defendant No. 4 in the suit.
The suit for partition of the property had not been finally decreed and as no final decree had been passed the shares of the defendants had not been partitioned by metes and bounds the property continued to retain its joint status and de fendant No. 4 being a co owner could legally make applica tion on behalf of other co owners claiming the benefit of Section 9 of the Act.
Since there was no conflict of inter est among the co owners, defendant No. 4 being a co owner could maintain the application not only on his own benefit but also on behalf of all other co owners as the fight of each co owner extends to every inch of the whole property alongwith the other co owners.
It is always open to a co owner to conserve the property for the benefit of all other co owners.
The preliminary decree passed in the partition suit did not affect the joint interest:st of the co owners as no final decree had been passed in the suit and the property under tenancy continued to be joint.
Learned coun sel further urged that defendant No. 4 being a party receiver in the partition suit was entitled to do everything for the conservation and protection of the property for the benefit of the parties to the suit.
The court below commit ted error in rejecting the application on the plea that the same had been signed only by defendant No. 4.
On the other hand, learned counsel for the respondent landlords urged that the application made by only one of the co heirs of the deceased N.V. Addullah Sahib, the original tenant, could not be conscrued as one made on behalf of other co heirs, as they did not contest 739 the ejectment suit and ex parte decree for their eviction had been passed by the trial court which clearly indicate that they were not interested in retaining the property or in continuing possession of the same.
Since all the other heirs of N.V. Abdulla Sahib were not interested to contest the suit, defendant No. 4 (Appellant No. 2) could not main tain application under Section 9 of the Act on behalf of other co heirs and the application made by him did not and could not reflect the desire of other co heirs who had settled outside the State of Tamil Nadu.
The learned counsel further urged that defendant No. 4 though functioning as party receiver was not authorised to take legal proceedings by filing suit or application on behalf of parties to the partition suit.
In the absence of authorisation by the court the defendant.
No. 4 had no authority in law to act as agent of other co heirs.
It was further urged that the receiver is an officer of the Court and he is not agent of any party to the suit notwithstanding the fact that in law his position is ultimately treated as an agent of the successful party on the termination of the suit.
We do not consider it necessary to express our opinion on these rival submissions made before us as in our opinion the appeals must fail on the second question which relates to the findings recorded by all the three courts that since the tenants have not been in occupation of the property in dispute, they are not entitled to the benefit of Section 9 which is equitable in nature.
The Tamil Nadu City Tenants Protection Act, 192 1 was enacted, as its preamble shows, to give protection to cer tain classes of tenants in municipal towns and adjoining areas in the State of Madras, who may have constructed buildings on others ' lands in the hope that they would not be evicted so long as they paid a fair rent for the land.
The object of the Act as contained in the objects and rea sons of the bill state: "In many parts of the City of Madras dwelling houses and other buildings have from time to time been erected by tenants on lands belong ing to others, in the full expectation that subject to payment of a fair ground rent, they would be left in undisturbed possession, notwithstanding the absence of any specific contract as to the duration of the lease or the terms on which the buildings were to be leased.
Recently attempts made or steps taken to evict a large number of such tenants have shown that such expectations are likely to be defeated.
The tenants, if they are evicted, can at the 740 best remove the super structure which can only be done by pulling down the buildings.
As a result of such wholesale destruction, congest ed parts of the city will become more congest ed to the serious deteriment of public health.
In these circumstances it is just and reasona ble that the landlords when they evict the tenants should pay for and take the buildings.
There may however be cases where the landlord is unwilling to eject a tenant, if he can get a fair rent for the land.
The Act provides for the payment of compensation to the tenant in case of ejectment for the value of any build ings which may have been erected by him or his predecessors in interest.
It also provides for the settlement of fair rent at the instance of the landlord or tenant provision is also made to enable the tenant to purchase the land in his occupation subject to certain conditions.
" The Act has been subject to several amendments seeking to protect the tenants ' interest and also safe guarding landlords ' rights in the property.
It would be profitable to refer to the provisions of the Act highlighting broad as pects of the benefits to a tenant and the rights of the landlords which have been safe guarded.
The Principal Act was amended by the Act XIX of 1955 and XIII of 1960 which made comprehensive amendments in the Principal Act of 1921 (Act III of 1922).
The Principal Act was further amended by Act IV of 1972 and XXIV of 1973.
"Landlord" as defined by Section 2(3) means any person owing any land including every person entitled to collect the rent of the whole or any portion of the land whether on his own account or on behalf of or for the benefit of any other person, or by virtue of any transfer from the owner or his predecessor in title or of any order of a competent court or of any provision of law.
"Tenant" as defined by Section 2(4) means a person liable to pay rent in respect of such land under a tenancy agreement express or implied and it also includes any person who continues in possession of the land after determination of the tenancy agreement.
Section 3 provides that every tenant shall on ejectment be entitled to be paid as compen sation the value of any building, which may have been erect ed by him and also the value of trees which may have been planted by him in a suit for ejectment.
If the landlord 's suit for ejectment is decreed the court is required to ascertain the amount of compensation payable under Section 3 and it shall thereupon pass a decree for the amount so found due and direct that on payment of the amount by the landlord within three months from the date of decree the tenant shall put the landlord into possession of the land along with the building and trees thereon, as 741 provided by Section 4 of the Act.
Section 5 provides for determination of compensation to the tenant.
If the landlord is unable or unwilling to pay compensation as directed by the Court he may apply to the Court for fixation of reasona ble rent for the occupation of the land by a tenant in accordance with Section 6 of the Act.
Section 9 provides that a tenant who is entitled to compensation under Section 3 and against whom a suit for ejectment is instituted may apply for an order that the landlord may be directed to sell the land to him for the price to be fixed by the Court, and thereupon the Court shall fix the price in the manner pre scribed therein and direct the said amount to be paid to the landlord by the tenant within a particular time and in default, his application shall stand dismissed.
Section 11 provides that no suit for ejectment shall be instituted against the tenant except after giving three months notice requiring him to surrender possession of the land, building and trees to the landlord.
These provisions broadly seek to recapitulate the objects and reasons as quoted earlier by protecting the tenant from eviction who may have constructed super structure on the land demised to him and it further safeguards the landlord 's interest by making provision for payment of the price of the land to him by the tenant.
In the instant case since the tenant 's right to purchase the land is involved we would refer to the provisions of Section 9 of the Act in detail, which reads as under: "9.
Application to Court for Directing the Landlord to Sell Land: (1) (a) (i) Any tenant who is entitled to compensation under section 3 and against whom a suit in ejectment has been instituted or proceeding under section 41 of the Presidency Small Causes Courts Act 1882, taken by the landlord may, within one month of the date of the publication of the Madras City Tenant 's Protection (Amend ment) Act 1979 in the Tamil Nadu Government Gazette or of the date with effect from which this Act is extended to the municipal town, township or Village in which the land is situate or within one month after the service on him of summons, apply to the Court for an order that the landlord shall be directed to sell for a price to be fixed by the Court, the whole or part of extent of land specified in the application.
(ii) Notwithstanding anything con tained in clause (a) (i) of this sub section, any such tenant as is referred to in 742 sub clause (ii) (b) of clause (4) of Section 2 or his heirs, may within a period of two months from the date of the publication of the Madras City Tenants ' Protection (Amendment) Act 1973 apply to the Court (whether or not a suit for ejectment has been instituted or proceeding under Section 41 of the Presidency Small Causes Courts Act 1882 (Central Act XV of 1882) has been taken by the landlord or whether or not such suit or proceeding is pending having jurisdiction to entertain a suit for ejectment or in the City of Madras either to such court or to the Presidency Small Causes Court for an order that the landlord under the tenancy agreement shall be directed to sell for a price to be fixed by the Court the whole or part of the extent of land specified in the application.
(b) On such application the Court shall first decide the minimum extent of the land which may be necessary for the convenient enjoyment by the tenant.
The Court shall, then fix the price on the minimum extent of the land decid ed as aforesaid or of the extent of the land specified in the application under clause (a) whichever is less.
The price aforesaid shall be the average market value of the three years immediately preceding the date of the order.
The Court shall order that within a period to be determined by the Court not being less than three months and not more than three years from the date of the order of the tenant shall pay into Court or otherwise as directed the price so fixed in one or more instalments with or without interest.
(2) In default of payment by the tenant of any one instalment, the application under clause (a) of sub section (1) shall stand dismissed, provided that on sufficient cause being shown, the Court may excuse the delay and pass such orders as it may think fit, but not so as to extend the time for payment beyond the three years above mentioned.
On the application being dismissed, the Court shall order the amount of the instalment or instalments if any, paid by the tenant to be repaid to him without any interest.
(3) (a) On payment of the price fixed under clause (b) of sub section (1), the Court shall pass an order directing the conveyance by the landlord to the tenant of the extent of land for which the said price was fixed.
The Court shall by 743 the same order direct the tenant to put the landlord into possession of the remaining extent of the land, if any.
The stamp duty and registration fee in respect of such conveyance shall be borne by the tenant.
(b) On the order referred to in clause (a) being made the suit or proceeding shall stand dismissed, and any decree or order in eject ment that may have been passed therein but which has not been executed shall be vacated.
Once a suit is filed by the landlord for the eviction of a tenant from land the tenant has right to apply to the Court within one month from the date of the service of summons for the issuance of order directing the landlord to sell the whole or part of the extent of land as specified in the application to him for a price to be fixed by the Court.
On making of such an application the Court is under a manda tory duty to first decide the minimum extent of the land "which may be necessary for the convenient enjoyment by the tenant." (emphasised).
The court must hold enquiry to deter mine whether the tenant requires the land for his convenient enjoyment, and if so, what area or portion of the land would be necessary for his convenient enjoyment.
The court may on the facts of a particular case come to the conclusion that the tenant does not require any portion of the land and in that event it may reject the application and decree the suit for ejectment and direct the landlord to pay compensation to the tenant.
But if the court finds that the tenant needs the whole or any portion of the demised land for "convenient enjoyment", the Court has to fix the price of the land on the basis of market value of three years immediately preced ing the date of the order.
The Court may thereupon direct the tenant to deposit the amount so determined within a specific period not being less than three months and not more than three years.
If the tenant fails to pay the amount so determined, the tenant 's application shall stand dis missed.
Section 9 confers a privilege on a tenant against whom a suit for eviction has been filed by the landlord but that privilege is not absolute.
Section 9 itself imposes restric tion on the tenant 's right to secure conveyance of only such portion of the holding as would be necessary for his conven ient enjoyment.
It creates a statutory right to purchase land through the medium of court on the fulfilment of condi tions specified in Section 9 of the Act.
It is not an abso lute right, as the court has discretion to grant or refuse the relief for the purchase of the land.
In S.M. Transport (P) Ltd. vs Sankaraswamingal Mutt, [1963] Suppl 1 744 SCR 282 this Court considered the question whether the right of a tenant to apply to a court for an order directing the landlord to sell the land to him for a price to be fixed by it under Section 9 of the Act is a property right.
The Court held, that the law of India does not recognise equitable estates, a statutory right to purchase land does not confer any right or interest in the property.
The right conferred by Section 9 is a statutory right to purchase land and it does not create any interest or right to the property.
The tenant 's right to secure only such portion of the holding as may be necessary for his convenient enjoyment is equitable in nature.
Under the common law a tenant is liable to evic tion and he has no right to purchase the land demised to him at any price as well as under the Transfer of Property Act.
The only right of a tenant who may have put up structure on the demised land is to remove the structure at the time of delivery of possession on the determination of the lease.
Section 9 confers an additional statutory right on a tenant against whom suit for ejectment is filed to exercise an option to purchase the demised land to that extent only which he may require for convenient enjoyment of the proper ty.
The tenant has no vested right in the property instead; it is a privilege granted to him by the statute which is equitable in nature.
Whenever an application is made by a tenant before the Court for issuance of direction to the landlord for the sale of the whole or part of the land to him, the Court is under a mandatory duty to determine the minimum extent of the land which may be necessary for the convenient enjoyment by the tenant.
This determination can obviously be made only after an enquiry is held by the Court having regard to the area of the demised land and the extent of super structure standing thereon, and the tenant 's need for the land for the benefi cial enjoyment of the super structure which he may have constructed thereon.
The enquiry pre supposes that the tenant making the application has been in the occupation of the land and the super structure wherein he may be either, residing or carrying on business, and on his eviction he would be adversely affected.
The policy underlying Section 9 of the Act, is directed to safeguard the eviction of those tenants who may have constructed super structure on the demised land, so that they may continue to occupy the same for the purposes of their residence or business.
Section 9 (1) (b) ordains the court to first decide the minimum extent of the land which may be necessary for the convenient enjoy ment by the tenant, it therefore contemplates that the tenant requires the land for the convenient enjoyment of the property.
If the tenant does not occupy the land or the super structure or if he is not residing therein or carrying on any business, the question of convenient enjoy 745 ment of the land by him could not arise.
The Court has to consider the need of the tenant and if it finds that the tenant does not require any part of the land, it may reject the application and direct eviction of the tenant, in that event the landlord has to pay compensation to the tenant for the superstructure.
In the instant case, admittedly the land in dispute was leased out to N.V. Abdullah Sahib for carrying on business, the Trial Court as well as the First Appellate Court both have recorded concurrent findings of fact that the business which was being carried on by N.V. Abdullah Sahib and his heirs was discontinued in 1964, and except for defendant Nos. 4 and 7, all other defendants have settled down outside Madras and they were not occupying the land or the building thereon nor they were carrying on any business in any por tion of the building on the date of filing of the ejectment suit.
Only in a small portion of the entire land account books of the business was kept and the rest of the land and the super structure standing thereon has been in the occupa tion of sub tenants since 1964.
The Courts have lurther recorded findings that except defendant No. 4 (Appellant No. 1) other defendants are not interested as they did not contest the landlords ' suit for eviction.
These findings clearly show that the none of the defendants have been in occupation of the land of the super structure standing thereon and they have not been carrying on any business therein.
Even in the ejectment suits, barring defendant No. 4 none appeared to contest the suit and ex parte proceedings were taken against them.
The Trial Court as well as the appeal court both have recorded findings that the land in dispute and the super structure has been in occupation of sub tenants since 1964.
In view of these findings the High Court refused to interfere with the orders of the Trial Court as confirmed by the appeal court.
Having regard to these findings and the nature of the tenants ' fight to purchase land under Section 9 being equitable in nature, it would be unreasonable to direct the landlord to sell the land to the tenants.
The facts and circumstances available on record show that the tenants do not require the land for their convenient enjoyment, therefore, it would be inequita ble to direct the landlords to sell the property to the tenants.
It is a matter of common knowledge that price of land, specially in the urban areas has escalated to a great extent and it would not be fair to deprive the landlords of their property and to allow the tenants to enrich at the landlords ' expense.
The law does not intend that the tenant should enrich at the instance of the landlord even though the tenants do not require the land for their convenient enjoyment.
746 We do not therefore find any good reason to interfere with the High Court 's order dismissing the appellants revi sion application.
We accordingly dismiss these appeals but make no order as to costs.
P.S.S. Appeals dismissed.
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Section 3 of the Tamil Nadu City Tenants ' Protection Act, 1921 provides that every tenant shall on ejectment be entitled to be paid compensation for the value of building which may have been erected by him.
Section 9 of the Act, provides that a tenant who is entitled to compensation under section 3 and against whom a suit for ejectment is instituted may apply for an order that the landlord may be directed to sell the land to him for the price to be fixed by the court.
The predecessor in interest of the appellants had ob tained a lease of vacant land in the city of Madras from the ancestors of the respondent landlords in 1924 and construct ed superstructures thereon for carrying on business.
The business was, however, discontinued in 1964.
A partition suit was filed and the first appellant was appointed receiv er.
Before a final decree could be passed in that suit, the respondent landlords served notices on the heirs of the original tenant terminating the lease and later filed eject ment suits against them.
Only defendant No. 4 (2nd appel lant) and defendant No. 11, advocate receiver (1st appel lant) contested the ejectment suits.
Ex parte proceedings were taken against the other defendants.
Defendant No. 4 filed an application in each of the ejectment suits claiming the benefit of section 9 of the Act, with a prayer to the court for directing the landlords to sell the land to the defend ants and to appoint a commissioner to ascertain the price.
The Trial Court rejected the application on the findings that the defendants were not in occupation of the property, for they had let out the entire building to sub tenants except a small portion thereof where the account books were kept, and that the defendants did not require any portion of the land for running their business or for the convenient enjoyment of the superstructures.
735 On appeal by defendants 4 and 11 under section 9A of the Act, the appellate authority held that as the defendants had not been in possession and occupation of the premises, they were not entitled to the benefit of section 9.
The High Court affirmed the findings of the courts below and dismissed the revision petitions preferred by the appel lants.
Dismissing the appeals, this Court, HELD: Section 9 of the Tamil Nadu City Tenants Protec tion Act, 1921 confers a privilege on a tenant, against whom a suit for ejectment has been filed by the landlord to exercise an option to secure conveyance of only such portion of the demised land as would be necessary for his convenient enjoyment.
It creates a statutory right to purchase land through the medium of the court on fulfilment of the condi tions specified therein.
It is not an absolute right, as the court has discretion to grant or refuse the relief for purchase of the land on the facts of a particular case.
[743G H] S.M.
Transport (P) Ltd. vs Sankaraswamingal Mutt, [1963] Suppl.
1 SCR 282, referred to.
The policy underlying section 9 is directed to safeguard the eviction of those tenants who may have constructed super structures on the demised land so that they may continue to occupy the same for the purpose of their residence or busi ness.
The section contemplates that the tenant requires the land for the convenient enjoyment of the property.
Whenever an application is made by tenant before the Court for issu ance of direction to the landlord for the sale of the whole or part of the land to him the Court is under a mandatory duty to determine the minimum extent of the land which may be necessary for the convenient enjoyment by the tenant.
For this determination the Court must hold an enquiry having regard to the area of the demised land and the extent of superstructure standing thereon and the tenant 's need for the said land.
That inquiry pre supposes that the tenant making the application has been in occupation of the land and the super structure wherein he may be either residing or carrying on business and on his eviction he would be ad versely affected.
The court has to consider the need of the tenant and if it finds that the tenant does not require any part of the land it may reject the application and direct eviction of the tenant.
In that event, the landlord has to pay compensation to the tenant for the superstructure.
[744G H; 745A B] 736 In the instant case, the findings recorded by the courts below clearly show that none of the defendants have been in occupation of the land or the superstructures standing thereon and they have not been carrying on any business therein.
The land in dispute and the superstructure have been in occupation of the sub tenants since 1964.
Thus, the tenants could not be said to require the land for their convenient enjoyment.
Having regard to these findings and the nature of the tenants ' right to purchase land under section 9 it would be inequitable to direct the landlords to sell the land to the tenants.
[745E G] The price of land, specifically in the urban areas, has escalated to a great extent and it would not be fair to deprive the landlords of their property and to allow the tenants to enrich at the landlord 's expense.
[745G H]
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